Networking Your Way to Success: Real Estate Insights with Jeremy Dyer Ep-526

Raising that amount of money from, from outside investors really comes down to your own personal reputation and how well people trust you. And I tell people all the time that you build trust one drop at a time and you lose it in bucketfuls.

Welcome to Streams to Impact and be inspired to engage passionately in the work of your calling while achieving financial prosperity through multiple streams of high-yield returns on investment to Bringing your dream of making a meaningful impact to reality. I'm your host, Dr. Allen, and I am delighted that you are joining us today. If you haven't yet, get a complimentary copy of our exclusive guide, High Yield Investment Blueprint: Secure 18%+ Returns in 60 Days. Go to our website, High Yield Investment Blueprint. That is www.highyieldblueprint.com. Just provide your email address and we'll send you a copy today. Welcome to Streams to Impact, the show where purpose meets prosperity. I'm your host, Dr. Allen. I'm a professor of psychology and founder of Streams to Impact. After surviving financial ruin, discovering myself through the wisdom of horses and mastering the art of passive investing, I made it my mission to help high-achieving professionals and entrepreneurs like you to build true financial freedom through secure high-yield alternative investments. This podcast is your invitation to go deeper into your calling, your wealth, and your legacy. Each week we bring you real conversations with thought leaders, visionaries, and everyday professionals and entrepreneurs. who are turning income streams into impact streams, because wealth isn't the endgame, impact is. So let's build a life of meaning, momentum, and massive contributions. So welcome to Streams to Impact. Today, uh, we are going to take a look at the art of networking your way to success with a real estate investor who's been in the business for several years, Jeremy Dyer. Is the VP of Capital Formation at Rise48 Equity and founder of Starting Point Capital. He is a real estate investor who holds passive equity in over 5,000 multifamily units across 31 deals. So welcome, Jeremy. Glad to have you with us today. So if you would, just go ahead and take us into the show and tell us what led you to make the significant mindset shift that moved you from traditional investing to real estate syndications?

Yeah, no, I appreciate that, Dr. Allen, and thank you, thank you for having me on the show. You know, I was very blessed early on in my corporate career in a sense that I was able to really be the Rookie of the Year in the technology sales space coming right out of college. By year number 2, I was the number 1 guy in all of North America in my business division. So, that really afforded my wife and I to be able to, you know, max out the 401 very early during the course of the year. So, we had some discretionary cash on the sidelines that we looked to deploy somewhere. Obviously, couldn't continue to double down in the 401 account because that was already maxed out, you know, by the end of quarter 1. So, you know, of course, I talked to my financial advisor and, you know, got some tips and tricks, you know, that way. And then what happened, Dr. Allen? is the global financial crisis occurred back in 2008 and 2009. And I remember very vividly picking up the phone and reaching out to my financial advisors to say, what now? What do we do now? And my financial advisor literally told me that he was hiding under his desk.

Hmm.

And so, it was really at that point in time where I realized in order for me to build the life of wealth and health and happiness that I want, I was really going to need to take financial literacy into my own hands. So, I personally started researching alternative ways of investing outside of Wall Street and into Main Street. Of course, there's usually 2 different paths that the investor can take when investing into Main Street. One is you scratch your entrepreneurial itch and you start a business, which doesn't always have to be from scratch. It can certainly be the playbook of a franchise, for example. The other option is you look to deploy as a passive investor into some alternative assets. So, I really started to do my own due diligence, my own homework, spent countless hours reading books and listening to podcasts and following some industry experts that were in the space. And so, it was really back in 2012 where my wife and I decided, you know, if I'm going to scratch this entrepreneurial itch and I'm also going to try to build a passive investing, you know, portfolio, I'm going to have to get started. I'm going to have to cut my teeth. So, it was really in 2012 that we decided to really invest my commission checks and my bonus checks into actively purchasing single-family homes that needed to be renovated. We did that for a few years, Dr. Allen. The challenge with us as it related to building up a single-family homeownership portfolio is that it was nothing but active. It was not passive, it was active income. And my wife and I also at that time decided to double down on children back in 2015. So I went from 2 kids to 4 kids, and it was honestly a bandwidth issue for me. So back in 2015, we decided to no longer scratch that entrepreneurial itch, and instead we decided to deploy capital into passive real estate investments. And from 2015, now fast forward So today, my wife and I are in 38 investments as limited partner passive investors in multiple different asset classes, multiple different sponsors, different geographical locations across the US, etc.

Well, that is— that's very interesting in that you started in single-family, and that's— I mean, that's not interesting because it's unusual. It's interesting because it's very Yeah. But I was kind of surprised to hear that that's how you had started as well. And as you found out, it's extraordinarily active. It's also, it's much more risky than what most people really think as well. And I think you can get a lot better risk reduction in commercial real estate investing through syndications. So Jeremy, if you could, Share with us the story behind your first real estate syndication investments and how did that go?

Yeah, I, and I'd like to maybe take a pivot back and then address your second question. Really, one of the other main drivers as to why we also got out of the practice of fixing and flipping houses is because the last home that we flipped We were set to make $90,000 in profit over about a 6-month period. And the day before the closing date, these— the inspection report for the septic came back as failed.

Hmm.

And so for the low, low price of $35,000 to replace the septic and do all the landscaping associated with it, that ate into about a third of the profit that we received. And then if you factor that in with the amount of time effort and energy that both my wife and I, and even our children to a certain extent, you know, put into flipping that particular home, you know, we were really paying ourselves minimum wage, right? And so the juice was not really worth the squeeze, so to speak. So then we fast forward again to 2015, and now I'll answer your question. So 2015, honestly, I used the shotgun approach when I invested in my first multifamily real estate syndication. Truth be told, I held my breath and I plugged my nose. Okay. All I All I knew was one thing, and that is I knew I liked and I trusted the lead sponsor. I didn't know anything about the asset class. I didn't know anything about the submarkets. I wasn't even aware of what the word syndication meant or cap rates or debt service coverage ratio. That was just not in my vernacular. Okay? What I just simply knew is that, again, I wanted to get out of active real estate. I wanted to stay— diversified and invested in real estate. I just didn't want to be the guy that was having to evict tenants anymore, swinging hammers on weekends and unclogging toilets at 2 o'clock in the morning. Right. So I was done with that type of an investment strategy approach, went completely passive. That first deal in 2015 happened to be a property located in Memphis, Tennessee. I'd never been to Memphis, Tennessee before. It was a value-add B-class asset. It took about 3.5 to 4 years for that investment to go full cycle. I effectively doubled my money, had great tax benefits associated with the power of depreciation, received quarterly distributions like clockwork into our account as an investor. And from that point, again, I scratched the itch and then I got bit by the bug, right? So, I got bit by the bug because my wife and I have obviously deployed capital into 38 additional properties. properties, you know, since then.

Yeah, thank you for pointing that out because, you know, there is this barrier. A lot of people who have a lot of capital to put into passive real estate investing don't do it just because of what you mentioned there, that fear of the unknown. And there just isn't really a whole lot of Good information out there in terms of helping a person move from the stock market and into private placement syndications. And so it keeps most people out of that. But you had done enough research that you, even though you went into it with a lot of trepidation, you did have a sense that this is going to work out, and it did work out. But you've been into 38 investments. Have they all been that wonderful?

Yeah, that's a fair question, and it's an important one at that. They have not all gone as planned. In fact, none of them have gone as planned. And what I mean by that is oftentimes investors will focus on the IRR projection and the equity multiple projection and the cash flow returns and the projected hold period. The truth is that No investment or sponsor ever hits what those projections are right on the head. Okay, I have been in some investment deals that have been absolute home runs. Okay, I have been in some that have been base hits, and I've been in some that there might be a portion or up to all of a complete loss of my invested capital. Okay, so it's important for investors to all understand that there's no such thing as a risk-free type investment. There are going to be economic headwinds. There are going to be future or maybe current black swan events that that lead sponsor is going to have to navigate through. And so the important thing that I learned, big lesson here, is you are not investing in the property. You are not investing in the business plan. You are not investing in the pitch deck. You are investing in that sponsor and the team that they're surrounded with, their ability amidst the headwinds to be able to execute on that business plan. So really, at the end of the day, when investors are evaluating different investment opportunities, You're not stacking one IRR projection against another IRR projection. Really what you're doing is you're stacking one sponsor and their ability to execute that business plan against another sponsor's ability to execute their business plan.

Yeah, I couldn't agree more that the sponsor is absolutely critical in selecting where it is you're going to put your hard-earned investments. But having said that, how do you go about determining what sponsors you are going to invest with?

Yeah, for sure. There's a number of different things that people can look at on the surface. One of them, of course, is their track record and experience, right? Which on the surface, that might seem like a no-brainer. The challenge is, is some sponsors are selective in terms of what that track record is. And also, there are currently deals that sponsors have today under management that have not gone full cycle, have not gone through what's called a disposition, right? So, as a direct result of that, those deals don't typically show up on the sponsor's track record. So, a savvy investor ought to ask an investment sponsor or a fund manager or a capital allocator if you're leveraging one, what's that track record look like on deals that that sponsor has acquired in 2021 and 2022, which is arguably the most recent black swan event or disruption in the real estate space that we've witnessed in the last several years. Okay? 2021 was at the peak of the last cycle. Okay? Valuations are down considerably, in some cases 20% to 40%. Today than what those properties or assets would have traded for just 18 to 36 months ago. So it's important for savvy investors to really understand not just about full-cycle dispositions, but also to understand the track record of the deals that are still currently under management today. Of course, other factors like debt structure, you know, is important to understand. It's important to understand how thick the ice is under the feet of the lead sponsors in the unlikely case that additional capital is needed to support those assets. The sponsor has a couple of options, right? They can either go to their common equity investors and ask them to pony up some additional dollars, or the sponsor might be able to leverage their own capital in order to continue to be able to support those assets. In cases like, for example, higher than expected interest rates, higher than expected property tax costs or material costs, right? We're talking a lot about, you know, on April 15th about the impact of tariffs, right? Well, if the sponsor's business plan is to renovate classic interior units to a platinum level scope, for tenants and they have a forced NOI growth strategy. Well, what about the cost of those materials if those materials are being sourced from countries like China or Taiwan or other overseas manufacturers? How do those increases in costs from inflation going to implement or disrupt, I should say, that business plan?

Well, In terms of that and looking at track records and what have you, how important is it to you when you're looking at this, looking at their track record in terms of capital calls and whether they've had a capital call, whether they haven't? How do you take that into consideration?

Yeah, for me it's a couple of things. You know, number one, I need to know that the sponsor is laser committed to the investment, okay? That they haven't decided to pivot and go acquire a new deal that produces an additional acquisition fee, an additional AUM fee. I want to know that they're fully committed to executing whatever business plan is left on the struggling asset, okay? That it's all hands on deck still.

Right.

With that operator and their— whether they're vertically integrated on property management, building construction, building maintenance, I want to know that they're still going to be laser-focused on supporting that asset till death do us part, so to speak. The other thing that I want to know is, is that sponsor's interests still aligned? Okay. I oftentimes will say that if a sponsor is going to invest none of their own money into the project or the future capital call potential, then I'm out, okay? If it's 2% of the total common equity or total capital call raise, I think that's cute, okay? If it's 5% or more, I'm in.

So, in terms— is that how you basically determine their commitment to a property? Because almost every syndicator you're going to go to is going to have multiple deals going at the same time and they're constantly looking for new opportunities. And how do you determine that they are not really commingling their assets between properties?

Yeah, I mean, commingling of funds, of course, is illegal, right? According to the SEC. So that's an easy one. I like to work with sponsors that have third-party audits done. Okay, so their financials are audited. All right, if you don't— if you're looking to deploy capital into a sponsor or a syndication team's deal and they don't have their financials audited by an independent third party, I'm out. Okay, so that addresses the commingling of funds, right? But you might have a scenario Where, say, for example, the sponsor needs to inject an additional, you know, million dollars of capital into a deal, and they don't feel comfortable going to their common equity investors to raise that capital through a capital call, right? They may choose to deploy their own capital into that project to avoid a capital call with their outside investors. And of course, in that case, that's not commingling of funds. That's more of a shell game, right? You know, they're taking their own personal cash, you know, from other investments or other fees, for example, and then deploying that, you know, capital into maybe the struggling asset.

Yeah. Yeah, those are good points and certainly something to think about in terms of when you're deploying money to ask for those audits and to be sure that they're part of that business plan. Well, you have raised millions for various different syndications. What is your secret for building trust with investors who you— from whom you are raising capital?

Yeah, I appreciate that. So I really started raising capital from my own personal and professional network just 2 years ago. When truth be told, I was just telling family and friends and colleagues about what I was already doing.

Okay?

And lo and behold, I learned that there is a way for me to be legally and compliantly compensated for raising capital into deals that I was already going to be investing my own money into. Okay?

Mm-hmm.

And lo and behold, I've raised $50 million from my personal and professional network Just in the last 2 years. One thing that I learned through that process is because I'm able to raise a sizable amount of money into sponsors' deals to fund their deals, there's a cost of capital, right? And so I've been able to leverage an enhanced or a better split from the investment sponsor that both my own capital is subject to, as is the investors' that are choosing to partner with me in these investment opportunities as well. And so, going back to your kind of original question, raising that amount of money from outside investors really comes down to your own personal reputation and how well people trust you. And I tell people all the time that you build trust one drop at a time and you lose it in bucketfuls. So, I was I was very blessed having had a 25-year career in the technology sales space, in a space where I was largely able to build up a network of people that knew me, liked me, and trusted me, right?

Mm-hmm.

So, when it came to the time of encouraging investors to invest their own hard-earned dollars, whether that's a $50,000 or $100,000 investment, there was a sizable amount of people that quite frankly didn't care about the investing thesis, the sponsor, the asset class. They wanted to partner with me on these opportunities because of me, right?

Mm-hmm.

And I oftentimes will tell people that outside of building trust one drop at a time, it really comes down to authenticity and transparency. And when you're authentic with people, and you're transparent with people throughout the course of doing business with them or throughout the course of nurturing that relationship, it's really that authenticity and transparency that builds trust with others. And that's really largely how I've been able to grow, you know, my network over the past 2 and a half decades in the corporate sphere.

Well, that is an impressive record, to say the least there. Well, what are— you started your own capital raising company, Starting Point Capital. When did you start that, and what were some of the factors that went into starting that?

Yeah, like I said before, I mean, I started Starting Point Capital just 2 years ago, and again, it was largely because I was referring a lot of my network to sponsors to invest in their deals. And I learned that there was a legal and compliant way to do it through a fund-of-funds structure, right?

Mm-hmm.

And so that's really where the company was born. And after I had raised, you know, the first couple of millions of dollars, I realized that we have leverage as a group of investors, you know, with the sponsor. And that leverage was significant enough whereby we can now let investors know that they can receive a better targeted return profile investing through Starting Point Capital into the sponsor's deal than they could if they went directly into the sponsor's deal. So we're largely, you know, using arbitrage almost to a certain extent. You know, we're really able to juice our investors' returns because we as a community of investors are choosing to deploy our capital into that opportunity versus if we all acted independent of one another and chose to invest directly with that lead sponsor?

Well, Jeremy, I think many of us know that if you're really going to develop wealth, you're going to have to find a way to do that in some passive way or the other. But people looking into investing and coming out of the stock market So a lot of them are going to be attracted to that single-family route. Others are going to come into this and they're going, well, I could be an active investor and organize my own syndications and get into this as an active partner in here, and I'll get bigger returns if I'm the active sponsor here. What advice do you give to people who are thinking, I've got capital here, I want to come out of the stock market just like you did.

Yeah, no, it's great, and I'm glad that you mentioned that. Obviously, the reason why somebody would choose to deflect capital from Wall Street and into Main Street is because of diversification and all the tax benefits and, you know, cash flow, appreciation, all those types of things. But, you know, really the question comes down to is, okay, now that I've maybe made that decision to diversify out of Wall Street into Main Street, Am I going to do it as an active investor or a passive investor? Right. I can tell you I've done both. Right. And again, the main reason why I personally chose to pivot from active real estate ownership to passive real estate ownership is really two reasons. Number one, bandwidth. Okay. I just didn't have the bandwidth anymore in my personal life to be able to have. 2 full-time jobs, or to really ride 2 horses, so to speak, at the same time, right? And so, it really came down to that kind of number one. Number 2 is really your priorities, right? We all have a number of different things that we want to prioritize in our lives. You know, for me, for example, you know, that's a faith-based life. It's also You know, regularly dating my wife, regularly spending time being intentional with my 4 children, right? And having some additional bandwidth in my life for time with friends and extended family, right? So, I only have so much time in a day. There's only 24 hours in a day, right? And I just want to make sure that I always have enough bandwidth to be able to prioritize the things that are important to me. And having 2 full-time jobs, one both in my corporate career and 2 in active real estate ownership, just was not giving me the amount of time that I needed to have that kind of time freedom in my life to be able to choose where to allocate my time best and what I wanted to prioritize.

Well, we've talked about a lot of different things. With people who are thinking of getting out of the stock market and into diversification through alternative investments, what are really the big mistakes that people make when they begin to make this move?

Yeah, the big mistake that I see all the time is people are just chasing after the shiniest pitch deck, right? They're chasing after the the, the, the best positioned marketing, you know, plan. Um, when really the, the, the anecdote to that, okay, is that before anybody ever chooses to invest in anything, okay, anything, you need to first invest in yourself, okay? And how you invest in yourself is similar to what my journey looked like, and that is I consumed content. Okay, I followed people that were already in the business to learn from them, right? They were mentors to me and they didn't even know it. Okay, I didn't have to spend a lot of money. I just had to follow these people on podcasts that they happened to be guests on, right? I had to consume their books, their blogs, right? I had to ask questions, do my own homework, do my own research. You know, for those that are listening to this podcast episode today, You've got a couple of people right here in front of you that you're either listening to or watching that would be more than happy to share with you our journey and what we learned, lessons learned, both the positives and the negatives. But the most important thing that any investor can do is to invest in themselves, invest in their own education, to really learn and understand all the different nuances to alternative investing in real estate. And even learn about other asset classes. You know, commercial real estate isn't all about multifamily B-class properties in, you know, B-class neighborhoods, right? Workforce housing demographic. There's all kinds of other asset classes out there that folks can learn as well. In my experience as a new investor, I latched on to multifamily because I understood it, right? Mm-hmm. Why someone would choose to want to or need to live in a B-class neighborhood in an apartment versus owning a single-family home because maybe that's out of reach, you know, for certain people in a certain demographic, right? I understand, you know, how a sponsor creates value and increases net operating income because I did it before. I just did it one door at a time. And sponsors that are acquiring multifamily properties with 300 units, you know, they're renovating hundreds of units as opposed to just one at a time like my wife and I were doing.

Well, I've got one more question before we go to that. Tell us what you're up to these days and how can we find you and pick your brain?

Yeah, no, I appreciate that. So I recently joined as a partner at Rise 48 Equity. Which is a team located down in Phoenix, Arizona that syndicates multifamily apartment communities in markets like Phoenix, Dallas-Fort Worth, and North Carolina. They primarily target properties that were built in the 1980s and 1990s where we bring in our vertically integrated property management, construction management, building maintenance, even HVAC and plumbing, right, where we can really control the timeline from acquisition all the way through disposition. We've had 58 deals that we've transacted. We've got over $2.4 billion in total transaction volume. We've had 11 deals that have gone full cycle. We've now got over 300 full-time W-2 employees, you know, on staff. And we're going to continue to target properties that, again, you know, have a value-add component where we can, through renovations, you know, force NOI growth, increase obviously the appreciation, and give our investors a solid return. As far as contacting me, you're welcome to reach out to me on LinkedIn. I'm fairly active there under Jeremy Dyer. You can also reach me via email at jeremy@rise Again, that's jeremy@rise48equity.com.

And we'll have that information in the show notes. Well, Jeremy, before we close out here, just answer this question. When you come to the end of the road, what is it that you would like to have on your epitaph?

Yeah, it's a great question, right? So, I would say that my why in life is my family. When I work every day, it's really not just to create an environment that they can survive, but rather thrive, right? So, the reason why I grind it out every day, the reason why I try to realign my priorities every day in terms of what's important now My why is my children and my wife. So, I'm laser-focused on, you know, being committed to them. I'm also laser-focused on letting people know about my faith-based life as well. So, from an epitaph perspective, Dr. Allen, I might have to get back to you in terms of the exact wording that I would use there. But it's really, you know, faithful and committed, you know, husband, father, and Christ follower.

Well, Jeremy, it has been a real pleasure having you. Thanks for sharing your expertise and your wisdom with us today. Enlightened Investors, thank you so much for being with us again today. And if you enjoyed today's show, please take a moment to like, share, and subscribe. Until next time, live abundantly, and we'll see you in the next episode.

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