Struggling to find the courage to ask for help? Jennifer Joyce knows that asking for help is a sign of strength and courage. She has been through difficult life circumstances and has come out on top. She believes in building a great team and scaled her real estate business to 16 properties and over 3,000 units. Listen and learn!

Table of Contents:

• Where To Listen To The Podcast
• A Common Path for Jennifer and Darin
• From a KPI Perspective, Asking for Help Is a Sign of Strength
• Always Have Your Boots on the Ground and Know That Asking for Help Is a Sign of Strength
• What's Best for the Property and the Investors
• The People Who Do Well in Real Estate Know That Asking for Help Is a Sign of Strength
• Why Real Estate Is a Wealth-Building Business
• How to Reach Jennifer Joyce

A Common Path for Jennifer and Darin

Darin: Jennifer Joyce lives in the DFW area with her family. She has always been a problem solver and a hard worker from an early age. She's a big believer in building a strong team and believes that when you need help, have the courage to ask.

In my first passive deal, Jennifer was also passive in that deal. We met at one of the events, and I'll never forget that. She had so much energy and was jumping up and down in front of the sign to take a cool social picture. We both did very well on that deal. I've seen her kill it going forward. I’m interested in what she's been up to. With that, can you share with the listeners how many properties and how many units you're currently invested in?

Jennifer: We have just under 3,000 doors and that's across 16 properties. Our assets under management are well above $150 million. The first property where we met, that was me just checking behind the curtain to see how it all really worked before we went all in.

Darin: Share a little bit with the listeners because I think that's a common path, and I did the same thing. I invested passively before becoming a general partner in deals. It's a great way to understand the business and how you want to differentiate yourself going forward.

Jennifer: When you first come into this space, the biggest challenge for us was wrapping our heads around crowdsourcing or syndication.

In Buying Larger Real Estate, Asking for Help Is a Sign of Strength

Jennifer: We wanted to understand how you could pool money together as a group and then go and buy larger real estate. That was really the enticement on my side because we had been owner-operators for years, but our money kept running out every time we found a good deal. This was a way to finally scale for us, but we wanted to make sure there wasn't more than what we could see in the sensationalized version of crowdfunding dollars. We wanted to jump in as a limited partner first.

All I found is you're buying into a business that's attached to real estate. Apartment complexes are businesses. They just have a storefront, they have units behind that storefront, and they offer a service and a product for people to buy and rent. We realized after we became limited partners that we were investing in a business that was already cash flowing and they had a plan about how to make the business better.

They were going to increase revenues, save on expenses, and wait on the calendar to tick by. Let the real estate portion of that business appreciate over time. They were going to let it happen organically and also by making the books or the financials better across the life of the project by increasing the net operating income, which is revenue minus expenses. So, if you increase that NOI, there's another calculation that you use in business that says, "This business is worth this much money." If you can make that number go up over time, that business is more valuable in the future.

Owner-Operators

Darin: You said you were owner-operators before you got into that deal. Explain what that means.

Jennifer: Like most people, we started out in a single family model.

Darin: I'm guessing you've really just done a smaller scale.

Jennifer: We started out in single family then we scaled from there. I think we got up to about 20 properties, then it was time to step up again so we started getting into small multifamily properties. But we were still cash constrained every time we did that because you had to go work somewhere else, save all those dollars and then put them as down payments on the next piece of real estate.

We were trying to figure out a way to go faster, bigger, and saw this as a retirement path for us while we worked in Corporate America, but it never would happen fast enough to really replace our corporate income. When we stumbled onto the syndication world in 2017, that was a game changer for us. It really changed everything. Since then, this is all we do. We don't even work in Corporate America any longer.

Darin: With that, I have to imagine that there was a mindset shift that had to happen. You were used to doing single family and then you started doing small-scale multifamily. But to go into the bigger world, even though you were a limited partner, there had to be some kind of switch in your head that, "I can do this at a much larger scale."

Jennifer: There were a lot of those reassurances along the way.

Leveraging Third-Party Property Management

Jennifer: One of the things that came with the economies of scale is that, instead of remaining an owner operator who had to be the leasing agent, the trash out person, the maintenance, and repairs, we now could leverage third-party property management for the same tasks. Instead of somebody saying, "My water heater's busted," or "My stove doesn't work on Thanksgiving," now, they called third-party property management.

We're only consulted on the big decisions, refinances, casualties, occupancy across the board. If you have a single family home go vacant, it's a mad dash to get it reoccupied. But if you have a hundred units, one goes vacant, you're still 99% occupied. The urgency around single family went away and we had that piece of bringing in some more help and not just being the only sole person who had to make all the decisions and do all the work. So, that's also been really great.

Darin: Talk about all the pieces that leverage by going from, you said cash constrained doing single family and small multifamily. Now you go larger, you're doing larger deals. Talk about how you're leveraging other people in what capacities. You mentioned third-party property management. Kind of just hit on some of the high-level ones.

Jennifer: Third-party property management is a big deal. Third-party-wise, we are able to involve attorneys and CPAs every time. Instead of us trying to squeeze the purse strings all the time on a rental, now we can afford right to have those professionals involved. Another big professional for us is our cost segregation companies. They come in and do our assessment for tax savings.

From a KPI Perspective, Asking for Help Is a Sign of Strength

Jennifer: These larger commercial properties have quite a bit of depreciation that you don't see down at the single family level. Sometimes our invested dollars can be offset up to 100% of what they invested in these in a tax savings loss on paper. That is a huge professional for us that entices people to want to invest or pool their money together.

Internally, we've been able to hire people who work directly for us. Instead of me having to field certain meetings or calls, they call my team, allowing us to buy our time back. This is really why we started in real estate all those years ago, to buy our time back. Now, the economies of scale are allowing it to happen. 3,000 doors, we have quite a team that works just directly for me and my husband. They're fielding all the questions that we have as more of a CEO role. We're coming in saying, "Tell me the executive summary of what I need to know about this particular location and how has it been going from a KPI perspective."

Even our Corporate America days are coming back into play where we can take all of those skills we learned there and apply them here. We learned about goal setting, KPIs, and metrics, and really work all the time on making the investor's dollars more valuable by putting hyper-focus on increasing the net operating income of each business.

Darin: What did you do before you got into this? Were you in Corporate America?

Jennifer: I've done it all. I was one of those kids that wanted to have a nice car, so I had three jobs at the same time.

Why Real Estate Needs People Who Believe Asking for Help Is a Sign of Strength

Jennifer: I put myself through college. I figured out that if I traveled for a living, they'd pay me more so then I could pay for college more efficiently. Then, I could also invest in real estate if I made more money. So, I traveled around and did end-user software training. I worked in things from Morgan Stanley Smith Barney to IT tech startups in the insurance claims world.

The short answer is IT, the long answer is I helped the really smart people talk to the people who click the buttons on the computer all day and couldn't communicate with one another. I figured out how to be a mediator between those two groups and solve problems. Because the end-user has a problem and the guy can fix it, but they can't seem to communicate how to fix it or why the business needs that.

I flew all over the country doing that and got very good at problem-solving. That helped really well in real estate. I've always said that in the single family space if you don't have a stomach for real estate, you should probably stay away because you're going to see all of the things you can possibly imagine happen in rentals. But when you get to the commercial real estate level, needing a stomach for it goes away.

It's replaced more by a professional setting, so then you're just a problem solver at a financial level or a corporate meeting level. Then you're asking others to give them their empowerment and say, "How are you going to solve this? Let me help you. What ideas do you have so far?"

Lean Into Your Team

Jennifer: You can actually lean into your team, third party and not third party, about how are you going to solve for this as opposed to, "How am I going to solve for this?" That's very helpful too.

Darin: That's great to share because there are people that have come into this industry from all different industries and backgrounds. Some people that are wanting to get in may be nervous that they have to have a certain background to come in. But you mentioned problem-solving. That's a key component. If you've done that in your industry, solve problems, then going into the real estate world, you're going to get to leverage all these other companies and experts like Jennifer mentioned.

You're going to have tax attorneys, bonus depreciation companies, and people and property management that you can leverage. You’ll be leveraging the funds of other people and other investors. I could speak from my own example. I'm a business guy. I was not a touchy, feely, creative, artsy designer. When it came to changing out the office, I hired a company that was good at that.

They presented me with some ideas and some prices, and then I agreed and said roll with it. For the painting, I had a number of different people provide paint colors to me because I couldn't come up with them myself. But then I was the final decision maker as to, "Roll with that," or "No, let's do something different." For the listeners, listen to Jennifer. You can come from a lot of different backgrounds and leverage the expertise of other people.

Leveraging the Experience of Others and Asking for Help Is a Sign of Strength

Darin: You're in 16 different properties. Talk about an example where you had an expert in one property that shared a rehab thing on another property that may have helped you. You didn't have that experience and then, all of a sudden, you get to leverage the experience of others.

Jennifer: One group we haven't talked about is business partners. Part of me buying back my time is just not being the sole decision maker either. If there are multiple people who are running the property with you that want an active role instead of a passive role, it takes some of the work off you. It also goes back to your statement, "I'm also not the Jack of all trades on these properties anymore, which means I sit mostly in my strengths, and I partner with my weaknesses."

So, if I have a business partner who's very good at making relationships with people who can source capital, that is a value that somebody brings to the team. If I have somebody who is in the medical or the IT world and they know people with 401(k)s or large retirement accounts that are dabbling in real estate, those people bring strengths.

My strengths really are legal insurance, rev ops, making sure that the investments are growing, finding ways to increase NOI on an operational level, and dealing with casualties. I love casualties. Those are my favorite because they are income-producing activities. But I want to spend the majority of my time there, which means I need to offset that with a business partner who loves talking to investors and meeting with people who have retirement investment strategy issues.

What Difference a Partnership Can Do

Jennifer: They're outward facing where I may be inward facing, working on the actual property for them. We become a superpower when we partner because I work in my strengths, and they work in their strengths. Together, one plus one is no longer equals two, it's equals 11. It's very powerful.

Darin: I think the people that aren't in the business that are considering going active, think that they have to do it all.

Jennifer: No, not at all.

Darin: They may get overwhelmed by all the different steps involved with syndication. But you can leverage the expertise of other partners too, which is a great thing that you brought up. I love that. Talk about some of the markets that you've purchased. I know, for example, you purchased in Amarillo. So tertiary market, not a major market. Talk about the difference between the two and where you guys are focused.

Jennifer: We started out actively investing in Amarillo because we saw the heat that was around the Dallas-Fort Worth market. Being a new syndicator, we have a lot of track record from our non-syndication days. But in this industry, they want to see a track record in the lane you're in.

So, we took that in a humble way and said, "Let's go somewhere easier than Dallas-Fort Worth." We started out in Amarillo and that gave us the track record to go down to Houston. Eventually, we came to Dallas. We also own in Lubbock, Tallahassee, Augusta, Tucson. We're about to close in Raleigh, North Carolina this summer. We are no longer constrained by being in our backyard.

Making Real Estate the Main Thing

Darin: Listeners, I have to give Jennifer some props here because that's in what? Two and a half years? Three years?

Jennifer: Since January 2020.

Darin: You guys have been lightning since then.

Jennifer: We've really enjoyed it because we just love this. I left Corporate America the previous year and realized that IT was not for me. It was just a way that paid my way through a lot of things. I really wanted to work in my passion. Real estate has been there all along through all those years. So, I told my husband I wanted to make it the main thing, and he's always been extremely supportive. Little did I know, he was going to leave his job several months later, but this is all we do.

Part of our lightning speed is, we did it how I wouldn't recommend, we left Corporate America too soon. We should have waited until at least one of our salaries was completely replaced with commercial real estate. But we didn't have that option. The pandemic showed up in March of 2020. Because it was our third economic correction, we saw opportunity when others saw fear.

We just thought we were going to go slow like everybody else and do it at a pace that we could handle. Instead, we realized it would be another decade before the opportunity presenting itself would be in front of us. We didn't want to wait another 10 years for that, so we just went to work.

Darin: That's a lot of different markets. How do you get comfortable going into different markets?

Always Have Your Boots on the Ground and Know That Asking for Help Is a Sign of Strength

Jennifer: Our strategy is we always have boots on the ground. If we're going to tackle a new market, we want somebody local. That's just from our historical days. We've always been close enough to be able to touch the real estate, so we're now leveraging business partners that are there. We get a comfort level with a new market because we partner with somebody who's near that market. "I'm the closest person to Amarillo, which is four and a half hours away, but I can be there by lunch."

In my mind, that's close enough for me. I only go there a couple of times a year now because the property is just humming with revenue, so there's not much reason to go up there. There was in the beginning, and usually, the first year is a little heavier than other years. But now we're leveraging other people's time. It's very precious to also have business partners.

The ways that we increase the revenue of the business is at the front end, we set aside a large account for capital improvements, basically like your HGTV channel with a whole bunch of zeros. We come up with a construction plan to increase the value of that property by making it a better place to live. We'll do things like replacing the roof or the paint outside, putting in amenities like a playground, or sprucing up a pool. We install Wi-Fi that's property-wide, then we'll go inside and do marble or granite or stainless-steel appliances or better paint schemes, better floor plans.

Creating a Community the Residents Never Want to Leave

Jennifer: We'll spruce up the leasing office, the laundry room, things that make it a better place to live, then bring in the community around that. We create a community event calendar to then use those infused dollars in construction over to resident events where we're creating fellowship between the neighbors over time so they never want to leave. They love living there.

So, anytime your house gets fixed up, most of the time by the end of it, you're happy that it's nicer. It's the same concept for somebody who's a resident. They want to live in the best part of town, in the best unit that they can, at the price they can afford because they're busy building their futures. But while they live there, there's no reason why we can't treat them like a family and make it a good place to live. Happy customers mean they stay.

Darin: From the general partner standpoint, the general partner is hiring the general contractor that's going to do the work. It may be one major general contractor that's going to handle all the different projects, or they may divvy it up and have different contractors do different things on the property. But the general partnership team will oversee that and make sure that it's being implemented.

The rehab happens and it looks good, and tenants are happy with it and all of that. Once all that is done, then it's more reliant on the property management company to get the rents that you projected and to manage the numbers. That first year there could be a lot more visits than in future years.

The Value of Creating a Community

Darin: You talked about community and I'm glad you did that. Some people may not understand the value of creating a community. You started to hit on it but share a little bit more on why you think that’s a good investment.

Jennifer: Not everything is dollar for dollar revenue. Some of it is indirect. One of those things is community events, community activities, and loving on your residents. This became hyper-focused. It's something we wanted to do where we got to play the angel nobody knew about behind the scenes that just loved on residents. It became a really big deal during the pandemic that they couldn't leave their own unit. So, we got really creative about how you can love someone that you cannot meet.

We did things like sign up for free pizza on April Fool’s Day. As long as they pre-registered with us, we fed them. We repeated it on Cinco de Mayo and did tacos, we also do burritos to go in the morning, stop by the office and get a burrito. That's stuff that we could leave by the front door. They didn't have to interact with a person because it wasn't possible at the time. We also had to pivot with Easter and had this huge Easter egg hunt planned with all the kids and now we had to cancel.

The churches were just not able to even have their doors open. So, we pivoted, and we did door decorating contests, and we had the residents posted on the Facebook page and they all voted on who the best Easter door was. They went outside their door, they made it beautiful, and they went back inside. Then, we went electronic.

An Ownership Group Who Cares and Listens

Jennifer: We also, through the pandemic, probably learned more about families than we did before. We knew who had a family member on hospice, who had a family member going through cancer. Then, we would bless those people with a surprise drawing where the contest was rigged. We helped out a family without them realizing that the ownership group was listening.

This is stuff that we did because we wanted those people to know that "We notice you, and we see you. We also need to stay anonymous ourselves because we don't need credit. No, we don't want credit. We just want this to be where you want to live. Where you feel like you've got a sense of community around you." We've taken that further and done turkeys on Thanksgiving. We’ve done Father’s Day flashlights and Mother's Day roses. We actually created a 12-month calendar with things as simple as Jellybean Day or National Popcorn Day.

There's always a way to constantly bring a sense of home or community back to these apartment complexes. Technically, we're responsible for hundreds of thousands of families without them knowing. So we think about them. We think about our staff and our investors, and we always try to find new ways to think about them more. It's not just a money business, it's also a humanity business.

Darin: For creating that community, other people may not have the natural inclination. But I will take that, what all those things that you were saying, and translate that back into dollars.

Listening to People Who Think Asking for Help Is a Sign of Strength Is Not a Waste of Money

Darin: If say you're a listener and you're like, "It sounds like a lot of wasted money," well, think about this. If those people stay and next year, when their lease comes up the retention rate is significantly higher than the property down the street, you don't have to renovate that unit when that person leaves.

Then all of a sudden you have to repaint it, reclean it, and fix anything that's broken. But if they stay, then there is nothing in addition to do. Having a high retention rate can significantly impact your dollars and your financial health. Building that community and building a place where people actually love to live, not only is it great for humanity and heartfelt, but it also translates into better NOI and better profitability for the property because less people are leaving.

Jennifer: Creating a sense of pride in their residents is worth more than having $200 more in rent when you have to spend possibly $3,500 to $10,000 to turn that unit based on what needs to happen when somebody moves out.

Darin: There's a lot of fear in the marketplace right now. Interest rates are going up. Inflation's going up. People are worried. There's all this talk about recession. We might be in one or one's coming. What's your outlook? Are you still bullish and are you still looking to buy or are you just hunkering down?

Jennifer: I'm still bullish. I'm pickier when I buy. But remember, after the 2008 crash, all the true money was not made until 2010 and 2011.

The True Operators

Jennifer: When our correction has been finalized, the people who are going to make the most are still coming. It has not happened yet. All we've been doing is writing this craze for the last couple of years. Everybody's been doing very well. It's making everybody's resume look very good. But the true operators are going to be the ones that take you through both the highs and the lows. Those people are going to bubble to the top here in the next few years.

The people who maybe didn't anticipate that the market changes on a regular basis on an eight to 12-year cycle are going to get surprised. Those people that anticipate that it's running on a cycle are going to prepare. That's the only difference is, are you going to use this as a strategy? Or are you going to use this as, "I'm sitting out. My money's going to lose value sitting in a checking account"? It's their decision, whatever they feel most comfortable with. But we do have quite a few people in the space that have just been riding the peak of that mountain. They may not be prepared for that valley.

Darin: Talk about being prepared. Talk about how you prepare for a storm, for a downturn in the economy. How do you mitigate that risk?

Jennifer: Part of the way we do that is what we said originally, we're going to increase NOI. We're going to appreciate those properties and appreciate those businesses. What that allows us to do is have more exit strategies. You never want to be forced to sell; you want to be able to sell when you want to.

What's Best for the Property and the Investors

Jennifer: If I have multiple strategies at a time like that, possibly getting away from the adjustable-rate mortgage into a fixed-rate product is better for the property and the investors. If we can position the property for a cash-out refinance, we can pull some of the equity forward while we still own the property and give the investors back a percentage, if not all their initial investment.

The property is still owned, and it can turn into more of an infinite mailbox money situation. Where if we were paying rate X and we have to lower it to rate Y, it's no longer off of something that's outside their checking account. Maybe we've given them some, if not all of their money, back through a cash-out refi. Now it's becoming infinite returns. If we're headed for an economic downturn or cash flow constraints, wouldn't it be nice to still have a check showing up every quarter or every month?

We're looking at ways where, if the property is still a good business in a good location and it's performing well, we're going to try to hold onto it. We’ll just pull equity forward through a cash-out refi on better loan terms. The other way is, if it's met its business plan and it's time to sell, we have to take into account the fact that it could take a hit on price. If you sold six months ago, it'd probably be a higher price than it is in six months, in the future. But if you've done all the right things and you've executed that business plan and it's time to sell, your investors are still going to get more than their initial return or their initial investment back.

Cash-Out Refinance Exit Strategy

Jennifer: That's a win. They can't all be home runs. Sometimes they're base hitters. But all of that money has continued to grow while they put it into our world, which is multifamily syndication.

Darin: I completely understand that cash-out refinance potential exit strategy. But some listeners may not understand well. There's a different tax implication also between whether you do a cash-out refinance versus selling the property. If you sell the property, whatever your gain is, you're going to have a tax implication. Then you're going to reinvest whatever you made less the taxes you got to pay on it, and you're going to reinvest that.

But in the instance where they do a cash-out refinance, that's a non-taxable event. Any money that you receive back is not going to be taxable. That's what Jennifer's talking about with the infinite returns. If you invested $100,000 into the deal, then Jennifer and her team increased the NOI such that the value of the property went up and they were able to do a cash-out refinance and provide you back that $100,000. Now, all your distributions from that point on, you don't have anything that you have invested in it because you got your $100,000 back. That's where the infinite returns come from.

Jennifer: That's what we're drove for. If we're headed for a season where it just makes sense to go into an operational winter, we just make sure we run the property through this rocky road and come out the other side of it. In a few years, what can we do to still service our investors who are a little nervous?

People Who Think Asking for Help Is a Sign of Strength See Opportunities

Jennifer: We're very calm because we see all the opportunities behind the scenes that maybe they're getting blasted with all the feeds from the different channels and it's just overwhelming. We live and breathe this stuff in the good times and the bad times, so we have strategies for all of that.

Darin: Investors have some money in real estate and some money in the stock market. All of a sudden, they take a 40, 50% hit in the stock market, and then they're nervous. They don't want the same thing to happen to their real estate portfolio. I know that at one point you guys were talking about going to the fund route. Did you do it and what was your experience?

Jennifer: We have Fund III going right now. It's behind the scenes. Sometimes, when our offerings come out, it's one property, and sometimes when they come out, it's multiple. Yes, we love the fund structure. The reason for that is the way we structure our funds, which not everybody does, is we make them as close to what people are used to as possible.

They have the bonus depreciation through cost segregation. So, they look a lot like a limited partner or a passive investment. They usually have a preferred return, which is you accrue money on your money every year that it's out. Whether we have to backfill that or not, depends on the market but we still owe it and then share in the upside at the sale. For some of our retirement account holders, it's better for them to have a higher preferred return with no upside on the sale or a refi.

Cash Flow from a Retirement Perspective

Jennifer: But that's a very rare situation because we try to convince them to go the other direction where they're going to actually have higher multiples on their money over time if they look at it. But some people still, from a retirement perspective, care about cash flow more than anything.

The fund's strategy is to be as similar as possible but actually give them better diversification for when things go awry across multiple cities. If we have a really great asset in one market and the other one is struggling, what if you had only invested in one? The fund actually allows you to invest in both and benefit from the good and bad of both. What we've seen is we can then take multiple properties, and maybe this one's cash flow constrained but very good upside.

The next one is very even-kill, it's going to do great. It's just going to chug along the whole time and just cash flow like it should. But then we have this other one over here, it's all 100% non-renovated units. It's going to have a $300 change in rent once they completely renovate that property and make it beautiful. Then it's going to have a whole new professional residential profile that's going to come in and live there. That one's going to have major cash flow.

The three of those combined make a better investment than just one by itself. That's really the reason that we've been enjoying the fund. When a property or a business has a problem, we can offset it with another property or business. Those things combined help every investor just perform better in that investment.

Asking for Help Is a Sign of Strength in Times When You're Raising Money

Darin: I have funds set up in different ways. Some are blind funds, so you raise the money ahead of time. Then the general partners decide which assets to purchase after the fact. That gives you a benefit with the brokers and potentially with the sellers because you already have the funds or bulk of the funds already raised, versus another syndicator who has to raise the money in the next 60 days. Some will actually identify the properties ahead of time and share that with investors. Which way do you go with it?

Jennifer: We do both. We have a blind fund that's multifamily only, and we have a fund that has three identified assets in it. There's another hybrid out there called partially blind where you know a couple of the assets you're going to buy, but maybe not the final assets. You're looking for that criteria to be met where there may be a gap or a weakness in one of the other locations.

We have done blind and identified funds. They both have their benefits and their challenges. It's very much a sophisticated way for an active partner to operate. I would definitely suggest somebody who's interested in starting a fund to partner with somebody who's a little bit further down the road than they are as a business partner. Somebody who's a passive investor that's looking at a fund, you just want to underwrite it the same way you would a particular property. You want to see the business plan unfold and look at the numbers behind the numbers. Make sure that at the end of the day, it is passive investor friendly.

The Business-Friendly and the Tenant-Friendly States

Jennifer: Just like we have business-friendly states or tenant-friendly states, you want it to be in your favor. The limited partner, the passive investor's favor, you don't want to see a ton of fees just like you don't at the business level. You don't want to see where they're incentivized to do things that you wouldn't normally do in your investment strategy type. There are plenty of options out there. You don't have to go with the first one that's presented. If it doesn't meet your normal criteria, then I would look for something that's better for your investment strategy. But yes, we love both. We still direct assets syndicate and do funds.

Darin: There are certain people, certain syndicators that I would probably pay higher fees. I would be okay as a passive investing in certain syndicator's deals because of their experience and their track record. Then maybe lower fees with somebody that's less proven. That is just my opinion. I don't think you can just look at fees. You have to look at the expertise of the general partnership team as well.

Jennifer: I totally agree with that. If everyone’s making money and they've proven it before, there's nothing wrong with people taking fees. What I'm talking about is 5% here, 3% there, and 2% over there. You add all that up and what's the incentive for the limited partner at that point? But yes, if somebody has paid you a wonderful multiplier on your money in the past and they want to charge a higher fee for the next investment, they've already proven to you that you are going to make money, not just them.

The People Who Do Well in Real Estate Know That Asking for Help Is a Sign of Strength

Jennifer: The people who do this and do this well, want to be able to support their own internal payroll. They want to get better systems for you better, better software tracking devices, watching your investments for you. Also, the higher fees usually equate to more stuff for the investors at the end of the day.

Darin: I was just thinking about it in terms of, some senior guys that have been in the business for a long time, they have waterfalls. After a certain return, instead of it being 70/30, 70 to the passive investors, it'll go down to 50/50. Part of me is like, "Well, that senior guy just wants to make that much more money." But part of it is they have a bigger payroll. They have more systems, and they have a higher cost basis potentially. There's probably a little bit of both, but they paid their dues to get that experience and that credibility and that track record.

Jennifer: Usually in those waterfalls, you're exceeding a certain IRR on your money too. Just make sure it aligns with the investment strategy. If you always want to see a 13%, a 15%, or a 17% IRR, as long as the waterfall is after whatever your investment strategy style is, then they should be compensated. They are incentivized to outperform your criteria.

Darin: You were a little girl at some point. You're such a go-getter now. Did you think that that was going to be the case when you were young?

The Importance of Having Role Models

Jennifer: You know, it has a lot to do with parenting, I think. I had a mother who had never couldn't accomplish anything. If she wanted to go outside and make this tree look Japanese, she would take a chainsaw and she would just go do it. Or if she wanted to put up a brick fence instead of a wood fence, she would just go do it. I had modeling around that if you just set your mind to something, you go do it. There's never a pause about, "Is this scary?" Never a pause about, "Can I?" She just did it.

It modeled for me that if I wanted something, I would just go do it. I'm hoping that my kids are getting that same thing from me when I want something, I work for it. I show them, I model it, and I just go do it. I'm hoping that becomes generational and they pick up on that. Anything they want to do, they just make it happen because they never question, "Can I? Should I? Is it scary?" They just went and did and got the lesson either way. Everything has a lesson whether you're successful or you're a failure, but you will never know if you don't do it. I'd rather just have the answer and no. I've just always been this way.

Darin: So, you saw it modeled as a kid. I think it could go both ways. You could see your parents always scared and that could motivate you to not be that way. But you had it modeled the other way where you saw her doing it, which was fantastic.

People Who Press on Despite the Fear Win

Darin: Talk about fear. Do you not have any fear? You seem like you charge full steam ahead. But sometimes people on the outside look that way and inside they do have some fear. Do you have it? If so, how do you press on?

Jennifer: Everybody has it. Usually, when you get to this level, you've personally developed in some way, whether it's books or gurus of that nature. But one of the things I heard a while ago that I've really latched onto is if you need to have a moment, just don't go over 10 minutes. Ball and cry. If you feel sorry for yourself, you can put a time cap on that, but you can still have that moment and get those feelings out.

I seek counsel a lot. If I'm concerned, I seek counsel because I'm not supposed to be the expert any longer in all areas. If the fear shows up with anything, I can look at the Bible and get advice. I can call a friend and get advice. We have peers in this industry that will help anyone. This is a very friendly industry; we have people that are one step above us that'll pull people behind them up the mountain. We can go to gurus or mentors, we can ask them.

And so we can still talk to people that we highly respect out there in the world and say, "I just need some help or I need some understanding." People will help if you ask them. The biggest challenge I had for a long time was asking. Asking was actually harder than fear.

The Side Effect of Having a Mother Who Knows That Asking for Help Is a Sign of Strength

Jennifer: When you grow up around a mother who's fearless or can do anything, the other side effect of that is you've never asked for help. My husband and I went through a life of it about 15 years ago, and we had to ask for help. We couldn't do it any longer on our own. That was a humbling experience because before then, we never asked for help. We just figured it out on our own.

That really showed us that if we could get past our own mindset, we can ask. People will help you generously. It's just, do you have the courage to ask? Sometimes can you set your pride aside to ask? Instead of living in fear, usually, we are action-oriented, and we go find a way to get out of it. If we can't get out of it on our own, that's an indicator to ask.

Darin: You said courage to ask, which doesn't seem like you should encourage to ask. Like, "It should be easy." But to your point, our egos get in the way and prevent us from asking. I love that you brought all that up. From the listener's perspective, I always say push past the fear. I've had a lot of people on the show who said that they were afraid, and they thought to themselves, "What's the worst thing that could happen if they make this decision?" But I also think like, ask. Ask other people that have done it. So many people are afraid to lose but ask all the people that have won.

The Value of Relationships and Networking in Real Estate

Darin: Ask all the people that have made a lot of money, all the people that have helped all these people in these communities live in a better community. Talk about relationships and networking and how that plays into the way you go about your business.

Jennifer: Relationships are a really big deal. The only thing that matters here, this is something that if you're interested in having those connections, to be able to ask, to find somebody who's a step ahead of you, to know what to do when you're fearful. It's all relationship driven. Now we're all incentivized to be very friendly in the beginning because, in the syndication world, you need each other to buy large commercial buildings.

But it's a great tone to set up everybody for the next 20, 30 years of having deep, meaningful relationships in a business setting and a friendly setting. With relationships, you want to be open-minded about the fact that you're going to be working with people that are not your personality type, which is what the world has really grouped us into these days.

Really, the only way these partnerships work is if you partner with your weaknesses. If I picked out some of my partners on a playground and said, "You're going to be my friend," I would've never picked the people that I've surrounded myself with. I would've picked somebody who's just like me and kind of bold and goes out there and does cool stuff. But I need the analytical person, the creative person, the people person, the spreadsheet person. I need a project management person.

How to Do Relationships Better

Jennifer: Never in a million years you'd put me on a playground with those people when I've picked my business partners. This is helping us personally grow how to do relationships better. Find out what the differences are and then value and treasure those, because it takes all of those strengths to equal a good successful business. It doesn't just take one strength.

I would not be where I am today if it wasn't for networking, partnerships, and relationships. It's only because of who we have networked with and who we've built relationships since we started that has brought me to where I am today. Start going to groups, Meetups, Zoom lives. Get to know people if you're interested in this space. Don't just read books, meet people. This is very much a people business.

Darin: Take it personally. If you're going down your lane, you go to a meetup group, you meet Jennifer and say, "You know what? I'm really good at legal insurance, rev ops, NOI growth." She's probably going to say, "That's my lane. Why am I going to partner with you? That's what I love doing. So I'm going to go." She may say, "I'm sorry, but it's not a good fit." You go to somebody else and you don't take that no, personally. Just go to the next person. They're like, "I don't like touching those areas at all." All of a sudden, you find your business partner. You find your fit.

So, you have to get out there and talk to people about what you like to do and where your strengths are and then find other people to match up with that. Like Jennifer mentioned, find your weaknesses with other people.

A No Is Only a Not Yet

Jennifer: I would also say this is a no, not, yet. Maybe today I say, "You should go talk to so and so. They're looking for somebody like that." But tomorrow I go, "Thank goodness you're here. I would love to take a step back and have somebody who's really good at this too on the team."

Just take everything as a no, not yet, because today it may matter, tomorrow it won't, and vice versa. That's another thing. Just because I haven't worked with certain people in the last five years doesn't mean we can't wait to work together. It just hasn't happened yet because of timing and other business partners and things like that. It will. So, we know that this is a longevity play.

Darin: Part of the reason why this industry is so collaborative and is so giving of each other is that to your point, if you treat somebody poorly, five years down the road that person's not going to partner with you. But you treat them kindly and help them, you never know what's going to happen. Two years down the road, you guys end up partnering together on something. People are extremely helpful and beneficial and collaborative in this business. You have to let people know what you're doing and what you're good at.

Jennifer: Maybe I won't always say the same thing. Maybe later I'm known as a fund guru. Right now, I'm known as the casualty guru. It evolves over time so stay in touch with people.

Darin: Talk about why this business is such a great wealth-building business.

Why Real Estate Is a Wealth-Building Business

Jennifer: Some of the people in this business love what they do for a living, but they want to know that there's a nest egg at the end of that journey for them. The passive investor wants to take the hard-earned money that they've worked to achieve doing what they love. They want to see it grow into something they can survive on. More than survival, they want to live. When they finally leave that passionate job that they love, they want to be able to live, enjoy their family vacation, and do things later in life. They want to partner with people that are professionals in a place that grows money.

The other part, what more? They don't love what they do. They're dissatisfied with their current profession and they're looking for more. Maybe like me, they went down a path of following the paycheck instead of following their passion. Those people may find a home in real estate and they are rewarded above and beyond passive investing into an active share in the real estate transaction where they can earn additional money off of putting together something.

I know Darin that you said you weren't creative, but I see business as very creative because we're taking something that's not humming along or a little bit broken. We're going to love on it, we're going to fix it, we're going to recreate it, and we're going to make it extremely valuable. I feel very much like an artist just in business, and I think you're the same. We're going to find a new passion by creating, making the business plan better, and fixing that business.

Asking for Help Is a Sign of Strength That We Can Be Proud of

Make it look like something new at the end that we can be proud of, that we can show people that we did that. That was me. I think we are rewarded not just on the passive investor side, because we all invest in our own deals, but also on the active general partner side. We're rewarded not just for that tangible item that we can see that we made better, but we're rewarded to be able to provide for our families. We are able to build up a retirement account for our later years when we were going to take a step back. This just become our new passion. Everybody in the world benefits from us being in a passionate lane just like they do in their profession while they grow their money elsewhere.

Darin: I've asked a lot of older people, I’m 52, people that are older and wealthier, like, "Have you seen anybody save their way to wealth?" They're like, "What do you mean?" I'm like, "Well, you know, just work at a corporate job and put 10, 20% away and have it just grown." I have not heard many wealth stories like that. I've heard it’s the people that have built a company, built value, then later sold that for a big number. It's people that went to work for IT companies. They got stock options, they helped grow a company from a small company into a large company, and they received exponential wealth based on those stock options. Here in the multifamily world, I see all the leverage.

What Brings Massive Wealth in Real Estate?

Darin: A lender's going to put 70 to 80%, maybe not 80% anymore, but 65 to 75% leverage down on a deal. But it's the equity owners that are going to receive all of the appreciation. The passive investors and the general partners receive all that upside. That is massive. Leveraging other people, leveraging other companies, and leveraging the lenders' dollars, I think is what brings massive wealth in addition to extreme tax efficiency in real estate. It brings massive wealth-building opportunities that just are not available by putting 10, 20% of your money into the stock market.

Jennifer: Sometimes, it's as simple as being a canary person just to hear the information. As a kid, I had no idea you could make more than 2% of your money. I'd never heard of such returns. At first, I was like, "Is this real? Are you sure it's real?" It's like a big secret.

Darin: We're both here to say it is real. We were both in that first deal together and we both were there to see is it real, and to learn. In any event, you've done a lot in the last two years. What's your next big stretch goal?

Jennifer: My next big stretch goal is really building out the company to the point where I am just working on acquisitions. It's a well-oiled machine. So that if we want to buy back our time, our kids are safe. We want to see the next 10, 12 years, we want to be there at all those sporting events, and we want to help with homework to a level that sets him up for success. No, we don't want to miss out on that.

How to Win Back Your Time With Real Estate

Jennifer: We realize time is precious. We learned that a long time ago. So, we're focused on getting this to a point where it's highly efficient, even if we don't step into the office except once a week. But we still want all the layers taken care of the staff, the investors, and the residents. We want everybody that our lives touch to be touched, even if we're busy raising babies. That is the goal. Our stretch goal over the next five years is to scale back and win back our time with such an amazing vehicle.

Darin: If people want to reach out and get to know you better, what's the best way for them to do that?

Jennifer: They can contact me directly. We're a friendly industry. Our website is www.jjcapitalinvestments.com. My personal cell phone number is on there. I talk to people seven days a week. We love this, and we love helping. So, anything we can do to help you on your journey, take that next step on the mountain. We're happy and we're here.

Darin: I appreciate you coming to the show. Listeners, here's another example of somebody that just went out and did it. You can do it too. So, if you have questions, feel free to reach out to her. If you want to get involved in deals, she's doing deals. I appreciate your listening. Until next week, signing off.

How to Reach Jennifer Joyce

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