Young Real Estate Investor has successfully closed deals of $40M

Young Real Estate Investor has successfully closed deals of $40M

today obviously Rob is a legend I’ve worked
closely with him on the recent deal that we closed on in Houston Texas, he is a
living legend and he’s only 22 years old I’ve been waiting for this interview here oh
thanks I wasn’t expecting that introduction but thank you very much
no seriously obviously I know so much about you Rob obviously we do business
together, with Kent as well, but I think dwell-listeners one a year straight from
the horse’s mouth can you tell us a little bit more about yourself I mean
kind of what got you to this point and you know kind of what you’re up to right now
absolutely so as you mentioned Kent and I are cofounders of Lone Star Capital
Group, which is a New York based real estate investing firm focused on Texas
as you can tell from the name so specifically we’re looking to buy
underperforming multifamily in Houston with a value that component usually from
improving management renovations and also unlocking value through the capital
structure so that’s a nutshell what we’re focused on right now and yeah
happy to talk more absolutely so let’s kind of you’re 22 years old let’s kind
of jump right into that let’s not shy away from that yeah obviously I know you
you know pretty well you amazing in terms of like Debt, multifamily, you know
this stuff I mean you make me feel like wow like you know this stuff really well
so there people out there maybe they even in their 40s or 30s or you know a
little bit older and they’re still trying to learn just trying to start their journey
in real estate but you’ve done pretty well I mean having almost 40 million you
know AUM (Asset Under Management) it’s pretty pretty amazing you know for your
age regardless I don’t want to go into that but it’s pretty amazing right so
can you kind of give us I know how did you get started I know you’re that
obviously you know does real estate in California but how did you get started
in this journey and you know towards the end of that can you say thing kind of
tell us what your experience has been being that you you know so much a young
person in somewhat big boys club and has that worked out for you yeah so you know
definitely didn’t do it alone I had a lot of help but it started
you know well really started obviously back just growing up and being in a real
estate family and watching my dad run his projects whether that be development
or you know single family flips and and managing his brokerage business but in
my adult life when I was still in college I started just doing all my own
research and reading up on bigger pockets like everyone does and they get
started obviously was really inspired by Rich Dad Poor Dad growing up and so
getting involved and reading and consuming all that content and just
keeping my intellectual curiosity going led me you know started me down this
path and then I pretty much started bugging my dad and saying hey we need to
really look into this multifamily thing this is doable you know for him he’s got
his he’s set in his ways and you know he’s figured out what’s worked for him
and he just does this single and we game and for me I was young and
didn’t know any better so I just said hey no we can buy ten million dollar
deals we can buy twenty million dollars let’s let’s go do this and so from that
him and I started researching together we started getting involved in
communities and really that’s what accelerated my growth so much is getting
involved and and meeting so many people and learning from them and being around
other people who were doing exactly what I wanted to be doing which just made it
so much more real yeah I like that and you mentioned a lot of really good
things intellectual curiosity you know just kind of staying curious you just
help us continue to you know learn new things right even though you guys were
already kind of in the real estate sphere investing sphere you’re done with
doing single family so it’s totally different beast as you know to
multifamily so you didn’t you know you didn’t think that oh you know we’re
ready doing real estate you know single family flips I don’t need to do anything
else I don’t need to look at it you know so just having that curious mind also
helps with the learning process I’m glad you brought that up so you you were
going on the forums you read of the amazing books reach out for that how
much of mindset has played a you know a vital role in your journey mindset I
think is huge for me especially but just for everyone in general and and my
mindset really started you know I don’t know if some of it was taught some of it
was just I was born with because I remember ever since you know my first
days at school we would get the the homework packet for the for the week on
Monday and it was done on Monday you know that was just the way I was and
that’s how I like to approach and attack things and so I was always a good
student but then where I really sharpened my mindset and and develop
that skill of perseverance and hard work was through football actually so growing
up I played football since I was 10 and then all through high school and you
know when you it doesn’t really matter what you’re doing but if you commit your
life to something you’re gonna learn a lot and you’re gonna learn a lot about
yourself and you’re gonna really grow as a person and I think that’s exactly what
happened for me and I really appreciate that experience to be able to
have those adversities and overcome them and have those lessons that can apply to
all aspects of life and and hopefully they you know specifically applied to
running and growing this business absolutely you’ve mentioned a few things
as well you didn’t do this by yourself obviously multifamily is just by its
nature a team sport like you unless you’re like a Saudi prince like I always
say I have like a gazillion dollars you would need people even even with that
you’ll still need attorneys yeah so you definitely need a team right and
you obviously you have that we’ve worked together so I want to really touch on
something this dwell listener listening to this conversation they are thinking wow my
goodness this guy’s 22 years old and he’s doing
this and I’ve been telling myself I’m too young I can’t get started I don’t
know how to start or I’m too old right oh I don’t have enough money or
whatever it is you know fill the blank what would you say to that person well
I’d say you know the right time to get started as always now and that doesn’t
mean all of a sudden you’re going to be fulfilling your dream right away and and
doing a whole deal on your own and you know you’re the king of the hill or or
you get the even the biggest piece of the GP pie right we talk about splitting
up GP responsibilities and how much compensation you get you know if you’re
thinking about doing your first deal just right there commit or understand
that you’re going to be receiving probably the smallest percentage of the
GP right there even though it’s your deal that’s just the way it is you know
that’s really frustrating to see on your first deal or first couple deals but
it’s really buying into that bigger picture that hey you’re building
something bigger than just what’s happening right now and you know
whatever you’re missing there’s always that counter piece available to you and
you just have to go and and ask for and get and get it I think one interesting
thing about multifamily being a team sport and I think it aligns with my
personality well is I’ve never been afraid to ask and so many people are
afraid to get rejected or to for something worried about you know
rejection and so for me I’ve always just been willing to be number one
intellectually curious and to ask so if I don’t know something I ask if I need
something I ask right so you know when when we were first getting started I
would always like to pick my attorneys brain I mean he’s been doing these
transactions for so many years right he of course has so much to offer to me so
I’d be a fool not to try to get some of that value so I’m not trying to
necessarily be in value leech everywhere I go and just get everything for myself
but it’s just a a journey of leaning on others in a I guess mutually beneficial
way yeah I think one of my favorite quotes is from Socrates which is wisdom
is knowing that you know nothing right I think that’s and that’s clearly what
you’re doing way and when you say that to yourself you know you understand that
you’re definitely being a value which is just that you know that the world is so
big even Google I’m sure doesn’t know everything right but still constantly
data mining Google so you know I think just having that humility to know that
you can always lean like you said on your attorney or somebody that has been doing
this for so long it’s actually the beginning of you know of intellectual
curiosity that’s exactly what it is so I love that you mentioned I want to
quickly go back to one thing you said as well when you get your homework one day
you get it done a Monday I also played football from you know from 10 years old
so I I can see that some of those disciplines I’ve actually been you know
just about some of the things that you’ve done and he’s probably helped you
get started so talking about getting started in multifamily can you tell us
about the first deal how did you find the deal how did you fund the deal you
could talk about the fundraising part for it what were the challenges I mean
that you I know there’s a lot of questions in there so we can over you
know wanna get that yeah before I dive into that I’ll just go back to you gave
a quote so I will through in a quote and I’ll say when you start out you have your humble
and you don’t assume you know it all which is you know that’s one of the
dangers of becoming successful is you think you know it all and then you now
you’ve become blind to risk and you become blind to
you know pitfalls and so you know one of my favorite Mark Twain quotes is it’s
not what you know what gets you hurt it’s what you think you know that just
ain’t so or something like that so it’s always good to make sure you you know
don’t be so sure yourself but but anyway so
diving into the first nil you know prior to that my dad and I
started hunting for deals in Silicon Valley right and so I was under a deal
after deal and I just kept telling him these deals don’t make any sense we
can’t really get these to cash flow you know the debt is going to come in with a
haircut on the leverage just because it doesn’t support the debt service
coverage ratio and and he said well we have to find a deal in Silicon Valley
because that’s where my clients are and that’s where we’re gonna you know
they’re only gonna be comfortable investing their money here and I said no
we have to go out of state we have to go to where the opportunity is you know
give your clients in you know in Silicon Valley in California the opportunity to
invest with us out of state so after looking at a hundred deals and in
Northern California he said well maybe la is better so look at another hundred
deals in LA and it’s the same same problem I said finally we started
looking seems like where everyone else is looking Texas but nonetheless there’s
still a great opportunity there and we’re looking at a number of markets and
finally you know an off-market deal came to us through the process of searching
for a different portfolio that was on the market so it was just through the
process of being in the marketing and getting to know different brokers along
the path of trying to pursue a deal a deal that we weren’t expecting to find
came to us and that was how we were able to actually
find our first deal and put it under contract so that’s that’s obviously the
easy part right putting something under contract and then then the hard stuff
begins which obviously raising money is when a lot of people talk about as being
very difficult and and the whole focus of the transaction but really aside from
raising the money there’s so much that goes into closing the deal it’s so
complicated and there’s so many moving parts especially when you get you know a
sophisticated bridge loan involved there might be a rate cap that you need to go
and arrange and you know there’s just hundreds of pages of loan agreement so
that you know really aside from us trying to learn for the first time to go
through the transaction process just from a due diligence and transaction
paperwork process there was also obviously the big 800-pound gorilla of
raising four and a half million dollars so that experience was a was a great
learning experience because you know with your back against the wall and you
have the time is against you you just really you you’re very very humbled and
you just figure that hey I need to talk to everyone I know and you never know
who’s gonna help you along this path but you know I call it dialing for dollars
but it’s really just reaching out and contacting everyone in my network
expanding my network asking for introductions asking for referrals and
and bringing partners on to help fulfill that that capital raise Wow I mean thank
you so much for you know mentioning all of that right but I got to go back with
something that you know that you just said a hundred deals you know on the
written in the sub markets of Silicon Valley and then you did the same thing
for LA and obviously you must have done the same thing if not more for Texas so
and the ratio is one deal right so you did almost you know just over three
hundred you know deals to get this one off market deal that it thanks laugh and
reason I mention in this is for folks listening to our conversation
is you know you have to have the right mindset to start off then you have to
have that grit that discipline the same discipline you had to do your homework
the same day is what helped you on the right 300 deals right and I think it’s
nice to mention that so you know this deal that you that you got this off
market do what was the unit unit size and what was the play was a value I play
and can you just tell us a little bit more about you know the story of this
day I know it’s still kind of you still in the life cycle of that deal so I’m
just kind of walk us through the story the value-added was and how’s the deal
kind of for me right now sure so that acquisition was 261 units
in northwest Houston and it was a pretty deep value-add play where the previous
buyer was a institutional buyer that had bought a large portfolio of foreclosed
assets and this was one of the 23 foreclosed assets so they bought it for
a song I’m sure put in just a little bit of money just to you know get it a
little bit running and then and then they filled it up with low-quality
tenants and then they you know flipped it to a value-add buyer that was willing
to take it to the next level so we got it for a discount because of you know
the deferred maintenance and the low occupancy so we essentially bought the
property at 70 percent occupancy with a business plan to push that to 93 and
along the way we would renovate interiors to get rent increases as well
as fix the deferred maintenance issues to obviously clean up the property and
make it a nice clean safe place for the residents to live so that was the
business plan and it that that capital expenditures budget was 1.8 million so
that’s the amount of money that we need to spend in order to get the property
where we envisioned it to be in terms of renovated interiors you know fixing up
the siding concrete repairs things like that adding amenities such as a barbecue
pit bed and spiffing up the pool area so so we have essentially spent our full
budget and have come in under budget so we still have maybe five hundred
thousand four hundred thousand dollars left of unspent dollars in our budget
which is great news for us and our investors because that we can take that
money and return that back to our investors and yeah it was a it was a big
deal for us but we were ambitious to take it on because we knew that we had
value there from underwriting so many deals and saying wow this one really
penciled so much better than than the rest of the deals we had been looking at
and so you know we had the conviction to say yes let’s it’s a
bigger of a deal than we maybe you feel comfortable with but let’s take it down
let’s let’s make it work for us and I think you know once we fully turn the
property around our investors be really happy thank you so much for for sharing
that so you mentioned really briefly about
you know dialing for dollars and raising funds right so you know 4.5 million raise
that’s no child’s play right yeah I can imagine
you know what do you think with the kind of main things that you learn from
raising funds and you know includes some of the shockers that you know that you
got when you’re trying to raise I’m such a know high amount well it’s uh I think
when people get started or they’re in the business they’ll they’ll joke about
how you know there’s some investors that they maybe see your email about the and
and your pitch deck about the opportunity and they’ll invest maybe two
hundred and fifty thousand five hundred thousand and on the flip side you’ll
have an investor that you know joins your webinar wants to have a one-on-one
phone call with you to hear more about the opportunity then wants you to put
together you know customized stress tests and analyses and then after all
this and you jump through all their hoops they invest fifty thousand dollars
or they’ll ask you can you lower your minimum and I want to invest $25,000 so
you never know who’s going to you know what investors are gonna do what but I
think that lesson taught me is it doesn’t matter you know who the
investors are what their plans are I you know especially being new and starting
out I was just willing to talk to everyone answer all their questions I
would get emails with just you know rows of questions and I would just dissect
that email one by one and answer each question and and go and find that due
diligence and go pull that information and ask the questions to make sure I I
was answering everything correctly and I think that was a was an interesting
maybe you know Wow and that’s something unexpected but
other than that I think you know the big lesson is don’t give up and keep you
know you never know where your break is gonna come from and and some you know a
partner might join your team and and be able to raise a lot more money than you
thought they could or or maybe it’s a lot less and so never be complacent you
know committed capital it’s not the same as funded capital or whatever you want
to call it soft soft commitments so we try to you know we never stop raising
money until all the money’s in the bank that’s pretty much how we have to go yep
yep yep I can totally relate with them you know a lot of the things that you’ve
said you know raising funds from you know I invest as yet dwelling so and
like you said as well you just you just have to you know continue doing what
you’re doing and providing value to those investors when they ask such
questions or whatever it is that it they need to know what to do
so partnerships you mentioned that Kent your partner Lone Star you know an
amazing guy legend as well I speak to him all the time as well and obviously
after your closing at 261 unit which was on the second deal in Houston you’re
looking at a deal Infinix you constantly closing on deals them you know as as
many as you can in the year so I’m I don’t want to you know go through
everything we do that you that you’ve closed on but you know you’re getting
towards 40 million in assets you have a partner what I have thoughts on
partnerships in general how can someone get a good partner yeah that’s I got
very lucky being able to form my partnership and company with Kent you
know I would say the the good way to find a partner would be to date for a
while and you know try out a few different partners and figure out what
you’re really looking for and really have everything outlined and that’s just
not what I did you know things just worked out very well with Kent and I it
was synergistic bringing my skills and and his skills and my inexperience and
youth and his age and experience and so things like that we’re really it came
there so I definitely not a partnership expert but I would say that’s that those
things to me seem like really important to date and just kind of try try working
on a few deals together maybe underwrite some deals together have feedback for
each other but you know at the end of the day clear responsibilities which are
really difficult to have when you’re starting out because it’s kind of all
hands on deck but whether that be raising money whether that be trying to
find deals talking to brokers you know all hands on deck so it makes it very
difficult to have clearly delineated responsibilities but the quicker you can
get to that point in the business in the relationship where there are clearly
delineated responsibilities I think that will promote growth and more efficiency
so that’s what we’re trying to work on now and and then from from our roles we
hire and grow those all right yeah thank you so much for that yeah I really like
the fact that you know you just mentioned that this was kind of like a
clique kind of partnership because that happens sometimes it doesn’t have to be
complicated it just you could just happen to be you know so thanks for
sharing that and we definitely definitely dwelling into the quick round
this are going to be quick questions quick answers you ready sir I’m ready
all right first question what makes you rub unique what is that differentiating
factor that separates you from the next guy the next girl perseverance and
intellectual curiosity awesome what was the last book that you read I mean was
the one thing that you picked that from that book okay so I just finished
I just finished managing the market cycle by Howard Marks everybody knows
that’s my favorite you know role model Howard Marks Rico
read his memos he’s been writing memos since 1990
my takeaway is there there’s there’s too many he’s an expert at not only what he
does but also writing you know right about finance in this market cycles so
one takeaway there would just be you know you you can’t time the market cycle
you can’t say oh we’re at the top I’m going to sell it we’re at the bottom I’m
going to buy it’s it’s more of a question of how do you lean lean into
the market cycle if so it’s in your favor
you know the ideas own more of things that are likely to do better over the
near term or mid term and unless what’s of what’s likely to do worse but yeah
there’s a lot more there Wow thank you so much for sharing that thank you so
much last question you’ve got Lone Star
you’re looking at deals across the country you’re doing a lot of stuff
you’ve you know you’re speaking you’re helping others you’re a busy man what do
you do for fun oh I have I have a lot of fun so you know right now I’m living in
New York so and it’s summer so I would like to go walking around so shopping
hanging around there I like to play golf so I was just back home in California
got to play some golf with old friends that was really amazing and I love to
read which I could read more but there’s a lot of distractions out there so and
then I also make sure I keep up my fitness so work out in the morning and
and yoga thank you so much for sharing that yeah yeah I really I really like
that I’m pretty balanced too if there’s a dwell listener listening a
conversation I’m thinking oh my goodness I love this Rob guy and I want to get connected
with Rob I want to know anymore I want to reach out to him what is the best
place to become reach out to you and how people get connected with you so you can
email me directly at [email protected] that address is the same as our
website on our website you can you know read more about
what we’re up to and also find our contact information from there Rob it’s
been an absolute pleasure thank you so much I learned a ton myself I really
appreciate you taking time out to talk to us you had well in show how will you
appreciate you thank you so much for having me it’s great
wow that was Rob Paisley I mean his story is just amazing
I mean he’s just crushing it I mean he’s only 22 years old and they’ve got
about 40 million assets they’re doing great
Kent, his partner as well their story is just amazing it’s just so your uncle’s just
question it for anybody out there that is still kind of thinking I don’t know
what to do I don’t know if I can do this I mean Rob is a perfect perfect perfect
inspiration to kind of get you started and just that right now don’t wait just
get started I also want to say thank you so much for listening to The Dwellynn
Show week in and week out we’ve just passed well 100 episodes about 100
episodes now so we really really pushing for reviews on iTunes so if you can hear
the sound of my voice please go on iTunes and give us a five
star review I also have a link for you guys in the show notes so please become
that link and give us a review on iTunes you might not know this but you know
the more reviews we get the better it is for the show and for the people to learn
so if you’re learning from this show you learn about real estate you’re getting
some wisdom it’s helping you it’s adding value to your life
please go on iTunes and give us a review and also drumroll we’re giving away
Amazon gift cards for each one for reviews basically so we’ll put you in a
draw so if you go on iTunes you give us a review take a screenshot of that
review and basically send an email to my myself [email protected] send that to me and
obviously we can get your Amazon gift card to you if you win also I just want
to say thank you thank you thank you for all those that have actually given us a
review right now we just want to say thank you we appreciate you I think
there’s a few that we’ve got that came in recently I’m gonna read a couple um
of those reviews I think there was one from I’m someone called Nick I think
Nick is from York County in Pennsylvania say from listening to your show on
others it is reaffirm my dreams of owning multi-family rentals I’m glad
at 24 years old I don’t quite have the capital to purchase my first
multi-family unit on my own so I plan on using your wisdom to accomplish my goals
as quickly as possible. I look forward to learning so much more from future
shows and I appreciate everything you do for young listeners. Nick, thank you so
much I really appreciate you I’m sure you are a young future entrepreneur
yourself of course Nick feel free to reach out to me if you need any help I’m
more than happy to get you on a call or 30-minute call just a free call talk
about real estate or anything wanna talk about make so reach out to me Nick or
anybody I’ll be actually on my email [email protected] I really appreciate you
guys. One of my good friends in real estate investing space, Rod Khleif is
going to be hosting another one of these live events in Baltimore I think it’s
from September 27 to 29 it’s all about multi-family investing so if you’ve
never been you have to be that you gotta granny’s also going to be here in
Baltimore, my home city, and if you want to I have a discount code for you can you
guess what it is? Of course, it’s DWELLYNN you get to meet me in person I’m gonna
be there as well with rod so try to come out if you want to fly or if you’re
close by and in this area make sure you be at that event you’re gonna learn a
time you concerned about multifamily invest in and out to get started I just
wanna say again thank you thank you thank you for listening hope to see you
on the next episode thanks

One thought on “Young Real Estate Investor has successfully closed deals of $40M

  1. aalways killing it!! love your interviews

Leave a Reply

Your email address will not be published. Required fields are marked *