Often we hear from people who've “made it” but they're difficult to emulate because they've achieved such incredible success.
If you're just starting out, it does you no good to learn from someone who has 1,000 multifamily units because their issues are totally different than yours. It also does you know good talking to someone about how they grew their million-dollar business to $500M because you really want to know how to make that FIRST million, not the next 499.
This is why this is one of my favorite episodes because we talk with Jay Boyle about closing his first 36-unit multifamily deal but we also do a deep dive on what happened long before that success – all the hard work that went into it without seemingly any success at all.
It was such a great (and long) conversation that I split the episode into two parts. This week you'll hear what Jay did prior to closing on the 36-unit. And in the second part you'll learn how he did that 36-unit, how he found it, how he financed it, and how he overcame several challenges. You'll also learn about what he's doing next (and it's much bigger than a 36-unit!).
Jay is a great example of someone who sets big goals and proceeds to make TINY progress at first (and for two long years!) before showing any “real” success.
A fantastic episode, and I hope you enjoy and learn from it!
Connect with Jay
To connect with Jay, send him an email at jayboyle at dawsoncreek dot biz.
How did you first get started investing in real estate?
I was an apt manager when I was in college, got free room and board. It was a fun time but I also learned a lot about the MF business. I met the owners. It took me a long time to get into MF but eventually I have. I read a lot of RE investing books, I've sublet apartments to other people. But I knew I wanted to get into MF to provide financial security for my family. I read a dozen books about RE investing, about how to get in. Some of the books were Keller's book “Hold and Flip” and Rich Dad Poor Dad books. Eventually I was able to save a little money to invest. So I started analyzing apts. I started looking at duplexes, I analyzed 100s duplexes over 2 years. I found a couple of good brokers and eventually.
So you're Taking action?
Taking action is a habit for me. It takes courage to act. Take whatever money you have and that's your start. You have to be willing to jump in. It's possible you'll lose that money. Not likely though. It's likely that it will turn out fine. Start small. Just start. You're going to be uncomfortable. You're going to be afraid of losing money. Just embrace being uncomfortable.
What small steps did you take early on?
I looked at a bunch of deals online, like 200 properties over 2 years. I downloaded an analyzer spreadsheet from Keller's web site. And I got a better understanding of cash flow and returns. In my area I narrowed it down to some neighborhoods and properties that would cash flow. Then I would call some of the brokers about the properties. One of them was a good broker who was also an investor. If they know you're serious they'll help you find it. Doing a lot of analysis.
The “Hold” book by Papason. Re-read the Rich Dad Poor Dad books.
What were your goals at the time?
I wanted to buy a duplex in 2014 and my goal was to have a 1000 units by 2020. I gave myself two years to buy that duplex. I wanted $1000 per month cash flow on a 15-year mortgage. I wanted to make sure that first deal would be successful. I envisioned myself owning more duplexes, until I envisioned myself with 40 units and having a property management company manage them.
No success after two years? How did that make you feel?
It was OK. I wasn't ready to act. It was a bit frustrating, yes. But the duplex is going just according to plan. It's not a get-rich-quick thing, if that's what you think, it's not going to happen – for most people at least. Focus on finances, understanding the market, analyzing properties. Then you'll be able to recognize good solid deals, and you become more confident to make offers.
Let's talk about your goals. You wanted 1,000 units in 6 years but you started with a duplex – why?
It's important to have stretch goals. But I was willing to start with 2. If I started with 20 or 40 I might end up with zero and never reach my goal.
At the time I was planning to live in half of the duplex. It didn't work out that way, but that's what one of the reasons was. The other reason was that there aren't any quads. 1,000s units is a dream type of goal, but it made sense to take baby steps.
I realized that a good property management company would be most interested a larger property.
When did you set a new goal?
I self-managed the duplex, and I learned that. I then started to upscale that in my mind. I thought I might be able to find 2-5 duplexes per year. But then I realized that self-managing that many units would be a fulltime job and I didn't want to do that. I decided to shift more to MF where property management companies can manage the tenants. I realized that PM's weren't interested in managing duplexes, the good ones wanted to manage larger ones.
What was your new goal and what steps did you take towards that goal?
I wanted enough passive income to quit my job if I wanted to. I have a good enough job but my tax burden is enormous, so that tax benefits of RE were important to me. My next deal was going to be a 30-unit deal.
I read more resources about MF. Evaluating MF is different than for duplexes. You have to pay attention to the NOI. It took me a little 6-12 months to learn MF analysis. It took me a while to find a market. NJ is not the best, I could have done it. I had a lot of familiarity of Arizona where I grew up where I found to be a lot of opportunity, and I go there often anyways. Then I analyzed dozens, maybe 100 properties. I made about 3 offers before the 36-unit. I had an offer accepted, a 90-unit property, the LOI was accepted but I didn't get the contract, someone else outbid me.
The 36-unit deal was an off-market deal. You can find some deals on loopnet, but most of the good deals are not on loopnet, but you can find the brokers. Call them, tell them what you're looking for. The one broker I called him every Wed. On a Tuesday he called me about this particular deal.
How many hours per week do you spend?
I spend probably 40 hours a week. Immersing yourself is important. There's so much to learn. There's financing. There's evaluating. There's repair and renovations. Taxation. Regulation.
But don't you have a full time job?
Yes, I do. But if you don't put in the time, it'll be slower progress. If you're only going to spend an hour per week, then maybe some other activity might be better. I commute 2 hours one way, so I use all of that time for education etc. My driving motivation is to look for RE to STOP commuting. It's also interesting. I hope to be able to retire in 7 years. I do enjoy my job, but I'd like to have options.
What's your motivating factor? Your Big WHY?
I have 5 kids and I want to be a good mentor to my kids. I want to show them that they don't have to be stuck in a commuting job for 30 years like I did. I don't advise it for them or anyone. And I really want them to see that they can be entrepreneurs, property owners, be the bank. One of my daughters has a learning disability. I need to provide for her long-term. There's lots of stuff I want to do, like travel.
What kind of education did you get?
I joined a mentorship group, and I advise others that this is a good idea to interact with other people. An experienced person to look over my shoulder as I analyze deals. I don't think spending $30K is worth it though. A smaller mentorship commitment like $2000 per year for weekly group meetings is a good idea. That gave me the confidence to make offers. When someone said that was a good-looking deal, or I would refine it.
You also purchased the Syndicated Deal Analyzer. Can you briefly talked about why you did that and the difference it's made on your investing?
I enjoyed your web site. I downloaded your podcasts. They're great because you can listen to them on the car. I liked the deal analyzer I was using for the duplexes but it wasn't appropriate for MF deals. It was clear that syndication was the way to go. It's a fantastic tool, it's well worth it. I used it twice this morning already! In 15 minutes each I sketched out the syndication plan, and they were good deals. It's very good. It gives you many different parameters to tweek, and a great tool.
Awesome, thanks Jay. I look forward to speaking with you next week about your 36-unit deal!