EP 11: From $130,000 In Debt To $60M Multifamily Assets: Tim Little's Inspiring Journey Part 2

That's when I did my first passive investment again. Saved up a little money, managed to put 25,000 into a passive investment in an apartment in San Antonio. Think it was like a 127 unit apartment building, B class in San Antonio. You know how to talk with the operator. He was kind enough to answer all my questions, even the dumb ones. And so I thought that was the best way for me because I thought this was something I could do on my own one day. But I wasn't there yet. And I wasn't ready to, you know, pay 20, 30,000 for a program. And I was also about to go on a deployment for almost a year. So I know if I'm sitting in Baghdad, I can't do the business anyways. So why don't I do something where I can at least make money while I'm still educating myself? And that's why I call that, you know, earn while you learn.

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Hey, hey, hey. Welcome back to Think Outside the Stocks. In our last episode, we were talking to Tim Little about his journey from 130,000 in debt of a student loan to becoming a syndicator in multifamily syndication. We were talking to him about his worst landlord experience last episode and he will continue to telling us about it. So, Tim, tell us about your worst nightmare landlord experience today.

Yeah, so I, I guess the one that people find most entertaining is the tenant that got arrested.

Oh my God.

In jail. So it happens, right? But it's just sometimes it's funny how it happens. I had gone to the property and I was like, hey, ask the other tenants, have you seen him? Because he hasn't paid. And they just offhandedly joked that, oh, he's probably in jail. And I'm like, I suppose that's possible. And luckily, Florida is One of those states where they post mug shots every week for anyone who gets arrested. So you can go onto those websites and check by name. So I checked the county that the property's located in, and nothing. So I was like, oh, maybe not. And then I checked my county, which is right next door, and. And sure enough, there his picture was. And I was like, oh, oh, my God.

So wait a minute. This is. The tenant has been long term with you paying you. Well, one fine during a period he doesn't pay you, and you go checking on him, you think that he's in jail and you for sure find him in the list. Oh, my gosh. So tell us more. What was in jail for? I mean, is it something that he did at your property? Something other trouble or that, you know, just.

So luckily nothing at the property. He had gotten pulled over. And I guess when they pulled him over, they found at least 25 pounds of marijuana in the car.

What?

And I was just like, I'm trying to wrap my, my head around that. Oh, my goodness, that is. That is like the size of a small child. I have a daughter who weighs almost 25 pounds or, oh, my God.

But that's absolutely bonkers. So he has 25 pounds plus marijuana in his car. Thankfully, this was not found in the property. Did that thought come across your mind?

It did. So, yes, thankfully it wasn't. And trust me, I looked very carefully within the property once I found out and found nothing to that effect. But £25 is certainly more than recreational use, so I knew he wasn't going to be getting out anytime soon. And so then you just have to ask yourself the question from a landlording perspective is, okay, what next? Right. Like, what do I do? So I went where everyone goes, Google, and tried to figure out where I was within my rights to, you know, just get rid of the stuff, or do I have to talk to him first or, you know, what has to happen? And so that's where the research part comes in. Right. Because the. The last thing you want is to be on the wrong side of the law, especially with some tenants who. Who know landlord laws better than you do. You. You don't want to be that person who makes a misstep and winds up getting sued.

Yeah.

Over it. So what I had to do was basically get him to voluntarily come off the lease. And so that was a process in and of itself. I, you know, made a legal document on, like, legal zoom or something like that with basically saying that, hey, I give up all my rights as a tenant on this lease, because only then can I actually, like, go in and take his stuff out after the point that, you know, he's no longer on the lease, because as long as he's on the lease, I can't just throw his stuff outside. That's not how it works, at least in Florida.

Right.

So I was able to. This is all during COVID of course, so I was able to have a virtual call with him while he was in prison. You know, they like call his name, and he walks up to the phone and we chatted and he agreed. And so I sent it to him, like registered mail to the prison. Didn't hear back. But I got his verbal confirmation anyways. And then luckily his girlfriend wound up bailing him out, at least for a couple of days. And I had coordinated with her to have her clear his stuff out. I was like, listen, I'm not going to go after you for the rent that you owe, because there was no point. I wasn't going to get it. But you want to sound like you're doing them a favor, but I was like, you guys need to get your stuff out of the apartment by this date. And so luckily, she bailed them out. They went in there in the dead of night, got everything out, like on the last day, and I think they even swept. So I can't really complain. Cause again, it could have been so much worse.

It could happen. I mean, first of all, when, you know, a lot of listeners today, the safest way that they invest in real estate is by becoming a landlord. And they think that, oh, it has been years, it has been going on just fine, and it's not gonna have problem, but asset protection. And asset, you know, that protection against getting sued by somebody so important in your case, I mean, thank God he agreed voluntarily to come out of the lease in this particular situation. I cannot imagine if you had, you know, if he kind of had some kind of, you know, the business out of your house and what kind of trouble it could have created. And here if the tenant is paying on time and, you know, he's being a good 10, and even if, you know, keeping the house clean and stuff like that, you would have no idea about what's going on and what they're doing behind the scene. I mean, it's lucky for you that you could get out of this sticky situation. And you're a very planned person, Tim. Right? You are like, you plan well, you execute well. So, you know, when you are saying and sharing the story and say that, okay, these things have turned out to be simplified for you. I'm sure that the way you handle it, the way you handle and manage that tenant has a tremendous kind of a possibility of unfolding it in the way it unfolded for you. So you have to give yourself a little bit credit for that. The way you managed it and the way you handle him. Right. You know, if you are listening to this episode, it takes that, you know, one tenant and if you're not able to handle that properly, the housing authorities, the housing laws, there's just so much out there. You know, you can take one step and you can step into the mud and, and you can get sued or you can get exposed to so much different liability. The single family homes, you are directly on the loan, you are directly responsible for that property. So many, many things can happen. Tim, in your case, you got out of that situation and you were able to re rent that possibility. Tell us that you know, all these things happening. I can see that you kind of mind is getting backed into swaying away from so called passive real estate investment of becoming a landlord to actual passive investment. So how did you land up into the actual world? The key to unlock that truly passive investments is syndication. And you and me are big proponents of it because we did find this little bit later in our life. Wish we had found it earlier, but this is our passion now to bring it in front of people and tell them about syndication, why you like syndications and what you are doing in syndication world right now.

Yeah, and the only thing I'll end off on the landlording thing is just a couple of lessons learned from my part, you know, had I continued it, which is be very careful when you inherit tenants because that was the issue here. Right. I had not screened or vetted any of these tenants because they came with the property. Only one of the three people in the three unit or the three, three bedroom unit that he was in was on the lease. And so had I been the one who had brought him on, obviously I would have had all three people on the lease. That way you can go after this guy or this guy or this guy if someone doesn't pay. So just, just some things to consider. It's nice to have that immediate income when you buy a rental property, but at the same time you're incurring a risk with the tenants that you haven't screened yourself.

So great, great, great input there.

Yeah. And so going into the syndication space, that was another one of those kind of things that as I was studying real estate, I looked at the limitation with regards to Being able to scale, right? Like, I was like, oh, okay, I'm going to need to get 50 or 100 units in order to reach my freedom number. And I was like, there's no way I'm going to get like 40 or 50 duplexes. Like, it just, it didn't seem like it made sense. And so that's where multifamily kind of came in. And so I went to a conference to kind of, you know, get the fire hose of, of what this is all about. And it was all new information, right? There's a lot of, there's a lot of things that are similar, but there's a lot of things that are very different too, about the way you evaluate, you know, larger multifamily properties and how they're valued and so forth. But I became intrigued and so I was like, okay, this makes sense, but let me try it out. And so that's when I did my first passive investment again. Saved up a little money, managed to put 25,000 into a passive investment in an apartment in San Antonio. Think it was like a 127 unit apartment building, B class in San Antonio. You know how to talk with the operator. He was kind enough to answer all my questions, even the dumb ones. And so I thought that was the best way for me because I thought this was something I could do on my own one day.

Wow.

But I wasn't there yet, and I wasn't ready to, you know, pay 20, 30,000 for a program. And I was also about to go on a deployment for almost a year. So I know if I'm sitting in Baghdad, I can't do the business anyways. So why don't I do something where I can at least make money while I'm still educating myself? And that's why I call that, you know, earn while you learn passive invest. First you're able to see how it works from the, the investor's perspective. You start to understand what's important to them, and then you're able to ask all the questions you want within reason, because, you know, you're the one investing money, right? So that gives you the access. So that's what I did. And once I got that first distribution, you know, whatever was six months in, that was the, the proof of concept. That was the aha moment. Like, okay, it's a real thing and you can kind of like, you know, wipe the sweat off your brow and say, I didn't, I didn't just, you know, become a victim in a con or, you know, I won't be on the next episode of American Greed or anything like that.

Not a Ponzi scheme. Yeah, no, that's, that's really important. First of all, what you mentioned that you identified that you wanted to be passive in this whole situation, right. So instead of spending that, you know, what 20, 30,000 that time was, and now it's about more 30, 40,000, I was in that same boat too, where, you know, I thought that I would rather invest that passively and earn some cash flow. Right. So I started my journey as a passive investor too. And you know, just exactly the same way that your thought process is just get the digs first, understand what they're doing. And at the same time, where I lacked or where we lacked that experience initially to leverage that solid experience from the syndicated team. Right. So I think that was a brilliant idea to leverage that solid experience and expertise that it brings in practically for free. Right. That you are now going in partners. So that's a great step to get passively into it, leverage that experience and expertise, kind of create that completely passive cash flow for you, which has many benefits like tax advantages and you know, just, just the growth that it provides you compared to any other instruments like stocks or other stuff that provide. So getting that, that test of a passive investor, how did you go from passive to being active?

Yeah, so like I said, once I had that proof of concept, I was like, okay, this is something I want to do more of. I don't think I was determined to make it my full time job at first, but it was something I wanted to get in on a deal. So then I started making those connections, surrounding myself with like minded people, and then went to a conference here in Tampa and met a lot of great folks. And you just know when you gel with certain people. And so I tried to keep in contact with some of them and they came to me and said, hey, we have this deal. Would you like to passively invest in it? And I was like, oh no, not really. Like, I was like, I, you know, I want to do my own deal, so I don't want to passive invest this time. And they're like, oh, okay. You know, and then a couple months pass by and they're like, okay, we're, we're like, we need to get this deal over the line. If you still have that capital and you want to come in as a gp, would you be willing to do that? And I was like, yes, yes I would. And so, you know, you find that, that. Where can I add value? 1, the deal was for a 59 unit portfolio here in North Tampa. So, you know, boots on ground so I can help out on site if needed.

Right.

I was working with the city, taking pictures, etc. And then was also coming to the table with, with capital. Right. Bringing money to the table to show that I have skin in the game. And so that was my first deal, getting on as a, as a GP with a group of scrappy folks who, you know, wanted to get their first or second deal done.

Right.

And luckily it all worked out that this Tampa was really hot. And this was during COVID So, you know, rents were going up, up and up and we were able to exit on that deal in like, about two years.

Yeah, that's excellent. So essentially it's really important as a passive investor, when we went into the first deal, even I think I would have done much more due diligence knowing what I know right now. Right. So for passive investors, word of caution. There's just a lot of people out there to take your money if you're ready to invest into syndication. But you got to be careful about what investments that you go in. And you know, it's great, Tim, that it worked out great for you and you got to be a part of actually partners, and you were not afraid to kind of roll your sleeves and be the boots on the ground and had an excellent opportunity there. And now with Zana Investment, you know, as a father of two and you have built quite a bit portfolio for yourself. So kudos to all this journey from that negative 130,000 to Jana Investment. And I wish we had more time and we could have more stories to discuss today, but we are kind of coming to the end of our segment. I am so happy that you shared your stories here today. We are going to our next segment now, which I always ask my guests, how do you think outside the stocks? How do you invest outside of the stocks, by the way? Do you invest in stocks as well?

I do, but very minimally, actually not in. Not individual stocks. I, I did dabble with that for a bit, but after reading the statistics, I was like, no one's very good at this, picking individual stocks. I mean, it's literally just the statistics. Even the people who are the most highly paid and are supposed to be the experts have a very bad track record. So I was like, I'm not going to do that.

But we are very good at one thing in stock market. We are very, very good at losing money.

Yeah, right. And so I, I do have a retirement account through the, the military at TSP, which is their equivalent of a. A 401K.

Yeah.

And so it doesn't have a. Yeah, it doesn't have a ton in it because I don't contribute that much to it. But that's in a. I think it's one of those, like glide path retirement plans.

Right. What about in terms of.

Sure. And outside the stock. One of the things that I've done is my solo 401k. So I had an orphaned 401k from my corporate employer when I was a government consultant and it was just kind of sitting there. Right. And so then I found out that you could set up a solo 401k or there's other options too. But basically you control the money that's in there and you can invest it in anything you want, almost anything you want with it. There's obviously, you know, rules and regulations associated with it, but I was like, why didn't I know about this before? And so you have to create the legal paperwork and have someone go over it and everything. And so what I did with that is surprise. I. I invested it in real estate and I invested it in a syndication deal that went full cycle in like 18 months. And so I saw my retirement money double in less than two years. And I was like, this is amazing. And I would have never seen this had I just kept it where it was. And then I was also able to do even more obscure things like use it for hard money lending. And the, the way I'm able to do that is because you have checkbook control over these types of accounts. So you can literally just send a wire or write a check if you want to, to whatever the investment is. As long as you're never touching the money or getting use out of the thing that you're buying for your personal. Yeah, from a personal perspective, then it's all completely legal. Like I, I couldn't buy like my brother a house and say it's an investment. There's like certain levels of connectiveness that you can't have. And I couldn't buy myself a vacation home and say it's an investment.

But that's a good use of, you know, the Solo 401K. I mean, you know, for our listeners, if you have an old employer and instead of rolling over, you could create an SDIRA or self directed and have that checkbook control. Or if you have a business, you can create the solo 401 game, which is better than SDIRA. We will talk about it in one of our next episodes with Another guest. So we will certainly focus more on that if you're interested. But that's great. So you pretty much are diversified into real estate. Is there any other asset classes that you look into outside of, you know, multifamily and hard money lending?

Yeah, I would say crypto, but that's, that's not worth looking at right now. So I'm just gonna, I'm just gonna sit and patient with the little crypto that I have and hope that it, it gets back up to where it was. But otherwise, because I am such a proponent of real estate, I still make sure that I'm diversifying even within real estate. Right. So making sure that if I'm investing in a property, it's not somewhere that I am already invested in or if it's a different class of property, say like an A class which is, you know, much safer but perhaps lower return compared to on the active side. I'm more in the B class and high C class. So there's diversification in that sense. And then, you know, for my part, I also am lucky enough to have a pension one day whenever I do get out of the army reserves, I'll have that pension waiting for me when I turn 56 or whatever it is. So I consider that like fun money. It's not enough to like live off of, but it's still nice to know that it's going to be there.

Yeah, no, that's great. You know, having that coming in, the diversification that you mentioned, that's really important. So even if you focus on just multifamily, there's just so many things, different classes, different markets, even different syndicators. You could just go and diversify in so many different aspect. And under real estate there's still more recession resistant asset classes like self storage, mobile home parks, industrial. So there's just so much of diversification you can do. So thank you so much for sharing a little bit inside look of your investment strategy. And you know, unfortunately we have come to the end of our show and I'm just going to ask you how my audience, if they want to get in touch with you, how can they reach you, how can they get connected with you? And then we will go to a fun round, which I call it a rapid fire round, right after that answer of yours.

Sure, yeah. So I try to be really active on social media, giving people on information on multifamily and how they can get into that on the opportunities that exist there. So LinkedIn I'm very active on, but I'm Also, you know, trying to get on the TikTok and the Instagram Instagram Reels, YouTube shorts. So, so definitely, if you like that short form content, look out for me there. And then if your guests would like a free resource, they can go to zanainvestments.com backslash cheat sheet and there they'll be able to download a free cheat sheet which basically breaks down a lot of the terms and the jargon that we use in the multifamily space and explains it in very simple to understand terms.

Thank you so much for sharing that, Tim. And we will post in the show notes. If you go into the episode on our website, you will have all the links for the LinkedIn and other social media links for Tim and also that link to the cheat sheet. So with that, let's go into our rapid fire round. Are you ready for it?

I'm ready, absolutely.

So quick questions, just two or three and you know, just quick 60 second answers to that. What is the most interesting thing an investor has ever said to you? That was really touching.

Oh, really touchy.

Yeah, I mean, just most interesting thing.

I thought it was interesting actually. Yesterday someone messaged me on TikTok and they basically tried to pitch me on crypto. And I was like, okay, but now's not a good time for that. And he's, I was like, I'm more into real estate. And he's like, oh, well, investing in crypto is one of the best ways to get started in investing in real estate because you learn how to analyze this, that and the other. And I was like, you lost me. But I, I like his, you know, effort there to, to try to segue into it. But yeah, I wasn't, I wasn't buying. And I, and he's like, you know, for beginners. And I was like, I'm not really a beginner in real estate. So that just ended. The conversation was like, okay, that's interesting.

That's very interesting. The multiple ways people try to kind of get through you, right? Trying to touch the, the thing that you like the most. But anyway, the next question, during your hardship days, one of the memory that just stands out that you will never and always remember and you still, you know where you are and you still look at that day or that moment and say that, oh my God, thank goodness I'm through it.

You know, we talked a lot about my debt, right, and how that kind of hung over my head. But at the same time, I try to live a life of, you know, no regrets or at least Very few regrets. So even that I can say that. I honestly can't say that I regret it because I would have never met my wife if I never went to that school. That's. That's where we met. I wouldn't have her. I wouldn't have my two beautiful kids. So that's where you have to, you know, shift your perspective on even those things that seemed really terrible and said you say, I wish I could have done it all over again. Well, you got to be careful with that because then you may not have the things that you have now.

So that's a great perspective. You know, always think about fresh, keeping it fresh. Start fresh thoughts, fresh ideas and strategies. I love that. And one last thing. What is that one advice or one thought that you will have for passive investors who have been thinking about real estate specialist indication, but they're just too afraid that, oh, I just haven't heard about it enough or I don't have many people around me investing into it. So I don't want to invest into it right now. What is that one advice, one thought that you would have for them?

Yeah. And so I guess education is the key to confidence there. The more you understand about the asset and the process and you know, you can get that from listening to shows like yours. And that's the only thing that's going to make them a more confident investor. And at some point they just have to kind of pull the trigger because once you have all the information you need, there's nothing left to do but take action.

Thank you so much, Tim. It has been a pleasure. Thank you so much for such great answers. That's a great advice, by the way. You know, by having the education builds you that confidence of investing. So, you know, till you're feeling the confidence and you're finding somebody to invest with, which somebody who you know like and trust, you know, take that first step. And the first step is going to kind of trickle in the domino effect for you. So thank you so much for that advice and thank you again for being on my show. I cannot wait to release this episode. And thank you first of all, for your service. You know, you've been military and serving our country. That is incredible. Incredible. And thanks for sharing all your stories. It was such a pleasure to have you.

It's been a pleasure being with you. Thank you.

Thank you so much.

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