Ep 183 - Our Journey Episode 11 - Our First Multifamily 56-Unit

Hey, everybody. Flip and Danny here founders in the Freedom Real Estate group family of companies. And welcome to another episode of our.

Podcast, which is called Freedom through Passive Income A Journey.

Welcome to another episode. And this episode is, of course, our. Our Journey. Our first multifamily deal. And again, if you didn't catch yesterday's live episode, it is birthday month. Way back when I did birthday. How boring is that? And then I started doing birthday week, which I thought that was fun. And then I'm like, wait, my birthday is at the very end of the month? One of the longest months of the year. I'm doing birthday month because I can. And so at the start of my birthday month, around the. Around the beginning of the month, they throw off fireworks for me.

Oh, yeah, they do.

Yep.

Yeah, yeah. Oh, July 4th, right? Is that when you.

It was right around there, actually. Canada does it the day before.

Oh, okay. Okay. You are popular.

I'm big in Canada too.

Yep.

I don't know about Mexico, but I know Canada likes me too. But so anyway, so this is our journey. And this is. So we started way back when we were in cruise ships. We in a way, told the whole journey.

Oh, yeah. And so sorry, Birthday month, if you're not watching and you're listening only for birthday. Yeah, yeah. You probably heard this yesterday on yesterday's episode, but I just want to remind people who are, who didn't, who missed it, that he's actually wearing a fun shirt today.

Yeah. Because it used to be fun. Well, it is fun shirt Friday, but because it's birthday month, every day is fun shirt.

Every single day for the month of July, he's gonna be on here wearing a fun shirt. You crazy?

Yeah. Yeah.

And that some people have commented on these posts saying, I want to see your closet and the amount of shirts that he's been buying. I talked on a previous episode, I was like, we're. But our clothing budget.

Our clothing budget kind of went through the roof.

But now that you own them, you.

Know, okay, yeah, you know, hey, I'm wearing them.

All right.

I'll just buy them.

So anyways, we're back to our 12 part series.

So anyway, so we talked about being on cruise ships and then going into art auction. And then. And then you did the insurance and mortgage industry. And then I got rid of our auction. And then we did. We said, somebody said, hey, you should do real estate. And so we did real estate realtors, which that sucked. And then we did real estate investing, Mortgage assignment, short sales. Sub two. Sub two reps. Seller Financing, wholesaling. And then we went into turnkey, and that's when we Turnkey real estate. And then we talked about building our renovations company. And then we talked about. That was fun. So we build a property management company. And so. And then because we had property management, then we also built our brokerage, which that was nothing. But then we built an acquisitions company, which is what we talked about yesterday.

Yes.

And so prior to our lives. Yeah, yeah. Prior. Prior to our live, not our lives on Wednesday, a previous life, we built our acquisitions company. Feels like it. But anyway. And so now today we're going to talk about our first multifamily deal. And it's funny because it has to do with our acquisitions company that we just built.

Yes.

You want me to take this one or you.

Oh, no, I'll tell some of it and you can just jump in where maybe I forget some stuff. So if you've listened to some of our previous podcasts where we've talked about this first multifamily deal, it was a game changer for us and it took us to where we are today. And we're going to be talking about that on tomorrow's episode, which is now. So our journey all the way up into where this was kind of the game changer that took us off into a another land that we weren't even realizing that we would play in.

Yep.

Right. It was always, I always have these big dreams and these big goals and whatever, but this wasn't necessarily one of them that was on my radar. And so Flip is in charge of acquisitions and he is approving things to be bought. And one of the things that he approved was 1215 pack. This is 12 single family and three duplexes. So it's a 15 pack. With this 15 pack, it was attached to a 56 unit apartment.

Correct.

And so they decided we'll wholesale the apartment complex and we'll buy the 15 pack. Well, the seller didn't want to sell them separately, even though we wanted to buy the 15 right now and then worry about wholesaling the 56 unit after the fact. And so because we had to do it together, then that means we had to find the end buyer for the 56 unit. The end buyer had to go through all the things that they needed to do for due diligence, lending all of that stuff. And so we understood that was going to take a little bit of time. It happened to be. Was this during COVID while we were wholesaling it, or was that pre Covid?

No, we got it In February. So it was the month before COVID.

Okay, so during COVID During COVID is when the lending environment started to change. Right. So the buyer.

Everything changed.

Yeah, the buyer had to switch lenders. And we totally understood that we were being patient, but I think it was six months that went by, and that came to the point where the buyer ultimately decided that, hey, I want to renegotiate this contract if I'm going to go ahead and buy it and renegotiate it. And we were getting, as we've talked about, wholesaling. How you get paid in wholesaling is you get a fee for the contract for the work that you did to put the property under contract to be able to wholesale it with somebody else. He wanted to negotiate all the way down to the purchase price that we negotiated with a buyer. And so we're like, no, we didn't wait this long to buy the 15 properties. Like you've dragged us and dragged us and dragged us. We didn't wait this long to buy these 15, only for you to say, we're not going to make anything on the 56. And so there was other things going on in the companies at that point in time that was just. The whole thing just got really, really frustrating. So Flip gets a text from one of the guys in our acquisitions team explaining all this. And Flip tells me, and I was just like, screw it, we're going to buy it. Just tell them, no, absolutely not. Cancel contract. We're going to buy it. Because the seller was getting frustrated too. The seller was going to back out. We weren't going to make anything. And so we said, we're just gonna buy it. Right. And so then you took the lead and you made sure that everything was set up. We got new contracts signed. We said, we'll do it in two weeks.

And this sounds crazy too, but the thing is, is we talked about a turnkey company, right? And so these 15 properties, typically when we get a package of properties, especially that many 15 properties, five are good.

Yeah.

Right. And the other 10. And then there's another five that. Eh. And then there's five that. Wow. We're gonna get rid of those like, right away. We're just gonna dump them. Yeah, right. All 15 of these properties fit all of our boxes. And they were 15 perfect properties that we. I needed them. I needed them now. I needed them in February of 2020 when we got. When we found them. I needed them then. And so. But because it took so long for the apartments, by the time that we get to this point where we're like, screw it, we're going to do it. The reason why we're at that point is because all 15 of those properties, because we haven't. We haven't touched them yet, but we already had them pre sold.

Yeah.

We had investors lined up for all 15 properties. So the second we closed on this deal, all it took was us to go into those properties quick, do a quick renovation and sell them. And it was. Oh, it was crazy. And so that's why we were just like, screw it, we're buying the apartments.

That's right. Because if we would have lost the apartments, we would have lost the 15 deals. And we had been waiting for them, and inventory was tight at the time. We kept on going. These 15 deals are just sitting there, and we can't close on them, even though we have the money to close on them. We had to wait. And so we didn't know exactly what we were going to do when we said we were going to buy the apartment complex. You know, but ultimately we. In two weeks, we did our due diligence, and we had hired inspectors, our project manager, and our rehab coordinator. They're all out there going through every single unit to do the best job that they could in that short amount of time to be able to say, hey, thumbs up. You are not buying a dud. So it was fast and Furious. Put together that rehab budget. We partnered with Chris and Arianne, who guys, a lot of people hear us say that name a lot because we. That we partnered with him on this apartment complex. That was important because this was new to us.

Yeah.

And so when you're doing something new, by golly, go find somebody who's done it before.

You don't know what you don't know.

Yeah. Especially in something that big. And we're always like, investors first. The people, the. Our private money lenders and the people who work with us. Us are even our team. Every. Everybody comes before Flip and I. So we're like, we got to protect them. We got to protect us. So we partnered with Chris and Arianne. They looked at the deal and they actually said, hey, we'll buy it if you don't. We're like, bam, let's get it. Okay, so we got it. And then we said, hey, why don't we just go ahead and just do it? This is just like doing 56 houses. Right. Except for the smaller houses, and they're all one location.

Anybody can do it. Anybody can do it.

And we had kind of made that decision literally before we closed because we actually brought in private money to be able to do it. And we said, hey, I think we've decided we're gonna go ahead and keep this one. We're gonna go renovate it. We. We think we can probably do this in 12 months, depending on how things goes. And so we had a private lender for each building, and we even had a private lender come out and walk the property with us. So we were really, really excited about it. And then after we closed, we realized, hey, this guy who was supervising the property, he gives us keys. None of them work. Turns out he's a drug dealer. Turns out there's a whole bunch of scams going on the leases. Some of them were written up by him and totally faked. People coming out of drug rehab, he would sell them drugs, sign them up on a lease, take their Social Security checks. I mean, it was a nightmare. And if you listen to our episodes 50, 16, horror story, part one, part one, part two, you're gonna hear the horror story and then you're gonna hear the numbers in part two to really understand everything that happened. But it was just a freaking challenge times. I don't. It was. It was just like everything that could have happened, happened.

Yeah. I was just reliving in my mind, like, I remember when it closed because it was the biggest closing, obviously. It was like, you know, 70 something doors in one day.

Yeah.

Or something.

Oh, yeah. 74.

Because we were like, 74 doors, bro.

Record today.

74 doors in one day. It was the most money that we closed on in one day. You know, everyone was happy. Everyone was, you know, drinking champagne. Not really, but everyone was super excited. And then we got up the next.

Morning to start learning all of these crazy things.

Yeah. And it. And it's just like, it was. And after a couple days of learning more and more about this property, it got to a point where, like. You're kidding, right?

Yeah.

Because this. That seriously cannot be true. Yeah, you can. No, no, I don't. At this point, I don't believe you. You know, and. But it's. But it still was. And it was just. Oh, my gosh. And just. Oh, my gosh.

Just because we can't tell it. We don't have time to tell those stories. But our renovation contractor that went out there, Mike, was in charge of all the apartments. He carried a gun to that site every single day. If that tells you, like, what was going on in that complex. It was just crazy. And. But this is something that you would never have known because you Couldn't see it from the outside unless you were there at night.

And they walked the property.

Yeah. Yeah. Exactly a block away is this beautiful, like, 200 unit complex that's fairly new and gorgeous. And even the police said, you'll hear it in the episode that if. Just go back and watch it. Even the police said, we know there's no problems over there, but one block here, it was that. It was that property. And so learning that and the challenges that we went through, it was just. Okay, so let's hit the pros, because this speaks kind of to the pros.

Go ahead. Yeah. So number one pro, we were thrown in the fire, so we didn't have time to be scared. We didn't have time to be, you know, you don't know what you don't know. Like I said, we didn't have time for analysis paralysis. It was. It was grab them and go.

Yes. And we're actually very, very good at that. You throw us in the fire, we will figure our way out to the top no matter what. We'll do whatever it takes.

Might get a little scorched here and there, but we'll still get.

That's right. So that is one of. I would say, if we're gonna say a strength, I think that's our strength. A lot of other people who'd have been thrown in there would have walked away once they realized what was going on there. Another pro was, to me, the lessons learned. So buying a 56 unit and having it be probably the most challenging property we'll ever do in our entire lifetime and having it be the number one deal that we did, like, that's huge. It's only up from here.

Oh, yeah. Well, yeah.

I'm so excited that, you know, we powered it.

Seriously. Can't get lower than that.

Yeah, yeah, yeah. So I really feel blessed and excited that that was our first property and that now I'm just like, piece of cake.

Yeah.

All right, let's buy that one. Let's buy that one.

Yeah. And it really showed how strong the team was. It showed the grit, you know, it showed everybody's grit.

Yes. And how strong our private money lender relationships were, because this was our first 56 unit. Right. And I mentioned one of them came down just to walk the property and, you know, take a look at it, make sure that we are making a good decision, because they had been with us for a long time with single family and small multifamily, but now we are saying, hey, you guys have been with us for two Years. We would like to invite you to be a private money lender on this. This is what we're going to pay you. This is how long we think it's going to do. It's 56 units still right here in our backyard. We're still doing the same thing. It's just 56 doors in one place. And so they trusted us and that. And they. I'm glad that they trusted us because we deserve to be trusted because no matter what happens, we will figure it out. And it was just really, really, it. It was a tall tale sign of how strong those relationships are because they went along the ride with us and it was a good ride for everyone.

Oh. And they're making some good understandings.

We've already cashed them out. They made some really good money on that property.

Another pro is definitely our inner circle, our partners, because we would not have been able to do it.

Yeah. Without Krisnerian, we wouldn't have jumped into this deal. So that was exciting. And another pro is we're actually going through the refinance. So I didn't write that down, but we are literally signing all the paperwork and going through all the. We had to approve a bunch of stuff, send in some final stuff just like yesterday. So here we are doing this, our journey episode, and we're right in the middle of getting this all refinanced. Even though we've cashed out our private money lenders, we're in the middle of refinance. And I'm super excited to see how that goes.

Yeah. And then so now our cons.

Yep. That trial and error, like, we literally had to learn as we go. And that is a scary position to be in when you don't know what's going to happen next. And the continual break ins and the fact that we didn't know where they were breaking in from. And we're putting alarms and they're getting stolen and it didn't even go off. And we couldn't figure it out.

They were getting past the alarms too. Relentless thugs. And I'm like, oh, my gosh.

Yeah.

I'm like, how did you get in?

You never realize how smart they are. Like, but they'll do anything to get what they need to get right.

They went through the attic of the stairway. Over.

Yeah, yeah, yeah. And the last con I put is just that it happened during COVID and we had eviction issues. So something that, like, that was already challenging became that much more challenging.

It was like the perfect storm of.

The environment that we were in. Yeah, yeah. So anyways, go back and listen to the episodes where we'll tell you a lot more about those stories. But let's go through our five risk tolerance.

Sorry, sorry. Yeah, Next.

Yeah, yeah, you need. Yeah, you have to. High risk tolerance for that.

The highest.

Yeah. Okay.

That was the highest.

Okay. Time availability.

That was the highest. I mean, well, not only for us, but the police as well.

Truth knowledge.

Well, you don't know what. You don't know. We didn't know what we were getting into. So let's. We're going to call that one some street knowledge.

Yes.

Because we learned the hard way.

Yeah. And at least we had the experience of doing this in a different environment. Right. Single family. It literally was just do this 56 times in one place. So we had the basic foundation, but we didn't know how to deal with a complex full of that many challenges. So we had to learn as we go inner circle.

Well, you talked about it, our partners. So. Yep.

Definitely needed that access to capital.

Ooh. Yeah, we needed that not only to buy it, but then also to renovate it because we had to renovate. Let's see, it was a 56 unit. Right. So let me see, how many units did we have to renovate? Oh, yeah, 56.

Yes, we did.

Well, actually. Actually more than 56. Because I think we did one or two more than once.

Yeah, yeah. Because they broke in.

Yeah.

Yeah. That was fun.

Yeah. Thank you. Thank you.

So that's a quick recap of the 56 unit that really changed the course of where we have gone, where we've landed here today. So tomorrow we're going to do our final episode of this 12 part series. Episode 12. That's going to really talk about where we are right now and what we're and the fantastic opportunities that we now have and we are passing on to our investors. We're super excited about it. So hope you enjoyed this episode.

Yeah. So make sure you're heading on over to our website, freedomcapitalinvestments.com and join our investor club. If you're still listening. Are you still there? I'm just kidding. These are longer than usual. I know, but make sure you're hitting the like button and you're hitting the.

Like button because this has been a fun journey. I'm excited to tell the final episode tomorrow.

Tomorrow. Yes, me too. But again, make sure you're hitting the subscribe button and all those things. The bells and whistles. But we like to end all of our episodes with Invest Smart, Live Happy. Bye. Everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. Guaranteed. All investment strategies have the potential for profit or loss.