Insider Secrets to Real Estate Success with Jonathan Wei

Foreign. Hello. Ginny Bowling here with Pivot to Prosperity, brought to you by Pivotal Real Estate Investments. And today we have Jonathan Way here. Thank you for coming, Jonathan. I appreciate it.

Thank you very much, Jenny.

I am going to read your bio and then you can tell us what, what it doesn't say between the lines. Okay?

Okay.

Jonathan started in residential real estate in 2003 and discovered his passion in real estate. In 2018, he expanded to commercial real estate and founded Greystone Capital Group, which specializes in multifamily and self storage facilities. He has over 2,300 units and $100 million in his real estate portfolio. Jonathan is also a mentor and podcast host of a show called Building wealth through Commercial Real Estate. Very good. Now there's a lot more that goes into Jonathan that I just heard, so why don't you tell the audience a little more about you?

Oh, great, wonderful. Sure. Yes. A little about myself. I was born at a time when the Vietnam War has just ended. So it was a very turbulent times and there was a lot of chaos in the streets. The currency was devalued because the, the North Vietnamese, Ho Chi Minh took over the Saigon and so everything was converted to really gold because that's something that holds his weight in, in value. And I remember my dad, who was a dentist, used to make gold and hide it in our shoes, put it in our teeth or somewhere to hide gold so we don't get taken away by the, the communist regime who would just used to take, come in and take my dad and beat him up all day long and to rob him and left him for nothing because, because their theory was that that's Ho Chi Minh's government money and not your money because there's no democracy in Saigon no more. So because of that atrocities and abuse in war and really war crimes, we decided to flee Vietnam to seek for, you know, for a better life, for freedom that we can live again under democracy. So we fled by, you know, bribing some, some smugglers out. And we tried multiple times. The first time we did not make it. We were caught by the, by the, but a, you know, government and I was put in jail. I was on like maybe a few, one or two years old. I was put in jail actually with my father. And we had nothing really much to eat, basically like a vegetable, a small bowl vegetable once a day. So it was like, you know, I was too young to know the pains, but my dad knew it. So then my uncle helped, you know, bribe one of the guards to let us go. Then the Second time we tried, could not make it because the family got separated and those, the, the boat was, was, could not make the destination. And the third time we tried, we finally made it and we finally got on the boat. And this boat was bullet hole ridden. It was a very old ship. And we were going halfway through the journey and then it started sinking. So, and then what happened was a small island called Hainan. Fishermen started helping us, rescue us so we don't dive or sink the ship like Titanic. So when we made there, there was not much food. We had no more money. We were just basically running empty on everything. And the ship was, was in disrepair. So they started fixing the, the ship. And during that time, it was one month in that small islands. We were like refugees. And then once the boat was fixed, the captain said, I want more money. But we had no more money. So he just dumped us there and went back to Vietnam. And then one volunteer said, I will drive the boat even though I'm not really experienced. But we had no map. So he told one guy, I want you to swim for hours and come back and see what's down there. So after half a day he came back. He said, oh, that's Hong Kong. He said, Hong Kong. We have to, we have to go to Hong Kong. That's only our way to freedom. So we got in a boat with no very little gas, with nothing, just a hope and a dream. And we went straight down there. And then, and then as soon as we saw Hong Kong, people started jumping out of boat and stuff, started swimming toward the shore. And then the Hong Kong police said, you cannot come in here because you know you're not, you know you're not, you know, you're not authorized to come in. And that time it was like 1979. 1979. And I think one of the admirals, the British admiral, said, we'll welcome them in as refugees. So thank God we got our chance to live in Hong Kong. Made it to at least freedom, which is temporary, like a temporary refugee camp. And then we got sponsored into New Jersey in 1980 with my uncle's help who came here first. And we stayed in St. Joseph parish church. A small rent control, very small apartment for like $3 a month. I think it was rent, don't know how to pay. I think it was free for like one year. And after that, after they got a job, it was like 200amonth for rent for a family of five people. So it was, it was really generous of them.

It was how much?

250Amonth for rent that time in 1980.

Yeah.

For a small little, you know, very small apartment. You know, not, definitely not class C, you know, that kind of thing. That, yeah, Class C neighborhood. Right. This is not say so you're looking at. So we guess how we got beginning. We got New Jersey and we grew our roots. So we worked really hard and I studied really hard, became a, an accountant and a cpa and then I worked really hard to climb the ladder, the corporate ladder, which is just, you know, you got to play the game, you gotta, you know, and work really hard. And I got, I got into the top spot. Ultimately after like five years, I became the tax executive and the head of tax and I started working for another like maybe 10, 15 years. And I realized this is not, this is not what I, I, this is not what I was dreaming of when I was young. This is not the life I want to live. And I realize I only have one life to live. So I had to make the most of it. So what I realized, I did some soul searching and I, I asked myself, you know, Jonathan said, what do I want to do? And I asked my wife, what are we doing here? Why are you, why are you not happy? Why I'm not happy. Why is. Most people in America are not happy. Most people in their jobs are not happy. They're like me basically. They're working nine to five jobs or nine to ten now these days and they're just not happy. So I realized, you know what, I have to quit my job and I hired a mentor and he showed me how to get into a multi family syndication and how to build my own business, you know, from scratch. And that's how I, in 2018, I, I started Creators from Grace on Capital Group to really scale and achieve financial freedom for myself and my family to live the life that I can for my, my daughter and, and for my family. So that's what I did. And I left my job last 2022, which is like almost two years ago. And that, that's where I'm at now.

That's a phenomenal story. Oh my gosh. And you know, it would be awesome to add pictures to, to that to show where you came from actually as you're describing this kind of thing because that's, that's like really extraordinary your background. Thank you for sharing that.

Thank you.

Yeah. So you've been a CPA for how long then?

I say probably I started my career in 1990. I say in 2000. I said 20. I said over 20 years at least. Over 20 years as a CPA. Corporate. Corporate CPA. Not, I'm not, I don't do for individuals, I do for a company. Large companies.

Yeah, not just large companies, but tell them who you work for. There you were explaining to me before we started recording, it's not just any large company, it was a lender, a bank, right?

Oh yeah, yeah. These were top investment banks, stuff that you go to Yale and Harvard for to get a very prestigious degree in finance or in business or accountancy or economics. I work for large investment banks. I mean these are European banks, you know, well known banks that you probably heard of like credit Suisse and SocGen and UniCredit. So these are very well established firms that I was able to luckily in my career get a foot in the door, prove myself and then become really a tax executive at the end of the day and managing very large groups in the Americas. So North America, Canada, US and South America was my region to oversee, provide, get tax guidance, become a think tank, give guidance on legislation from Washington D.C. be part of these groups, masterminds and also lead in institutions because there were very challenging times from Dodge, Frank to fatca to a lot of legislation that was really, really a eye opener in tax world because we've never seen that pendulum swing so significantly from, you know, ever since, from, from the time. So that's why it was very a challenging time.

Yeah, yeah, I, I was an appraiser and engaged in real estate most specifically through all those years. And, and I can only imagine, you know, you were probably struggling to keep up with all the new legislation. Like I was too. There was, there was a lot to digest over especially the 90s and 80s. But yes, but yeah, so that's fantastic. So does that mean you graduated the top of your class or how did you get that? That's a pretty esteemed position, I think.

I think it's also who you know and also luck. I graduated from Rutgers University with, you know, decent gpa. Now I wasn't definitely a scholar, I wasn't a magna cum laude as people expected. I was just an average person. But I think me, my personality being very honest, being held out integrity, holding to the deadlines, working on the weekends. They saw that I was a reliable person who can depend on to manage and get things done. So they'd rather have someone who they could rely on and not someone who is very, very smarter or smart but they can't get the job done. So they want some practicality and someone who can really trust. So at the end they Said we'll give it to Jonathan. He can run the business. He does it very well. He could save us millions of dollars in tax planning. So let's give it to Jonathan. He can do the job, basically.

Great, great. Well, and that's a terrific background to bring into real estate, obviously. And so. So tell us about your first deal.

My first deal, I was a. I was. My first multifamily deal was in 2019 when I bought Ridgewood Village, which is a 56 unit plus one office building multifamily in Moore, Oklahoma, which is like three hours north where I live. I started in the market because the price point was very reasonable. And I got an off market deal from my relationship with one of the brokers and, and written very well. And at the time we had great loan to value because it was very low rates at times, like 4% or something at the time. And so we decided to do my first to send an loi. I was a little nervous, but my mentor me. Yeah, I guess do it. So I did it and then got under contract. We did the due diligence and then we closed on the property. So I was very happy about that first deal.

That's great. That's great. And that was in 2019. Okay.

Yes.

And then have you closed anything recently?

Yes. The last closing we did was built to rent, which is a 94 unit in Columbus, Ohio. And those are $18 million. I'm very happy and proud of that, of that deal.

And a BTR is a build to rent. And the. You said 94 units. Okay. Did you end up incorporating any kind of the ESG movement that's going on now, or have you really thought about getting into that at all?

Yeah. What our strategy was, it was similar to a multi family because this was, this was, was new. It was like existing, built to rent. It's not digital development.

Right.

So what we did was we bought it, we were value adding it and it's doing very well. Like 90% occupied, 92% occupied. Now Ren isn't happy with good manager. And we're running almost like a multi family. How we run multifamily, basically.

Okay, okay. And now the way you run multifamily, do you, do you hire local management or do you have your own management or how do you, how do you do that?

Yeah. So property manager, we have a very strong local team in Dallas that we hire and we work with them as a partners and we make sure that we oversee them. We have weekly asset management calls and I, I tour it personally myself. My team, we do it like you know, like around once or twice a week. We go there, we talk to the manager, we make sure things running smoothly, make sure our tenants are happy and ensuring that we have happy tenants and all the workers been taken up in a timely manner. And we have a very nice on site person who was being very friendly and being courteous to our tenants.

Good, good. Okay. And, and so your Dallas team goes to wherever the asset is. Are they oversee remotely with local folks or what?

Yeah, they go to, whereas in Texas they drive there and they do what we call a on site visit. And then we also have weekly zoom calls with the, with the, the manager who's, who's a, who's in charge of that region to make sure that it hits our KPIs. So our list will be like what's the occupancy, what's the new leads? Where are the sources coming from? Is it being effectively spent on the advertising dollars? What sources? Where? What's the reason for slower demand this month? How do we increase it, how do we minimize expenses? So stuff like that, we go through like a weekly checklist called KPIs to ensure that every week we're on top of it as well.

Right, right. Okay. Okay. And we're sharing your screen. Do you have a particular property you want to show us on the screen too?

Sure. I mean I can show you the latest one that we, we acquired. This one is so this one called Traditions at Slate Ridge, it's in Columbus, Ohio. It's a, intel is building a new chip plant because under the new, under the current government we are trying to expand our chip manufacturing from away from China and Asia. So be self reliant in domestic manufacturing. So we have a lot of incentive to build in homeland of America. So one of the regions is Columbus, Ohio.

Yeah, I like Columbus.

Yeah. So it's a very good market. Rents are increasing. So we, we acquired this beautiful built torrent, built a class A building like into 2000s. So it's very nice.

Okay, great, great. Okay. Now as far as where you see yourself going in the next say five years, what's your vision?

Yeah, my vision, I have very exciting plans for this year. This year we're building a multifamily fund, $2030 million. It's a grace on multifamily income fund. It's for credit investors only. And it's be focusing on my home state, the Lone Star state. So we target the I35 quarter from Dallas Fort Worth to Austin to San Antonio and the Secondary market. So you have Waco, you have some other strong markets coming forth like New Braunfels, St. Marcos, which will often become one metroplex of the Austin and San Antonio markets. So since I live here, I know the dynamics and that's why we're focusing more on that. And we're also focusing on Phoenix, which I love because it's another growth area where I have a team that lives there. I'll be my eyes and ears. And Phoenix has Taiwan Semiconductor which is one of the largest investments. I think it's like $30 billion, which is really large. And it also has lucid air. It has numerous companies coming in and because of that we also targeting Phoenix as a, as a, as a multifamily market as well.

Gotcha. Okay. And when you get an asset that you want to look at, are you the underwriter since your background is CPA or is your team? How do you, how do you do your logistics?

Right, so we have a quote we call a four point internal check. So first my, my team who underwrites it, who is an actuarist, help me underwrite the deal. Then my other team member will, will also check it and then I check it and then my mentor who is my key key principal check it as well. So that's a. And after we have property manager will check it as well as well four point check. So it'd be internally my team, then it'll be me, then be my mentor or key principal and then it will be the property manager. So we're a four point check system to ensure that it's very conservative and we always under promise but over deliver. That's our model.

So the deals that you've already completed, how many, how many have you finished full cycle?

We finished three full cycle and very happy to to announce that we have way exceeded our investors projections. And yeah, and our average annual return we pitched was 17%. We did around 34% in like two years and a half. Our projection was over five years but we did in half the time and we almost double, more than double the money in, in half the time.

And of course with that we do need to announce past performance is not an indicator of future performance. But yes, that's phenomenal. That's a great track record and I congratulate you. So also I did not get to warn you but as we're winding up here, one of the questions I ask all guests since the company name for me is Pivotal Real Estate Investments is what is a pivotal person or event that made a huge difference in your life. And we'll come back to that. I'm just putting that out there for a second. But let me ask you, as we're wrapping it up here, as your vision going forward, this fund that you're talking about, what kinds of investments are you going to be getting into there?

It'd be focused solely on multifamily. And in 2024, we see a window opportunity that's rare. We're going to see distressed assets coming because of these bridge debts that in the past years they took aggressive positions. Whether you're a new operator or even experienced. You may took aggressive positions where you did not expect and no one expected this black swan where the, the Federal Reserve increased it 18 months was straightforward to increase so many, I think 11 times the interest rates, which is very unprecedented in, in any, any history that we looked at in our lifetime. So certainly my lifetime, your lifetime, we never seen that happen, which caught them off guard and do a dune adjustable rate bridge debt which maybe had a cap rate on it, but that either expire or be goes firing and the risk premium on that exponentially increased. So now they're in a dilemma. The dilemma is can I pay that cap? If they cannot pay the cap, then unfortunately the lender may want to take back and foreclose on the, on the property. So we see a good opportunity now for us to have this fund and capitalize on those discounts so we can do a value add plan and then execute in three to five years, basically.

Right, right. And that's yes, exactly what I've been saying too. If you would stop sharing your screen so people can see you a little better. Okay.

Oh, sure, sure. Yeah.

Yeah, there you are. Okay.

Yes.

I fully expect there to be many more opportunities over the next couple years for just that reason. And those of us that stay very tuned in to the economic environment are pretty much all saying that. So, so we're trying to, to gather our, our resources and I think that people will want to follow you. So I'm going to have you tell everybody how to get in touch with you, but only after you tell us what is a pivotal person or event that made a big difference in your life.

Yes. The person who made before my life was my mentor, Drew Whitson and also Michael Block, because I'm also like a mentor in this program. But I feel that they changed my life and teach me how to operate syndication and how to become an operator, a great operator, conservative underwriting. And the principle they follow is basically we want to help create freedom because My goal is I want to help freedom to anyone who helps me in my circle and help them create freedom to life, live an abundant lifestyle, have fulfilling life and make a difference for others and help others. And that's kind of the goal that I'm trying to my message trying to go bring bring across Basically we didn't.

Really touch on you quit working full time in 2022, right?

Yes, correct.

And that was because of these multiple income streams you built, is that it?

Yes. I was able to achieve financial freedom through multi family because I acquired numerous assets. Now I'm up to 12, I think 10 or 1112 and basically about numerous assets. I could live on the passive income and also we also sold some so we had a lot of significant gains from that from income as well. And every year I continue to acquire and you know these assets will have more passive income and some of them are infinitive returns like self storage. I have is infinite, infinite returns. So we just refinance, hold it for long term as well.

So explain how it could be that.

Yeah. So investors, I show them a deck, I say here's my vision and in certain really good asset classes and good areas we might just hold it, buy it and in a few years after evaluate refinance, get the majority of the return of capital back and just hold it long term for passive cash flow or legacy holding.

And that's considered infinite returns, right?

Yes, infinite returns.

Just want to be sure that we clarify that. You never know who the listeners are. Very good, very good. All right, well so if someone wants to follow you or get in touch, go ahead and announce how they might be able to do that.

Sure. So one of the ways to go to my website, greystonecapgroup.com that's G R E S C O N E c a p group.com on there you're going to see a booking link to connect with me through Calendar. I also have resources if you're new to passive investing. The complete guide how to passively invest, investment fundamentals course and a DD checklist on how we look at our assets like multifamily and self storage. So you can check those resources free. Russell, you download and book a time at Calendar. I'd love to talk to you.

Very good. Well thank you. I appreciate you coming on and sharing your story with us.

Thank you very much, Jenny. I appreciate it.

All right, take care.