REID Gino Barbaro | Multifamily Real Estate

 

What do you want to be when you grow up? We get often asked this question and oftentimes, our answers are influenced by how we were brought up and what we already have. But it’s never too late to go after the life you want to live. In this episode, multifamily real estate investor Gino Barbaro of JakeandGino talks about building your identity and finding your purpose. He also shares how hard work and a positive mindset can open opportunities in scaling your business. With the right mentor, partners, and support groups, you can make informed decisions and take your real estate business to the next level. Tune in and learn how you can make profitable investments from the man who accumulated 1800 multifamily units and $100,000,000 in assets under management. And helped their students close over 24,000 units and purchase over a billion dollars in assets in the last four years.

 

Get in touch with Gino Barbaro:

LinkedIn: https://www.linkedin.com/in/gino-barbaro-03973b4b/

Facebook: https://www.facebook.com/gino.barbaro.1

Website:https://jakeandgino.com/

YouTube channel: https://www.youtube.com/c/Jakeandgino

If you are interested in learning more about passively investing in multifamily and Build-to-Rent properties, click here to schedule a call with the CPI Capital Team or contact us at info@cpicapital.ca. If you like to Co-Syndicate and close on larger deal as a General Partner click here. You can read more about CPI Capital at https://www.cpicapital.ca. #avabenesocky #augustbiniaz #cpicapital

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About Gino Barbaro

REID Gino Barbaro | Multifamily Real EstateAre you struggling in your real estate business? Not able to find the right strategy to create wealth? Or are you working at a job that is not fulfilling and want to get out of the rat race? If so, I can help.

As Co-founder of Jake and Gino LLC, I have created a unique framework we call “Wheelbarrow Profits”, which entails the three pillars of real estate: Buy Right, Manage Right and Finance Right®. This framework has allowed us to grow our portfolio to an excess of over $100,000,000 in assets under management within five years and enabled us to both transition out of our jobs and become full time investors.

We love talking about real estate and want to show you why buying and holding multifamily assets is the best way to generate passive income and create wealth. What’s different about Jake and Gino? We have developed this unique framework and are currently utilizing it with massive success in the current real estate market. We are out there buying properties and expanding our portfolio and we want to show you how to replicate our system.

Let’s connect to learn more!

 

Multifaceted Multifamily – Gino Barbaro

Welcome to the show. We have another great show for you. Please like and subscribe as it helps us build our channel and allows us to keep bringing you great content and great expert guest speakers. Our mission is to empower investors to earn passive income through real estate investing. We are joined by Gino Barbaro. Gino has amassed a portfolio of over 1,600 multifamily units with $100 million in assets under management. Gino is an author, podcast host, educator, and father of six. We believe this interview with Gino will bring value to passive investors looking to start investing in real estate and private equity and to those who want to join a community of investors and like-minded individuals.

 

REID Gino Barbaro | Multifamily Real Estate

 

Thank you so much for being here, Gino. Welcome to our show.

Welcome, Gino.

Thanks. It’s an honor and a privilege to be on the show.

Can you please start off by telling everybody about your background and your start in real estate?

I got out of college a long time ago. I got into the restaurant business because my father was a restaurateur. He was an immigrant from Italy. He opened a restaurant. I was there for twenty years. In 2016, I ultimately decided to leave, but there was a long process in the midst of that leaving and meeting Jake in the process.

I loved the restaurant until I didn’t. How many people out there are stuck in a W-2 job? They feel like they’re stuck in the rat race, and that’s what I felt back in ’07 and ‘08. It started winding down. I didn’t feel like being there anymore. I was looking for alternate routes. Luckily for me, I got into an education company, started my mentorship back then, got into personal development, and met Jake.

One thing fell after the other. I bought my 1st deal, 2nd deal, and 3rd deal. I figured out that I didn’t want to do the restaurant business anymore. I got into the real estate aspect of it and loved it. I got into it, accumulating assets. I didn’t think of it as an entrepreneurial venture. At Jake and Gino, we say we create multifamily entrepreneurs.

I love your mission statement to empower investors. I was trying to write that down because none of us have that. A lot of people don’t have what my partner, Rick Sapio, calls a catalyzing statement or a mission statement. That’s what we want to do at Jake and Gino. I figured it out multifamily is not accumulating assets. You’re building a business, whether you’re syndicating deals and creating investors, buying assets by yourself, or creating an educational platform. Whatever it is, multifamily is an entrepreneurial venture.

REID Gino Barbaro | Multifamily Real Estate

Multifamily Real Estate: Multifamily is not just accumulating assets. You’re building a business. Whether you’re syndicating deals, creating investors or you’re buying assets by yourself, or creating an educational platform. Multifamily is an entrepreneurial venture.

 

Once I realized that, I was like, “Restaurant business, I don’t want to work weekends. I don’t want to work on the holidays. I’m missing a lot of stuff out of my kids.” When I was younger, it was okay, and I thought that’s what everyone did. Go to school and get a good job. I thought as a restaurateur, you’re supposed to miss these days and these holidays. I didn’t know until I figured it out and said, “This is something that I don’t want to do anymore.” I got clarity on what I wanted and started going towards it. Luckily for me, I’ve got an amazing wife and an amazing brother, Mark. My partner, Jake, is amazing as well. You surround yourself with the right people. You take some action and get some accountability.

There’s so much intertwined into that question because people think it’s an easy thing. It has been a twenty-year journey for me. I’ve learned so much over the past couple of years, whether it’s the relationship with my wife, my partners, and the business. Looking at the business from a different way than I did several years ago, I’m not a mom-and-pop investor.

I want to scale something up, create some value, and create a system within a business so that if I ever want to sell it, I can sell that business and go into another business. For me, it’s been an amazing journey. From starting out with one restaurant for twenty years and within 6 or 7 years accumulating 1,800 multifamily units, where was the shift? What happened? What did I learn along the way? There’s a lot to unpack in that question.

We’ll get to those aspects of it as well, but to put some emphasis on the transition from being a small business owner to then becoming a full-time real estate investor. We have many people on our show who left their W-2 jobs or their careers, particularly in the restaurant business. I used to own a restaurant years ago with my dad, so I understand the process. The restaurant business itself gets immersed in your life. It becomes part of your life.

You’re dependent on the income and on the success of the business, but then also, you have employees and others who are dependent on that business as well. That transition, in my opinion, is much more difficult than leaving a job or a career. You’re leaving your baby, something you’ve worked so hard on.

Also, on that restaurant topic, there’s somewhat of a cultural dogma that exists. People are saying, “Stick to your lane. This is what you’re doing. This is your business. What are you doing? Real estate investing? Educating?” Talk to us about this transition a bit more and the anxiety that exists. I’m sure a lot of people are stuck at a job that they’re not happy with or in a business that they know there’s something greater within themselves. That’s something that we both went through even though we are real estate professionals who are continuing in the real estate business but in a different type of aspect of it. Talk to us about that transition, the anxiety, what people said to you, and the whole process, please.

Let me start with a quick joke for both of you. How do you make $1 million in the restaurant business?

I don’t know.

It is a hard business. The one thing that I learned in the restaurant business was when people complained to me and say, “I worked at eight hours a day,” or, “I worked ten hours,” I’m like, “Work when it is 105 degrees in the kitchen and you have seven people screaming at you or you’ve got to learn another language. People can’t wait six minutes for the lasagna because they get a package overnight.” It’s all about instant gratification. All of that pressure, working all week, you’re the owner and not getting paid, and everyone else gets paid and you don’t, there’s a pain in that.

I didn’t understand how to scale that business. There’s a saying in Italian. I don’t share this often. It goes this way, “L’occhio del padrone ingrassa il cavallo.” What that means in Italian is the eye of the owner fattens the horse. What my dad meant by that is you need to be there. You need to breathe it, live It, and die for it. How did I interpret that? I was like, “I’ve got to be in the kitchen. I have to send out every dish. I’ve got to wash the plates. I’m in there.” There was no system building.

Once I transitioned to real estate, I had a different paradigm. People see the world as they are. That’s how I saw it, not as it is. How is Bezos building this trillion-dollar company? He’s not much smarter than the two of us are. He has different skills, thoughts, and mindsets based on a business that I didn’t learn until a few years ago.

Most of us have these limiting beliefs and assumptions that hold us back, and I had that. When I started buying multifamily, I was still the pizza guy. Jake’s the dug rep and I’m the pizza guy. He was selling pharmaceuticals and I was stuck with the apron and the chef coat. That’s the important thing for everybody. It’s about your identity.

Once I started identifying as a multifamily investor or once I started identifying as Gino from Jake and Gino, writing books, and getting on shows, all of a sudden, the identity shifted. I started doing things that a multifamily investor does. What does that mean? I started talking to brokers. I started doing property tours. I started underwriting deals. I started networking. These are things that a multifamily investor does, not what a restaurant person does.

People who quit smoking don’t stop smoking. Once they adopt that identity, they are non-smokers. They don’t even have the vocabulary anymore. It’s very hard for a lot of us to adopt that. It’s a slow process. It’s about working on personal development, getting some life coaching, and figuring out what your why is. My why ultimately wasn’t for multifamily, believe it or not.

My why was to create an amazing business with a family-like atmosphere where I could lean on my employees and my employees would love to come and work there. For years at the restaurant, I didn’t like my job anymore. At Jake and Gino, my team loves to work there. We love to empower and motivate people.

I want to be a role model to my children. I don’t want my kids seeing me come home after twelve hours cursing about the job and the employees, not getting paid enough, and being grumpy. I didn’t want that. What vehicle am I going to find for me? It was multifamily. Multifamily led me into the education space, syndication space, and property management space. We call it multifaceted. We’re even selling whole life insurance for real estate investors.

From that one business has spawned multiple businesses, but you’ve got to start with a 125 crappy little property that we did. From there, there was the vision. For me, it is about identity. It’s about setting goals. James Clear has got a great book. The book is called Atomic Habits. Everybody should read the book. It’s an amazing book. It talks about goals. We all look at the goals as the result. That’s the result of what happened, but don’t fall in love with the result, fall in love with the system or the process that you’re going to get there.

How are you going to get your first deal? Set up a system or process to do that. Underwrite 100 deals, call the brokers, do property tours, and then reverse engineer that. If you’re underwriting two deals a week and you’ve got to look at 100 deals, it’s going to take you 50 weeks to get that first deal. Figure out what the system is. Fall in love with that system and then replicate it. Ultimately, bringing it back to your question, it’s all about your identity. If you’re identifying as the pizza guy in the kitchen, you’re not going to become the multifamily investor. That’s very hard for people out there to understand. It was hard for me because, at a certain point. I was like, “Am I having impostor syndrome? Am I going out there?”

To everybody reading this, we all start at ground zero. The three of us have had experience in this space. We’ve been doing it for years, but we all started from nothing. I started from a fourplex, and I built that up. Having the partnerships, accountability, and community has helped me to continue. It’s also having that support group and proximity of five people around you. Everyone says that proximity is key.

The last thing I’ll say about this is your language becomes your experience. If the language of positivity or the language of financial intelligence is not there or you can’t speak the lingo, then you’re not going to be part of the lingo. Sharon Lechter was on our show talking about that and saying, “I’ve written these books because I want to empower people to speak the financial language.”

If you don’t know what a cap rate is or what a cash-on-cash is and you don’t receive properties, then you’re not a multifamily investor. That’s the bottom line. It’s the same thing in any space, so know the language. Your language becomes your experience. When you talk to yourself, how are you talking to yourself? How are you presenting yourself? Where’s the energy in your life? If you have no energy, no passion, and no desire, it all goes out the window. You have to check yourself. Check where your identity is and watch what language you use around yourself and around others and especially in your own mind. Does that make sense?

REID Gino Barbaro | Multifamily Real Estate

Multifamily Real Estate: If you have no energy, no passion, and no desire, it all goes out the window. So you have to check yourself, where your identity is, and watch what language you use around yourself and around your others, especially in your own mind.

 

Yes.

To add to that a bit, there are preconceived limitations that a pizza guy’s identity has, whereas a real estate investor doesn’t. There is a mindset that’s there. That is the concept of immersion, surrounding yourself, and eating, living, and sleeping it. It’s this concept of whatever the business is, be the student of the game. We’re going to get into those.

I’ll give you a quick story on that. Jake and I had done our first deal. It was our second deal. I’m in the kitchen. I walk outside and sit in the front. A gentleman walks in. His name is Mike. He is a good customer of ours. I’m like, “This guy is driving a nice car. He’s always dressed well. He comes around 5:00 PM to take food out.” I start speaking to him. I’m like, “What do you do for a living?” He was a hedge fund trader at the time. He was asking me and we were talking about China, oil, gold, the economy, and inflation. He looked at me as the pizza guy and was like, “You really know what you’re talking about.” I said, “I’m looking into multifamily. I bought a 25-unit. I’m buying a 36-unit.”

Mike, at the time, was buying single-family homes. He was like, “Give me a call. Let me look at what you’re looking at.” I called him up a week later. Long story short, he invested in the second deal and partnered up on the second deal. His balance sheet was strong, so on the third deal, we had no problem. He has been our partner with me and Jake since our third deal all the way to scaling up.

That’s to say that if I had identified as the pizza guy and I hadn’t come out of my shell and hadn’t spoken to Mike about the value that I have, we wouldn’t be having this conversation. People say, “Where am I going to get the money? Where am I going to get the time?” Mike was that lever for me, and I provided value to Mike. He’s buying $3 million single-family homes up in New York and Connecticut for $10,000 a month in rent. Do those numbers make sense? No. When he saw that value, it was game over.

At the same time, if I had sat there, didn’t speak to him, and did not engage, I wouldn’t be able to provide value to him. That’s what I’m talking about with identity. Don’t be afraid. What’s the worst thing that can happen? I’m like, “That conversation’s over. I’ll never speak to Mike all over again.” When God opens up a door, you have to go through that door. You have to be present and say, “What am I going to do?” Was I lucky that day? Probably. Was I working hard? Yes. The harder you work, the luckier you get and the more opportunities present themselves to you. That, to me, is what it comes down to. We all need a little bit of luck, but without hard work, luck is not going to get you anywhere.

The harder you work, the luckier you get and the more opportunities that present themselves to you. We all need a little bit of luck. But without hard work, luck can get you nowhere. Click To Tweet

Luck is when preparation meets opportunity. 

That’s right. I love that. That’s excellent. Preparation meets opportunity equals luck. You should trademark that.

I’ll make a comparison with a buddy we all have. He is the buddy who is an expert in a certain sport. He knows all the stats about basketball players, when they won a championship, who did what, and everything. The guy isn’t somebody sophisticated, intelligent, or educated, but he has immersed himself in that game and knows everything about it.

At times, if in life, we could do the same thing in business, you could be very successful in it. That is the approach we’ve taken. We’re immersing ourselves in the business that we’re in and understanding everything. Especially when you deal with investors and private equity, you need to be very knowledgeable in this space to come across as you know what you’re doing and also for that trust that needs to be in place as well.

 

REID Gino Barbaro | Multifamily Real Estate

 

You immersed yourself into real estate and the self-development spaces you were saying. Talk to us about the humility needed to seek mentors and the immersion process to learn and educate yourself in a business that previously you had no knowledge of. Do you have any advice or a playbook you can share with our audience on how to take those steps?

Check the pain meter if you’re having pain and you’re saying to yourself, “I don’t know how to get to the next level,” which is all of us. Luke Wren was in our live event on October 23rd, 2021. We had MM4. There were 900 investors there. He’s a Tony Robbins speaker. He was our keynote speaker there. He says to people, “I either want to hear from you that you’re doing terrible or you’re doing great. If you’re doing terrible, we can get you to great. If you’re doing great, you’re motivated every day. If you’re doing just good, that means you’re pretty comfortable. You’re not going anywhere.”

Check yourself. If you’re doing great, we don’t even have to have this conversation because you’re going to continue to educate yourself. Jake and I are spending hundreds of thousands of dollars a year on personal development because we don’t know what we don’t know. Do you think from one restaurant, I know how to scale up a company? We went to coaching with Scaling Up and Traction. The list goes on and on.

If you’ve never done it before, how are you going to do it? Do you want to waste the next five years of your life trying to figure it out, or do you go pay somebody for the next twelve months and figure it out? It’s a no-brainer once you see it. You have to look at it as an investment. Unfortunately, most of us consider it an expense, but the entrepreneur sees that education.

REID Gino Barbaro | Multifamily Real Estate

Multifamily Real Estate: If you’ve never done it before, don’t waste the next five years of your life trying to figure it out. Pay somebody for the next 12 months and figure it out.

 

If you’re spending $300,000 to go to a four-year college, what the heck are we talking about with $20,000? Why are you and Hayman having this conversation? You shouldn’t even be having a conversation. If you’re thinking that way, you’re thinking small, and that’s okay. That’s where you’re going to stay. I was there for years until I ripped off the Band-Aid back in ’08 and said, “How do I do this?”

I’ve already lost $150,000 on one crappy deal. I already bought a deal after that that I was in for ten years. If I had had the education before that, I would have saved on those two experiences, but I didn’t know. Once I educated myself and got into the mentorship program, I understood what due diligence was, knew what a cap rate was, and how to analyze a deal. It’s not hard. I then found another mentor which took me to another level.

On that third deal, I had a mentor that was walking me through the deal. It was a $4 million deal for us at this time with 136 units. That deal’s worth over $12 million now. He was giving me docents, takeover checklists, underwriting, and the credibility book. These were all these things that I didn’t know what they were. Could I have done it myself? Probably. Did I make mistakes? I probably made more than $20,000 of mistakes in what my education cost me. I look at it that way.

Are you serious? Do you want to waste time or do you want to see somebody who did it and followed a proven method? You’re not going to stop with one education program. I buy tons of books. I’m constantly getting coached, whether it’s speaker training or doing our live events. We have coaches to put our live events together. When you’re putting the live event together for $200,000, what the heck is $5,000 or $10,000 to coach on that to do it properly, add different ways to monetize, or bring value to the person going to the events? Look at it from that perspective.

I’ll say it once again. Don’t look at it as an expense. Look at it as an investment. Whatever you learn, one of these days, you may be able to monetize and teach others how to do it. That’s what I ended up doing with myself. I started with mentorship and coaching. The amazing thing about the coaching and what we’ve done with Jake and Gino is every week. I’m learning something new. I’m interviewing other amazing guests.

Don't look at education as an expense. Look at it as an investment. One of these days, you may be able to monetize and teach others how to do it. Click To Tweet

We had a boot camp in Atlanta with 80 students. We were doing finance writing. There are so many things that I learned from the students, whether it’s a market or a technique on how to find a deal. Whatever it is, let’s learn, do, and teach. Once you teach, it’s amazing what you learn. People don’t understand that. Once again, look at it as an investment in yourself that you will keep for the rest of your life.

On that topic of educating, let’s get into that next question.

You were talking about going from a student of the game to being a thought leader. We have many Canadian and US investors who have been in touch with us. They are part of your investor educational community, so your reach is international, which is fantastic. Maybe you could talk to us about building the Jake and Gino platform. How did the idea come about? What is it that you guys do, and what does the future look like for the Jake and Gino educational platform?

When we started out, you see all the gurus selling education. I said, “It’s March of 2016. You’re doing the portfolio full-time.” I have no job. I left the restaurant. I’m in Florida and Jake is in Tennessee. I’m like, “Let’s see if we can buy some assets in Jacksonville,” where I had moved at the time. I looked and wasn’t thrilled with the market. I said, “Let’s write a book. We might as well. We’ve got a couple of hundred units. Let’s start a podcast.” It was for fun. I started writing articles and then one thing led to another. I then created an educational program on Kajabi, which is a learning management system. I created videos. It started more as a passion project of mine, not to monetize. It was a lot of fun.

In March of 2018, we bought our first sales representative. His name’s Josh Roosen. From there, it has grown. It wasn’t started to monetize. It’s been amazing the last couple of years, but it started out more as a selfish passion project. Every weekend, when you’re interviewing people, whether it’s Sharon, Lechter, Mark Victor Hansen, Michael Gerber, T, Harv Eker, Oren Klaff, and the list can go on and on, how much money would I need to spend to get these people on the phone call for 1 hour? It’s thousands of dollars. With the podcast, I’m able to talk to them every week. It’s selfish. When brokers listen to us and hear us, they go, “I know Gino and Jake. Let me send them a deal.” That’s where the benefits have come from.

I’m not a thought leader by any stretch of the imagination because most people who are thought leaders or experts are usually wrong. I’m just out there sharing information from other people and trying to package it. We have our system. It’s called Buy Right, Manage Right, and Finance Right. Out there, the market is constantly changing. Being an investor, being what we call vertically integrated, understanding all three aspects of that business, being able to share it with the students and then the students learn, and then the students are able to partner with us if they want to, ultimately, for me, it was more of an abundance mindset.

It’s a fixed versus growth mindset. They say, “If you teach everybody, they’re going to take the deals from you.” I don’t care, and I have no ego. I’d rather see both of you in my community more successful than myself because I have more than enough. I don’t need to make any more money. I’m more than happy with what I want, but the success, the fulfillment of seeing students close deals, and getting that email saying, “I left my job,” that’s something that is very hard to explain until you’ve gone through that.

Having over 24,000 units closed by our students and over $1 billion in assets that our students have purchased over the last few years, that’s freaking amazing. That’s for us, and for me, especially. True financial freedom allows you to do what you want to do. I want to focus on education because I’m doing very well with it. I’m learning a lot. I’m also giving back and impacting other people’s lives.

That’s where education has come full circle. It’s from wanting to do it from a selfish perspective to all of a sudden impacting all those lives, and then full circle, having my entire family involved, whether it’s writing children’s books, coming to our live events, or teaching them about multifamily. It’s legacy wealth that we’re passing on to our children, but it’s also those legacy skills.

We want to pass on skills to our kids. Money’s great, but if they don’t know how to make it, manage it, or spend it, it’s all for nothing. Teaching them these skills and letting them see the amazing community that we’ve built and all the families that are there and having lifelong relationships from that, I know it’s been a long answer, but for me, that’s what it’s been for the last couple of years.

It's legacy wealth and skills that we're passing on to our children. We want to pass on skills to our kids. Money's great. But if they don't know how to make, manage and spend it, it's all for naught. Click To Tweet

If you’re not deserving of being called a thought leader, I’m not sure who can. We attest to the fact that you are a thought leader.

Let’s get into the business side of investing, if you may, please.

We’re in real estate private equity. We’re also known as the syndication business model. We like to call it both. Your business model is not solely utilizing private equity, but you are the sole owner of many properties you own and operate. Maybe you could talk to us about these two business models and your experience.

They’re both great. When you go into real estate, especially multifamily, there are so many different strategies that you can employ. You can buy deals on your own like Jake and I have. You can syndicate deals and raise capital as you guys have. You can do creative finance deals and get seller financing on these. I want to look at every deal through every lens. For us, the syndication model came late. You don’t know what you don’t know.

We first started out back in 2010 or 2011. Let’s take a trip down memory lane. There were a ton of deals. There were deals everywhere, but were the banks lending? Was their private equity? Was there capital? No. Jake and I had to bootstrap it. We started buying deals ourselves. We were fortunate that we got to that point. What we ended up doing was that instant gratification was delayed. We didn’t sell our deals, which is what most people do. We bought our deal. We refi’d the deal out and then we bought the next one with those proceeds. In the first 1,000 units, we were able to refi out over $15 million from the portfolio. That money goes back into the next deal. For us, that was powerful.

I can sit here and say, “Should we have started syndicating sooner?” Probably. We’d probably have 4,000 units, but that wasn’t in our mind. We just wanted to build equity. We were within a three-hour radius of Knoxville. We wanted control. At this point, we didn’t want an outdoor infrastructure. Remember. We have our own property management company. If we buy 3,000 units in one year, we’ve got to hire 20, 30, or 40 employees. For us, that model doesn’t fit us. We’d rather hold a smaller number of units within that area and be able to manage them.

We have a CapEx crew. We’re building out our own units. We’re taking flooring in-house. We’re doing a lot of the stuff in-house. For us, scaling up big may hurt our model. Especially with the hiring freeze going on and the labor shortages, it’s a little bit difficult. Syndication is awesome. I was sharing the story of our first deal with Jake. Our first deal at syndication was back in March of 2016. It was a $55 million deal. Back then, for us, where are we going to get $12 million or $14 million?

He calls me up. I was in the library because, at this point, I’m in transition. I have no office. I’m not in the restaurant anymore. I don’t have an office. I’m working out of the library. I walked downstairs because people would tell me to stop talking. I’m like, “I took a real estate deal here.” I get on the phone. He’s like, “There’s a $55 million deal.” I felt like throwing up. Do you ever get that feeling in your stomach? It was so scary at the time.

I looked back at it and he was like, “Let’s learn syndication.” At that point, we didn’t buy the deal. I wish we had. That’s when we took our venture to syndication and said, “Let’s look into these larger deals. Let’s get out of our comfort zone.” I love the syndication model because it is a great way to monetize in a couple of different areas. You can get acquisition fees on the front end. You can invest as a limited partner on the other side. You can get asset management fees. You can scale up and choose what your expertise is.

If you love to raise capital, you can do that. If you’re out there doing the due diligence and taking the deal down, you can do that. If you property manage, you can bring that level of expertise to it. There are so many different areas in investor relations within syndication that you can partner up. The scalability is amazing.

For us, we’ve only closed on 150 units this 2021. We’re fortunate because it’s in our market and they’re very close to other assets. When are students out there trying to close a 25-unit deal by themselves in a market that they started out with, how about looking at a syndication model where you have a couple of people partnering up with over 100 units, where you can scale up, and you have that property manager full-time and that maintenance tech full-time? That’s what syndication allows you to do. It allows you to build a bigger business.

The only negative that I see to it is usually that you have to return your investor’s capital. Hopefully, you can hold out a little bit longer for 5 or 7 years because that’s where you create true wealth or possibly a refinance. Maybe refinance some of those proceeds and hold that asset. For us, we want to hold our assets. We want to buy good assets in this part of the market cycle. We want to buy them in great areas with good meeting income and good bone so, in the next ten years, we can see ourselves owning this asset.

We sold two of our syndications. We’re really well on them. That’s the only negative I see having to turn that asset over, but if you can hold on and possibly refi those investors and keep them on board, I love the model. Look at every deal through the lens of each strategy. Learn each strategy and see which one fits your model. Does that make sense?

Continuing on the real estate private equity topic, maybe you can talk to us about the relationship between a general partner, a sponsor operator, and the investors. Similar to the students of your program who are your pupils, investors rely on the general partner to make the most astute investment on their behalf. Maybe tell us about the relationship you cultivate with your investors and the process of being a great general partner.

Transparency is key. When things are going great, everyone wants to hear, but when you’ve got a sewer leak, a gas line break, or a murder on the property, you need to tell them right away. Investors can understand that when there’s an eviction moratorium, there’s nothing you, as the general partner, can do to do about that. Being transparent is number one. Number two, the reason why we syndicated later was I wanted a little bit of a track record. I didn’t want to take people’s capital until I had a business model that was proven. That is possibly limiting beliefs on my part. That’s what I felt.

We go back to these limiting beliefs. If I feel that way, I will not go and get a deal syndicated. For me, it was always trying to buy those deals internally for myself, seeing the model work, and then going out and having that relationship with the investors and letting them know, “I’ve done this a few times myself.” It’s having that transparency and also making sure that our goals align.

Limited partners do nothing other than give money to the general partners. We’ve written a book called Passive Investing Made Simple. What I want you to think of as a limited partner is I want you to understand it as if you’re buying it yourself. As a limited partner, it’s not like buying a mutual fund where you put a lock and load. You need to understand the market when you’re underwriting a deal. You need to understand what your investing goals are. You need to understand where your money’s coming from.

You need to understand the sponsor and the relationship. Does the sponsor have that track record? You need to know who the sponsor’s team members are, who their property management company is, and who their syndication attorney is. All of that, you need to know. That would probably be an episode in and of itself, but in that relationship, the limited partner is going to be passive in the deal. The general partner is the one making it happen. Signing the debt and taking all of the risks on the front end, they’re getting compensated for that, but there’s a lot of work that the general partner needs to do. They need to underwrite the deal and make sure the deal works.

For us, after we took the deal over, we were property managing along with asset managing. Those are two different responsibilities. You can either hire third-party property management or you can get management in-house, which is what we did. We also have asset management, which manages the asset. Remember, we’re not buying assets. We’re building a business. We need to manage them from the asset management lens.

I’m trying to think if there’s anything else that I can touch upon with that relationship. It has to be open. We would do monthly webinars with our limited partners and let them know what is going on with the deals. We eventually went to quarterly. We’re having those quarterly touchpoints and letting them know what CapEx items we are doing every quarter and where rent collections are.

We had daily rent collection when COVID started to make sure that we were showing them how we were collecting rents. We’re showing them CapEx items, income expenses, and the growth from quarter to quarter. We’re also letting them know when we didn’t hit a preferred rate of return, what happened, and why they didn’t happen. It’s important. That communication is key in any business relationship. Especially with limited partners, they may not be on a call, but let them know that you’re putting that effort into it goes a long way with them.

I personally took some golden nuggets away from that.

I was writing a bunch of stuff down. Thanks for that. You’re a father of six beautiful children, which is incredible. In my opinion, being a father of six is more work than managing a real estate private equity firm. Maybe you could talk to us about time management. How do you create time to spend with your children and family and manage your business?

That’s a tough question because, for me, it’s about values-based decision-making. I don’t have many activities in my life. I have my family, my business, and other hobbies. I am not watching football on Sundays for seven hours as most people do. I’m not going out to the bar every weekend and hanging out with my friends. I’m not going to play golf. I hate golf. I could never imagine myself on a golf course every Sunday for six hours. I don’t have the time for that and I don’t think that’s high value for me.

If you want to have a family, an amazing business, an amazing relationship with your spouse, and an amazing relationship with your kids, there are certain things that you can’t have. We’re always taught that you can have it all. You can’t have it all. You have to choose and decide. If you have it all, then you have nothing. That is my personal opinion.

REID Gino Barbaro | Multifamily Real Estate

Multifamily Real Estate: There are certain things that you can’t have, and we’re always taught that you can have it all. You can’t have it all. You have to choose and decide because if you have it all, then you have nothing compromised.

 

Compromise is a very important part.

For me, I chose to spend most of my time building my businesses, building the teams out, and scaling with Jake. We homeschool our kids, so I’m able to see them throughout the day a lot of times. I’m going to go play tennis with one of them. I went out with the other one. Spending time with each one of them is important. Also, time-blocking is important. For me, in the very beginning with the restaurant and working 50 hours a week, there are people that say, “How do you find the time?” I will guarantee everybody. If you put down a 24-hour timesheet for the next seven days and you see where you are wasting your time, you’ll be pissed off at yourself.

Stop watching Oprah. Stop watching a YouTube channel. Stop doing Facebook. My phone is gone. My phone is out of the room because I need to focus on this. Time-blocking is being intentional with your time and getting more out of your time. That’s what most of us don’t do because we’re so distracted. There’s no such thing as multitasking. You cannot multitask. You have to single task. Focus on what you need to get done and then move on to the next task.

There's no such thing as multitasking. You cannot multitask. You have to single task, focus on what you need to get done and then move on to the next task. Click To Tweet

We’re scattered. We’re all over the place. For me, start with time blocking and then create your week, whether it’s a Sunday or a Monday. Delegate all the responsibilities you need to get done during the week, write them down, and make sure you have time planned for each of those. For me, it’s family and business. Those are the two things that I focus on. That’s how I get a lot of stuff accomplished.

Time-blocking is a game-changer. For anybody reading, stick to your time-blocking. Since we’re on the topic of children, many of us were not taught the fundamentals of money and investing by our parents. It’s more like, “Go to school, get a job, save, and put some money in for retirement.” We have to go out and learn it. I have a lot of conversations with investors and they are saying the exact same things to me. They’re like, “Learn it, research it, and then explore to find the answers.” Have you started teaching your children about making smart investments and how real estate investing can be a wealth-building machine for them?

My wife came up with the idea to create an academy for kids. We created a personal financing academy as part of Jake and Gino. It’s for thirteen weeks. If you think about it, we’ve been taught in school what skills we need to learn. Have we been taught in school insurance, taxes, credit, financial planning, money, or banking? All of these skills, we’re never taught, so we decided to create a program for those young adults.

We started writing children’s books. Our first children’s book is called The Cannolis Exploded! Now What?. It’s starting out early on. It’s having parents sit down with their kids, reading the story, and talking about it. The story is about personal responsibility. That’s what it comes down to having personal responsibility.

As far as allowing and teaching my children, I let my kids invest in my deals. My seventeen-year-old son, at the time, wanted to buy an amplifier. He wants to spend $1,500 on an amp. I’m like, “You have $5,000 in a bank. I’m not allowing you to spend 30% of your net worth on that. I’ve got a deal. Would you like to invest in my deal?” He put the $5,000 in the deal. It was the best decision he’ll ever make in his entire life because the property, two years after, we’ve refi’d it twice and sold an asset. His $5,000 has grown to $50,000.

Remember, your language becomes your experience. All of a sudden, he’s saying, “Why haven’t we had any owner draws this month? Where’s the economic occupancy?” Why are there 30 units that aren’t to rent? When’s the next refined role coming?” All of a sudden, he had these questions that he would never have had any idea. He put a little skin in the game and he understands the model. He’s got that capital. He doesn’t care about an amplifier. He’s like, “When’s the next deal? I want to roll my money into the next deal.”

It’s allowing your children to see that process, whether it’s $100, $1,000, or $10,000. Letting them have that buy-in, letting them understand what’s going on, getting them on the calls with you as well, spending time with them, and walking them through this will be life-changing. All of a sudden, I know he understands multifamily from that aspect.

I was able to have him work with our company underwriting deals for Rand Partners, our syndication company. He did an internship over the summertime. He is underwriting calls, looking at those assets, looking at all the debt that we’re using, looking at Fannie and Freddie, and all those different things on that side of it. Include your kids. Don’t be afraid to speak to them about money. It’s a simple conversation as reading a children’s book. From there, continue that conversation.

It’s unfortunate because they’ve made money, this taboo or daunting thing. It’s not that difficult. Money is something we make and utilize. It’s another tool in the tool belt. The more money you make, the more opportunity you have, and we can all spend it in any way. Ultimately, what we’re all trying to capture is our time back, and money allows us to use our time in any way. If I had to go to work in a W-2, I wouldn’t be on this episode with you. I’m able to do this because I’m “financially free” and I want to do this. There’s a big thing to be said about making tons of money. It’s not how much money you make. It’s how you use the money.

Your son being introduced to this excitement of your money growing for you passively at such a young age, I never felt that until I figured it out on my own. The point that he got that excitement at such a young age is going to become, “An amp? No way. I want to invest my money and get it working for me.” That is amazing. I love that story. Thank you so much for that. Here’s a good one. What is your advice to anyone looking to start passively investing in real estate?

Find the experts. That’s what I would do. The first thing you need to do is. Honestly, you need to know what your goals are. Are you even looking into multifamily? Is it too risky for you? I would say multifamily for the next 10, 15, or 20 years. We’re renting. The US is becoming a renter’s nation. Look at the demographics, whether Millennials or Baby Boomers, the asset in demand, and the affordable housing crisis we have.

We are millions of units short of affordable housing. That’s the reality. There’s a shortage in the single-family space as well. They’re not able to buy a home, so they’re either stuck. They’re transient. They’re moving around. Apartment renting is great. Renting an apartment for $1,200 and after a year, you give the keys back? It’s an amazing thing for young adults. That’s where I think it’s going to be as far as the future.

I love the apartment space. I love the multifamily space. Cap rates are compressed and all, but where else are you going to find an asset that’s a basic human need? It’s food, clothing, and apartments. That’s what it comes down to. Inflation is taking root. As a limited partner, getting back to your question, find out who the experts are. See what business model they’re employing. Are they employing the buy and hold strategy that we would want? Align with them. Do you want your money back every 24 months? Align with them? Do you possibly like the self-storage space and maybe want to invest with somebody who’s doing self-storage? Find what niche you like first, then find the operators in that niche and start investing passively with them. If you learn that model, possibly, you want to do it yourself. From those limited partners from that transactions, you’ll learn, and then you can transition over to the active side.

 

 

We’re onto the next segment of our show. It’s called the Ten Championship Rounds to Financial Freedom. Answer with whatever comes on top of mind. I’m going to get started here. Who was the most influential person in your life?

I’d probably say my mother. She’s worked in the restaurant for years. What I love about my mom is she sacrificed so much. She worked all those years in the restaurant. She didn’t have to. When you look back at that and you have a role model like that, it’s amazing. You want to do that for your kids as well. I will say the negative. She did give me that mindset of, “We have to stay small. We have one restaurant. We can’t take too many risks.” That’s the language that I learned from her.

Being an immigrant and having to save money, learning that was what was holding me back from the restaurant. From that perspective, that’s fine. I had to learn that on my own. I can’t blame her for that. That was her paradigm. That’s the way she looked at life. I didn’t have to adopt that once I understood that. For her to be my role model was great. She was always there for me. Moms sacrifice a lot.

What is the number one book you’d recommend?

There are so many books out there. I read Stephen Covey’s book, The 7 Habits of Highly Effective People, a couple of months ago. I read it again. I read it years ago and I thought it was a bunch of crap. I read it six months ago and it was probably the best book that I’ve read in years. It depends where you are in life. His habits truly are transformative. Think with the end in mind. What do you want to be 30 years from now? Most of us don’t think of that. We don’t even know where we’re going to be 30 days from now. Think of where you want to be at the end of your life and let’s reverse engineer that to where you are now.

Here’s the next question. If you had the opportunity to travel back in time, what advice would you give your younger self?

I wouldn’t want to do that because then, I’d probably change where I am now, but if there’s one thing that I would say, and I was pretty good at this, “Be a producer. Don’t worry about consuming. Don’t worry about buying that million-dollar house when you’re 34 years or 33 years old or building an amazing house. You could have bought a house that was a little bit cheaper. Put the rest of that money in the bank and have that money work for you. Don’t get caught up in the consumerism you produce like I’m producing now.” Consumption is foregone thought. I don’t even want to buy another car or another house. I don’t need it. That’s not what makes me happy. Go back, buy assets, and invest for the long-term, not for 1 year or 2 years, but for 10, 15, and 20 years.

 

REID Gino Barbaro | Multifamily Real Estate

 

What’s the best investment you’ve ever made?

We bought a 281-unit deal a few years ago. It was $11 million. It was all owner-financed, 80% bank and 20% owner financing. We put no money into the deal. At closing, we walked away with $140,000. That deal is probably worth triple what we bought it for. We’ve held it. Most people would have sold that. We’ve refinanced it twice and held it.

It’s been an amazing deal. We didn’t put a nickel into it. It’s understanding the motivation of the seller and knowing that they wanted to sell. They tried to sell. It was a larger asset, so there was not a lot of competition. Private equity didn’t want it because it was in a smaller market. It was a fragmented deal. For us, it was an amazing deal. It was our 5th or 6th deal. We already had a few hundred units under contract. We were already running that, and they took a chance on us. The bank said, “We’ll try it. What’s the worst thing?” If we didn’t pay the note, the seller would come back and take the property from us, so there were no risks. That was probably the best deal we’ve ever done.

What’s the worst investment you’ve ever made? 

Number one, not investing in my education sooner. That’s probably the worst, but the second one is I bought a deal in New York back in 2006 or 2007. It was a strip mall. It’s mixed-use property. The reason why it was a bad deal was I wasn’t educated. I didn’t do due diligence. I didn’t buy in actual numbers. I bought it in a terrible market. I didn’t understand commercial leases.

I held that deal for ten years. I probably lost $500,000 or $600,000 in that deal, but it wasn’t the money. It was the time and the effort. It’s ROE, Return On Effort. I put so much effort into that, and the return was abysmal. It was always on my mind and sucking the energy and the life out of me. No deal is better than a bad deal. Write that down, everybody. That’s truly important. If I had not done that deal, I would have saved hundreds of thousands of dollars and thousands of hours of my life.

No deal is better than a bad deal. Click To Tweet

How much would you need in the bank to retire now? What’s your number?

I have more than enough in the bank to retire. Even with six kids, I have a very frugal lifestyle. I spend $12,000 a month on average. Most of that’s the food bill. I have no mortgage. I have no car bills. For me to feed eight people, it’s about $4,000 a month, believe it or not. It’s probably going up with inflation. We cook everything at home. We’re very frugal. I don’t have luxuries. I have a few houses. They’re all paid off. The cars are paid off.

I don’t want to be burdened. I don’t want to have that education and think that I need to make a certain number to be able to live off of it. Once you start chasing money and not chasing opportunity, things get skewed. That’s why when you build a business, you can’t chase money. You need to say, “How do I create value for my customer?” If you’re thinking about creating value, but you’re thinking about how much you need to make and what’s in it for you, you’re losing the point of serving that customer. For me, trying to keep my expenses down and enjoying what I have is key to what drives me.

You can't chase money when you're building a business, you need to see how you can create value for your customers. Click To Tweet

If you could have dinner with someone dead or alive, who would it be?

It would probably be my dad. He passed away. We were cool.

Here’s the question. If you weren’t doing what you’re doing now, what would you be doing?

I had a restaurant in New York. You see what happened in New York. They locked everything down there, so I’d probably be homeless and not have a business. That’s what it’s about, being proactive. For everybody reading, we all think that there is no risk in having a job, but there is risk in starting a business. There’s risk in everything. You can work for an employer and they can downsize you. They can go out of business. They can relocate.

I had a student. His name was Mark Matthews. He told me when he joined the Jake and Gino community the reason why he joined in July of 2020. It was because he got laid off. He was outside his building, looking at the building and saying to himself, “I put twenty years of my life into that company and they laid me off. Now, I can’t even get back into that building.”

Could you imagine putting twenty years of your life making money for someone else, then getting laid off and not even being able to go back into the building and say goodbye? What more risk is that than having a legacy and having twenty years of your life taken from you because a company decides to downsize? Don’t use that as an excuse, “Going to business, buying an asset, or investing in multifamily is risky.” There’s risk in everything. What you need to do is you need to limit your downside risk by getting educated. Does that make sense?

Of course. I’m excited about this one. Book smarts or street smarts?

You do want to get educated. You want to have some kind of book smarts because you need to learn, but having street smarts, to me, is having wisdom and knowledge. When you’re a street-smart person, to meet, you’re looking around and seeing what everyone else is doing and learning from other people. I would probably say street smarts if I had to pick 1 of the 2.

Here’s the last question. If you had $1 million in cash and you had to make one investment, what would it be?

Depending on the situation, I’d probably put it into WholeLife.

I appreciate you coming to the show. I appreciate the passion. You’re a thought leader, an educator, a great father, and a great all-around person. I appreciate you taking the time to come to our show and adding value to us personally and our viewers. Thanks.

Thanks. I appreciate it. This is a great show. I enjoyed it.

Thank you so much.