Co-Syndication: The Way To Scaling Your Real Estate Investments With Chris D. Roberts

 

Real estate investors are always looking to maximize their ROI. But with all the noise about what strategies to do, how do you know which one will actually work? For today’s episode, our hosts Ava Benesocky and August Biniaz are joined by special guest and CEO of Sterling Rhino Capital Chris D. Roberts, who shares how an investor can double profits by investing in co-syndication with other investors. With his extensive knowledge in real estate, entrepreneurship, and marketing, you’ll be sure to learn how to scale your investments once you tune in!

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Watch the episode here

 

Listen to the podcast here

 

Important Links

• CPI Capital
• Sterling Rhino Capital
• CreateYourFortunePodcast.com
• How To Win Friends And Influence People
• LinkedIn – Chris D. Roberts

 

About Chris D. Roberts

Founder and CEO of Sterling Rhino Capital Chris Roberts is an entrepreneur, author, speaker, podcast host and real estate investor. He owns and operates multiple businesses and is an Enterprise Partner with Feeding America.

 

 

 

Co-Syndication: The Way To Scaling Your Real Estate Investments With Chris D. Roberts

We are joined by a guest who’s right across the border from us, August.

We’re excited about our guest, not only the fact that he is right across the border. It’s because he’s got a lot of energy and knowledge. His background in business goes so far and it’s very interesting because he has a background in marketing. In my opinion, marketing is the foundation of building any great business, particularly real estate private equity. if people don’t know you, they’re not going to invest with you. They’re not going to partner with you. It’s important to get that no factor checked off.

That makes me think of something from the past when we first cofounded CPI Capital. August had this marketing. His brain just came alive and he had all these cool marketing ideas and it helped us grow our company. We’re excited to dive into Chris’ mind here.

He has zero marketing background. He never even took a weekend course about marketing, but marketing is getting yourself seen. If you’re good at that, if you are a rooster like I am, you’ll flap your wings and everybody’s going to get to notice you.

Let’s introduce our friend that’s right across the border in Seattle. We’re in Vancouver. We’re joined by Chris Roberts. He is the Founder and CEO of Sterling Rhino Capital. He is an entrepreneur, author, speaker, podcast host, and real estate investor. He owns and operates multiple businesses and is an enterprise partner with Feeding America. I’m looking forward to learning more about Feeding America.

 

 

An interesting thing about his company is that my custom-building home development company is White Rhino Development, there is a connection. I’d love to learn about Feed America. I thought America was taking planes and feeding the world. What happened? Do you have to feed America? It’s the richest country in the world. What’s going on over here?

Let’s talk about that but before that, everyone, we believe this interview with Chris is going to bring great value to real estate investors looking to learn how to passively invest in real estate. What a lot of people don’t even realize is, “I can passively invest in real estate.” Most people think you have to be an active investor. Let’s dive into things. Welcome, Chris. Thank you for being in our show.

Thanks. I appreciate you having me. I’m grateful I have the opportunity and I’m looking forward to jamming back and forth with you. You’re amazing. You add a ton of value to your audience and many others out there as we followed you along your journey and I’m looking forward to what questions you’re going to ask me. Let’s do it.

Please tell us about your background and your start in real estate.

I was on my own at a young age. I had that entrepreneurial bug. I had to figure things out. I had a mentor at a young age around the age of eighteen. I’d been on my own for several years at that point and he put me on the right path. He gave me books to read. He taught me how to build a strong work ethic, mindset, and problem-solving. He put me on a journey to building a sales career which I would have never thought I would be good at. It was his guidance that set me on the path to building financial stability in my life. I build a sales career and turned that into an entrepreneurial journey where I started my own company and became a sales and marketing guy. We grew up to about a $30 million company.

I gabbled in single-family real estate land and found my way into multifamily and now development. My journey started at a young age. I had an opportunity to experience troubleshooting, problem-solving, hard knocks, and a crazy work ethic, achieving success eventually through that journey. I’m grateful to be here and I’ve got an awful lot of stories along the way but that’s the short story.

Let’s focus on that transition between single-family and multifamily. For the readers who might not be familiar with the difference between multifamily and single-family, single-family is assessed and looked at by a comparable approach. What’s your neighbor selling? Your house is probably going to sell at the same price. Whereas multifamily is by the income approach, that cap rate as it’s known in the commercial real estate space. When did you realize there was an opportunity to get involved in multifamily? What were the first steps? Where did you start investing as a passive investor? Did somebody pitch you a deal? You wanted to scale. Talk to us about your initial first steps on and your initial part of a journey.

The travesty in this world that we’re all in is that there is no access to it. You’re not taught about it at school. A lot of people are involved in it. Your bookkeeper and CPAs don’t talk about real estate a lot. After being in the stock market for years, I had a great conversation with a friend who had rentals. He got me into single-family fix and flips. I started learning on YouTube swinging hammers. That’s the whole story.

The travesty in this world that we're all in is there's no access to real estate. Click To Tweet

You’ve heard it before but it worked. I realize there’s no way for me to create a lot of wealth or financial freedom. I need to scale and grow. How do I do it? With limited capital, I realize the best way to do it after researching and learning online, through podcasts, and things of that sort, that multifamily was a good vehicle for that. You could use other people’s money alongside your money to grow faster and create wealth. At the same time, I’m doing the thing that I love which is my passion. I’m teaching others, helping, educating, and sharing my journey and experience.

I got the best of both worlds with that. I transitioned from single-family to multifamily for several reasons. One was that I couldn’t scale and develop well. If I had a dozen or so single-family rentals, I was making cashflow and little equity. The fix and flips and the capital gains became a challenge to manage. I then went bought my first 100-unit multifamily complex, which was my first one, and we made ten times the money. It was way less work when you spread it across the team. This was a challenging deal, but it was way less work collectively. We found that from that moment we were in, we caught fire, we built out our systems, and we started growing exponentially so that was the transition.

I’ve been in real estate for 17 years, when I realized real estate private equity or the syndication model. I invested a lot of time and resources to learn about the industry and business. A lot of that information and content came from listening to podcasts and watching YouTube videos. A lot of times, as I was watching those stories and hearing people’s journeys, important milestones were breezed over.

That’s why I want to break this down. When somebody’s reading this, a busy professional who owns a couple of homes here in Vancouver, the medium income is $90,000. The medium home price is $1.2 million. It’s difficult to buy most people’s primary residence, let alone invest in real estate. When they learn that the first apartment you bought was a 100-unit apartment, it’s mind-blowing to others.

Let’s break that down. You have a job. You have a business. You’re investing in a single-family. You want to scale that. What are the first steps? Did you go get a mentor? Did you get a coach? How did you connect with these other individuals to partner to buy a 100-unit? Was it syndication? Were you passive or active? Break it down to us. Give us the blueprint on how is this even possible.

Did you have a hell of a time putting it all together?

It goes back to before that. I’m going to keep this simple. I’m writing a book about that first deal, which you’re going to love when it comes out in the first quarter. It was a lot of trials, tribulations, and challenges. It starts with something far deeper. I had an inspiration early on because I grew up with nothing. I was on my own at a young age. There was a fire in me that caused me to work far more hours than most people would. It’s not that I had to, but I felt like I had to. I always worked as though someone was going to take my stuff. I put the extra hours in.

That set me on a path to success because when I made the transition, I looked at a 100-units as though it was another transaction. I was not intimidated by the door counts. We don’t even count doors in my team. We count the wealth we generate for investors and ourselves. I looked at it and said, “Let’s break this down like any other business model,” which I had done before I started the business.

What kind of team members do I need? What research do I need to do? What marketing do I need to do? Do I need a mentor? Yes. I hired a mentor. I found that first deal without my mentor. I found it within two weeks of signing up for a mentor program and my mentor called me and said, “I heard you got a deal. Why didn’t you tell me?” it was pretty funny.

It was my work ethic. It was my activity in the forums. It was my ability to jump on a plane a week after I got a contact from someone in a forum, fly across the country, and start taking massive action. Where it started was me saying, “I’m not going to sit on TV on the weekends. I’m not going to go to games with my buddies. I’m not going to buy boats. I’m going to work 7 days a week, 16 hours a day until I achieve my dream.” That’s how it all started. There are the fundamentals of how you execute which is a deeper answer.

You go from single-family to multifamily. It’s a 100-unit. You have the drive, passion, energy, and all the power to you. You must have been part of an organization for that deal to even come in. You must have even been told.

How did you find the deal?

It started similarly to what I said. I got very active in forums. Somebody reached out asking for help in a Slack channel amongst one of these forums that I had signed up for. It’s no different than any of the other meetups you are in or the groups or whatnot on Facebook. I said, “What kind of help do you need?” He listed the things that he needed. He said he had a deal under contract. Weeks later, I flew across the country and I was part of his team.

His team started to fall apart. Because I was active, I had the opportunity to take over that contract. I happened to have the capital to take over that contract. We rewrote the contract, we negotiated, and I brought other team members on out of similar forums that I’d come across, including a mentor-student that was in the same program I was in.

We all tackled that deal together after eleven months of negotiating. The process was being active in the forums. I had a mentor to give us some guidance. It was Michael Blank’s mentor program. Within that culture or circle of influence, I found others that were like-minded that could help with capital raising, asset management, or underwriting.

We had a sponsor outside the group that came across that was willing to sign as a key principle and liquidity net worth experience. He helped us to get Freddie Mac debt on that first deal. That’s the process of how it worked. It wasn’t me on my own. It was a group of people. I was the lead on putting it all together. We just stayed active, followed the processes, and nailed it.

What you did was gold. I’ve watched videos and listened to podcasts and I wish the interviewer would ask the question I asked you and that was gold. It is not the enthusiasm to be involved. It’s taking action and having the guts to say, “You have a deal. What do you need to close this deal? How can I add value?” and taking a flight, going on learning, and learning on the job. What year was that?

 

 

The mentor program I signed up for in mid-2019. We got that deal within two weeks of signing up. It wasn’t the mentor program. I did jump on deals through the mentor program as well. It worked out great. It was worth the money. It took us eleven months to close that, we sold that particular property in January 2022. We started that process.

I wanted to take a step back and thank you for sharing that. It was that talk with a friend that started this journey in multifamily. That’s why we like to put a lot of content out there. It’s that one time or that one investor that talks to their friends and it can change people’s lives around.

My start in the business was I heard the word syndication. I’ve never heard that word before. I googled it. I went on YouTube and I watched the video of Dan Hanford explaining what syndication is. I eventually got in contact with Dan. We did our first deal and another deal with Dan. We became good friends, but it’s searching for that one-word, syndication. What is this word? What does it mean? How can I be involved? How I can raise money for my deals?

August got all excited about syndication. I was walking by his office and then I did a hostile takeover.

If I may, along the lines of what you put into your business, creating your craft and your skills, you’re very good and very professional. You do a wonderful job. When people see you, they don’t realize how much ground and pound goes on behind the scenes. That’s important because it’s not just energy with me. I have a lot of energy, enthusiasm, and gratitude. It’s the work ethic, the execution, and surrounding yourself with people that can help. That deal was a lot of work. I had approximately 800 hours of my own time in it before we closed, but that deal yielded incredible returns.

I would never trade it for anything in the world. All your readers need to understand. It’s not one thing to hire a mentor, read a book, or listen to a podcast. You have to be prepared to sacrifice a significant amount of time in your life to build your craft. It will net you incredible returns at some point. You may not get it, but it will come. You got to sacrifice now to have later.

You really have to be prepared to sacrifice a significant amount of time in your life to build your craft. Click To Tweet

I love that you touched on that because we always say, “If this is easy, everybody would be doing this.” It’s not. You do have to sacrifice. We’ve sacrificed starting our family in order to build our company. We thank you for touching on that.

Chris talks about being involved in his business and profession and investing in single-family. He sees multifamily, jumps right in it, and gets a 100-door project under contract. He’s part of a mentorship. He’s building his team. When does he make the transition from having a job to being a real estate investor? Is there any anxiety involved? What is he going to say to his family, friends, and his mom?

“I’m not going to be building houses anymore. I’m going to go to the US and syndicate deals.” “What? You’re going to leave your career, the business that you worked hard in building?” I’m like, “Yes, mom. I am.” “How much are you going to be making?” “I’ll make most of the money when the property is sold 5 to 7 years down the road.” “What?” Talk to us about that journey.

How was the transition for you?

I’m going to talk about my partner briefly. He’s probably a better story than I am because I’ve been an entrepreneur for quite some time. I’m familiar with the chaos and uncertainty of being a business owner, so that didn’t scare me. Tackling 100 doors was intimidating, but I know it was just modeling, numbers, and performed as an execution. When I started the company, I was already working maddening hours. I increased those hours and slept less seven days a week. Now I work seven days a week, not because I have to. I’m financially free. I don’t have to work if I don’t want to, but I love the business, the space, and this.

My partner, on the other hand, the COO, was a construction engineer. When he came on board with me a few months after I started the company, I said to him, “You and I have complementary skills. Why don’t you jump on with me and I’ll split the company with you?” We were in the same mentor program, which worked out great. I said, “Instead of us spinning our wheels, why don’t we do it together?” He left a lucrative company that he had helped build over twenty years and that was scary for him.

He said to me, “Once I partnered with you, I knew we were going to be successful and I was ready.” As Michael calls it, he burned the boats and jumped on. I was an independent contractor and I was working extra hours. We did it together. It was scary. I talked with him and many others about that leap. What’s important is that if you have a few good team members on board, it’s easier to make that transition because you have someone to share the ups and downs with.

 

If you’re trying to do it on your own because you want acquisition fees or you want to get rich quickly, that’s a mistake. You need to find people around you that complement your skills, strengths, and weaknesses. You’re then going to build confidence. You’re going to get 1 deal or 2. When the time is right, you can exit. You have to talk yourself through it. The team is what helped all of us, not me as an individual, being a leader. I couldn’t do this without my team. They’re amazing and they’ve helped us scale exponentially.

Let’s talk about another very important part of this business. Aside from finding deals and surrounding yourself with the right people, being energetic, and getting a lot of knowledge, you’re going to need equity and capital. Talk to us about your experience early on, particularly on the 100 doors and all the deals you’re doing. Prior to the show, you were talking about large deals.

What was the process there? The mentorship program assisted you with that. Did your marketing background assist you with that? We’ll get into that part. Early on, when you realize that if you want to be successful in this business, you’re going to need to have access to capital and equity, what were the first steps you took?

Here’s the deal. First, I want to start with the wrong mindset I had, which was, “We need $2 million. I can do that. I can raise $2 million.” It’s a huge mistake for someone coming to this business. Even if they’re a sales marketing expert or a talker and it is difficult to raise capital. I encourage anyone that’s thinking about it to take it seriously and understand that there’s no quick way to raise capital especially when you start.

The best way is through your relationships with existing people and their circles of influence, their friends and family, and your credibility over time. That’s how you’re going to raise money. It’s them sharing with friends and family, “I’ve invested with these guys. I like them.” You can do marketing, but the mistake I made was thinking I could raise millions and millions of dollars. On my first raise, I raised $325,000, which shocked me. We all got the raise done and it was great. In the second deal, I raised $1.2 million, which was exponentially higher than the first raise, and after that was millions and millions.

How long after was it? How long was 1 to 2?

It was six months later maybe. By the time we got it under contract, we’re ready to raise.

What do you think you changed in that six months that allowed you to go from $325,000 to $1.2 million? What would you equate that t? What would you say was the reason?

Two things. One, the 1st deal I had did not close by the time the 2nd deal got under contract and closed. The first deal took so long that we had another deal come in. That’s the one I raised $325,000 on. I had been working this deal in learning, developing skills in my presentation, and building credibility. I have this deal under my belt.

By the time I got to the second one months later, it was, “We have this deal. Here’s what we’re doing here. Here is the construction process. Here’s my team.” We had a network now because we had raised and we had credibility. I was able to hone my skills in my presentations and all of that together along with a little bit of activity by way of marketing allowed us to grow faster.

I have 5 or 6 investors, and 5 of the 6 invested in my second deal. I asked those people that invested in my second deal around closing time, “Would you be willing to put more money in?” About 80% of them said yes. These were things that I worked on along the way that worked out well. I was active. I wasn’t afraid to ask questions. That’s part of what helped me and probably a little bit of luck. I’m not going to lie. Sometimes it’s just timing, luck, or a referral from somebody.

Would you say mentorship is helpful when it comes to capital raising?

It’s important if you have the right relationship and connection. Sometimes you go into a blanket scenario where there’s 1 mentor and there are 500 people. They’re not all going to be the right fit. Not everybody’s going to resonate the right way. They’re not going to pick up the right skills. The one-on-one stuff is good and having a mentor as far as capital raising is good for the fundamentals. There’s no substitute for you getting on the phone, calling people, following through, presenting on YouTube, and telling the world what you do, not what someone told you to write down or read some script. That’s the most powerful thing. You’re the one they know, like, and trust.

It's important to have the right relationship and the right connection. Click To Tweet

Let’s talk about capital raising fundamentals. I want to give you a blueprint on how to raise capital. It’s the triad of know, like, and trust. People have to first know you even exist, want to like you, and find you interesting to trust you enough and give their money. Focusing on that know part of the equation and marketing is an important part of that. Let’s decipher this a bit more and go through this a bit longer.

As I promised, I was going to give you the blueprint. The blueprint is creating content. As an investment firm, you create content. For example, in our YouTube show, we’re creating a lot of content. It’s out there. People see it. They come into our funnel. We use bits and pieces of the same recording to have it on our social media platforms.

We speak on other people’s podcasts and YouTube shows. We speak on stage. We rent booths at conferences and events. Ava’s authored a book. I write newsletters. There’s a lot of work that we do out there, and a lot of content we create that somebody out there, depending on their demographic, background, and where they’re at, they see this content and they end up coming through the investor journey into our funnel.

At some point, they’ll be nurtured in our CRM. Because we’re syndicators, we syndicate deals a lot of times. Most people in this business don’t manage a fund where they can continuously raise capital, allocate that capital, and buy assets. We do deals. Even the biggest firms have deals throughout the year. You might not have a live deal at some point. It’s important to nurture your audience.

Talking about this blueprint that I provided, this idea of creating content, being noticed, and getting people to come through your funnel, digital marketing avenues, CRMs, and landing pages, did you realize early on that this is an important part of the business that you need to leverage your background of marketing and building businesses to come into your business as an investment firm to utilize those? Which one of these items that I mentioned are utilized? You do have your show and YouTube show as well. Talk to us about that.

It’s a journey that never ends. We’re always evolving, getting better, and tweaking things. That’s where people make a mistake. I can hire somebody or I can buy a program and put a bunch of content out and I’m going to raise millions of dollars. People say that. Raise $50 million in a week. We’re good at what we do and raising money is hard. We’ve raised a lot of money but it’s not easy. The important thing is figuring out what is it that you’re telling your audience. Everyone is going to open up Facebook and see XYZ, return syndication, and jump in. There are 1 million ads or podcasts out there. What is your unique niche that resonates with people?

Learning is a journey that never ends. We're always evolving. We're getting better, and we're tweaking things. Click To Tweet

You’re talking about yourselves, your personal life, and why you got into this space. For us, it’s health, wealth, and mind. At CreateYourFortunePodcast.com, we talk about health, wealth, and the mind. We just don’t talk about returns. Those are boring. Wealthy people see the numbers. You don’t need to go on and on about underwriting. What they want to know is, “Who are you? What do you do in your personal life? How can I trust you?”

You have to mix it up. You don’t just crunch on about numbers. You have to be somewhat personal in my opinion. You do have to have multiple streams of marketing, whether Facebook, YouTube, and podcast. We found that this show works well for us. I’ve done a show where I interview people. I found there was another one where we generate good content people resonate with and that seems to work better for us than the structure of the interview.

What do people resonate with? Talk to us about that.

They resonate with us specifically answering questions on our show about things they’re concerned about like family, life, wealth, and mindset. How do you calm down? How do you leave your career? What is real estate investing like on a simple level, not ROI, cap rates, IRR, and all this stuff? It’s, “We get people together, buy complexes, and it’s pretty cool.” It’s this kind of language. You find that people resonate and we might interview an investor and they tell their real story. We don’t coach them. They just explain why they left being a massage therapist to go become a passive investor.

In all the content, it’s critically important to have a thought leadership of some platform. It’s very important that you figure out what you are good at delivering on those platforms, how you are speaking directly to the people you want to bring into your world, and not trying to be everything to everybody because everyone is doing that. Everybody is sending the same type of information out. The number of newsletters I get is ridiculous and they’re almost the same thing. You just put a different logo.

That right there is some goal because you are a student of the game. You’re subscribing to all these newsletters to learn, educate yourself, and possibly emulate some of them. That in itself is a way to gain knowledge by subscribing to as many newsletters as you can if you’re trying to start and grow in this business.

There’s nothing wrong with that and you have to learn. I don’t have the answers. I can tell you though that we have found that going to the investors that we want and trying to speak their language on the other side of the numbers has worked well for us. It’s natural, feels good, fun, and inviting. It’s not boring. There’s a mix in there for everybody but you’ve got to find that journey on your own. You’ve got to do trial and error. You’ve got to work through it.

Don’t get me wrong. We do Facebook ads and we’ve done some paid stuff in a lot of interviews and things like that. I have found that the organic approach and speaking directly to the investors and them telling everyone how much they like us because they relate to us and we relate to them, has paid massive dividends versus I’m throwing newsletters out. A third of people open your newsletters, and then they forget and don’t open them again. How are you getting to them?

 

If they do see another piece of content, is it the same thing you sent them in the email, “We’ve got 17% returns?” or is it, “Are you stressed out about the economy? We did an amazing show where we deep dive and make it simple for everybody. You don’t need to stress. Tune into this show.” “I want to know that.” CNN’s got us freaking out online. You need someone to calm you down, not get you to freak out.

Maybe you can put us at ease because, being in your company and having a lot of different marketing and other initiatives to create leads and connect with investors, there have been strategies that we’ve put into place that were totally fruitless. Have you experienced such a thing as well coming from a marketing background? Did you use a certain strategy that didn’t bear any fruit or didn’t pan out?

Let me tell you the ones that worked because there were many that don’t. I have found that social media works when you’re on multiple platforms. If you’re on Instagram, Facebook, and YouTube, you’re catching men, women, and teens. You’re creating the same type of messaging. You’re hitting them in one way, shape, or form. In other words, you’re not creating special content for Instagram. You’re putting your message out, “We’re talking about the economy. Tune it.”

That works well because I find that people will come in a year later and say, “Chris, I saw what you did on Facebook. I want to invest in that thing.” I’m like, “I’ve known you for 15 years and I’ve been posting for like 5 years now. That’s the first time something resonated with you?” It was Facebook that got them or Instagram and someone asked the question.

It’s important to figure out what messaging you are good at, how you’re delivering your messaging, and what platforms you like posting on. Test it and feel it out. Are you getting anybody clicking, liking, and doing anything? We love newsletters because we thought that was the way to go and it does work but it’s better for our existing investors. Someone came in a funnel and we’re sending out content to them because they never get it and they’re not looking for it.

We’re figuring out that we need to be pounding it on social media, referrals, phone calls, text messages, and things of that sort. That’s where we are seeing better results than our traditional newsletters. They’ll tell you, “You’ve got to have a newsletter base. It’s gold.” Yes, but only if people engage and take action because that’s the result. It’s action, not, “I got someone clicking. I’ve got 5 million subscribers.” If they’re not doing anything, what does it matter? You can’t sell it to anybody.

 

 

You have an investor who has connected with you. They’ve pursued you to invest with you. They’ve seen your content, contacted you, and have gone through the onboarding journey. They got on a call with you. They say, “I’m looking forward to investing with you. You don’t have a live deal. I’ll invest with you in the future.” You have a deal you’re working on. This is a few months later. You call that investor back but they’re busy. They’re like, “I’ll call you back,” or you can’t reach them. How many times do you call them until you get in touch with them?

We’ve got multiple points of contact. In other words, they come in somehow and we are emailing them for a week, every couple of days. “You came in. You’re interested.” The question will get oftentimes is, “When does the fund close or when does the deal end?” The question I have for them is, “Are you looking to invest or are you shopping? Are you just thinking about it?”

Why is someone asking you when it ends or when it closes? They’re either asking because they still want to think about it or they have a constraint. They have to transfer their IRA money or wait until the house sells. I try to get to the point with people, “This is a great opportunity and we want to get you in. You’ve committed but we need you in. Can you give me a timeframe of when you will be in, signing your docs and wiring or we can go ahead and remove you and make room for someone else to come in?

That’s the message. How many times are you willing to call them if they’re busy or they’ll say, “I’ll call you back?”

Let’s say somebody signed up and they want to invest. You reach out to them. They didn’t answer. Your text messages and they didn’t answer. You emailed them. They didn’t answer. How many times do you reach out to them? People do have busy lives.

You are busy as well as a general partner. You don’t have time to call somebody 30 times.

We have a team. I call people. They all call people We have a big team because we have a lot of leads coming in but here’s the answer. The answer is that there’s no fixed number. It’s a feeling. Is it a million-dollar investor? Is it a person who already told you they had constraints? You’re giving them a little more room. Are you keeping notes on Google Docs live so that the whole team can see where everybody’s at and where the notes are? Where are they along this process?

If you get to a point where maybe you’ve reached out to them 3 or 4 times, you may just red-list them and leave them. Let me give you one quick example of why I’m saying this, and I’m not answering direct, there is no direct answer. We had one investor come in, a significant amount of money off of social media. After months of communicating back and forth, I was the lead contact with that person. I had spoken with them personally. They committed to a significant amount of money. They were busy. They had this going on at the bank.

I got to a point after about two months. I’m like, “They’re not going to invest.” I told my team, “I’m shelving them but if you want to try at some point, let me know. They’re clearly not communicating.” One of my team members reached out via text message and happened to get him on the phone and they resonated together. That person invested the next day and wired the funds.

I had communicated at least five times with this person via text, voicemail, and email. We were on the phone three different times. I don’t want to say the number. It was significant and it was a matter of, “I own so many businesses. I’m crazy. I’m busy but I want in.” I’m like, “Why didn’t he respond the other 3, 4, or 5 times? You cannot give up.

You hit him at the right time and the right day.

You need a system though to help you refine that process. It could be 3 times, 5 times, or 10 times. I don’t give up. I just put them on the shelf and maybe right before you close is your last-ditch effort. “We’re closing the fund in a week. We’re almost there. Are you in, or are you out?” If they don’t respond, they’re out. You never know. Don’t give up. These are all valuable investors and valuable partners.

You always talk about the circle of influence. What is the circle of influence and how do you use this concept in your daily life?

When I was growing up, I didn’t have a positive circle of influence. I didn’t have people around me that encouraged me as much to go out and achieve my dreams. When I met my mentor at eighteen years old, he was a positive influence. He was that circle of influence that was good and was going to elevate me.

How did you connect with this fellow at eighteen? I wish I had a mentor at eighteen. I never had a mentor until I was 30 years old.

The funny story is that I was working at a hotdog cart and this guy came to me and said, “I want to hire you.” I’m like, “What? Why on earth would you want to hire me?” He said, “Your attitude, energy, and enthusiasm. You deal with pressure. I got to have you.” It shocked me. He offered me a great job. I couldn’t pass it up. I went to work for him and he took me under his wing. He allowed me to succeed and fail, gave me room, and gave me books. From there, he built my confidence and it showed me that anything is possible if you put the time and energy in. That’s where it all started. It was with him.

That’s the circle of influence. That was one person. He then pushed me into a sales career and I started looking at all the successful people around me. I eliminated communication with the people that were failing, showing up to work drunk, and doing stupid things. I looked at the people that were very successful and said, “I want to be in their world. I want to be in their circle of influence,” and I learned this from a book. I started paying attention, trying to hang out with them, and asking them a lot of questions.

Successful people want to share their success. They want to tell you. They want to brag. I started taking notes and said, “I can be like him. I can do what they do. I can show up early.” From there, I started building. In my life, I eliminated negative people. I tell people, “If you’re negative, I don’t want to hear it. I don’t need that in my life. There’s plenty of negative.”

Let’s create a separation between a circle of influence and the inner circle. Are you talking about an inner circle? Doesn’t a circle of influence mean people you have influence over or things you have influence over? If something is outside of your circle of influence, you can’t have any influence over it. If something is happening in Ukraine, you have no influence over the decisions of Vladimir Putin. That’s not your circle of influence. Let’s say your family or business partner, that was my understanding of the circle of influence rather than your inner circle.

It’s subjective. For example, I never had an inner circle. I was on my own always. It was me. I had to figure it out. I looked at the circle of influence in both ways. Who are the people around me that are positively influencing me in a positive way and who are the people outside me that I can perhaps influence? They weren’t always the same people, but I realized that these people were going to create an interdependence in all of us that was going to work well for us in some way, shape, or form.

Let me give you an example. When I started climbing the corporate ladder, I found that the more I helped everyone around me, the more opportunities came my way. We were both influencing each other. They could present opportunities to me. I could help them and make their lives easier. When I say circle of influence, that’s what I mean by it. In essence, probably by definition, a circle of influence is the people around me that I influence but for me, it went both ways.

We wish we could get into your projects. You’re currently doing development projects. We’d love to have you back on the show to get into that. The show has been so valuable. Let’s keep going here. At some point, we’ll get you back and talk about all the great deals you’re doing. Before getting to the next segment of our show, let’s talk about the market we’re in. It’s an interesting part of the market. Interest rates are at 7%. Private is at 9% to 10%. Are you investing in this market? Are you sitting on the sideline? The Fed keeps increasing interest rates to defeat inflation.

We finally see the job market being affected. The word behind the veil is that they’re going to stop increasing interest rates or reducing the numbers and not be as bullish and start being a bit dovish. What is your view? How do you think multifamily value-add or development will be affected in the next little while here? The markets are already coming alive the last few days on this report that the next Fed funds raise might not be as significant. It might be something much less. Where are you at? Is your group investing? Where do you think the market is going to go?

In my opinion and many other experts, we are currently in the recession phase of the real estate cycle. The next phase is going to be recovery. When do you think the recession will end? When do you think we’ll enter recovery? How are you bringing all of these things into your investment firm, especially since you’re dealing with investors? The last thing we want is to lose investors’ money because that stays with us for the rest of our careers as syndicators. Talk to us about the market, your predictions, and when the recession is going to end.

In a nutshell, we’re bullish. We are aggressively pursuing properties all the time, every day. The reason for that though is that we use fundamentals, history, and data to guide us. We don’t use emotion and the news. We have found that every time that we have done that, even in my history of single-families through multiple recessions, it’s worked well and that we have exceeded our promises to our investors. We haven’t missed the mark. If we were listening to everyone when COVID hit, we wouldn’t have bought nine properties during COVID, some of which doubled or tripled.

What is co-syndication? People will hear this again. Their brains will blow up if they hear you saying that you got into this space, 9 deals, 100 doors. They’re going to be like, “This is unattainable. I can’t do this. Chris is a superstar and rock star.” Is this done through the co-syndication model? Are other GPs involved in these deals?

We have not jumped on deals for a small percentage to just get door counts. A lot of people do that. That’s okay. These are deals that we either had full control over or at least half the ownership of. These are large deals that we were co-sponsors or we ran the entire deal. We didn’t just jump in and put our names on the paper. We managed them and that was not easy to do. There was a time when we bought 6 properties in 7 months. It was crazy but we did it. During that timeframe, we raised $18 million. It was nuts. Never could have thought we would’ve ever been able to do that, but we did it.

To answer your question, yes. It takes partnerships, groups, and a work ethic but we follow our fundamentals. We don’t let people take us off of what we know. We don’t let things jar us. If you get caught up in all that, you’re going to fall off the rails. We’re aggressively pursuing our development projects because we feel the way the economy’s going, we are in a good position when the interest rates drop, which they will drop sooner than later.

 

The economy starts roaring again after this Fed-induced recession we’re going to have, which we’ve done nine times in recent history. Every time, the economy has boomed back and interest rates have plummeted. You know by looking at history, and this is milder than the last nine that we’ve had, things are going to be just fine. The key is how to time it if you can.

Let’s talk about timing. A lot of times, people are familiar with multifamily value-add business models where you buy a building. You buy a community. You go in. You do some form of upgrade. You increase rents. You increase the asset’s value through the value-add business plan. Currently because the high-interest rates, the yields might not be there. You might not be cashflowing or you might be going in at a very high-interest rate for your bridge debt.

Are you saying that your development business model is in a way where you’re constructing and developing the project while we’re in the recession phase of the real estate cycle, hoping that by the time your projects are built, the business plan is to build them and rent them or build them and sell them? Are there condos?

Build, rent, and sell.

Is what you are alluding to this idea of going through this downturn by being under construction? By the time your projects are built and rented, you’ll be in a different type of market.

The short answer is this. Let’s talk value-add quickly and new construction. In general, as a blanket statement, if you looked back years ago and you stayed in this frame of reference, which was the here and now, things would be dramatically different 1 year or 2 later or 1 year or 2 before. Look at what we’ve done. We had this crazy upswing, then COVID happened. No one’s paying rent. People did pay rent. It wasn’t that big a deal. If you stay in this frame of reference, I’m shopping value-added. If I’m shopping a value add shopper and looking at 7% interest rates, I’m simply shifting my model slightly.

I’m saying to my investors, “Because of the interest rates, we’re going to extend our cashflow. We’re not going to be able to give you cashflow for 2, 3, or 4 years. As soon as we refi when interest rates come back down, we’re going to get back into a stronger position.” The fundamentals are there because rent is going to go up. Rents don’t follow recessions.

Everyone talks about how rents are dropping or they’re going to drop. That’s BS. If you look at the last several years, that doesn’t happen. There are blips in rent but they always go up. The average rent increase over the last several years is like 8% plus and if you look at inflation, it’s much lower than that. You look at interest rates, for a 30-year average, it’s 7.5%.

I tell people, “Don’t focus linearly. Look a little broader. Think about the future. If you’re buying value-add, you’ve got to be a little bit more creative with your offerings. Understand that you’re probably going to have to refi. You might do some interest only, short-term debt, bank debt, Fannie, Freddie, or whatever it is.

New construction is totally different. I’ll explain that briefly. It’s not that you can’t find deals. It’s just that the sellers still want prime value. They still want prime money for their properties and interest rates are climbing. It’s making it harder to give returns. You may not find many deals as you had and you may have to sit on the sidelines for a while. If I were buying value-adds, I wouldn’t be sitting on the sidelines because there are still opportunities.

Let’s shelf that for a second. The reason we love new development is that we are building properties with rates we’re getting quotes on right now between 6% and 7%. Let’s say the building costs us $50 million to build. By the time we build it in a few years, start to occupy it, and get it stable, based on historic trends, the interest rates will start dropping. If they don’t drop way before that, they’re going to start dropping.

Supply and demand tell us that we don’t have enough multifamily to house people until 2035. We are way out to have enough properties for people to live in. We know the demand’s going to be there. When you’re building in Denver, Colorado, Phoenix, Arizona, or markets that we’re going into, there’s no shortage of people moving into those markets and making great money regardless of recessions and all that. They’re short-lived.

What are you building exactly?

Class-A luxury, infinity pools, Zen gardens, the whole shebang, dog washing stations, electric bikes, 200-plus on every property except for one, and some of them are within a few blocks of stadiums and downtown.

We’re talking about well over $50 million. Are you guys seeing yields?

We have two separate funds, The portfolio will be worth about $750 million in our estimate so 1 investment, 6 properties, about $650 million or $750 million.

You’ve created a fund for your mandate as developing these projects and you’re raising capital for them. Have you started on any of these development projects?

We break ground in January 2023 on the first property but we own 5 of the 6 parcels that we’re building on. Anyone can invest in our funds. It’s a credit, noncredit, 506(c), and all that. We have a huge platform. I wanted to real quick touch on the construction thing because I don’t want to leave your readers. Here’s the thing. The reason we love it is that construction costs are going down from our modeling.

We negotiated $700,000 off in one of our properties, just off the land. All the modeling is looking even better as we’re moving forward. By the time we start occupying these units, rates will be stabilized. Even if they’re not, we’ve built it into the modeling. We know one thing is for certain. The supply and demand is not changing for a long time. I don’t want to get into all the details because it’d be too long. The bottom line is that we’ve modeled this.

The fundamentals are there. We are in development. We’ve done one development project before. We started a few years ago. That’s just finishing. It’s about an $80 million project and we are 17% now above the performer rents we projected and we’re just getting our occupancy going. A few years ago, if someone had said new development, you might go, “No. No new development, it’s not going to work.” Now, you look and go, “Thank goodness we did that.”

I know that’s a lot of information, but I want to give you a high level. You can make any of this stuff work but you have to look at the marathon in the broader picture and not get caught up in what’s going on right now. Shift and adjust, stick to your fundamentals, put the work in, and surround yourself with good team members that can maybe help you extrapolate and pull out the right data to help you make the right decisions. There’s no one way to do it.

 

At Sterling Rhino Capital, you syndicate deals. You also have funds. You buy value-add. You also do ground-up development. When someone connects with you, how do you assess what’s the best investment for them within your portfolio and all the different strategies you have? How does that work?

There are different processes. One of them is required to be a public offering and filed with the SEC. They have to go through a certain platform and we have to keep all the communication public on that platform via back-and-forth messaging. It’s all regulated by the SEC. The 506(c) is accreditation. You don’t even have to be on a phone call with them. In the years past, we would require a phone call to qualify them.

Some of the fundamentals are that we don’t want you to have high credit card debt. We don’t want you to invest the last of your money. Do you understand the basics of investing and how risky it is? We do make sure it’s the right fit and we tell people openly, “If you need cashflow or you want a certain return, we’ll refer them to other syndicators. You may not be a good fit for us but this is a small world and maybe you might want to go look these guys up.”

We appreciate. Thank you for all the knowledge you bestowed upon us and our audience. Let’s get to the next segment of our show.

We’re going to do the ten championships round of financial freedom. I’m going to start asking you some questions, whatever comes top of mind. Let’s get started. Chris, who is the most influential person in your life?

There’s no doubt about it. It was that first mentor. His name was Ron Norgan, entrepreneur, a great family man, and he’s like a father to me.

What is the number one book you recommend?

It was How To Win Friends And Influence People by Dale Carnegie early on. That was the first book that my mentor gave me.

I’ve been meaning to read that. If you had the opportunity to travel back in time, what advice would you give your younger self?

Slow down. Don’t take everything so personally and don’t be afraid to fail. I was critical of myself early on. I had a lot of pressure I put on myself and I realized as I got older that it wasn’t as necessary although it helped make me who I am. Take time to absorb and enjoy the relationships around you a little bit more. Success is coming.

 

 

I take life way seriously. Ava’s helped me out all the time.

That’s nice to tell your younger self. What’s the best investment you’ve ever made?

The best investment was the first multifamily syndication we did. It’s staggering. I’ve had a lot of great investments. I’ve lost little money in my life in any business transaction.

My next question is, what’s the worst investment you’ve ever made and what lessons did you learn from it?

I dabbled in retail. I invested in some retail and that wasn’t my passion. I needed to be a free bird and be creative and have a 30,000-foot view and all that. While I can swing the hammers, I don’t want to be seven days a week somewhere and I don’t want to be held accountable for somebody not running my business properly. I want to control that. I lost a little bit of money, but nothing major. I learned a valuable lesson and I stick with real estate now.

How much would you need in the bank to retire? What is your number?

I’m well over-positioned to do that. I have enough cashflow and liquidity to sit on a beach for the rest of my life. Quite honestly, it’s not about the money for me. I’ve reached that. I enjoy the journey. I have fun talking with you and helping people do the same thing. That’s the truth. It’s all good.

Next question, if you could have dinner with someone dead or alive, who would it be?

It would probably be President Lincoln from way back in the day. He overcame tremendous adversity in a time when we had a lot of segregation and challenges with war. He built his company and mindset through bootstrapping and figuring it out. I would love to have a private conversation with what was President Lincoln.

If you weren’t doing what you’re doing now, what would you be doing now?

What I’m most passionate about next to real estate is speaking on stage and helping young people. I would probably be a speaker, coach, or mentor. I don’t have mentor programs, but I imagine that would be the natural progression for me after building a long-term sales career and being in real estate. It is being on stage, helping people, talking, and giving back. I enjoy that. That’s probably what I’d be doing in some way, shape, or form.

Book smarts or street smarts?

Street smarts.

Last question, if you had $1 million cash and you had to make one investment, what would it be?

It would be in multifamily syndications. It would be the development, but multifamily syndications in general.

We appreciate it. You’re sharing more knowledge and more experience and opening up your kimono for us. What’s the best way that people can reach you?

Simply reach out to SterlingRhinoCapital.com or you can check out our show, which is CreateYourFortunePodcast.com. We’ve got everything on there. You just check us out on 1 of those 2 places.

Thank you so much, Chris, for being here. We appreciate it.

We hope to see you soon. We appreciate you coming on.

My old team loves you, guys. We appreciate all you guys share with the readers and the real estate world. Thank you so much for having me. I’m grateful that I have the opportunity to talk to you.