Are you looking how to start building wealth through real estate?

Corey Peterson is a multifamily investor with close to 2,000 units. He's an author, podcast host, mastermind host, and coach. Corey has learned how to create both financial freedom and time freedom. He continues to buy one to three $20-$30 million deals per year. Corey enjoys serving others by building both his and his investors' wealth and teaching others how to do it. Corey motivates himself to continue growing as he loves being the "Supplier of Fun" for others!

You can learn from him on his podcast or in person at one of his workshops or seminars. His goal is for you not only to make money but also to have fun doing it! Learn more about what he offers at https://kahunawealthbuilders.com/

Table of Contents:

• Where To Listen To The Podcast
• The Process of Building Wealth Through Real Estate
• Advantages of Masterminds
• The Day Corey Committed to Building Wealth Through Real Estate
• Recipe to Building Wealth Through Real Estate
• Copy Your Way to Success: Standing on the Shoulder of Giants
• How to Reach Corey Peterson

The Process of Building Wealth Through Real Estate

Darin: Corey Peterson and his family live in Arizona. He's built a multifamily portfolio of close to 2000 units. Corey's achieved both financial freedom and time freedom. He loves jeeps, loves building wealth, and loves teaching others how to do it.

Today's a special day as well because it's actually my 50th podcast episode. Started the podcast last year, do one per week. I can't believe it's been almost a year, but love having you on as the 50th. Just a little bit to the listeners and viewers on how we know each other. If you are in the multifamily space, I'm sure that you know about Cory Peterson. But I knew of him through social media. Then we were both speakers at an online multifamily conference that Dan Handford put on called Multifamily Investor Summit. Then I was on Corey's show and I'm just honored to have him on here today. Corey, appreciate you coming on. The first question I typically ask is how many properties and how many units do you currently invest in?

Corey: I think we have seven active projects close. This is funny. I don't know the exact number my wife probably does. But I think it's like 1900 and some units, almost 2000. She knows the exact number, I don't get in the weeds.

Darin: No worries. 2000 units. It's pretty crazy. I talk to people all the time, some that are in that same boat where they're scaling. They're 500 units looking to get to 1000. Others are just trying to break in and get their first deal.

Why Kahuna Investments?

Darin: Then third people that really don't have the time to go out and run around and find deals, but want to partner with syndicators and invest their money passively. You've been in this space for a long time. You have a company called Kahuna Investments. Can you share a little bit about how long you've been in the business and how'd you come up with the name?

Corey: That's a great story. I've been in business since 2005 when Kahuna Investments was born. To tell you how I started and how I got the name for that, I got to back up almost 20 years ago. Something happened that drastically changed my life. My mom was married to a man named Bruce. I call him Bruce Wayne. He wasn't Batman, but Bruce was loaded. So he invited us to Hawaii. It was my girlfriend now my wife of 19 years.

We get to Hawaii. And we didn't know this, but Bruce had a house right on the beach. We get on the beach and it's on a cove. We walk the cove on our first day there, in the morning. Then we walk to the other side to the point, watch the sun come up, we're holding hands hand-in-hand. I looked over at Bruce's house and I was like, "Man, what does this guy do?" Because Bruce had the two things I think we're all searching for, which is time and money. He had them both in spades. It was different, I could tell it was different. I asked him, "What do you do?" Then he said the magic words. Said he was in real estate and he owned apartment complexes. I wish the story got better because Bruce was a grumpy old man.

Roadblocks Along the Way of Building Wealth Through Real Estate

Corey: My mom was really pretty, don't judge my mom, she got me to Hawaii. But I left the island thinking he was the big kahuna like he had it going on. Six months later, I read Rich Dad, Poor Dad and that's when it all clicked. I was like, Bruce is a real estate investor that buys cash flowing properties. I went on a journey and lo and behold, I started off as a wholesaler, no money, no credit. To single family fix and flip, I learned how to raise some private money. Then ultimately we bought our first apartment deal in 2011 and that's all we do now. We've got a portfolio of like $135 million. We're actually probably going to buy $30 million of acquisitions this year. It's going to be a great year.

Darin: That's fantastic. The thing that's common with what you did and with a lot of other people that I've interviewed is that they found somebody that was already successful. Then you had this curiosity and then you went and found out, like, "Well, how'd you do it?" Then you decided I'm going to go after this as well. That's huge.

Corey: I hit some roadblocks too. I just gave you a story of the pretty version. But the real version is a lot of failures. I had to learn to fail a lot. My first failure was to start off as a wholesaler. Well, actually my first failure was I took a home equity line of credit out of my home to get some money, like 25 grand. I bought three fix and flippers. So I did them all, myself. I made a bit of money on each one. But then I took all that money and bought three rental properties.

Putting the Dreams on Hold

Corey: I fixed them all up, but I had all my money in the rental properties and I was making $200 cash flow per property. All that money turned into $600 a month and it just wasn't enough. I hit my first roadblock, I didn't know what to do. I went back and got a job as a financial advisor.

Darin: Did you really?

Corey: Yes. I put my dreams on hold for a little bit because I didn't know how to get out of them. It's funny but Bruce never taught me, I was book caught up until then. Where my life changed is when I really reached out and found mentors that guided me. In 2009, I was a financial advisor for Edward Jones from 2005 until 2009 when the market crashed. When the market crashed I realized I had no control of every investment I made. Every bit that was in Wall Street, like none.

I realized that I wanted to control and I wanted to help people make money. Real estate was really my passion. What was on the other side of the crash, real estate was on sale. That's when I went full-time and that's when I sought out though. But I did it differently instead of being book read, I went to the local REAs, I found mentorship, I found guidance. That my friend has changed everything for me.

Darin: Where do you live?

Corey: I live in Phoenix, Arizona.

Darin: You're in Arizona. Were you there at the time back in 2009. Then you found a mentor. You started leveraging that and then? I don't want to speak for you, but I'd like to get your take up.

Find the Right Mastermind That Helps Building Wealth Through Real Estate

Darin: A lot of people that I've talked to, started with a mentor that teaches them how to buy multifamily, and then they don't stop. They found somebody there and then now they go looking for another mentor to help them get to the next level and then keep leveling up. Do you find yourself doing the same thing?

Corey: I find that's what I do in masterminds. I'm part of probably two or three masterminds that I pay a lot of money to join and be part of them and I surround myself. When you really think about, who do you surround yourself with is a reflection of probably the things that come into your life that are really good. The learning curve gets shortened. I've got some business masterminds that I’m in. Really we don't all have real estate in common, we just have business in common. I like that because I get to get a different spin on things and it's really cool.

But then I also have my multifamily masterminds that I go to and the real estate ones, where some of them are fix and flip. I had belonged to some fix and flip ones too. So I learned things from those guys in their systems and operations piece that they used to talk about. I'll tell you hands down, when I got into masterminds, the value of masterminds is what changed the game for me. Because there's so much information there.

Darin: What is the big secret of being a part of a mastermind?

Corey: The right mastermind, the right ones. Now there's a lot of crappy ones out there, but the right ones do it with a giving heart.

Advantages of Masterminds

Corey: If you got to be part of the group, you've got to give. When I'm talking about gives, it's not like, "Well, yes, here's what I do." It's, "Here's what I do exactly, step one, here's step two, here's step three. Here it is a la carte in the Excel spreadsheet. That's the kind of gift and not worrying about, "I'm going to have competition." No. It's never that way.

Darin: Then what happens, you get it back tenfold.

Corey: Then you give the same thing tenfold because I might have something that they didn't even know was part of, they're like, "Dude, I'm going to take that idea and make it something." I'll give you a good example, you see like that here. This is totally off script here, but I want to grab it because I know. If you're watching right now, there's this binder. This is what I call my property binder. For every investor that invests with us, we give them this binder. This was not my idea. I got it from a mastermind that was a guy who was doing notes.

He had a note business and everybody that bought one of his notes he created a binder. It had their documents, their paperwork, and all their stuff. I was like, "Dude, that is a great idea. Why am I not giving my investors something to their house, fedex it, make it special with all their documents? So they can put it in their bookshelf and the spines they can see all the money they're making every quarter. That's what you get in a mastermind, you find some ideas and tricks that you can turn into money. That's the difference Darin in what masterminds is like for me.

Stepping Up the Game in Building Wealth Through Real Estate

Darin: I can tell you I've invested passively in somewhere, I don't know, plus or minus 10, 11 deals and GP and three. I have never received a binder from anyone. I'm happy with my investments, but the touchy feely, like build the brand and build the relationship. Once the money is wired, it's a matter of just getting that email every month. That's a nice touch. The fact that you didn't even think about it, you had somebody else, you took something else from a different industry, a completely different product.

Corey: No. I'm going to tell you how I just added it too. First, we just send the binder. I shared the idea with some of my students. Then they came up and said, "Hey, Corey, check this out." They had the binder set up the way we teach now, for all our students to do it. Then they're like, "Corey, look at this. Now we put the binder in a box. In the box, we put our mug." I'd put your branded mug.

Then they put on a shirt, we have a cool shirt. Now, this was the other people. They're like, "Here's what we're doing, we're giving him a shirt or give him this." Then they open this thing up, it says, "Don't keep us a secret." It was something I can't remember what it was. We've stepped up our game. Now we got our cool little custom box that's branded. We got our shirt, we got our mug that goes in that thing. Now not only do they get their stuff, but we're going to give them some swag. Because I find that your investors love it if you've got cool swag and it feels good. Don't ever buy cheap stuff.

Passive Investment

Corey:  If you buy a shirt, buy a nice shirt that feels comfortable, that they want to wear. That's what we've done and then we get raving fans out of it.

Darin: That's huge. Look, I've talked to countless syndicators that have said when I say, maybe we'll talk about this later. But when I ask where do you find your passive investors and time and time again I hear people say, "Look, your existing investors are your biggest lead source." Your first deal, you do well by them and then not only do they want to come back, but they tell their brothers and their sisters and their mom and dad and aunt and uncle and friends and colleagues. There's a ton of referrals that can happen from that. Some people may be thinking, "Well, man, I don't want to pay the cost of creating that binder and sending out free swag" But it's an investment in the future to help grow your investor base.

Corey: It's money. It is the best investment you'll ever make, to create that and send it is peanuts to get one referral. It gives you $100,000, come on. Then it leads to communicating with a newsletter. Here's a newsletter that we do every month. We just have different articles. We have an investor spotlight. Why? Because people like to look at themselves and hear about themselves written down. We're always trying to find ways to edify our investors, to lift them up, to praise them, and to reward great behavior which is a nice referral.

Darin: Absolutely. Sometimes if somebody is looking to invest passively, talking about having that investor profile on there. Look, somebody wants to invest passively, they may not be able to relate to a syndicator.

Phases of Building Wealth Through Real Estate

Darin: That is out chasing deals and building wealth that way. But they may relate to the story of a physician who is making money and he's decided he doesn't want to put all his money in the stock market and he's investing in these multifamily syndications. It gives new investors something to see themselves in.

Corey: Yes, and even talk about. This thing is given to investors and they do something and then they start seeing it happen for the first time. I'm like, you said hey, I'm going to give you a quarterly payment and it's going to be this. Then you actually do it. All of a sudden even when they first give you their first money, I think they still think, "Did I make the right choice?" It's not until that first paycheck starts to show up that they're like, "Well, that's pretty cool." Then when it keeps happening and then so it's always fun to remind them and give them ways to share a story.

That's why we have on the back the crossword puzzle. Well, why? Because we want those things sitting in some ways for a couple of days. They might have friends over. They might be like, "What's that," "Oh, that's this," or just whatever. It's funny in the game of finding clients and potential investors and raising money and really creating award-winning experiences. All the little things add up to something pretty big.

Darin: I agree. Look, based on your story, you were talking about you starting in real estate. Then you had to go back to being a financial advisor. Then you came back into real estate. You had a startup phase, everybody has a startup phase. If you're in real estate, there's always a first investment property.

Educating People to Get In the Game

Darin: But now you've had a lot of success and now you're developing a way to give back. Some of those ways are you have a very popular podcast. You also have a mastermind, you also have a summit for raising capital. Talk about how you add those things on and why you do that. There's a financial gain to you for that. But there are other people that are learning how to get in the game because you're teaching them.

Corey: Then let me preference this just because I think it's really important. I make most of my money doing real estate. It's what I love, it's my passion. I'm a real estate investor, that's what I do. I educate because I truly enjoy it. So I find that I have to charge people to educate because if not, it's going to waste a lot of my time. I only have so much time and I'm really a real estate guy that enjoys teaching and coaching, but it's not my primary and will never be my primary. In fact, I've tapered it down to even less and less and less.

Because I only want to teach the right people that are ready to, when the student appears there comes the sensei. That's my philosophy, but the reason I teach and coach is, it's very gratifying by the way. When you see somebody, I can think of a couple of investors. One is a student, the name is David Rosenbaum. Three years ago, he came into my classroom and we were teaching in a boardroom. Single family guy and it had to work for him. He's like, "Dude, this is my last thing. My wife's not letting me do anything else and I've got to make this work."

A Path With Crumbs While Building Wealth Through Real Estate

Darin: No pressure at all.

Corey: He said right in the very front of the room, on the left-hand side, and was just on it. He now owns almost a thousand doors. He'll cry. If I get into him, tell him about that. It's so cool that his life has changed. Now, listen, I'm a small portion of that, he had to do the work. But his life-changing and for me, that edifies me so much because I remember when I was starting out and I needed guidance and I wanted more help and more access.

I couldn't afford it and I couldn't really get it. And I had to do a lot of it on my own. I made so many mistakes that I probably wouldn't have if I had even better mentors in my life or some better systems. So I had to crawl and so my goal was to leave ablaze, a path with lots of crumbs that people could clearly see that's the path that Corey took.

Darin: That's huge. For your student, one of the things I want to bring up based on your story to listeners and viewers is that he had to make a decision. He had to be committed and that is something that to listeners, to viewers look, there's a lot of people that want to get into real estate. There's a lot of people that want to start their own business. But you have to make a firm decision and you have to be firmly committed to making that happen because you don't have all the answers yet, but you have to figure out a way.

Corey: That is so true, Darin. Listen, I'll never forget the day that I made the commitment.

The Day Corey Committed to Building Wealth Through Real Estate

Corey: See, I started my company in 2005, but I was one foot in. That's why I went back to a financial advisor. But when the market crashed, listen, when I'm sitting in front of John and Susie and their 401k became 201K and then they want to move their money and I got to charge them a fee, listen, my heart left the business. Once my heart did, my sales went down as well. I got fired. Actually, I was supposed to have a meeting with my manager at 8:00 o'clock or 10:00 o'clock. I show up at 8:00 and my secretary can't look at me. Then I know the fix is on. I know I'm going to get canned that day.

Darin: She knows and you could tell by looking at her.

Corey: I go into my office, I shut my door and I'm all by myself. I'm like, "Okay, what are we going to do? What's the plan." I'll tell you, I remember this little voice inside saying, it was like that little kid that used to dream and believe he could do anything he put his mind to. He's like, "Put me in, I know what you want to do." But he's battling this 40-year-old or 35-year-old dummy that's like, "Well, I got a mortgage, I've got a wife and I got kids." All the reasons I couldn't do it. The kids, just like, "Yes, you can." Now, I'm glad to say that that little kid beat that grown man's butt.

I remember and listen, in the silence of the four walls that were surrounding me all by myself, I made the most gut-wrenching, I'm telling you everything that I am committment.

An Entrepreneur's Journey

Corey: I made it to myself that I would be willing to do whatever it took in real estate as long as it was legal and ethical. I was willing to pay the price and burn every bridge along the way. I meant it. It was like saying I do to my wife. It was the biggest commitment that I ever made. I made it solemnly to me and I've kept it. I'm telling you the moment I decided and made that level of commitment, everything I've ever needed, I've failed and made mistakes, but I'm telling you, I've never wavered from that dream and passion. Everything is showing up because of that.

Darin: That's huge. I think you said something else important there is that you made that commitment. Because I talked about decision and commitment for that gentleman that was your student. But you said that you've made that commitment to yourself. I think that that's so important that you need to be making that decision for you, not for your wife or your kids or for somebody else. It has to be so important to you that you're not going to let it happen where you don't reach that goal. You're going to have pivots and you're going to have stumbling blocks, but you're going to keep on charging ahead.

Corey: It was. I always say as I came out of that office, I was like Rocky. I was like, "I'm ready to go fight the fight." But in every Rocky movie, we know what happens. That's the way he feels and then he gets clobbered. Then he has to go back and retrain and refigure it out and get better. That's really the story of my journey and that's really what happens for any entrepreneur.

The Path in Building Wealth Through Real Estate

Corey: You have a plan, you start going forward. It doesn't work. You've got to re-strategize and refigure out a better plan with better information you go forward. Then sometimes you get knocked down again and we keep doing it. But then over a period of time when you look back, you're like, "Gosh, I've come a long way."

Darin: Absolutely. you couldn't have seen all that when you made the first decision, all the pivots and all the learning that had to happen. Let me ask you this question and I don't even know the answer. I'm hoping it's the same as mine, but I don't know if it is. Look, I've counseled a lot of people that have been on the fence about whether it's getting into real estate or whether it's just starting their own business. I don't have one person that left corporate America to start their own business that's come back to me and said, "Hey, Darin, man, that was a bad call. That thing is not for me."

Now, what has happened is some of the pivots that you've mentioned like maybe someone went to start a business and they were three months or six months down the path. They saw it wasn't working and they pivoted. They say, "Hey, well, this thing over here looks like it has some opportunity." The business may not be exactly what they thought it was when they started, but I don't have one person that regrets leaving and starting their own deal.

Corey: Listen for me leaving, I left being a car salesman. It was not a hard choice too. I don't have a degree, I wasn't formally educated. I have done it the hard way. But the journey is the reward.

Building Wealth Through Real Estate Shapes You as a Person

Corey: I have a deal in my bookcase over here and it really says the journey is the reward. I believe that within my heart, I would never go back and change anything that's ever happened to me because it's made me who I am today. At 47 years old right now, I'm living my best life. I have time, I have money. And I play monopoly now for real, professionally. I only buy the red houses. I'm leaving a legacy for my kids.

They're probably going to pick up the business. I hope that they smash dad. I'm okay with that because we're building a family legacy. My kids may not do it. I think they will. And I think they're pretty happy with it, they see the benefits of real estate. But either way, it has been such a great journey in the real estate realm, and looking back and to have those two things. I now know what Bruce had.

I now know what time and money feel like. I'm going to tell you it's the most valuable, most precious, most life-changing thing. What I really only wish if I could change anything different is that I would have not sacrificed time earlier on. Sometimes you got to hustle and grind a little bit. But I've learned now that if you were just blocking your time better and you can still have both, the whole journey, I didn't know that in the beginning. I thought I had to really hustle and grind and I did it pretty hard for a while.

But I realized that if you'll just work smarter and calendar and really work on your time keeping of what you do because a lot of times we waste valuable time. You should have both.

The Supplier of Fun

Corey: You can still be a full-time dad, watch your kids' games, do all that alongside building a multimillion-dollar business.

Darin: A word that you used over and over in that, which I love is the journey. Is that look, to me, it doesn't matter what that net worth is. We're all charging to get further ahead and increase our cash flow, increase our net worth, freedom of time, freedom of money. But the journey is what gets me charged up. It's like setting the next goal of something that I haven't done before and then going out and figuring out a way to do it.

Some of that is who can I leverage? Mentors, people that have done it already? Who could I partner with? How could I bring other investors in? But the end goal a lot of times, it's like the scorecard. It's like the money in the bank. It's okay, you redo your personal financial statement, you see that your number's bigger. But along the way is where I get really charged up to where like man, I don't know how I'm going to do this, but I'm just going to go one step at a time.

Corey: Well, I've got a new motivator too. I call it “supplier of fun”. This is the only reason I do real estate now. It has nothing to do with any numbers. It's only called a “supplier of fun”.

Darin: Tell us about it.

Corey: Listen, last year I took five neighbors. Now I still live in a really nice neighborhood. I live in the same neighborhood that I've lived in for the last 15 years because this is where my kids grow up. All our neighbors are friends.

Building Wealth Through Real Estate While Providing Joy for Others

Corey: I out-earn them a lot, I try to be humble here, but I out-earn them quite a bit. But that's not where I started. I started when they were all on the same playing field. But they've never been to Hawaii, ever. Last year I said, honey, let's take them all to Hawaii, and we did.

Darin: What do you mean by all?

Corey: Like, five families. I got to pay for all the excursions and I got to supply the fun. I put us in an environment that was so cool, so wicked awesome. No one had to worry about paying for stuff and was all good. Now, they insisted they pay for their flights. They weren't going to not let me not pay for the flights, but I paid for everything else. When we got there, we got to do everything because I was like, "Dude, we're going to go do everything." We already got it mapped out. We already have a plan set up.

Darin: How cool was that?

Corey: It is what's cool. That's what drives me now. I like for my friends, for my family, for the people that I care about. Supplier of fun is what drives me. It has nothing to do with money.

Darin: I love that.

Corey: I guess it is, but the end results of what we do, I want to be known for the guy that when someone says, "Hey, let's go to Australia for the women's world cup." I'm like, "Dude, that's a great idea. Hold on, let's go." I already like, "Here's the VRBOs, I've got them booked." I'm like, "we're going to take 10 people, let's go."

Darin: That's so cool. I got to get into your inner circle.

Being Corey's Friend

Corey: I just don't put a lot of value in money either.

Darin: Again, the invite on the supplier of fun.

Corey: It's good to be Corey's friend.

Darin: That's cool because look, I had a coffee meeting last year with a guy here locally. He's not in real estate and he's actually a financial advisor. But I'm sure when you're starting out as a financial advisor, it's hard. You're not making a ton of money. You're trying to build up your book.

He's telling me like, "Look, I've got these few good clients and I really want to grow, but I really don't need that much. I only really need this much income." What I told him was, "Look, I think you're thinking too small?" He's like, "But I don't need the fancy car. I don't need the fancy house." I'm like, "Dude, you don't have to have that. But I think you're a good guy and I think you could provide value to more people and that you could have a much larger earning potential." What you do with those funds that's up to you. You could carve off half of that and give it to charity. Or you could do the supplier of fun, which I think is very cool.

Corey: Lots of ways to get there. But the truth is once your income and your net worth have reached a level that it doesn't matter anymore, I'll never have to worry about if I am going to buy a car. Anything trivial just does not even, that's the farthest thing from my mind. I'm not trying to just survive and I'm already thriving, so there's got to be a different metric that drives you. Because why do I come to work now?

Enjoying Time & Money by Building Wealth Through Real Estate

Corey: I love what I do. And I love playing monopoly. I don't play it every day. I take Fridays off. So I don't start until 9:30. I get off at four every time. I've got rules on when I play, I want to play and I like to get engaged and do it. Everything else has to fit inside the box. Then all my family vacations get scheduled first. Friends' vacations get scheduled next. Kids' sports and games all get scheduled. Then my business has to fit in the cracks. That's just the way it works. That's how I've designed my business and my life. That is why I'm enjoying the two things, which is time and money.

Darin: That's huge. Because there are some people that are listening and watching that they don't understand that. Like okay, well, this guy is obviously wealthy. He's obviously done well for himself. People keep talking about this whole multifamily thing that it's a big wealth building. But why does multifamily return big dollars to both general partners and limited partners?

Corey: Because you can control it. One thing I learned in financial advisor land, they didn't have much control. But I can control the NOI, the net operating income of properties when I know what I'm doing. In other words, I know when I buy a property that suffers from what's called deferred maintenance, things are not done or unkempt. Also maybe some bad management, bad systems, bad people. We fix these things. How do we fix deferred maintenance? Actually, we put in fresh capital to fix the broken stuff. Then we insert a new management company with new people, with fresh ideas and great standard operating procedures in a really nice system of how we do it.

Recipe to Building Wealth Through Real Estate

Corey: Our culture gets inserted into that older property. When we do that correctly, over a period of time, like say five years, we'll generally start bringing in that property and being able to raise the rent significantly. And when we raise the rent significantly, we create lots of additional profit. Normally we do this, right. We're going to lower and taper off some of our bad spendings.

You'd be amazed how many properties they're spending money crazy and the owner has no idea what's going on because he's not in real control or in touch with the operation side.  They're spending money on things they'll never see, or it's not the right place to spend the money.

When you do this properly, it really creates a really nice opportunity to not only pay investors a great return, but now I get the profit as well. Then not only that, here's the best part of it is that communities profit. Everybody wants to live in the nicest property that they can afford. We take these 1980s, 1990s buildings and try to put A-class management into them and then rehab them up to a really nice standard that's affordable. But we treat them like that A-class tenant. That's the recipe.

Darin: There are a few things there. There's first the difference in valuation between single family and multifamily. So single family, look, you buy a house and you're dependent on the comps of surrounding homes. If the neighborhood, other properties are selling it at gains, then your property is going to go up as well and vice versa. Where in multifamily it's different. You could have two properties right next to each other built in the same year.

Scale and Leverage

Darin: They look almost the same and one is managed very well. One is not managed very well. They could be valued significantly different because it's valued off of the cashflow, not off of just the property. That's where you get to say you get to control it.

Corey: I have a way more levers to be able to manipulate it. Then as a seasoned operator, I've learned a lot of what works and what doesn't. When I was first starting out, it was a little bit riskier to maybe be a part of Corey’s syndication, even though I put a lot of time and effort into it. But now I have a way bigger track record and there's not a lot of things we've not seen and we know what to do.

That's really, when you're looking at a syndication model, or you really want to vet the operator, what have they done? Show us your track record. But more importantly, I think any good operator should be able to give you some testimonials or people like real investors to talk to. That's where you'll discover if the guy's full of it or not. Investors never lie about money usually.

Darin: Right, exactly. When they have a big winner, they're going to be out singing the praise and if they have a loser, they're going to be telling people about that as well.

Corey: Or even tell more.

Darin: Exactly. The other thing that we didn't talk about, but multifamily versus single family is leverage.

Corey: On scale.

Darin: Scale and leverage. One, instead of managing a single family property yourself, you're hiring a third-party property management company, or when you get big enough, you may end up taking that in-house and have your own property management company.

Hit the Nirvana by Building Wealth Through Real Estate

Darin: Secondly, you're typically getting a loan on the property anywhere in between 70% and 80% so you're leveraging the financing. Then there are massive tax advantages to investing in real estate. Now you're a financial advisor, so you can talk about the returns from the stock market. If you compare the returns on the stock market to the returns to investors in real estate, it's not apples to apples because the depreciation is going to cover any of the distribution. You're not being taxed on that versus.

Corey: It's not even the same because usually, you'll say, listen, if I could get 12% consistent or an average of 12% is it the same? It's not. I started off with this in the financial world and you track Wall Street or anywhere where it goes up and then it goes down and it goes up and down. Then eventually the average is 12. You look at the real dollars, even though it says 12% average return. Or you take 12% and you just consistently do it and pay it year over year, the difference is you'll have a lot more money with a 12% average than the 12% negative 15.

Then 18% and then the curve is not the same. That's what I've learned from the financial world. Listen, people truly in the stock market are making six to 9%. Maybe if that. That's just the average truly. To make 12% or more or better in most syndications when that's what most models look like, you're hitting Nirvana. Most people actually prefer a thing that's risky. 12% when we're in financial advisor land is like that's hidden, you're in the Corvette speed nothing can kill you.

Corey Doesn't Pay Taxes

Corey: Corey doesn't pay taxes either, Darin. I've not paid taxes in four or five years. I'll never pay taxes again, I think.

Darin: That's crazy. I remember seeing when this is back when I was on a capital markets desk, 2002 to 2006 of a large international bank. I had some guy's tax return, a real estate investor. He owned a bunch of properties. I saw his tax return and it was like, I think his net worth was over 20 million. His tax liability was like 15 grand because he had so much depreciation that was allocated to him that he wasn't having to pay taxes.

Corey: There's a reason Donald Trump wasn't ever going to show his tax return because most people don't understand the rules of taxes and the benefits of real estate. When you own real estate, you can do what's called a cost segregation study that allows you to accelerate your depreciation. I'll give you an example. We just bought like a $13 million building and we got a three and a half million dollar cost seg study.

We can take that three and a half million dollars and accelerate it and give it to us in year one. Then we can use that depreciation and carry it forward on future earnings. Because I'm a real estate professional, Corey Peterson is, I can use that to offset all other income. Now I have an education company that makes money. But do I pay taxes on that money? No. Why? Because my real estate business gives me all that benefit.

Darin: That goes to like meeting other people, surrounding yourself with other people, and finding out.

Tax-Free Wealth

Darin: I remember when I first got involved three and a half years ago, some guy was like, "Have you read the book by Tom Wheelwright? Tax-Free Wealth." I'm like, "No." He's like, "You got to read it." I read it and I have another business too. All of a sudden becoming a full-time real estate professional, I was able to take all this depreciation and allocate it against this other business. I was like, "Oh my gosh, why haven't I been doing this for years?"

Corey: Uncle Sam is always true and he never will cheat on you. He will always get his.

Darin: What I didn't realize was that the tax code is, whatever it is, 3000 pages. The first five pages are like, "Hey, you make this much money, here's how much you pay." The other is all incentives that the government puts out for business owners, for real estate professionals, for people in the oil industry, all different areas where the government wants you to invest money. One of the pluses is the tax advantages.

But when you think about the impact, all of the syndicators and all of the limited partners who are investing in these deals, yes, there are great returns, it can be tax-free. But we're taking those properties and improving those properties. Where if those advantages weren't there, maybe people weren't going to be doing that as much. Workforce housing may not have as many good alternatives.

Corey: I totally agree. We're producing a product that is much needed. They don't build 2000 or 1980s buildings anymore. But they're out there and a lot of them need help. They need fresh capital to make it and modernize it and bring it into 2021.

A Beautiful Business

Corey: You can make a lot of money by doing that. The great thing about and, Darin, the last reason why apartments, the benefits of that taxes. By the way, that's a huge benefit.

Darin: It's huge.

Corey: It's absolutely huge. But, the scale. Try to buy, think about single family. I got a lot of guys that are like, "I'm just going to take my money and buy single family." Well, that's great, but try to buy 100 single family homes in a year. It is very hard my friends. You have to have some systems, you probably got to have some more people. Then to manage all that, it's really hard. But you can buy one deal with 100 doors and have one line, pretty simple in apartments.

That scale and have the staff, the people to show the property could work and have a maintenance guy that does all the repairs that works on-site every day, Monday through Friday, or whatever their time slot is. Then you also have a property management company that will do all your financials and bookkeeping, and basically run your staff and employees. You still get to make profits. It's a beautiful business.

Darin: It is a beautiful business. Another thing that I don't hear too many people talk about, and maybe it's because of the background I come from. I've been in the loan trading space, large loan portfolios between banks since like 2002. Look, I saw a chart where Fannie and Freddie, they showed, I think it was 60 or 90-day delinquency. It was over a long period of time. Up until the great recession, say 2008, 60, 90-day delinquency was like 25, 35 basis points, less than 1%. That's not the default, that's delinquency.

Frannie and Freddie of the Industry

Darin: Fannie and Freddie are the largest lenders of large-scale multifamily. They have all the data they need through ups and downs in this market and in that market. Then in the great recession, which was horrible, 2008 to 2010, 11, their delinquency went up to like 85 to 95 basis points. Still, under 1%, delinquency not defaults. I think personally, it's another save, a kind of a check and balance. It's like, look, you, as the syndicator, put the deal together, you think you're going to get a 75 LTV loan. Well, if Fannie and Freddie come back and offer 75% loan to value, or they even offer more than that, they're like, "Hey, you know what, I'll even offer you 77." Well, that's saying that they believe that the property based on all the data they have is strong enough to produce the cash flow.

Corey: It does and they do. Here's the reason why. I think about this often in how most buyers buy multifamily apartments is for cash flow. If you buy for cash flow, now, some people in some markets don't always work out this way, but for most of them, they do. Is that you may have to supplement cash flow in year one because you got to fix some stuff. But usually, by year two, you're there. If the market kind of craters, you still have the cash flow. You're not normally lowering rents. It's very abnormal to lower rents. Rents don't usually go down, they usually always go up.

If they go down it is for a very short period of time to fix a short-term problem called vacancy. Vacancy doesn't last very long because once you lower it, you fill it back up and then you come back to market pretty quickly.

Copy Your Way to Success: Standing on the Shoulder of Giants

Corey: Usually the market allows you the cash flow. In other words, make your debt service payment. Do you know what I mean? You may not make payments to investors if that was the case if you had a downturn. But most of them will survive. That really is the beauty of what, because in the great recession apartments didn't get hit like bad. In fact, it was a great time to be in.

Darin: A great time to be buying.

Corey: That's when I bought my first one, I bought it in 2011 for 3.2 million bucks. I held it for five years and I sold it for 8.8 million

Darin: 3.2 to 8.8. That's crazy.

Corey: I got one right now that I bought three years ago and I can't say where yet because I have not sold this deal and that it's not under contract. But I've got an LOI that I bought for 8.9 million. I just got an offer for 20.3 million bucks, less than three years. It's a beautiful thing.

Darin: Before we got on the call, you said that I was asking you if there was anything that you could maybe share with listeners and viewers. You said you had a book that you'd written and that you'd be open to sharing that with people.

Corey: I would love it. This is my book called Copy Your Way to Success: Standing on the Shoulders of Giants, which is really what we've talked about today is learning from others and trying to unlock some mysteries of the game of multifamily. I would love it, my team will give you this book for free, it's not free plus shipping. It's just free, we'll ship it to you.

The Making of the Book

Corey: But to get it all you gotta do is text the word book, B-O-O-K. 480-500-1127. Follow the prompts and we'll send you the book. The thing is I wrote every word of it Darin.

This book should make you laugh, make you cry, and probably inspire you to be the best you can possibly be. It's my hero's journey. It really talks about my start to becoming successful, the journey, and how I did it. It's an amazing story. There's a couple of parts in here that as I was writing, I wrote this book while I was flying at times. One time when I'm in some of the pain parts, I'm sitting there crying as I'm describing the pain gone through.

Darin: On the airplane?

Corey: Yes.

Darin: People are sitting next to you, looking at you going, "What's wrong with you."

Corey: I wonder if they thought, I was going like did you give us a hard time or something. I don't know if I shut my laptop. But it was really weird, but like I had to get pushed through it because it was the piece that was true and then I had to describe it and to relive it, it was hard and painful.

Darin: I appreciate you sharing that with people. I know that when I got started three and a half years ago. I think it's part of the path for most people. It's like, when, alright, you make a decision to get in. Then it's like absorbing education. I just listened to a ton of podcasts. So I read as many books as I get my hands on. I didn't know about your book. And I don't know if it was out three and a half years ago or not.

Corey's Podcast and Website

Darin: But that's something that if you're looking to get in the space, man, you just got to absorb the success lessons of other people. That's awesome that you're willing to share that.

Corey: The last one is to go get our podcast. Check out our Multifamily Legacy Podcasts. We teach a lot. I just put it out there. I talked about the dirt. Felt like not a lot of people talk about the dirt, like all the things that can go wrong and how you can lose money and how you can get swindled. I think that's where my strength is. I've never been afraid or ashamed to say here are some of my mistakes.

Darin: Talk about some of the things that we were talking about earlier in the podcast was that you've started laying stuff on top. You've got a podcast. What's the name of the podcast again?

Corey: Multifamily Legacy Podcast.

Darin: Check him out on that. Where can people find you on the website?

Corey: It's kahunawealthbuilders.com. That's our education piece.

Darin: Then what else, you've got a mastermind. You have a capital-raising summit. Would they find all of that on that page or?

Corey: Yes. If they go to Kahuna Wealth Builders there are links to all that stuff. There's our courses, our books, our events that are coming in. That's a great place to figure it out. It's really been a fun journey. It is fun to teach others. It's fun to play the game. It really is life-changing. All I can tell you is I sometimes pinch myself because if I knew the life that I live now, I would have said you're absolutely full of it. But it is a great life.

Committed to Building Wealth Through Real Estate

Corey: Multifamily has given me time and money just like Bruce had, and it's changed my life.

Darin: That's huge. But I also want to give you credit because look, you actually had to take a risk. You had to jump off, you had to make that first investment. You had to do the learning. Look, it's competitive to win deals. You had to get out there and build relationships. You did the work also, so I applaud you for that. Hey, another thing you mentioned earlier was wasting time and having to charge for things.

When I started the podcast I went down to Austin. I met with a few different people. One of the guys that I ended up interviewing, he had told me, we got together just for coffee. He's like, "Hey, Darin, man, I had all these people that we're reaching out to me and I love to help people." But I found I had all these people that I talked to them for a half-hour or an hour on the call and then all of a sudden, I have no idea if they did anything after that.

It got to the point where I was spending too much of my time with people that may not be fully committed. He's like, I started to put a dollar figure to talk to me and I started to offer classes because I wanted to be working with the right people. The people that had already made the decision, that they were committed and they needed somebody to help them along the way. I think that that gets lost on some people. Look, there's a lot of courses. There's a lot of masterminds. There's a lot of different opportunities for people to partner with people to learn.

The Next Big Stretch

Darin: But I think they have to understand that some of these people don't have to do it. You want to do it with the people that you know are going to have success.

Corey: Yes, and doing it now. There's a lot of people that teach that don't do. You want someone that's doing it now that teaches because it's really part of my mission and part of who I am. I teach because I love the game, I always will and I enjoy giving back. It's fun to watch other people get that same fire and light that I had and that I still have. It's neat to see them get in gear and then start heading towards their dreams and their goals are the most rewarding thing of what I get to do. It helps me be a better supplier of fun.

Darin: Awesome. What's your next big stretch goal?

Corey: I don't have a stretch goal. Here's how Corey plays the game.

Darin: Well, you said supplier of fun? How big of a supplier of fun can you be?

Corey: Well, so here's my thing. This is how Corey works. All I want to do is do one to three deals a year. How many? One to three. Not really four, because of too much work. That's going to get my time factor. But, now I've increased the deal size, that's how you play the game. You want to do more, just buy a bigger deal. We buy between right now we're in the $20 million space. That's our new favorite, 20 to $30 million is our new asset we like to buy. But do one or two, three of those a year, that's the pace, that's all I do. I don't need to do it.

Corey's Love for Riding

Corey: I'm happy where I'm at now, but my team is geared to do that and we like that. That's really the pace. That's what I'll be doing probably till I die. One to three deals a year, enjoying the game, traveling a lot, watching my kids grow up, being a great dad, being a great father, being a great husband to my wife. Enjoying everything, being a part of as much as I can go. Take art classes, jeep a lot, go on epic trails and go to Sturgis and ride my motorcycle. That's my lifestyle. I don't have a stretch goal. I just have a nice, simple, let's do one to three deals a year. Let's continue in that till I die and all things are great.

Darin: That's awesome. Riding your bike in Sturgis, well, if we ever get an opportunity, I'd love to go riding with you. I don't have a bike, but I love riding.

Corey: You can rent one in Sturgis, baby..

Darin: Exactly. When I mentioned that Austin trip, I'd rented a big old Harley here in Dallas and drove down to Austin, I was itching to ride. Would love to do that with you. What do you like to do outside of work besides riding motorcycles?

Corey: Jeep. I've got three Jeeps, I just got my new one yesterday and it is so awesome. I rock crawl. Then I go out and do things that people probably shouldn't do with their Jeeps. I always think the Jeeps that are, I call them all crawlers once they're always on the pavements. So I thank them for keeping my insurance low. Because we go out and try to see if we can almost roll them. Here's what I love about that.

Corey Outside of Real Estate

Corey: That's another supplier of fun. I just took out three guys from out of town yesterday. That's when they came in, we flew in, we were doing the business together. But then I was like, "Hey, let's go out and do this." Give them an experience of doing that. They were just from ear to ear, like that was cool. Because I think they almost pooped their pants.

Darin: I don't know you that well, but I could tell that you behind the wheel with some people in there for the first time that you're probably going to push the boundaries a little bit to see who can take it and who can't.

Corey: I've got routes that are pre-built and pre-planned and I know. Listen, it's all automated at this point, but everybody gets the same feeling every time.

Darin: What's the best way for people to reach out to you? Is it from the website or is there another way?

Corey: Listen to my podcast. If you like it, keep listening. Go to my website, kahunawealthbuilders if you want some education, we got some free stuff called the Quick Start Workshop Guide. You can get that for free. Just click it, download it. We'll teach you how to raise private money and how to find deals. It's some great video training. Then get the book. Those are the three best places. That's how you start your journey. Then one of those places you'll be able to get into my network and figure out. If you want to go to one of our courses, you'll find that naturally.

Darin: Awesome. Corey, I really appreciate you coming on, man. It was a blast and hopefully, I get out and see you out in Arizona at some point.

How to Reach Corey Peterson

• Website
• YouTube Channel
• Multifamily Legacy Podcast
• Text “book” to 480-500-1127

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