Are you looking to invest in multifamily properties? Jerome Myers left his corporate America job as an engineer five years ago and hasn't looked back. He's an owner in 90 doors over five properties. His focus to date has been on JV opportunities rather than syndication. Jerome has a heart for the tenants in his properties and for teaching others. He's a natural "coach." He lives by a couple of great quotes "Do good while doing well" inspired by Jim Rohn and "Love on the asset and the asset will love back on you." You'll learn how he invests, why he invests that way, his focus on coaching multifamily, and much more. Listen and learn!
Table of Contents:
- Where To Listen To The Podcast
- A Heart for Helping Tenants and Coaching Multifamily
- Help People Grow Their Wealth by Coaching Multifamily
- Coaching Multifamily on People Who Want Autonomy and Freedom
- The First Lesson: Learning to Articulate Your Value
- Coaching Multifamily Helps Rookies From Making Mistakes
- Giving Back by Coaching Multifamily
- Get In the Game and Take Action
- How to Reach Jerome Myers
A Heart for Helping Tenants and Coaching Multifamily
Darin: Jerome Myers left his corporate America job five years ago. Since then, he started two successful podcasts and closed on five multifamily properties. This guy has a heart for helping tenants have a better place to live and helping others learn how to get started investing in multifamily.
Jerome also has a podcast in the multifamily world. I see him all over social media. This guy is a mover and a shaker, and was kind enough to have me on his show. Typically, the first question I ask is how many properties and how many units are you currently invested in?
Jerome: I am the asset manager on everything that we do. We've got about 90 doors across five properties in Greensboro, North Carolina, and Richmond, Virginia.
Darin: We talked about this when I was on your show, and I’ve seen some comments in your documentation that you prefer the JV over doing syndication. Talk about why that is. I have a lot of syndicators on the show and syndicators love to talk about how many units they have and just charge forward. Their goal is 5,000, 10,000 units. Why do you like the JV model over syndication?
Jerome: Maybe it's just me being selfish. I like to own more of what I'm in control of. A lot of folks go into deals. They're chasing door count, but it's not really changing their net worth, nor is it changing their cash flow situation. If you own 0.001% percent of a deal, you don't really have a whole lot to say.
A Corporate America Dropout
Jerome: The other piece of it, and maybe I'm just a little bit bitter, as I'm a corporate America dropout. One of the things that I did not like, which was one of the top priorities was maximizing returns to shareholders. I think about syndications in the same way. You have to figure out how to get the people who are holding a piece of the deal, the LPs, as much money as you can.
There aren’t a lot of decisions between the partners on what's best for the actual community or the residents at the community. It's all about how much money you can make. That's fine if that's what you're after. When I dropped out of corporate America, I realized that money wasn't my primary motivator. With that said, I know that you can make money and do what's right. Even though you may not be optimizing for making as much money as possible, you can make an impact on a community as well as put some money in your pocket. Do good while doing well.
Darin: Talk about what your primary motivator is.
Jerome: It's not just mine. One of the guys who is invested in all my deals is James Bryant. When he took a detour from paying off his home to start putting money in real estate, he said, "I want my investments to make an impact." That hit me in my heart. I was the guy who was chasing money, who wanted to have the biggest house and the coolest car. And I was buying things to try to replace or fix holes in my soul. When I left corporate, I was like, "I really want my life to make a difference. I want to make an impact."
Understanding the Plight of People
Jerome: When I started looking at apartment buildings, because of everything I buy, I went into every unit and started seeing the conditions that people were living in. I started to understand the plight of the folks who were living in workforce houses and how there's cognitive dissonance between the owners and the residents. If you don't pay attention to your property manager, your units, your assets can end up in pretty poor condition. I said, "I don't want to be that type of investor."
The type of investor I want to be is one that's making the lives of the people who live in our communities better. We're giving them a great place to live, but we're also improving the area around our assets. We are holding it to a higher standard than what a whole lot of people may do when they're optimizing for money. If you have a property, you may not spend money on something that isn't going to give you an immediate return, if you're trying to get as much cash on cash as possible. For us, we feel like if you love on the asset, the asset will love back on you. In that mutually beneficial relationship, in the long range we'll be able to create huge returns and not just ones that go in your pocket.
Darin: I love that saying. "Love on the asset and the asset will love back on you."
Jerome: Our avatar for the person that we buy these properties from is somebody that's a mom and pop owner. Usually they're 55 or older and they've got the majority of their wealth tied up in the building.
Coaching Multifamily on People Who Are Trying to Unlock Their Capital
Jerome: What happened, especially in COVID, is their cash flow dried up because people haven't paid as they normally would've. They have it hard because the residents have been there a long time. So these folks are trying to figure out how to unlock their capital. What also happens when they run their business that way is that they don't have enough money to make the repairs that are necessary.
So they end up in this downward spiral when they don't raise the rents as they should. They don't have the capital reserves in order to keep the property at a high level. So, they have a choice. They can continue to ride it down or they can exit it and exit it at a price that they probably wouldn't be able to get if they went to market. They don't have a property that's actually market-ready.
Darin: Then you take it to the next level from that standpoint.
Jerome: Well, all of our projects have been in construction.
Darin: New construction?
Jerome: No, but there's always been a renovation plan for everything that we've bought. It's never something where it's already working well. We just come in and take care of the cash flow.
Darin: You mentioned impact. I've talked to a lot of people and people have a heart in different areas. I could tell your heart is really in providing a great living environment for the tenants and then that will pay you back dividends. For me, I'm a business guy, a numbers guy. I'd be sitting in church and church pastor's always talking about serving.
Help People Grow Their Wealth by Coaching Multifamily
Darin: I just don't really want to go clip bushes or pick up garbage or get into the community. If I do it, I'm going to feel good afterwards. But one of the things that this business has provided me is that I feel like we're in a position to help other people learn how to grow their wealth. So many people are just taught to take a certain percentage of their income and put it into 401ks and stocks. There’s actually another way. My mind in my serving is geared more towards the investor.
I feel like I can help grow the wealth, teach people how to do it or they can partner alongside me. But it’s cool when I'm walking across the parking lot; say we just painted a property. The tenant is like, "The property looks so much better. I've been living here for 10, 15 years and finally somebody's putting money into it." It catches me off guard because that's not where my initial thought is or my initial heart is. It's more towards helping other people grow their wealth, but you come at it from the standpoint of the tenant, which is awesome.
Jerome: In a lot of ways, even though people don't get excited about this, they're your customer. If you serve your customers well, they don't go somewhere else. What I've learned through the operations of our properties is, if a person moves out of your unit every year, you'll never get cash flow positive. You spend money on the turn, and the turn just eats up all the profit. What we really want to do is get people who are there to stay there for two, three, four years.
Different Decisions on How to Live Life
Jerome: That's when we can really get profitable on the units. The only way that people actually stay is when you fulfill their maintenance request. Two is you give them a great environment that they're proud to call home. Everybody's not going to buy a big house. Everybody is not going to go buy a trailer or live in one of those tow behind things. At the end of the day, everybody's got their different decisions on how they're going to live their life. There are some people who are just going to be renters for life.
We have some residents at one of our smaller properties who have been there since it was built. That property was built in the '80s. They plan to stay there until they die. So while we will raise rents, while we will make investments in the property, we want them to be really excited about where they live. If they're not, then we have to turn that unit, we have to update it, we have to market it. We've got all the expenses that come with making a transition.
My friend James that I mentioned earlier, he talks about them being your partner. I'm not going to go as far as him, but I will say they are your customers. The moment that you forget about that is the moment that you get in this position where your property may end up empty. That's far worse because somebody decided to retaliate because they weren't treated well.
Darin: Coming at it just from the business side, not even the feel-good side is retention rate. They're typically annual leases and you come upon a renewal.
Coaching Multifamily and the Costs Associated With It
Darin: If they stay in the unit, you have no additional cost. But if they move out, there are a lot of different costs. Talk about some of the costs associated when somebody moves out, even if you're not upgrading the unit. If you're upgrading the unit, that's one piece. But if you're not upgrading the unit, talk about some of the costs associated with that.
Jerome: At the minimum, there's paint. Usually there's some damage to the floors and people will talk about, "Well, you got a security deposit." Depending on how much your security deposit is, it probably won't go very far. What I hear most people say a unit turn costs depending on the size of it is somewhere between a thousand and $3,000. I don't want to nerd out on math. But if you look at how much money an operator makes per door on a unit, then you back that out, and then you compare it against the turnover cost, you'll see that the breakeven point is past a year for most people.
If that person moves out, you did nothing but make enough money in order to pay for the turn. That is terrifying because if half of your property turns or 60% of your property turns each year, then let's say that your profit per unit was a hundred dollars a month. Let's just say you end up only getting $60 out of those hundred dollars in profit that you made. That isn't going to be exciting for anybody to be in the business. It drops your returns down below the double digits that most people are seeking when they make one of these alternative investments.
Jerome: When you think about the risk-reward on it, some people would say, "Well, it might be safer for me to put my money in the market because of the liquidity piece." Others who are like, "Well, it's a hard asset. You don't have to worry about inflation and some of the other stuff. I want to park my money here."
At the end of the day, both people are right. It's just a matter of their risk tolerance and what they see as risky versus being un-risky. Liquidity for some people is the holy grail. For other people, they know they're not going to use it. So they're willing to lock it in for a little while. But I don't think they want to lock their money up and get a return less than what they could get if they could go in and out of the market as they please.
Darin: That's an overlooked area for a lot of people that are new getting into the industry. It’s that retention rate and keeping people and the thought of building community. I have met other syndicators that have a heart like yours, that is really focused on the tenant. They'll partner with third-party charities that will come in. They give free backpacks to the kids when they start in school or do other types of programs.
It doesn't even have to be any cost out to the property. But it takes some initiative to go out and build those relationships with the charities and get them involved. You said you're an ex-corporate America guy. What were you doing before you got into real estate?
Securing the Real Estate Rights
Jerome: I did a lot of things. I'm formally trained as an engineer and so my last role was building a $20 million division for a fortune 500. We were taking overhead power lines and moving them underground in Eastern Virginia. My group was responsible for securing the real estate rights. We’re doing the engineering of the actual power line, the new configuration, and then construction crews, putting it in the ground.
Darin: That's a big responsibility.
Jerome: It was a wild ride.
Darin: When did you leave that?
Jerome: I've been out of the matrix for a whole five years. What's crazy about that was I was employee number two in that group on January 13th of 2015. By September 30th, we had 175 people on my team. At the end of that year, we hit the $20 million mark. We had 30% profits and I get the phone call on Christmas Eve. The guy who I reported to said, "I know we've been going back and forth about this, but we're going to lay half of them off."
I go into my proclamation of how wrong this is and we're not going to do this. There's got to be another way. He lets me go on for about two minutes and then he says, "Jerome, it's 4:59. I'm going to spend the rest of the year with my family. I'll talk to you next year." And he hangs up on me. I knew then that there was something wrong and something inside me died at that point because I'd never done it before. Then to have to do it in the way that we were doing just didn't make sense.
Coaching Multifamily on People Who Want Autonomy and Freedom
Jerome: I had the illusion that I had the autonomy to do what I wanted to do, I was making money and nobody was really checking in. So I was seeing people once a quarter, I was talking to them every other week. I vowed that I would stick through it, we put Humpty Dumpty back together again and we ran another year.
Then it was a couple of days before Thanksgiving where I stood in front of the room again and said, "Don't spend all your money on Black Friday. I'm not sure what's going to happen." That was when the rest of the desire to be in corporate America died. I was like, I don't want to do this ever again. It was at that point that I actually took responsibility. Before it was, they made me do it. This isn't something I would do, they made me do it. Then it was like, well, I'm part of the problem because I'm participating in the system. That's when I decided that I was done; I was going to do something else. So I started chasing real estate.
Darin: I didn't realize your story, but that holds true for a lot of people in corporate America. You think it's a safe place, you think it's the safe play to have a W2 job, but you're really at risk. Most people have just one income source and they're chasing up the corporate ladder to make more each year. But at any point in time, you can get that phone call. I'm sure you know many people too; it's not like it's always the people that are at the bottom that are just no good at their job.
A Scary Place to Be
Darin: I know a lot of great people that were part of layoffs and they were just in the wrong place at the wrong time. Another company acquired them, and they brought in new people. Those new people wanted their own people, and all of a sudden they're out and that's a scary place to be.
Jerome: That’s my biggest challenge with the first go-around because we did have some fat. That fat wasn't something that gave my heart a ton of burn. But the people who were good, the people who were actually productive, it tore me up. It broke my heart.
I'll never forget getting the phone call that one of the people that we laid off, he was in a really rough spot. His wife left, took the kids, eventually he lost his transportation because he wasn't able to find a new role. Then he eventually ended his life because he lost everything and I guess lost his dignity.
Darin: You never lose everything. You can get help and you can move forward. Let's just say that. If there's somebody out there that feels that way, there is always the opportunity to move forward and get help. It doesn't have to end like that.
Jerome: It doesn't, but that was a story he told himself. In a lot of ways, at least initially, I felt like I was part of the reason why he was there. In the end, that ended up being traumatic for me because I didn't want to be the cause of pain. I didn't want to be the guy who helped create a situation where somebody felt like they were in a corner and couldn't do anything else.
The Huge Impact of Mindset
Darin: You said it’s a story he told himself. Let's take that as a segue to talk about mindset. What happens in between your two ears, in your head has a big impact on how your life is going to go. If you keep telling yourself that you have no value, you can't do this, you can't do that, you think negative thoughts, or you're thinking about doing things that you know aren't right, that perpetuates on itself. The opposite is true also. How did you go from that? You didn't have multifamily. How did you make that transition out of the corporate world and then believe that you could do it?
Jerome: It was ignorant bliss. A bumblebee doesn't know that they can fly. I was out here doing all the things. So I went to LoopNet, got the deal off LoopNet, and then put my business plan together. I went to the bank and said, "Don't you want to give me a million dollars? They said, "No." I was like, "What do you mean, no?" I said, "Well, I got some money in the bank. I got an 800 credit score. Why wouldn't you give me any money?" They said, "Well, you don't have any experience."
I said, "What do you mean? I got an MBA and I'm a professional engineer and a project management professional. What credential do you want to prove that I have experience?" He's like, "Have you ever owned a property of this size and executed the business plan that you're proposing?" I don't have any of those credentials. So they said, "You need to go find a partner."
The Bank Doesn’t Invest in Dreams
Jerome: That was when I realized that I spent my whole working career not doing any of the things necessary to get me to the place I really wanted to be. So when I was a sophomore in college, I realized that I wanted to own apartments. But I didn't know how to get there. I figured, if I go into corporate America, then I can make some money, get some credentials and get a credit score. Then the bank will be excited to give me money.
But the bank doesn't invest in dreams; they invest in proven operators with great business plans. So I needed to go find a network of people or somebody who had that and I didn't know where to go.
So after going to 10 banks, because I thought each one that I talked to before was just idiotic and didn't know what they were talking about and that wasn't the way things got done, I finally gave in and I pivoted. I’ve started fixing flip-in using hard money because I was a hard money lender when I was in corporate America. I was giving money to guys, letting them do their rehab projects, seeing them make a huge return, and taking my double-digit interest payment.
But I questioned, well these guys can't be smarter than me. Surely I can do that. So staying as close to real estate or apartments as I could, I got into some deals. I was sitting on the porch of a 1920s building where we were doing a $90,000 rehab.
Jerome: I'm there every day at 6:00 in the morning and I'm leaving after 6:00 at night because I'm proud and I'm going to do it and I'm going to fix the thing. The guy pulls up in a white Dodge Ram, hops out and says, "Hey bud, I want to check out your finishes. We're getting ready to do a house down the street." I was like, "Okay, come on." I'm proud now because somebody wanted to see what we were doing. After being beat up by the banks, somebody actually cared about my little house project.
So he goes through, he walks in, sees all the stuff and is getting ready to walk back out. He says, "Do you know anything about that building?" I said, "The 23 unit apartment building?" He's like, "Yes. I'm going to make an offer on that today." I said, "You're the guy I've been looking for. Please don't leave me out." Because you have to have experience if you're going to make an offer on the building.
He's like, "Yes, we own some stuff." I was like, "Please don't leave me out. What do I have to do?" He said, "Well, what are you going to bring to the table?" I said, "I don't know, but don't leave me out of this deal. You're the guy I've been looking for. The bank said I need somebody with experience." He said, "What are you going to bring to the table?" Again, I told him, "I don't know. We'll figure that part out. Just don't leave me out of the deal." So he gave me another chance.
The First Lesson: Learning to Articulate Your Value
Jerome: He said, "What are you going to bring to the table?" I said, "Look, I don't know. I just know that this is what I want to do and I need you to bring me in on the deal." Looking back on it, I see how silly I was.
I didn't spend any time articulating my value; I didn't talk about any of my training, I didn't tell him I had capital to bring to the deal. And I didn't say any other things, but mainly because I didn't know any better. I just wanted to tell him, "I can do the work and we can get this thing done." So he walks off and he walks through the yard, hops in his truck, and drives off. This is a Wednesday, I'm like, "He'll call me by Friday when he's got it under contract."
Friday came and went, nothing. Whole weekend, nothing. Monday of the next week, I was like, "All right, they got through the weekend. They got through negotiations. Today is the day." Nothing and then my heart began to sink. I thought to myself, "Wait, he doesn't even have my phone number. How's he going to call me?"
Tuesday comes and goes. Friday of the following week comes and goes. Then Tuesday of the following week I get a phone call from a guy. He said, "They just asked me to be a general contractor on this project that you and I talked about five months ago. I told them I'm only comfortable doing it if you're involved in the deal." It was like fireworks went off. I was like, "Okay."
Darin: Was it that guy?
Second Lesson: The Power of Network
Jerome: It was a different guy. One of the guys I used to lend money to when I was in corporate was a pretty well-known general contractor. They reached out to him to be in charge of the construction for this new complex that we were going to buy. He and I talked about it months before when I tried to buy it but didn't have the right relationships. So he circled back on them and got me to the table.
The same guy who I talked to in my rehab house was the guy who had the contract, but he needed a team. So it was the three of us together. Then we added in a property manager who put some equity in the deal and then the broker rolled his commission in. The five of us took down this deal and we did everything.
When I say everything, I meant the roof, parking lots, landscaping, and new HVACs in all the units because they didn't have them. A lot of them were still window units. Taking walls out because these were townhome units, granite, stainless steel appliances. Because we added a laundry room on the first floor, we had to replace the main drains underneath all the buildings and they were on slab. It wasn't like there was a crawl space where we could just go in and do it nice and easy.
So jackhammers, all the things are happening. While we're going through this, an article comes down in the newspaper. It says something along the lines of "Rising real estate investor partners with proven operators to revitalize Churchill townhomes." I'm like, "Who are they talking about?"
How Closing That First Deal Can Change Your Life
Jerome: Then I saw my name in the paper and I wasn't the only one that saw it. So banks are calling and they want to create relationships. It's just amazing to see how much closing that first deal can change the way that people see you. I came down to Greensboro, North Carolina, started buying deals here and that's where our focus has been.
Darin: There are a few things on what you went through where others can learn from. First, you believed in yourself enough to keep saying, "Get me involved. I don't know what my value is, but get me involved." That confidence level is key and the belief and the determination to keep moving forward. You could have spent some time identifying what your value is. Then, what are you missing? Those are the partners that you want to go after. When people reach out to me and they feel like they're too young or too old, or they don't have enough money, they don't have enough experience, whatever the case may be, everybody has value.
Figure out what your value is and what you're missing, then find somebody else that has what you're missing but wants what you've got. That could be capital raising. Some people don't realize this, but some people don't want to be out there chasing the deal. They want a young, hungry person to go out and find the deal, run all the numbers, get everything squared away, and then come to them. They've got the balance sheet, the capital, and the relationships. There's a partnership. It only takes one or two deals and all of a sudden you build a reputation for yourself.
Coaching Multifamily and the Things I Wish I Knew
Jerome: That's the thing that I didn't know.
When I hear people come into the space and they're trying to get their deals done, the thing that I know now that I wish I knew then was, there's four things you have to overcome. Knowledge, deal flow, experience, and capital. Most people try to get that done out of order. They say, "Well, I'm going to go buy something, so I need capital." But capital is the last piece and your capital is even a small piece of the big capital. Usually, the debt is going to bring somewhere between 65 and 80%. But you're not going to get the 65 or 80% of the money until there's somebody that's experienced involved in the deal. Nobody experienced is going to get involved until you actually have a deal.
Deals and leads have the same letters, but they're not the same thing. The only way you can tell the difference between a lead and a deal is if you have the knowledge. So for everybody out there that wants to get in a space and you're like, "Well, I listen to Darin's podcast, and now I'm ready to go buy a deal." Here's what I'll liken it to. Darin, I know you've done really well. You've done the distressed debt. So here's the thing. I'm starting my MMA career and my first fight is going to be with Connor McGregor.
Darin: When is that going to be? I want to see that.
Jerome: Well, we got to get to the fight first. I need half a million dollars to get to the fight. That's my buy-in, got to get everything in there.
Jerome: If I win, I'll return a 20% return to you. But if I lose, then you can lose all your money. Now here's the thing. I've listened to a few podcasts, I read a few books and I'm ready to get in the game. Are you going to make that investment? I can send you the wire transfers right now.
Darin: You're a nice guy, my friend, but I'm not investing in that.
Jerome: Come on. It's me versus Connor.
Darin: I'm sorry, man. You look like you're in good shape and you could probably do well in the ring, but I'm not taking that bet.
Jerome: That's how I think about apartment buildings. They're wild animals. We're asking people who we barely know to send money to do things that we really don't know how to do. We think we do in concept, but we don't really understand what's going on. So that understanding, truly having knowledge, having somebody look over your shoulder is the way that you go from being in a space where you have an idea of what's going on and knowing what's going on.
That is the way that most people get in trouble. This is part of the reason why I'm challenged by the whole syndication model because we go out. We raise money and we say, "Oh, well. Yes, I know what I'm doing, but we're using other people's capital to learn with." I don't think that's fair.
Darin: I'm in the syndication space, so I'll come at it from a little different angle. I still think that in the syndication space, you need to partner with somebody that has experience.
Coaching Multifamily Help Rookies From Making Mistakes
Darin: So my first syndication deal, I partnered with a gentleman outside of Chicago, Raj Gupta. He had 10 years plus experience in doing all types of real estate, including large multifamily transactions and he acted as my board of directors.
Any of the major decision points, I'd go to him and be like, "This is what I'm thinking of doing." Most of the time he's like, "run with it." Every now and then he'd say, "You may want to consider this." He didn't call me a dumb ass, he just said, "You may want to consider this." I think about it and I'm like, "Oh, that's smart." It helped me from making some rookie mistakes by having a senior guy.
So you can do the syndication business and still have experience on your team. I wouldn't recommend partnering with three completely new guys, raising a bunch of money from people and just having a bunch of rookie mistakes. But if you partner with somebody with experience, you could still get that knowledge and that learning by doing that. You also learn from the partners. You learn from the attorneys. The attorneys when they're negotiating the contract and helping you, you learn what they look for.
What are they redlining and why? Property management company, you learn how they operate. Some of it makes a lot of sense and some of it you're like, you know what? Why don't you tweak this a little bit. They're working for you, so they're happy to do that most times. That's where I would come at a little different slant that syndication doesn't have to be completely taking a major risk if you partner with the right people.
Somebody Looking Over Your Shoulder
Jerome: You need somebody looking over your shoulder. I think about it like a driver's ed. You don't just get the keys and you go. There's somebody riding in the car with you, helping you avoid the bridge and making sure you're looking out for that deer. But at the end of the day, what I do see a lot is we don't have any money, we don't have any experience. So we think that we can go out and take down Moby Dick, which is the biggest apartment building we can think of.
Then we get all these people to put our money in and then we get into operation. Something goes sideways and we personally can't fix it. Now we're doing capital calls. What it does is it taints people who come into the space. Because they trusted somebody who didn't know what they were doing from ever doing another deal with this incredible wealth building and creation tool that we have in multifamily investing.
Darin: In today's market, what I would say is see the brokers that are representing most of the deals in these larger syndication multifamily deals. They're not going to typically recommend a buying group if it's a bunch of first-timers. The only time they'll recommend that is if they're way overpaying.
If they're paying dramatically more and they're putting down dramatically more hard money day one, they may tell the buyer, "You know what? They're putting down double the amount of hard money. You could take a chance. If they don't work out, then you got the hard money. You just take it out to market again." But if they're on par with other people, they're going to recommend the tried and true operators.
Coaching Multifamily Through Podcasting
Jerome: I agree with you completely. But the thing is, people are so desperate to get a deal done recently, that they'll pay whatever just to say they did a deal. That's when my stomach gets in knots and then people who know even less are putting their money behind it.
Darin: If you're looking to get in the space and maybe you're a first-time passive investor looking to get in the space, look at the track record of all the general partners in the deal. Make sure there's some experience there. It could be a new guy partnered with an experienced guy. Make sure that there's somebody who knows what they're doing. That's very important or else you are putting yourself at risk by investing in that. You've got two podcasts. So I want you to talk about why and what are they focused on? Then you also have a conference coming up in February, so talk about that as well.
Jerome: So the podcast, the first one is Multifamily Missteps and we were fortunate enough to have you jump on with us. What I found when I was going through the space, when I got in, I was like, I got to learn as much as I can. I was listening to 40 hours of content a week.
What frustrated me when I got into my first deal was I felt like an idiot. Everybody who went on a podcast was talking about all of the great success they were having. They never made any mistakes and here I am fumbling around trying to get permits and all this other stuff. I was like, wait, am I the only one having a challenge doing the thing?
Jerome: What I realized once I spent more time with operators was, no I wasn't. But these fireside chats, these war stories that were being traded were only reserved for the people who were in the game. Everybody knew that everybody had their mistakes; everybody knew that there were challenges. We just didn't talk about them with the general public. I said, I have always learned more from my mistakes than I have from the things that went perfectly.
So what if I was able to get enough people who were in a space to come on and share stories that they didn't want anybody else to trip over on their journey? Because let's be clear, you and I aren't in competition. If we are, it's for a very small period of time where we're chasing a deal and we're trying to figure out who can pay the most for it and still make money. Outside of that, the better you are, the better I am.
If we're buying stuff that is adjacent, we raise our rents together; we're giving our clients great experiences. All of that is for the betterment of the community. That's what Multifamily Missteps was born out of. I was tired of the HGTV feel of multifamily investing and I wanted people to really understand.
Darin: Most people talk about the good, so that's cool that you did that.
Jerome: The other podcast is called the Dream Catchers Podcast. What we really look for is people who have exited the matrix or dropped out of corporate America. What we want to know is the tools, tips, and techniques that they have for us to make our transition or our journey smoother, better.
My Life Path Is Coaching Multifamily
Jerome: What I found is that there are a whole lot of people doing things because they pay well, but not because they're actually in alignment with their mission. Part of my life path, my journey, and my mission is to help a hundred people leave jobs they're not passionate about. They do that a number of different ways.
But the whole premise is if we can have people not doing things that they are not excited to do, but they pay well and get them to do the things that they're really excited about, they can make a difference in the world. Eventually, they'll be compensated really well for it. Dream Catchers gives them education, inspiration, and direction and helps them make that transition.
Darin: There are so many people that are in a place where they make a good income, but they're not happy or passionate about what they do. But they let fear prevent them from taking a chance. So something like Dream Catchers is awesome to inspire people. You got a conference coming up, talk about that.
Jerome: This will be our fourth Mid-Atlantic multifamily investing conference. The way I like to brand it is we have the most diverse lineup of speakers in the country. Fortunately or unfortunately, the majority of our conferences only have white men who are between 40 and 60 years old talking. On my journeys, I've found that there are so many other races and specifically women who are in the space doing deals. There's people like me looking for somebody who looks like them doing the thing. That is really exciting for me.
Coaching Multifamily to Encourage and Excite People
Jerome: I still remember being an entry-level engineer at a company that had 17,000 employees and we had 88 executives. There was one African American man and I would see him in the parking garage. I would see him in the hallways and I would say, "Craig, you inspire me. You give me hope that I could run a business unit one day." He'd always say, "It's not about race. You just have to do a good job." I understand that. But because you're actually there, I see that somebody that looks like me could actually do this.
We created the conference to showcase people from all backgrounds. So nobody out there who wants to do this business has an excuse for why they can't do it anymore. It's really to inspire them, to encourage them, to excite them. We've had some really amazing folks come and share their stories. I'm the only one that has an educational product. It's not a pitch fest.
There are a lot of people who get frustrated when they go to conferences. People are literally sharing how they got to where they are and the things that they had to overcome. They’re authentically sharing in a way that you won't get anywhere else because they're not posturing. It feels more like a family reunion than a, "I'm great, you should put your capital with me."
Darin: Where is the conference and how do people find out more about it?
Jerome: They can go to myersmethods.com/win2022. It's going to be a virtual event. People are still a little wary about COVID, but hopefully when we do our fall edition, we'll be able to get in-person on that one.
Giving Back by Coaching Multifamily
Darin: You're giving back by doing all these things. Two podcasts, a virtual conference, it's a lot of work. Some people are like, "He's doing it because he wants this." Yes, there's typically some benefit to doing it. But there's a lot of work to do. You're giving back for free in a lot of different ways. Let's talk about networking. Networking could be about finding partners. It could be about bringing passive investors into the mold. I know you're not a syndication guy, but if you are in syndication, they may invest.
When you were talking about your missteps, I was thinking about the network. I'm like, I know people get it. They may be doing this for a while. All of a sudden, they have a fire at a property and they've never had that happen before. But they know another syndicator, another owner that had that happen to them. They just pick up the phone and call that person. "What'd you do in this situation?" Within five minutes, they're like, "It’s all going to work out. Here's what's going to happen." It's so different from being on an island where you don't know anybody. If you network, you can find answers quicker. It's not just about getting the deal, it's about managing the deal and learning the business.
Jerome: That's the piece that most people miss with multifamily investing, you actually have to operate the business. You have to improve the net operating income in order to truly get that backend number that you're looking for, it’s the real pop. Cash flow is nice, but the incremental difference, the real shift, and the valuation comes on the exit. That only increases if you improve the net operating income.
Making Sacrifices for Love
Darin: Growing up, did you have brothers or sisters? Were you rich or poor? Where'd you grow up?
Jerome: I'm the son of a soldier and a stay-at-home mom. No brothers, no sisters. As a kid, I was pretty fortunate because it was just the three of us. But I do remember hearing my dad tell stories. He didn't tell me while he was going through it, but I remember being deployed in Korea. Instead of spending any money, he sent everything back home and he would drink sugar water to take care of himself.
I remember I didn't get it when he was doing it, but my dad was a jump master in 82nd airborne. He jumped out of airplanes for an extra $200 a month. He loved jumping out of airplanes, but the monetary reward, that extra $200 a month, was the difference between me getting an extra pair of shoes or us going out to dinner versus not having those shoes or those cleats for that athletic season or going out and celebrating whatever we were celebrating.
The ramifications of him jumping out of airplanes for so long is he's had to have both his hips replaced. He's had intense arthritis since he was in his late 30s. He lived in pain for a really long time and he still has some pain. If I could trade in every pair of shoes and every dinner for him not to be in pain today, I would. As a kid, I had no idea of the sacrifices that were being made for me to have the luxuries in life. But as an adult and as a dad, I get it now and I know why he did it.
Half as Good
Jerome: I'm just hoping that I can be half as good of a dad to my daughters as he was for me and give my mom or buy my mom's freedom. Because we weren't a two-income household, there were things that we couldn't do. But she had her time and she was able to invest that time with me. Hopefully she's proud of her investment at this point.
Darin: That generation sacrificed in a different way than we may sacrifice today. They would work two jobs or send money back, travel to provide for the family. For that generation, that was a big sacrifice. In today's world, we see a lot of people like you giving back. You’re sacrificing in other ways by teaching people another way to build wealth, another way to provide for their family. You do still get the freedom of time if you do that as an investor versus working a nine to five or nine to nine type of job.
Jerome: I still pick with him because he worked those Carolina half days, 6:00 to 6:00. I still remember standing in the front yard and telling my mom I wanted to be a trash man because Lonnie was home when the kids got home from school. It was really cool to be able to see a dad play with their kids. I'd get to play with my dad on the weekend or in the summertime when the days got extended. But in the winter, if I wanted to play catch or if I wanted to do something else, I wasn't going to see him before dark.
From Selfish to Generously Coaching Multifamily
Jerome: I was a selfish little thing because I was like, "Well, I'm ready to eat. He's not here yet." You weren't going to eat before he got home, so I absolutely got it. That was one thing that I wanted. I wanted to be able to have time and location freedom. So when I realized I was climbing the wrong ladder, I had to jump off that thing and try to get out here and make a real difference.
Darin: You mentioned that you have some programs where you help other people learn how to do this. I don't have that. I've interviewed a lot of people, some are just chasing how many units they get and they're making a ton of money doing that. Other people have built education platforms. There are some people out there that are against that. I'm like, you don't have to buy it.
Jerome: You don't have to buy it.
Darin: But isn't it great that somebody is offering something to shortcut? I joined a mentorship group and it took me a year to go from a duplex to a 76 unit complex. I'm pretty certain I couldn't have done it without joining that group. It just gave me access to so many people. I met my business partner there. Talk about your platform and how you help other people.
Jerome: The multifamily kick start program is born out of little Jerome and little Duran not having to go through what big Jerome and Duran went through. Like I said, my buddy and I were sitting on the stoop in college. What happened was engineering students doing math in their free time. It was like, I'm paying 395, I got two roommates doing the same thing.
A Multimillion-Dollar Real Estate Portfolio
Jerome: You have the same thing going on downstairs and we multiplied it out across the unit. The guy was making $700,000 a year, but we never saw him and talked to him. Now for me, the son of a soldier and a stay-at-home mom, we didn't have anybody with a multimillion-dollar real estate portfolio coming over to the cookout. So I couldn't go ask my dad, how do I do this?
Then we fast forward through my time in corporate America and then my exit. I still didn't know anybody that owned an apartment complex, even though I wanted to be a real estate investor. I’ve wanted to own apartments and I didn't even know about the mentorship groups or any of that stuff. Podcasts were just on the rise at that point. I was like, "How do I make sure that somebody has access to get this thing done?" Listening to 40 hours of content isn't practical for most people. In fact, it's the most inefficient and ineffective way to do it.
Here's the thing; I can listen to your show. I can listen to the guy from the Northeast, one from the Midwest, I can listen to mine. And I can go down to the people in Florida and Texas and listen to all these podcasts. What I'll find is that everybody's got their different perspective. Nothing goes end to end that's going to walk me through the process.
That foundational process is the difference between doing a duplex and a quad, maybe a seven-unit or an eight-unit next or going from two to 20, or two to 60, or something in between.
Coaching Multifamily and How to Get a Solid Deal
Jerome: We encourage people to go for their first deal. Buy something between half a million and 1.5 million depending on what market you're in. Get a nice, solid deal under your belt. It'll be the hardest deal you've ever done, but you'll know how to operate at that point and then you can use that.
I call it getting tuna in the boat. You go do that deal, you make some money, you come back to shore, and you lay your tuna out. Everybody's on the dock seeing how big your fish are and how many you caught. Then when you go back out, if you caught fish, they want to go back out with you. You're building that track record. Now more people are going out with you. Maybe you have a bigger boat. You got tuna that time; let's get some swordfish or marlin. Come back, lay them out. Then you can go shark or whale hunting.
But what I've watched a lot of people do is they just want to go whale hunting. They don't have the requisite track record, they don't have the experience and they don't have a partner to help them go to that next level. What I want people to do is go find deals. I want them to have some success, even if it's a small success. That's what's going to keep them going. I don't want people to get frustrated and quit. Then they decide that it doesn't work or it works for everybody else, it doesn't work for them. I want them to get into the game because this business can change your family tree. It absolutely can.
Get In the Game and Take Action
Darin: So getting in the game, taking action. I was having a conversation just earlier with somebody and I said, "Look, I bought a new construction duplex and I was scared." I had plenty of capital. But it was the first time doing a real estate purchase other than my personal residence. Earlier today, "I wired money into two different syndications where I'm a passive. The investments were significantly more than my investment on that duplex and I'm not scared at all." But I never would've gotten there had I not taken the first step. Bite off what you can chew.
Wherever your mindset is, whether it's buying a single family home or a duplex or a fourplex, some people’s mindset is that they can partner with somebody who has experience in syndication. Do that right out of the gate. It doesn't matter, but you have to take action. Like Jerome said, if you listen to 40 hours’ worth of podcasts and you don't do anything, it doesn't really benefit you. I don't think people talk about this enough, but your success is not just for you. It feels like it is, like your world revolves around you.
But after you learn how to do it, your kids watch you, your aunt and uncle, your friends, your business associates are watching you. All of a sudden, they come back to you and say, "How'd you do it?" You share with them and there's a ripple effect. You can't see it now, if you go out and you take action and you make it happen, other people are going to want to learn from you.
Coaching Multifamily Through Experience
Jerome: They're learning from you even if they don't talk to you. That's the thing that most people miss and this is why freeing a hundred people is so important for me. There's somebody who you don't even know, who's counting on you to do the thing you're supposed to do so that they can do their thing. When you decide not to step into that, you're literally snuffing out all the good that's supposed to come on the backside of what you're supposed to do.
Darin: If you get a hundred people that leave their corporate job and go after something that they're passionate about, and then all the people that are going to learn from them, that's just a massive ripple effect. What's the next big stretch goal for you?
Jerome: I'm at a pivot point. I've got to decide if I am a real estate guy who does some coaching or if I'm a coach who has some real estate. That is literally where I am. That’s the thing I'm contemplating in meditation every morning right now.
Darin: Where is it leaning?
Jerome: Coaching. I've found that I can help more people get more done by being a coach who understands real estate than being a real estate guy who tends to coach. Real estate is important. Our coaching model has six levels: self-image, relationship, work, health, prosperity, and significance. The real estate fits really nicely in the prosperity piece and the work piece if they want to be active.
The Mindset Guys Are Coaching Multifamily
Jerome: Understanding that actually knowing how to operate and evaluate deals puts me in a space that the mindset guys who coach real estate people can't add value on. That really excites me. But the people who I'm most interested in, when you think about Kiyosaki’s cashflow quadrant, the employee and the self-employed sit over there on the left side. I see a lot of people going from there to investor. I'm not certain that that's the place most people should go.
If you're already wealthy, then yes, put your money in as an investor. But I think that business owner, that quadrant is where you can exponentially grow your equity. Then you can take that equity out and invest it because you've got more leverage to pull. You have more control, there's more leverage there. Helping people get in that B and then turn that B into the I is really where the biggest impact is. I'm in transition as we speak.
Darin: That's the other thing, just spending some time to think. Think about, what do I really want? What am I passionate about and how can I give back to others? Based on what you said, it sounds like the coach route is for you. Talking about those quadrants, my wife's uncle has done very well for himself financially. I remember asking him early on, "How did other people get wealthy that are in your circle?" He said, "I don't know too many people that saved their way to wealth. It mainly came from either investments or starting a business." That really struck home with me.
Jerome: Well, that's what you did. Your business was and is phenomenal.
The Missing Piece
Darin: I started a business, which gave me the freedom of time. I was a coach to all my kids, both my kids growing up. And I went to all the practices and all the games. I made my own schedule and all that. Actually, in real estate, you could really expand your wealth dramatically and also leverage other people doing it; third party property management companies and whatnot. I was missing that piece, but I like both of those quadrants. Starting a business and getting into investments for sure. What do you like to do for fun outside of work?
Jerome: Drive fast cars and international travel.
Darin: What kind of car do you drive? You have a lot of cars?
Jerome: No, I don't have a lot of cars. I have a Nissan GTR. I would never admit that on a recorded line, but I like fast cars.
Darin: Any trouble with the speeding tickets?
Jerome: I haven't had a speeding ticket since probably 2010.
Darin: What about driving on one of those tracks with your private car?
Jerome: That terrifies me because I don't think your insurance pays for that, unless you pay for supplemental insurance.
Take a Chance
Darin: My wife actually purchased it for me one year. It wasn't with my car, but they had cars and you went and learned how to drive on a track. I know a guy here in Texas who does that for fun. He's got two or three crazy fast cars and he brings his personal car on the track and races.
Jerome: I did one of those track days and I was fortunate enough to realize that I no longer want a Ferrari. I drove a Ferrari 488. But I realized that I am an all-wheel drive car guy through and through. So the next car after the GTR will probably be a Venator.
Darin: Listeners, I hope you enjoyed that one. Check out Jerome's podcasts, he's got two of them. Go and check out his virtual summit and just listen to what he has to say. He didn't say this, but life's too short not to take a chance. Get out there and do something. Take action and do something that you're passionate about, whether it's starting a business or getting in investing. Until next week, signing off.