In this week’s episode, Mark is joined by The Apartment Guy℠, Bruce Petersen, who is a syndicator of large multi-family properties throughout Central Texas ranging in size from 48-292 units. He was awarded the Austin Apartment Association’s Independent Rental Owner of the Year for 2016 and the National Apartment Association’s Independent Rental Owner of the Year for 2017 as well as Think Realty’s Multifamily Investor of the Year 2019.

 

Bruce targets stabilized properties where he can buy a cash-flowing asset and drive value through building “community” and improved operations. He is able to do this by implementing his proven systems and deploying his experienced staff to replicate his business model across the new acquisitions.

 

Make sure you pick up a copy of Bruce’s phenomenal new book, Syndicating Is a B*tch: And Other Truths You Haven’t Been Told.

 

 

What You’ll Learn In Today’s Episode:

  • Syndication is tough. It can be incredibly rewarding, but the stress is high, there is a lot that can go wrong, and if your not prepared you can be setting yourself up for failure.

  • Property management is a full-time job, and it can slow your growth, but it can give you unprecedented control over how your properties are run.

  • Look for ways to add value outside of unit upgrades and utility bill-backs. Think laundry machines, covered parking, and even credit repair.

  • Life is too short to do things that suck. 

 

Ideas Worth Sharing:

“They have to live somewhere, but they don’t have to live in your damn property.” – Bruce Petersen | Tweet This!

“You got to have way more reserves than you think you need.” – Bruce Petersen | Tweet This!

“There will always be a correction, and if you’re not reinvesting in your property you’re going to get yourself in a lot of trouble.” – Bruce Petersen | Tweet This!

Resources In Today’s Episode:

 Books Mentioned in the Show

 

Enjoy the show? Use the Links Below to Subscribe:

 

Transcript

 

Mark:              He was awarded the National Apartment Associations, Independent Rental Owner in 2017, as well as Think Realty’s Multifamily Investor of the year. This past year, his strategy is to buy cash, flowing properties and drive value through community and improve operations. He just published a new book, entitled Syndication is a Bitch and other truths you haven’t been told, I’d like to welcome Bruce Peterson.

Bruce:           Hey man, thanks for having me on. This is going to be a blast. I’m certain of it.

Mark:              Of course. Thanks for joining me and congrats on the new book.

Bruce:           I appreciate it. I think this will have already aired by the time it’s out, but it’s out April 5th, special pricing for the first couple of weeks, but I’m excited about it. It was a book I felt I had to write because I was tired of seeing good people, good companies with a good product, but stand on stage and sell only the rainbows and lollipops for the most part, because they’re trying to sell something to you. People would get into it and go, Oh, this is really hard. They didn’t make it sound like it was as hard as this really is. So it was important for me to write the book, just kind of tell you every step of the process to syndicate an apartment complex, but also tell you some funny, maybe some scary stories along the way of the things that have happened to me and likely will happen to you at some point. So it’s just my way of pulling back the curtain. So you go into syndication if you choose to with your eyes wide open.

Mark:              As soon as I saw the title of the book, I was like, yes this is needed because I agree. I think just the reality is that a lot of the platforms out there and the pundits and thought leaders and gurus, they all have multifaceted businesses where they are doing coaching, boot camps, syndications, and podcasts, and all of those things rely on investor enthusiasm. So there’s like an incentive, a disincentive to tell the scary stuff.

Bruce:           Exactly. And that’s exactly what I saw. Again, it’s a great way to make a living. And again, I really believe that most of these national groups are very good people. They have a very good product, but what I try to tell people, pull yourself out of the emotion of that weekend event. Think rationally, surely it can’t be perfect all the time for everybody and it’s not we have issues, but it’s still the most profitable thing I’ve ever found to do. It’s still the most rational thing I’ve ever found to do. The passive cashflow is great. So I still love everything about it, but it is a lot more difficult than many people will lead you to believe. That’s all.

Mark:              I agree. Obviously, I’ve been doing it for 20 years. I love it as an asset and as an investment, but there’s some warts that come with it. There are warts that come with everything and people should know about them and embrace them. Little challenges. I first heard about you a few years ago when I was first getting into the Austin market and you’re very well respected. Everybody that ever knew you had a very high respect for you despite the salty language in your book title. But I wanted to hear about how you got into real estate. How did you get started? I think you pivoted, right?

Bruce:           Yeah, I did. So I want to talk about something you just said the salty language and just who I am as a person. It bothers me when people want to judge, I get it. People are going to judge. I am not going to change who I am. They’re words that society chose to place meaning upon it’s just four letters put together in a certain order. And now we’ve assigned a negative connotation to it. I’ll be talking to a room, I’ll be on stage, addressing a bunch of people and you can just see people cross their arms and scowl.

Mark:              Are you serious?

Bruce:           Past the way I walk. I have incredible value to share with you that if you’ll listen, I not kidding. I can teach you how to make a million dollars a year doing this, but you’re so hung up on the word shit that you just tuned me out. And now you’re going to go back to work at 7-Eleven, 40 hours a week, hating your life and more power to you. But I think just people need to not be so damn sensitive. But anyways, that’s my little soap box. Now we’ll go into my pivot.

Mark:              That’s so funny. Did you second guess? Sorry to interject, but did you have second thoughts about your title?

Bruce:           Not at all. Actually I work with my business coach and my ghost writer to come up with it.

Mark:              Yeah, I think it’s great.

Bruce:           I told them I am a very authentic, genuine, transparent person. I do not want to represent myself in a way that’s not really me. That’s why I wanted something bracing to be on the cover because I want you to know what you were about to pick up. And I actually mentioned it or make light of it early in the book to say, look, I’m not for everybody and I get it. It’s totally okay. You might not care for my delivery method. You might not care for me as a human being. That’s okay. I’ve got really good information for you. I can make you a lot of money and I can save you a lot of heartache if you’ll just listen.

Mark:              Well, good. Well, let’s hear about what was your former life and how did you make that pivot into real estate?

Bruce:           Okay. So again, I barely got out of high school then I went to college because in 1986, that’s what had to do, you were supposed to go to college. So I went to college. I sucked at every bit of it. I didn’t like it. I’m a lifelong learner. I’m pretty intelligent, I think, but I did not thrive. In fact, that structured like a military thing. I couldn’t go into the military, either respect those guys madly, but it’s not my personality. So I dropped out of college and not having a degree, especially in the late 80’s, early 90’s, I fell into retail. There weren’t a lot of options for me without starting my own thing.

And so I worked in retail for about 18 to 20 years and I loved that. ‘Cause I’m a people person until I realized I’ve been lying to myself, everybody gets into retail, says, “Oh, I’m a people person. So I love retail.” Well, you love retail until you realize this sucks. I love working with people, working with the customers. It’s great. It’s brutal on your body. People don’t realize this, but you can make pretty decent money in retail, but it’s hard. Lots of hours, lots of employee turnover. So I hit a wall about 18 to 20 years in and I just stopped working for other people and started researching real estate, being a single guy with no kids. I was like, I got to figure the next 50 to 60 years of my life out here.

So I just started looking for a mentor in real estate. And I got very lucky to find a woman that helped me. And she helped me see the wisdom of going straight into apartment complexes and then went into apartment complexes into actually syndicating deals. So that’s how I got my start. That’s my background and bought my first property, a 48 unit in North Austin, Texas in 2012. And we’ve been off and running since we’ve done a little over 1100 units to date and love, every bit of it.

Mark:              Nice. And so in 2012, was your mentor with you during that first purchase? And did you syndicate that first one?

Bruce:           Absolutely. I didn’t know what I was doing. So I said, “Hey, you’re going to be at the closing table with me”. She goes, “No, why would I be there?” I was like, “Oh, I just thought that was normal.” She goes, well, “Look, if you’d like me to be there, I’ll be there.” So she drove up from San Antonio to sit with me at the closing table. Sound kind of funny. Yes. So she was with me the whole way. At the beginning, I took over a 48 unit property. I’ve hired and fired people my whole life, but I don’t know how to interview a property manager. ‘Cause I started managing my own property and let the property management company go. So I had to figure out how to hire a property manager.

Mark:              So to back up, you bought it with third party property management and then fired them and did it yourself.

Bruce:           Exactly. They did an okay job for me, but I knew long-term. I wanted to have my own management company. So I kept them on hand for the first six months. Then after six months I went to them and said, look, “I want to exercise my 30 day out with you. And I want to take over.”

Mark:              That’s fascinating to me because everybody seems to have a love, hate relationship with their property management company. And most investors constantly are asking themselves, should I just do this myself? How was that when you made that change, did you regret it at first?

Bruce:           No, I’ve never regretted it, but I’ve got two approaches here. Two thoughts on that okay. If it weren’t for, as you said, the love, hate relationship with management companies, most management companies, I hate to say it. They’re just terrible. They’re absolutely terrible. They’re in it to make a buck and they don’t really care about your property or you or your investors and that’s a pretty harsh thing to say, but I firmly believe it. Now you’ve got them great big players, the Amylase and the Camdens and the Gray Stars. I think they’re really good. But people that do what I do on a small scale, we can’t afford those guys usually. So we’re dealing with some second, third, fourth tier management companies that are just chasing the hot industry right now, where they can make a quick buck.

So I think many of them are bad if it weren’t for many of them being bad, full transparency here too. The hardest thing about syndicating and investing in real estate is running my management company without any question. I love it because I love having employees. I love developing employees, being there to see them shine, get promoted and excel, but it is easily the most difficult part of my real estate business or empire to use a cheese ball word. It’s hard and it’s not super, I mean, it’s super profitable from a percentage standpoint, but you don’t make a lot of money per property. You just got to have a lot of properties, which makes it even harder.

Mark:              It gives you control, but it also gives you a ton of headaches.

Bruce:           Exactly.

Mark:              So what did you do next from there?

Bruce:           So the 48 unit, I had it for a little less than three years. Well actually a little less than 2 1/2 years. I bought it in September of 2012, sold it in February of 2015. I got my investors, my limited partners, 300% return on that sale. But in my heart, what I like to do is help and teach. So I didn’t even buy another property for a while. I wanted to help and teach others. So I wasn’t the most experienced person in the world, but I knew I had enough experience to at least help people and provide value to people that had never done this before at all. So I started mentoring others in how to do this. And I did that for about a year to a year and a half. So I took a break from my personal portfolio, got married in that time and came back to it, bought my second property, 120 units with my wife. We syndicated that deal as well in North Austin again, and we bought that in December of 2015, held that for almost a full three years and then sold that and did a 1031 tax free exchange into a 200 unit property on a golf course beside a Lake in San Antonio.

Mark:              In San Antonio. So you moved from Austin to San Antonio and run up to 200 units.

Bruce:           That’s the only place I’ve ever bought her in these two cities.

Mark:              Did your criteria evolve over time or what’s your profile of the investments that you look for?

Bruce:           Well, no, it hasn’t changed. I’ll take a deep value add anytime I can find one. The problem we had faced, I liken it to the 2005, 6, 7 run up in flipping single family properties that everybody was paying full retail prices on a property that needed a crap ton of rehab work to be done because they knew it would go up 400% in the next day, which was just stupid.

Mark:              And speculate.

Bruce:           They know a lot of people in the ass. So I was seeing a smaller version of that and multifamily that these deep value add that maybe were 60, 70% occupied busted out windows, lots of deferred maintenance, lots of collection issues. They were selling for full retail as if they were fully stabilized assets. I’m like, that makes no sense. So we’ve just been focusing on the fully stabilized properties that make money from day one. We go in, we tighten up the operation because we’ve been doing it for a while. We know different income streams to implement that others haven’t done rates and expenses. And we really work on creating community at the properties, which leads to lower unit turnover. So we’re just buying stabilized properties at this point.

Mark:              And what about right now, given the current economic situation with Coronavirus?

Bruce:           Well, I’ll address that on two different fronts as well. The first worrisome time for all of us that are worried about rent collections was April. We all cross our fingers and held onto our butts. Thinking Oh my God, what are we going to collect in April? But everybody that I’ve talked to did very well. We have collected between 95 and 98% on every single property we own. And then we come into May and then, okay. May surely is going to be the first month where we have a really big impact so far anyways, we’re quite a bit higher in collections this time of the month than we were in April. So far we haven’t been negatively impacted. I think May though will settle out to be a lower collection month than April. June might be even worse because you’re going to get your one time stimulus check and that might carry you through maybe a month, month and a half of rent. And then what are they going to do?

So we’re holding on there. And then as far as the market at large, kind of more of a macro look at multifamily nationally, we’re not buying anything at all. And I know other people are, and I’m sure they’re going to do fine. I wish them the best. There are too many unknowns and too much uncertainty in this market. I have not got the slightest clue how to underwrite a property at this point, because if June collections on average across a nation or on a sub market are 50%. Oh my God, well, I just paid you on your trailing 12 month financials. Meaning I probably way overpaid for this property. How long is it going to take me to get it back the full collections? So for right now, we’re going to be fine long term. I believe that with every ounce of my being, but for right now, I don’t know how to assign value to a property. So we’re just sitting on the side-lines until we get some more certainty and clarity,

Mark:              And having gone through 2008. It’s frustrating when you buy and then you have to go through the dip and your property drops 20% and then you have to wait for it to recover that 20%. Why not just buy it after it goes down? If you can calculate that. Personally, I think it’s not that tough. What I did in 2008 was I just waited for two consecutive quarters of GDP growth to indicate that we had hit bottom. And that’s when I started buying.

Bruce:           And a lot of people ask me about, well, this was before Corona hit because we were in this raging bull market forever and people would always ask me, well, what about the next correction? What happened in 2008? Look for the people that were buying in 2005, 6 and 7. If they were good operators, they were fine. Like you said, they may have had to extend their whole timeline by a year to three years. But they eventually got out, either broke even, or they made a little bit of money, but they didn’t lose the property. And I don’t know a single person that lost any money during that time either. But again, I’m talking about good operators.

Mark:              I know a couple big LA multifamily operators that got caught and over leveraged and had a domino effect and lost multiple buildings. I’ve heard those horror stories. So it does happen. You just have to be careful. Leverage is a big cause and reserves, you’re going too big, too fast is what I saw that caused it.

Bruce:           And that’s what I tell people also, how big should I go for my first property? Go as big as you possibly can, but do it safely. Don’t get out over your skis. Don’t take on too much debt. You better be very amply, capitalized, meaning reserves in the bank, don’t run it skin tight and razor thin because things can happen. Even if the Corona this thing that nobody ever saw coming this, a black Swan event, it doesn’t even take one of those to put you in a predicament. If you don’t have reserves. I’ve got some friends that owned in South Texas in Corpus Christi that I think it was 2017 when hurricane Harvey blew through it only wiped out a few buildings of their 10 to 15 unit building properties. They needed to have reserves because they lost a ton of their income. Now they were made whole through insurance, but it took a while for that process to run its course. So you’ve got to have way more than reserves than you think you need,

Mark:              And I think now people are starting to recognize that rents can go down. I think for the last five years, there was a worrisome sort of notion that multifamily is recession proof and rents don’t go down, they only go up. But yeah, if you’ve been through a downturn, you know, that rents do go down and you have to be prepared for that, with your reserves in not being over leveraged.

Host:              Now, if you’re enjoying the show, please do us an easy favor and hit the subscribe button. And if you like the show, please give us a five star review. As a listener I always wondered why podcast hosts are always begging me to subscribe and rate them. Well, now that I’m on the other side, I see why it allows other listeners to find you. So here I go. If you like the show, please subscribe and give us a five star review. I like doing it. And more importantly, in an era of unprecedented hype over real estate investing, my goal is to be a truth teller. Real estate is not as easy as it’s made out to be, but you can do it. If you can get past the hype and get to the truth. My aim is for this show to help with that. Anyway, let’s get back to the show.

Bruce:           And that’s another part of the book that you can be very successful in this and real estate investing is very rational for the most part, but yes, rents do go down and people will always counter. Rents can and they probably will go down again at some point. Everybody has to have somewhere to live. So I will be safer. I think you’re overly cautious. You’re right. People always need a place to live, but you know what? Back in 2008 and 9, sometimes that place to live was under a freaking bridge. So you’re right. They have to live somewhere, but they don’t have to live in your damn property. So quit try to convince yourself that this is bulletproof it’s recession proof. Oh yeah, you can. And a lot of people are [inaudible 18:29] real quick.

Mark:              And what are they going to do during the peak of the boom, the market gets flooded with new inventory. Buildings are popping up all over the place and you’ve got tons of competition for your vacant unit is competing with 3000 other vacant units. So yeah, you’re in this economic ecosphere that you just have to try to understand all the aspects of it and yeah, it’s a great investment. And if you learn how to do it and you’re conservative, you’ll do very, very well, but there are risks lurking out there.

Bruce:           Absolutely. And that’s why in a strong market, you better not be raping that property of all the profits. You need to be putting lots of money back into the property to keep it up, to keep it maintained, to even improve some of the amenities and be smart about it because that day’s going to come, we’re going to have a downturn and we’re in it right now. But there will always be that day coming and whatever cycle we’re in, there will always be a correction. And if you’re not reinvesting in your property, you’re going to get yourself in a lot of trouble.

Mark:              You mentioned you had some go too ways to raise revenue on a new property. Could you share some of those?

Bruce:           There are a couple of them that everybody knows and it’s easy stop rubs. You’re going to build back a portion of your water bill, to the tenants who are the ones using the water. It’s fair. It’s legit and then everybody thinks, okay, I want to go in and spend three to $5,000 to upgrade a unit and get another 100, $150 in rent. Those are the easy things everybody knows. Well, we have things that we do for our residents that helps them repair bad credit, where we charge them a small fee per month. It’s only six bucks to them, but all those little dollars add up because if you’re buying with a cap rate, if you have a leveraged transaction, meaning you take on debt for every dollar, I increased the profitability by I’m increasing the value by anywhere from 12 to $18 for every added dollar.

So $6 is not a lot, but you add 10, 20, 30 people on a property that would have taken you up on that. A proposition that starts to add money. We’ve also gone in. And if we were at a point in a laundry room contract that we can get out of it because they’re really hard to get out of, but a few of them that we’ve bought we’ve been month to month when we took over in that contract. So we got rid of the contract, bought our own machines that has about 100 or 150% ROI. It’s massive. And the one I just did on roughly a 200 unit property, I increased the value of the property by $900,000 by doing that. And I’ve got about another point, the point and a half percent return to the passive investor by doing it as well. ‘Cause we took our collections monthly from $1,450 a month on average to $6,000 a month on average, that makes a huge difference in your value and your return. So that’s probably the most profitable thing we’ve done.

Mark:              Yeah. That’s phenomenal. What are your thoughts on the market right now with Coronavirus? How has it impacted you as an owner?

Bruce:           I wish I could tell you my thoughts. I don’t know. Nobody really knows what the hell’s going on, but every day you think you have a handle on the latest legislation or cares package that came out and then tomorrow they throw more crap at you. So we don’t know. We don’t know what’s going on. We don’t know what tomorrow holds. I’m sure some of your listeners have heard, but there is something going around where they’re trying to say that you can’t collect rent from anybody period. It might be COVID affected people only, but that’s still going to be a sizable number of people. But they’re trying to have, I forgot what it’s called, but it’s a rent and mortgage payment forgiveness program that as long as we’re in a state of emergency nationally, you can’t collect rent from these people at all, but you’re not asking the grocery store to give me groceries for free.

Why am I being forced to do this? Because I have bills I got to pay. And if you don’t pay me your rent I can’t pay my bills. And now you’re going to be living in an apartment complex that maybe I can’t get pest control done any more for you, get your pool clean for you anymore. Have trash picked up. I don’t think it’s ever going to go there, but that’s this domino effect that these people that are passing this legislation or trying to, they’re not thinking about that stuff. So again, hate to get on a soap box and a rant there, but we don’t know what’s coming. We think we’re okay. April collections were really, really good. We expected problems. We’re collecting between 93 and 98% at each of our properties. So we got affected because we usually collect all, but about 500 bucks, we’re really good at collections.

So we’ve seen a slight dip. We’re waiting to see what’s happening. So until we have a better feel for where this ultimately is going to fall out, I’m not buying anything because I don’t know how to underwrite a deal anymore. I don’t know what makes sense.

Mark:              It seems like there’s so much uncertainty that it’s hard to move forward.

Bruce:           I think ultimately we’re going to be fine. I think multifamily honestly is going to weather this storm better than most, as long as the government doesn’t completely destroy our businesses for us. With this legislation, 2008, 2009 real estate fair better than a lot. Now real estate got destroyed got hair and all that, but investment real estate, commercial real estate by and large did better than a lot. And then within commercial real estate multifamily wasn’t spared at all. But we were spared a lot of the heartache that a lot of other niches got hit with. We rebounded quicker. We didn’t get hit as hard and I really think that’s, what’s going to happen again, that people have to live somewhere.

You don’t have to have the new iPhone, the new fidget spinner or a pet rock, whatever, but you got live somewhere. So I think we’ll weather it as well or better than everybody except maybe freaking Amazon and Zoom. These two copies are killing it right now, but I think long-term we’re going to be good. We just got to get through this weird stuff.

Mark:              Exactly. Get back on track to the way it had been operating. Was there a failure or a mistake that you experienced early on that later, you found to be a key to your success.

Bruce:           Failure. I’ll talk about one thing that really, it worked itself out finally, but it taught me a very painful, well, a very scary, stressful lesson. The third property we bought was a 256 unit property in San Antonio. And we were buying it on an assumption. Okay, perfect. This guy that I’m buying it from has a better loan that I can source currently on the open market. And at that time it was a great loan, 4.39% interest. Two years of interest only left. By today’s standards that’s a terrible loan. But back then it was a very good loan. So we were going to go through with an assumption seller agreed. Yep. We’ll sell it to you. We’ll sell it to you on the assumption. Well, after we get through our due diligence, so now my $75,000 of hard earned money is truly hard, it’s gone. If I can’t close, right. Well, they said, no, the lender said, no, we’re not going to do this assumption for you. I’m like, what are you talking about?

I know lending guidelines. I have the requisite amount of net worth and liquidity that you guys should be happy with. They go, “We don’t care.” You’re right. You do. But you don’t have as much net worth and liquidity as the guy you’re buying from. So inherently you are more risk than they are. We don’t think you’re risky, but you are riskier than they are like, Oh my Lord, I just lost $75,000 of my personal money. I don’t put that on the passive investors. A lot of syndicators I think do. And I think legally you can and all that, but I don’t feel comfortable with that. I got hung out to dry. They didn’t. So we’re going to eat the whole 75.

Luckily the seller is a massive operator nationally that has worked with his bank for years. And they stepped in and said, “Nope, if you do not sell this property on an assumption to Bruce. Well allow me to sell it on an assumption to Bruce, we’re not going to deal with you ever again. We’ll, walk off, we’ll find another lender.” And that was enough to scare them into making us and approving us. So I learned you better put verbiage in your purchase sale agreement that protects you in case that assumption does not get approved by the lender. So learned a hard lesson.

Mark:              Wow. Yeah. Few. Jeez. That’s always terrifying that the lenders don’t really feel that obligated. Once they give you a letter of interest in a rate lock and you move down the road and they’ve made this verbal commitment to you, they can back out at any time long after you’ve removed contingencies.

Bruce:           Yes. They can and on that one. We didn’t even get to that point because we figure that would ever be a problem. So we didn’t have verbiage in there to protect us. But again, we got lucky, the seller stepped up and helped us out there. ‘Cause we didn’t even have a finance contingency. The market had gotten competitive enough that your terms had to change to win deals. It was a good deal. So we thought, Oh, we’ve never had a deal go bad on lending. So yeah. We’ll waive our finance contingency. So yeah, we were truly hung out to dry if they hadn’t to come through our rescue, basically.

Mark:              Fascinating. What’s your criteria? What does a good deal look like to you?

Bruce:           Well, what does a good deal look like to me is based on what my investors think. I’m always asking my investor base, what’s your appetite for yield right now? What do you feel you need to consider a deal seriously? And when I first started doing this, everybody expected 10 to 15% cash on cash returns. Well, now people are coming down to the 5, 6, 7% range and realize that’s still better than anything else I can get anywhere else without taking a lot of undue risks.

So I got to find a property that will support the expected return on the investor side. But I have started to come up market. I was buying C-minus properties at the beginning, but now I’m buying B- plus properties. I haven’t gone into an “A” there’s not enough spread there for me to make a decent enough return for my investors. But on the B- plus I started noticing that the C-properties were trading at the same cap rates that the B properties were trading at. So I thought, well, why don’t I go up market and get a better property, better staff, better tenants. So, we’re still buying cash flow in assets, fully stabilized assets, but we have gone up market now and we’re dealing more in the real estate space now.

Mark:              Okay. Interesting. What do you think is the biggest myth or misperception that’s being perpetuated right now in the real estate space?

Bruce:           The reason I wrote my book. I think people oftentimes are not being purposely misled, but they are being misled because when they go to these real estate conferences and expos and seminars and these two day events, they’re trying to sell you a platform, a program, an educational package, that if I tell you the scary shit, that’s going to happen to you, you’re not going to give me 20 to $40,000 for me to teach you. So I think that’s what it is. I think so many people buy into the hype and the emotion of these events and they don’t realize this is hard. This is very hard. Things are not going to go well, sometimes. It’s just going to happen no matter how good you are, how thorough you are in your due diligence, you’re going to find stuff after you purchased. You had no idea what’s coming.

And I think people get into this now thinking it’s a panacea, it’s a Holy Grail. It’s, rainbows, lollipops, unicorns, and we’re all going to make a lot of money and make everybody happy. Give people great places to live and nothing can go wrong. BS things are going to go wrong. We’ve had people die on property fires, arson. People I know have had entire buildings disappear in hurricane. So that’s my biggest thing right now. I think a lot of people don’t realize what they’re getting themselves into and how hard it’s going to be. It’s a great industry and there’s a lot of money to be made, but there’s a lot of work that goes into it.

Mark:              Yeah, I agree. What’s happening now is a little bit reminiscent of what I remember in 2008, there were all these alarm bells happening in the economy. All these danger signs yet the thought leaders at the time in the real estate space were still cheerleading for everyone to jump in. Now it’s still a great time to jump in. And I couldn’t figure out why, but there was one woman who was older, maybe in her 70’s. And she had been investing for 40 years in Southern California and ran like a real estate group.

And she was telling everybody, stop investing, get on the side-lines, shore up your cash. We’re headed for trouble. And I was always grateful for her, but couldn’t figure out why the other ones, nobody else was sounding these alarms. And obviously it’s because all the gurus, the thought leaders, they don’t really have diversified businesses. They do syndications, boot camps, conferences, seminars, coaching, and all of those things depend entirely on investor enthusiasm. So they were very reluctant and it was a conflict of interest for them to be sounding those alarm bells.

Bruce:           And that’s what I talk about in the book. That’s why I wrote the book because I wanted to be the guy that pulled the curtain back and showed you what really goes on in these syndications. Again, I love syndication. I think they’re a great thing, but please guys, before you step into this, understand with your eyes wide open, you are going to have trials, tribulations, stress, and all kinds of things. So I really think most of these quote, unquote gurus, these educational platforms. I think they’re good people. I know most of them, I think they have a good product and they’re good people, but they’re trying to sell to you. So they’re only for the most part going to accentuate the positive. They might pay lip service to the negative because they have to protect themselves legally. I got to tell you that pass performance is no indication. They have to do that legally but that’s a lot of times about the only thing you’re going to hear.

And I was tired of seeing that and having people get into this and go, Oh crap. This is not as easy as they made it sound. So it was important for me to write the book, and the book I’m giving you every single step of the way through a syndication, how to find investors, how to talk to them properly, how to make sure you don’t get hung out by doing the wrong thing within the eyes of the SEC. All the people that are going to be on your team, your real estate attorney, your syndication attorney, your bookkeepers, your management company, who you need when you need them and about what you should expect to pay them. And then the entire process of closing a property, the 60 to 75 day, I break that down a week by week project by project. But I’m telling you some scary stories along the way, because I want you to understand that there is a lot that goes into this and shit’s going to go wrong. So if you want to keep doing it after you read the book, fine, go to one of these seminar, sign up. They’re good seminars, but know what you’re getting into.

Mark:              Yes. It’s still worth doing real estate is absolutely in my opinion, very worth it. But there are headaches. There’s a lot of challenges to it, but you know, it’s worth it in the long run if you’re prepared and I think your book would be invaluable. So I have a thing called multifamily psychotherapy. What’s a trait you possess that has served you best both in real estate and in life.

Bruce:           I think I have a high degree of EQ Emotional Intelligence. I know for the most part, how to talk to people and give them what they need. And it really comes up in staffing, working with my employees. I know that each person is a human being and an individual. Not everybody’s going to respond to the same teaching method, the same carrot or stick, that kind of thing. So my EQ, I can usually tell by talking to you, are you full of shit? Are you telling me the truth? I love interviewing. I love it. It’s a sport because I can see through most books some people get by on me and you know, it’s okay, it’s going to happen. But my EQ is very, very high.

But then the second half of that is empathy. Treat people the way you expect to be treated. Somebody has an air conditioner go out. What would you expect to be done for you? If you were that tenant, treat it that way. We have policies and procedures to follow until they’re not follow-able. If you make the right decision by a tenant who was a human being, you’ll never get in trouble. If you didn’t do SOP Standard Operating Procedure, just be able to tell me why you did what you did. And if you always defer to doing the right thing by a human being, you’ll never make a mistake.

Mark:              I love that second part of the multifamily psychotherapy. Is there a trait you feel that holds you back that you need to work on?

Bruce:           Absolutely. And I don’t work on it though. I don’t know if you know who Gary Vaynerchuk is? But he’s big on know what you’re good at and doubled, tripled, quadrupled down on it, but realize also what you suck at. Hire somebody else. The problem I have, I can be on stage. I can be in front of lots of people. I can do these podcasts. I’ve been on TV. I’ve been on radio. I thrive. You put me in a room where I don’t know anybody. And I got to work a networking event. I flip out, I’ve never had a panic attack, but I’ve had the closest thing I can imagine to a panic attack. I freeze. I don’t know how to do it.

I get really anxious and uptight. And I will literally, if there was somebody on the other side of the room with a million dollar check for me, I will still walk out of the door. ‘Cause I freak out. But again, put me on a stage in front of 10,000 people. I’m on fire. That’s my thing. And I’m fully aware of it. So luckily I married a social butterfly. I’ve learned to do like in the Jake and Gino event or the bigger pockets event at the networking parts of those events. I’m like a puppy, dog. I follow her around the room. She starts a conversation. I will interject and start talking. She will then break away, go find the next one. Then I’ll go over there and follow her again. I know my weakness, that’s my weakness. I’ve learned to accept it and work on it. She hates being on stage. So we compliment each other very well.

Mark:              That’s hilarious. That’s similar to me. My wife is a social butterfly and I am reserved. I don’t know how to break the ice with anybody.

Bruce:           Those small talk is really hard for me.

Mark:              If you were to pass on some advice to your younger self, what would it be?

Bruce:           Get going quicker. I worked in retail for almost 20 years and it’s always people saying, well I should have gone bigger. I should have bought more. No. For me, it’s even more fundamental than that. I have so many friends that work at a job they hate. I’ve had one person actually almost take his own life because he hated his life like dude. So to my 25 year old self don’t work in retail for 18 years, if you hate it, you hate it. It’s scary. Rip the Band-Aid off, cut all those ties. Tony Robbins, burn your boats, get out there, figure out something that you really do like. Life it’s the cheese ball thing. Life is too short to do shit. that sucks. And that’s what I would say. I would push myself to get out there faster.

Mark:              Awesome. I love it. So are you ready for our question round.

Bruce:           I’m scared, but yes, I’m ready.

Mark:              And now our question round. The book you’ve recommended most over the past year.

Bruce:           Well, three of them, but it’s Killing Sacred Cows by Garrett Gunderson. He pokes holes in money myths. We’ve all been told. Wealth Can’t Wait by David Osborn. And then the third thing would be how Hal Elrod The Miracle Morning read these and it’ll set you up for success. If you follow these principle.

Mark:              A favorite quote.

Bruce:           I think it was by Henry Ford, but it’s, “If you always do what you’ve always done, you’ll always get what you always got .”

Mark:              An online tool or app that brings you the most value.

Bruce:           The CRM that we use, we use ActiveCampaign and it makes my life so much easier. I try to manage my database of investors. It helps them with communication a lot.

Mark:              Do you eat food past its expiration date? If it looks fine?

Bruce:           Oh my God. Yes. I left a mayonnaise cheese and ham sandwich on my desk for like two days. I ate it. I don’t care. Do not care.

Mark:              I’m sure I’ve eaten expired food in the last 48 hours. If you had to come up with a nickname for me, what would it be?

Bruce:           Mark ‘Stewie’ Hentemann. We got to get the word Stewie in there. ‘Cause I know kind of your background and I’m a huge Family Guy fan. I love Stewie.

Mark:              Awesome. Good answer. I knew that would throw people. A bad or cheesy movie you love.

Bruce:           My favorite movie of all time. It’s a wonderful life.

Mark:              Your most impressive, totally useless skill.

Bruce:           If you ever watched Cheers back in the day, Cliff Klavan was considered the walking encyclopedia of useless information, I guess that’s it. I just know shit that nobody should ever know.

Bruce:           Which decade created the greatest music.

Mark:              The 70’s and the 2000’s. The 70’s because that’s when I kind of came of age. But I think that 2000’s, like Altro Rock, Godsmack and Disturbed. Oh, I love that stuff.

Mark:              I love the 70’s too. What was your most awkward year? T.

Bruce:           They’ve all been awkward. They’ve all been awkward. I don’t know how I got my wife. I didn’t get married ’till I was 45 bad answer, but my whole freaking life.

Mark:              That’s great. Aside from real estate. One thing you could spend all day talking about.

Bruce:           My passion is baseball, baseball, baseball, baseball. I want to own a double ”A” or triple “A” baseball team in the next five years.

Mark:              Your favorite sound in the world.

Bruce:           It’s a child’s laugh best sound in the world.

Mark:              Have you ever had a paranormal experience?

Bruce:           No.

Mark:              The most amazing place in nature you’ve ever been?

Bruce:           Its Vegas Count.

Mark:              That’s a perfect answer. Vegas Count. If you could have the answer to one question, what would it be?

Bruce:           When will all this shit be over and we can get back to normalcy and what is normalcy even going to be?

Mark:              The best sandwich you’ve ever had.

Bruce:           This is a local joint, the Noble Pig, which unfortunately they closed their doors. About a year ago. They had a smoked duck, pastrami sandwich, best sandwich I’d ever eat in my life, but I can no longer get it.

Mark:              Belly button, innie or outie?

Bruce:           Innie.

Mark:              What movie can you quote the most from?

Bruce:           The one quote I do go to often is “wafer thin mint.” I don’t even know what Monty Python movie it’s from. I just know it’s a Monty Python thing with a big dude eating dinner.

Mark:              The meaning of Life. Mr Creosote sketch in The Meaning of Life. I love it. What country has the best accent?

Bruce:           France.

Mark:              A childhood cartoon character. You had a crush on?

Bruce:           When I was a young adult like the heavy metal. Remember that? I just remember thinking, what is this? This is unbelievable.

Mark:              Mine would be someone from Scooby-Doo Daphne. Maybe. Is that her name? What’s one thing on earth. Everyone can agree on.

Bruce:           We would all like to continue breathing. I think we can all agree on that. We all want to breathe again tomorrow.

Mark:              When are you happiest?

Bruce:           So being married late in life and having now an adopted daughter and a stepdaughter I’m a dad now I’ve never been dad my whole life. And it’s just a special thing. I didn’t think I’d ever have that. So what it is for me is any time we are together as a family in the kitchen, cooking a meal in the kitchen together, preparing a meal together.

Mark:              I love it. And finally, where can listeners reach out to you?

Bruce:           So the website is apt-guy.com. Now it’s being revamped right now. We’re cleaning it up, making a better version of it. So you might actually be able to find it at spelled out apartmentguy.com. And then social would be Instagram, which would be apt.guy or Facebook, theaptguy.

Mark:              Well thank you so much, Bruce. It was great to finally meet you. And this is great.

Bruce:           Same here, man. Thanks so much for having me on and tell Stewie I say hi.

Mark:              I’ll do that

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