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June 8, 2021

How To Make Fantastic Returns On Multifamily Distressed Assets, With Jimmy Edwards [Ep. 052]

Are you looking to invest in distressed assets?

Jimmy Edwards started in residential and scaled into multifamily. He is a general partner in about 600 multifamily units. He's not afraid of the tough stuff, and he's made it work time and again. His latest deal doubled investors' money in three years on a West Texas multifamily property. He and his team grew occupancy from 50% to 92%.

Listen to hear how Jimmy is used to being comfortable with being uncomfortable and how he and his team find ways to improve the value of distressed assets.

Table of Contents:

There’s Less Competition in Distressed Assets

There’s Less Competition in Distressed Assets
Photographer: Karla Alexander | Source: Unsplash

Darin: Jimmy Edwards lives in the Dallas area. He started as an investor in residential homes and then scaled up into multifamily. Jimmy believes that going after the tougher deals gives him and his team a competitive advantage as there's much less competition. He's a general partner in over 600 units and has massive growth goals.

So just a little bit about how I know Jimmy. So if you've listened to any of the other prior shows, I joined a multifamily mentorship group back probably three and a half years ago, December 2017. And I met Jimmy in that group, and he's been killing it since, and he just closed on a sale of one of his properties and I was like, "Let's get you on here and help share some info," with you listeners. So with that, Jimmy again, appreciate you coming on. Can you just share with the listeners, how many properties and how many units you currently own?

Jimmy: So we've had several dispositions but we're up to four. We currently hold two. I'm an LP in some other units. I think my total unit count is probably 600, something like that, but GP we've got two deals right now, 100, give or take, units each.

Darin: Fantastic. So we caught Jimmy. He actually lives in the Dallas area, but it's raining in Dallas all week long. So he decided to jump on a plane and head to Fort Lauderdale. So he is actually recording this in Fort Lauderdale, at a resort. He's got two IPAs waiting for him after he's done with this and he's going to enjoy his time in Florida. So I appreciate you taking some time out and hanging out with us.

Discover How To Save Taxes and Build Wealth

How Jimmy Got Into Multifamily Investing

Jimmy: Yes.

Darin: Hey, I know that your background was really single family, fix and flip and I think there's a lot of listeners out there that are in that same boat, that they got comfortable with that and they don't know how to make the transition. So can you talk a little bit about your history in terms of what you were doing and then why'd you make the decision to go multifamily?

Jimmy: Yes. I've been in real estate pretty much my whole career. I think I had this thing in the back of my mind, that was what I wanted to do. And I started off as a realtor. And then I was a loan officer for quite a few years, and that was 2009 to 2012. So I mean I was doing a ton of refi’s and a lot of new business. I was helping a lot of VA borrowers. They closed my branch down and it had nothing to do with production. I think that there was some differences there, but in 2013 I decided to start flipping houses and I started one at a time. By 2016, we're doing about 60 a year.

Darin: Wow, 60 a year?

Jimmy: 60 a year. So it was a lot of work. I learned a lot and we made some good money, but I was at this position to where, how am I going to scale this business? Am I going to scale this business? Or am I going to do more houses? Am I going to have more people on staff? Or am I going to do bigger houses? Am I going to do new construction? Am I going to do more expensive deals? And ultimately what we did was, it was 2017, we did less volume, higher margins.

So we did about half the deals and made more money. And there was really kind of a pivot there. I learned about multifamily that we had one deal that it sat on the market for a while and the holding costs were really killing us. And I learned about multifamily and it just was kind of that aha moment, "You can reposition this asset while they're covering your holding cost." So 2017 really dug into multifamily, got our first deal early 2018, and then almost, it seems like we've bought one or two a year since then.

A Decision To Scale From Single Family to Multifamily

Darin: That's fantastic. You said you wanted to do it, and then you just made it seem like it just happened, right? I mean, there's a lot of people that are like, "Oh, I want to do multifamily, but…" Talk about how you went about doing that. You were doing all those single families, you decided to scale and go multifamily. How did you make that happen?

Jimmy: So it's interesting. It's an interesting story, my partner, Kathryn, she married a good buddy of mine from college. We met each other in the dorms, and they got married, and we circled up, and we were friends, and around 2013 or 2014, I think she was having her first kid. We had done a couple of projects together as partners on single family deals. But she was working primarily in the apartment business. She'd worked for major owners and she'd also worked for a guy that we both know that does a lot of the due diligence in the DFW area. And so, she worked pretty tight-knit in that circle. And so, she'd been in the apartment game, but as a vendor, and we were flipping houses as a unit.

5 Step Process Ad

Jimmy: And then so, when we had this moment, in 2017, of like, "Hey, how do we scale this?" It was really her. It was like, "Hey, I think we need to get back. We need to get into apartments and I have a lot of contacts there." And so I explored a little bit in the market and understood some of the mentorship groups, and really just started meeting people, and we were chasing our first deal and I was looking at the comps on DCAD, and one of the owners of a comparable property, she was like, "Oh, I know that guy. Let me call him."

Cheering the Cheer Leader

Jimmy: And so she just made a phone call. So I personally had a little bit of an in, but I mean, at the end of the day, we went after it. My neighbor called me and said he was selling his 26 unit building in Dallas. He'd moved to Miami, had sold his house, and we went after the deal. And I was always taught, if you have a real deal, you'll find the money. So we just went after it. It didn't work out, but it created a lot of bridges into other things that really helped us.

Darin: Well, you said something there that I've heard a lot of people say. You went after something, it didn't happen, but you learn a lot during that process and then all of a sudden, some doors may open because of it. So sometimes people are just sitting back waiting for the perfect opportunity and it never comes around. Where if there's a good deal that looks promising, you can continue to dig in on that deal and potentially put in an offer and move forward and still have time to get out if it's not right.

But something else may come from it. You may build a relationship with the broker, with one of the lenders. You could end up finding another partner from the deal. So there's a lot of different things that could happen by taking some action. So that's huge. I have to do this because this is a Jimmy thing.

Darin: So this guy, every time somebody does something good in our group, Jimmy is there with the big old boom. So I want to give you one because I heard that you guys just closed on a deal, went full cycle I think. What was it? Last week?

Jimmy: Yes. It was about two weeks ago. Man, it means a lot to me and I appreciate that. It was the first big deal that we did. It was 103 units, but it was 50% occupied when we bought it.

Darin: 50% occupied, that's crazy.

Jimmy: Yes.

The Guy Who's Not Afraid To Buy Distressed Assets

Darin: So for most of the people that I brought on the show, they're syndicators that focus on buying stuff that 90% or greater occupancy at the time of purchase, agency type loans. And Jimmy's a guy that he's not afraid to buy the distressed assets. He had that experience on the single family side and he's brought that to the multifamily side. So continuing to talk about that deal, it’s 50% occupied. What else? What else about the deal can you share?

Jimmy: Yes, it was pretty hairy. We ended up, I think, at our lowest point was, mid-thirties, 30% occupancy. I think it was one of those deals where the ownership team may or may not have known really what was going on. And through due diligence discovered a lot of stuff and it was still a project that we were excited about.

So we got a new management company. We actually were on our second management company, but we turned that thing around and had a lot of deferred maintenance. And we got it stabilized through COVID, ended up selling it. I think we closed two or three weeks ago in April. The next buyer is going to have an awesome project, and we did really good for our investors. I think it's ended up like 2X multiple 27, 28 IRR in 35 months. So it was a really good deal.

We learned a lot, man. I mean, there were challenges, and headaches, and pain points, but nothing that we hadn't experienced before. So sometimes there are opportunities in places that other people aren't looking at, and that was really what that deal was for us.

Darin: So a deal like that, how do you look at that deal differently. Look, most of the deals I've looked at and syndicators that I know, again, they're buying stabilized properties. So how do you look at that deal? How do you underwrite that deal? What's the break-even on that? Is it 70% occupied or what? Help us understand that.

The Benefit of Building Relationships

Jimmy: It was probably one of those deals. While it was one of those deals where we raised the extra money for operating costs because we knew the first year was going to be in the red. And it was a deal that we pitched our investors that wasn't a strong cashflow opportunity. But for me and my team that was around that our investors are comfortable with, right? I'd been building relationships over the past four or five years with people that were investing in flips, or interested in flipping. And even our partners had experience with this type of thing to where we had a seasoned database of people who said, "Hey, I'm not looking. Cashflow would be great, but I trust y'all's experience to turn this deal around."

So it was an interesting deal, it was a bank-financed deal. But it was a bank that we had a relationship with and they trusted that we could make it happen. Trust but verify. But again we had a track record in the single family space, and then some of my partners on that deal had also done heavy lifts in apartments as well. So we really just brought a really good team together that was able to execute and had a lot of trust around us.

Darin: That's fantastic. So you mentioned it was a bank-financed deal. For the listeners perspective, if it's below 90% occupancy, most likely having to get either a bank or bridge financing, so what was the term on that? Was it a three-year, five-year?

Jimmy: I believe this was a seven-year recourse loan with two years of interest only and a floating rate, maybe 50 basis points above LIBOR. But, I mean, the way that we looked at it at the time, this was three years ago, this was at the top of the market. This was before the next recession was coming.

Darin: I'm not sure if you're saying the top of the market because maybe interest rate wise, but not necessarily per unit price-wise, because it's still pretty hot market out there.

The Play: Succeeding From Distressed Assets

The Play: Succeeding From Distressed Assets
Photographer: JESHOOTS.COM | Source: Unsplash

Jimmy: I mean, I think it's going to go for the next five years, but at the time we thought I would rather have seven years of loan. I would rather play on a floating rate. I'm basically paying my prepay upfront on a floating rate for seven years. To us, that was the play. I want to make sure that if something happens, I'm not stuck in a three-year bridge loan.

I'm entertaining bridge loans now. I think that over the next three to five years, we're going to see the same growth that we've had. We've seen the catastrophic event and multifamily has been crushing it. So I'm extremely bullish on where I think the market's going, and you can still be safe with some products that fit what you're trying to do.

Darin: Fantastic. So where was the occupancy when you sold a couple of weeks ago?

Jimmy: We ended at 92. So bought it at 50, went down to mid-thirties and sold it at 92. The buyer was able to get an agency loan. It was a good deal, man. I think they've got a lot of opportunity there. It was just one of those things for us, like, "Dude, we completed our business plan, we filled this thing up, let the next guy really finesse it." And we're excited about that.

Darin: So basically when you said 2X multiple, I mean, if somebody put in 100 grand as a limited partner.

Jimmy: Yes, if you put in 100 grand, I think you just got a check for $204,000.

Darin: Thank you very much, Jimmy. I'm sure some people are saying, thank you.

Jimmy: Yes. We've got some excitement going on. I think we're going to have a party here in a couple of weeks and celebrate. So I'm really glad that we're able to do that for our investors and it's been a good project all around.

Darin: Fantastic. Hey, you said that there were some bumps along the way, some hiccups. Can you talk about any of those?

Jimmy: I think that anytime you inherit a property that's in that condition, there's going to be some skeletons in the closet and there's going to be, I like to call it, poking the hornet's nest. You're going to shake the tree a little bit and shake some of the bad apples out. And so, there were some experiences like that. I think that it was an older property with quite a bit of deferred maintenance.

Darin: So give an example if you wouldn't mind.

The Lubbock Market

Jimmy: So really, I think, the biggest pain point on this one was a chiller system. It was built in the '60s and I think it had a two relatively new chillers. Maybe one was put in 20 years ago and the other one was 7 or 8 years old. But what we found was, as we took over the property, it's got individual condensers in each unit. We budgeted to replace a handful of those, and we went in there and this person was like, "Hey, my AC is blowing cold, but my unit is not getting cold." And so our AC guy would go in there and sure enough, the blower was working, but it didn't have any ducting, no ducts.

So on an all-bills-paid property, we're cooling the attic space in between the downstairs unit and the upstairs unit. That was one of the things. I don't know if you call it overlooked or didn't know about, but I mean, we had some contingency in the budget. The money was there, but I mean, there was a handful of those, and it was just one of those sayings where, when it sits empty for so long, when people are living in units, they're more vocal. So when they're empty, you don't always know about the problems, but that was probably the biggest.

Darin: Yes. That would be an interesting one, for sure. So you ended up buying in Lubbock. Why did you pick that market?

Jimmy: I mean, mostly because I'm a Ted Raider.

Darin: Texas Tech.

Jimmy: Yes. Texas tech, get your guns up. We looked at a lot of different markets, Dallas, San Antonio, Austin, Lubbock, was interested in Waco. And this deal presented itself and it was the right place at the right time. I mean, I've always felt I understand the Lubbock market. I understand the different parts of towns, where you want to go, where you don't want to go. It was a slower appreciation play, but price per pound at the time, I mean, this was 2018, I think we got in at 35 a door and that was unheard of in Dallas.

Darin: Yes. Completely unheard of.

Jimmy: It was the price per pound and we felt like we didn't need the huge rent growth bumps, and the huge appreciation and cap rate compression, because we were buying it as a 50% occupied deal. So there was a different opportunity to create value and it presented itself and we knew the market, and so, we went for it.

Different Machines To Consider When Buying Distressed Assets

Darin: Fantastic. So yes, I mean, some people talk to me about, "Should I be in?" The disadvantages of being in the high-growth markets like Dallas, whatnot, is that there's a lot more competition, right? So some newer people will be like, "Hey, should I go out to some of the tertiary markets?" And that can be a play. You just have to know that, one, when you go to sell, there's going to be less people looking at those deals. Two, you're not going to have as many vendors to choose from, as in some of the larger markets. But if you can get comfortable with those things, the advantage is that you don't have the competition going in. There are not as many people looking to compete, to buy that property.

Jimmy: Yes. I mean, I would agree 100%. I mean, we're looking at both. I'm still making offers in Lubbock and we're also making offers in DFW, San Antonio, and Houston.

You just have to understand that there are two different machines. One, is highly competitive, but the appreciation aspect is through the roof. And then the other is less competitive. But if you find the right deal, then it's a solid cost-per-pound play. And like you said, there are struggles, the workforce is smaller, the trades are less. I mean, there are things that you have to deal with, but that's why you're buying it at a different value and selling it at a different value. So there are trade-offs.

Darin: And now that you have experience out there, you know the markets that much better, and you've developed relationships with property management companies and with vendors to do rehab. So that gives you a leg up on the next guy who's coming out to try to bid on deal that doesn't have those relationships.

Jimmy: Yes. When we're looking at deals, I sometimes question myself if I'm doing something wrong by being too conservative. But then I also realize it like, we have real-life experience in tertiary markets and understand the struggles that come along with it. And so, when people are ready, willing, and able to pay more than me, I'm actually excited about it because it's a great comp for some of our current deals. So there are struggles and I think that sometimes you don't know what you don't know. I mean, none of it's catastrophic, but it can be add to the workload.

A Big Component of Your Expenses

Darin: No. I mean, I'll add an experience for me. So I bought a deal in about 15, 20 minutes south of Fort Worth in Crowley. And at the time was being given guidance, like use 80% of current property tax valuation. So, I used that in my underwriting. And then, after we bought the deal, Tarrant County went in, valued the property above our purchase price.

Jimmy: Oh my gosh.

Darin: So more than 100%. And property taxes is a big component of your expenses. Thankfully we were ahead of budget on our rent bumps, on the new value add. And then we had to protest and then we had to actually sue the County, and we ended up getting the value down. But that's just an example of, okay, I'm like, if I'm going to buy another deal in Tarrant County, I'm going to budget for 100% of the purchase price, because I don't know where they're going to come in.

But the guy who's buying for the first time, he might be getting the same advice I got four years ago saying, "Underwrite it at 80% and good for you," but hopefully you're able to get the property taxes down because that's a big expense. So now you're focused on San Antonio, Lubbock, and Dallas, and Houston?

Jimmy: Yes. I'm interested in Houston. We're not there yet. We're pretty active in the Dallas marketplace, but I mean, as you can imagine, it's competitive.

There’s Competitive Advantage From Buying Distressed Assets

Darin: Do you focus on more of these deeper value add type plays, or do you look at the stabilized properties also?

Jimmy: I'm interested in both. And to me, depends where the opportunity presents itself. I'm more interested in going bigger nowadays. I like the value add, stabilize is okay. I mean, we bought a property that was stabilized, but 100% classic units. So I'll do both. I don't discriminate on deals.

If there's a play that can be had there, I'm really interested in it. But I think it's good to have both. I think it's good to have some deals that are maybe stabilized but it's a management play, or it's a classic to a premium play. And then there are some other deals that have just been completely mismanaged and fell apart, and I'm okay doing those both. My portfolio isn't all about the cashflow. If we can make a big pop repositioning something, I'm really interested in that.

Darin: Well, I think that you have something that a lot of people don't in terms of not having that fear of going after distressed assets. I think where the majority of the competition is on the stabilized deals and there are not as many deals in today's market that are in trouble. But if they are, that shrinks the buyer pool, because a lot of people don't even want to look at those deals, and the facts that you'll look at both, says a lot.

Jimmy: And typically those deals aren't going to market, right? So if a broker gets a call about those or whatever, I'm one of the first guys that gets that call. So now my competitive advantage is much higher, right? We do both. Look, I go after retail deals, and I like off-market deals.

His and Her Role

Jimmy: I like distressed assets, but you got to start with establishing the relationship with a broker. And the first way you establish a relationship with the brokers is you go after marketed deal, and then you build a relationship. Then you tell them what you're really looking for, and then you get those calls later, "Hey, here's what I know you can take down and everyone else can't."

Darin: Yes. I mean, that's huge to get that call early in that process and get to be able to take that first look and say, yay or nay. So you ended up partnering with Kathryn. What are the different roles between you and Kathryn? What do you play versus what roles and responsibilities does she handle?

Jimmy: Sure. This piggybacks on what her and I did several years ago. I really enjoy the acquisitions. It really is my driver. Day-to-day minutiae, it's not my thing.

Darin: You don't seem like an admin guy.

Jimmy: Yes.

Darin: You like pushing paper.

Jimmy: Yes. No, it's not my thing. But she really is construction, it’s one of her strong suites. So, on that heavy value add deal, completing the CapEx, and understanding the vision, and executing the vision. So when we go look at a property together, we see the vision and we know what it's going to take. Because we've done hundreds of deals together. I mean, that's really how it's worked out for us. We have partners on different deals and there are operational aspects of that too that also isn't my favorite part. I mean, like I said, I like chasing the deal and getting a win upfront because usually I know when we're buying something, there's a reason for it.

Trust: A Huge Part of Success

Trust: A Huge Part of Success
Photographer: Alex Iby | Source: Unsplash

Darin: Oh, the other good thing is she's willing to take some of those responsibilities that you don't like, you guys compliment each other well. But she also has to be visionary enough and trust you enough that you can pull it off.

Jimmy: Yes. And that's 100%, and I think a lot of that comes from just our previous track record in the single family. Life was like, we went through a lot of trials and errors and there's a lot of times where it's like, "Dude, you got to trust me this is a winner, and when we execute, we're going to do it." So, then we'd execute.

Then several years down the road, she was in a position of like, "Hey, that's a bad idea and I'm going to prove it to you." And we were finally at this place of trust and it works. So we're in total sync now. We can be walking into a property and just know what each other are thinking. And so, I really think that's been a huge part of our success. We'll look at some deals and I mean, it's been tough too, right?

Because most of the time we're 100%. We look at the same deal and it's a dud, but there have been some instances where I see the potential, but she doesn't, or she does and I don't. But we don't end up doing them anyway. And the ones that we do take down are gold. It's been really awesome.

Darin: That's fantastic. Where'd you guys find your investors for your deals? Your passive investors, did they come through the multifamily mentorship group? Did they come from prior relationships? From the single family fix and flip days, a little bit of all the above? Help us understand that.

Jimmy’s Source of Investors

Jimmy: Yes. A little bit of all the above. When I was doing single family stuff, I didn't know what I was doing at the time, but I was buying houses that needed a 20% down payment. And then I would go out to my friends and family and I'd ask them for the 20% down, and I'd give them a profit share in our deal. And so, I was funding these houses, doing all the work, and giving them a profit share.

So when I found out about how multifamily syndications work, to me, it was already something that I'd been really doing. Like finding the deal, leveraging it, and raising the equity. So I had a lot of relationships. I found a lot of new commonalities in the circuit, in the multifamily space. I mean, there are tons of syndication groups out there. And so we just started frequenting a lot of those.

And then over time, we also had a lot of word of mouth. Friends of family, or friends of friends, or wins of wins, and people would just start reaching out to us and saying, "Hey, I've heard what you've guys been doing. Let me know about the next deal you have." So I think it’s just one of those things that are like, it just takes time. And when you do the right thing and you do right by your investors, it starts to snowball eventually.

Darin: No, that's great. So I do not come from the single family world. I was not in the real estate world, did a duplex, and then went right into large-scale, multifamily.

Jimmy: I mean, you say that, but I know you were in. I know you were in residential real estate.

Darin: Well, I trade loan portfolios.

Jimmy: Yes.

The Single Family Investors’ Appetite

Darin: Large loan portfolios, residential multifamily, and commercial. Still have a business that does that, but it's not the same as buying real estate. I never bought a single family house and fixed it up and flipped it. But I was having coffee with a guy earlier this week. Well, today's Monday, so it was last week. And he is coming from the single family side. So he's completely on the single family fix and flip. He's like, "Hey, I'm hearing more of my investors wanting to get on the multifamily side." And he was trying to understand how to make that cross that chasm and get over there. One of the things that I talked to him about, like, "Well, where will your investors come from?" He thought he would bring a lot of his investors over from the single family world.

But one of my questions was, and maybe you can answer this. Well, if you're an investor in single family fix and flips, they're pretty quick. You can fix it up and sell it in a few months and be out, right? And so, an investor put up money to buy it, to rehab it, but he's getting his money back and his profit back pretty quick, where a lot of these multifamily deals, they're built off of a five-year business plan.

It may turn before that, like on your deal, you're turning it in 35 months but the market is still an attractive market. So it could be as early as two or three years, or it could be five years, or it could extend. If all of a sudden, the fourth year you go into a downturn and it could be six or seven years. So do those same investors have an appetite to put their money to work for that long?

Jimmy: They do. And it's interesting though because I had a lot of people asking me, "Hey, I want to invest in this single family." And then when I brought the deal, actually, there was quite a few more people that I had anticipated, but it was also the perfect deal because it was a flip. I had told each of them, the people that were interested in the single family stuff, "Hey, this is a five-year pro-forma but I think it'll pop quicker." And so that was kind of an off-table discussion, but I had these previous relationships with them. So I mean, I do.

I think that if you're an investor, and you've got some capital, and you're diversifying between single family and multifamily, and heavy value adds and non-heavy-value adds, I think you're doing a little bit of everything, which I would be, and I was, and I still do. So yes, I do think so.

Jimmy's Childhood

Darin: Very cool. Hey, let's switch gears for a minute here. Where did you grow up? How'd you grow up? Brothers, sisters, rich, poor?

Jimmy: Yes. Sure. I'm just a blue-collar kid from Austin, man.

Darin: From Austin?

Jimmy: Yes. Austin, Texas. Grew up in Austin, single mom, and hung out with my dad every once in a while. I’m an only child. I was just a skateboarder kid and found my way slowly but surely up to Texas tech. And I wasn't planning on going to college, but all my friends did. So I went up there too. I ended up getting an engineering scholarship.

Darin: Did you really?

Jimmy: I did. My dad was an engineer for the city of Austin for 30 years and I got an engineering scholarship, and the first semester I was like, these are not my people. So I changed to business and went from marketing into finance. And then once I got to finance, I ended up taking some real estate classes. My senior year, I read Rich Dad, Poor Dad. So that's really what kicked it off for me.

So I was just a kid running around that didn't really know anything or have much, but that's one of the things I'm passionate about, is trying to help. I think that there's a lot of kids out there that have untapped potential, they just don't really have the resources or the know-how. So that's part of where I try to give back.

Darin: That's huge. Well, look, I think that there's a lot of listeners that fall under that camp. They're not young kids, but I believe there's a ton of people that are working W2 jobs that don't know another way out. They're unhappy, but they just don't know how to do it. When you talk about large-scale multifamily, I think that a lot of people have this preconceived idea that it's all big business that are buying these large apartment communities. Then, when we open up the world to other people, I think that your story is awesome because you're like, "Look, dude, I grew up. I'm just a skateboard kid like call our guy, didn't know what I was going to do."

Get Comfortable Being Uncomfortable

Get Comfortable Being Uncomfortable
Photographer: Sigmund | Source: Unsplash

Darin: And now, you're out there buying a hundred unit plus deals at 50% occupancy and you're confident in your ability to turn that around. The other thing is that I think it takes a level of guts to get into this. To take a chance, to take that first chance, even when you, I don't know, go back to your first single family purchase. That took guts. But then you learn and you don't stop learning.

I mean, every deal you have different challenges, you learn from other people, you learn from deals. But I think it's encouraging to hear people's stories like yours, that, "Look, man, I didn't grow up with a silver spoon." The other thing you didn't say, but it's true is that you didn't just give into the way society pushes you. You ended up deciding, "Look, I'm going to figure out how to make my own way somehow."

Jimmy: Yes. Every day I'm thankful that I did because like I said, I'm sitting here on the beach for the rest of the week, for no other reason than just because I fricking felt like doing it.

Darin: I'm jealous, man. I'm jealous.

Jimmy: So yes. Anyone can do it.

Darin: It's easy for us to say anybody can do it, right? It's easy for us to say, "Yes, all you got to do is get involved and network." But talk about some of the fear involved with either on the single family side or when you transition over to the multifamily side. We all have fear. The difference between the investors I've interviewed on here and other people that haven't is that even though there's fear, you're able to take action through that fear.

Jimmy: And that may be part of how I’m wired too.

But I think at some point, you have to get comfortable being uncomfortable and the first step is scary. But if you have a partner, or a teammate, or someone that's involved, a mentor that has done it before, they can get you comfortable being uncomfortable. And then you eventually get to this point where you're like, "I'm not growing if I'm not uncomfortable anymore."

Push Your Limits

Jimmy: I did my first house, that was a win. I need more houses. Now it's time to go bigger." And so it's like constantly scaling the business because when I start to get comfortable is when it just, for me, at least it starts to get boring. So I always have to push the limits. And then there are other people that I'm surrounded by, that my partners that are depending on me to go find more deals, which fortunately is what I like doing. So I really think, at the end of the day, for me, it's just been getting comfortable being uncomfortable. And once I hit that peak, there's really no limit.

Darin: Yes. And I mean, there are so many good things there because in the beginning, people have asked me, like, "What was the hardest part about doing your first syndication deal?" And I'm like, "Every part was hard."

Jimmy: It was all hard.

Darin: It was all hard the first time I did it. And now, I look back and there are so many of those steps that are not. They're not scary to me anymore. So I get your point in terms of like, "All right, what's the next thing to be uncomfortable with?" And then, if you can partner with somebody, or have a mentor, or talk to somebody that's been through it, surrounding yourself with people that have already done what you want to do. Man, there are people that have been on here that have 2, 3000 units that a lot of people can't relate to. And they're talking to the people that have 10, 20,000 units, like, "How'd you get there?" And it's not all about the money. Part of it is building wealth and all that and giving yourself financial freedom.

Man, you said something, "I get bored." I'm the same way, man. It's like, if I'm doing the same thing over, and over, and over again, and I don't have a challenge, I'm going to be bored. And so, if you can go after a bigger goal, a bigger challenge, or something you haven't done, that's where the juices are, that's where you get fired up.

Delayed Gratification

Darin: Hey, talk about some of the sacrifices you may have had to give, going this route. We talked about some of the benefits of going your own way. But you also give up some stuff early on to try to make that happen.

Jimmy: Yes. I think there's a lot to be said about being a nomad. You get to do what you want, but then you also you got to fund it.

Darin: But you have to fund it somehow. In the beginning, that's the challenge for a lot of people, was like, "How do I go from a guaranteed income, trading time for money to doing my own thing, but I don't have any guarantee?"

Jimmy: Yes. I mean, I think early on, I was kind of taught, and so, I saved really well, and I was fortunate. 2009, 2012, I was in mortgages and I was really good at it. I was a young kid in my late 20s doing really well. And so, I saved a lot of money and it allowed me to go in and do my own thing. I mean over the past 15 years, I've sacrificed a lot of my personal life, which it's, again, I do what I want, I run my own schedule, but there are some other things that not so much.

Darin: Well, look, I mean, you said a couple of things and maybe you don't think they're that important but I do. And I think that if listeners are wanting to do something on their own, whether you want to invest in real estate or whether you want to start your own business, you have to set yourself up for it. So Jimmy said he made good money and he saved well, and he sacrificed some of his personal life. So delayed gratification. I had a guy on that's said his dad grilled into his head, "You either pay now and play later or you play now and you pay later." So that I think is a great quote because it's so true.

Partner With Somebody Who Has Experience

Darin: Look, it's very difficult to go off on your own if you don't sacrifice a bit in the beginning. That could be that you save a lot of money and put it away so that you can take a chance. If you're younger, could be that you live at home with mom and dad or with a buddy on the couch, whatever, so that you have money to survive in that early stage. But most people, they get the raise and they buy the nicer car or the nicer house right away, and then they're stuck. You don't want to be stuck. Look, if you are in a job that you love, so be it, that's fantastic. I'm not talking to you, I'm talking to all of the people that are unhappy with what they're doing, and they're making somebody else rich.

And you typically are not going to get there by spending all your money. You're not going to be able to jump ship and take a chance. How old are you now Jimmy?

Jimmy: 37. I'll be 38 in June.

Darin: 38. So I'm 51. Dude, I wish that I had started investing in real estate back when you did. So I applaud you for doing it and I've had young people in their 20s and 30s come to me and they're like, "Hey, should I start now or should I go on a career and bank a bunch of money and then come back to it?" And I'm like, "Look, I wish I had started earlier." But here's the thing, you have to play to your strengths and your weaknesses. So your strength was, you were doing only single family fix and flips, you understood how that game worked. You just had to take it to another level.

If you're in your 20s or 30s and you haven't been in the real estate world, you probably don't have a ton of capital and you have some experience, but why is your uncle and your grandfather going to invest with you on your first deal, right? That's what I get a lot of people with this kind of limiting belief. And I'm like, "Just go partner with somebody that has the experience." If you're the younger guy and you don't make as much, you won't take as big of a piece on the first deal, but you get the experience and then all of a sudden, when your uncle and your grandfather are making money, they're going to go tell their golfing buddies. And now all of a sudden they're all into the next deal.

Jimmy: Yes. 100%.

The Benefits of Mentorship Groups

Darin: Another thing that people have asked me about is mentorship groups. Me and you met in a mentorship group. For me the vast value, because I knew multifamily as an asset class because had been trading it as loan portfolios for a long time. I was not in the real estate world, but I did understand it as an asset class. But it really was the value of being surrounded with other people that were doing it and seeing that all these other people are being successful at it. And I'm like, if they could do it, I could do it. Then all of a sudden identifying, who can I partner with? I don't have the experience, who can I partner with? And it brings all those people into a much smaller-knit group, and it gives you proximity to those people. What's your experience?

Jimmy: Yes. No, I mean the same way. I mean, that's what happened to us, is I started out, and thought I could do it on my own, and didn't have enough experience and partnered with people who had tons of experience, and we helped each other out. We did a lot of the work and they've benefited from having the resume.

But I would say it's just like anything else. Look, I mean, if you want to go do a marathon or whatever, I can't think of it what I'm trying to think of, but you're going to go train with people who are wanting to do the same thing. And you're all going to help each other, and you're all going to get to the same goal. So if you're wanting to get into apartments, you need to be hanging out with people that are either wanting to get into apartments or have been in apartments. And that's really just been it for me, it's just like anything else, get around people who are doing what you want to do.

Darin: And then you get to fly to Florida and hang out on the beach.

Jimmy: Yes, man.

Darin: That is awesome. Hey, what's the next big stretch goal for Jimmy?

Jimmy’s Next Big Stretch Goal

Jimmy: I think we're trying to go pretty big. I think we want to get to 500 million in the next five years, assets under management. And if you do the math on that, that's like 1 billion in 10 years. So really, just this year has been systems, processes, procedures, all the stuff that Jimmy hates, but I've been doing it because I know we have to. Yes, I mean, I think, we've started hiring some people and I think really, we're going to ramp it up.

Darin: Fantastic. Hey, what do you do outside of work for fun?

Jimmy: Man, when I'm not working, I'm usually just hanging out at the beach, doing podcasts with Darin.

Darin: I doubt that, and this was a favor. You're like, "I'm going to Fort Lauderdale." I'm like, "You still got time?"

Jimmy: Yes. Man, I like working out, I like going on bike rides and hiking. I got a couple of old vintage motorcycles and a couple of vintage cars.

Darin: Really? Do you ride?

Jimmy: Yes. I do.

Darin: Well, I would like to go riding with you sometime.

Jimmy: Yes. My little classics might not be able to hang up with your Harley's, but I can rent one and we can go bang it out.

Darin: Hey, I don't have a bike. I rented a Harley to drive down to Austin, but that was a rental. I don't own one. I'd love to get out. That'd be great.

Jimmy: Yes. We should do that. I've got a couple, two in the shop. I like restoring things. But yes, I got a couple coming, but if not, man, we can get on a couple glides and just go cruising.

High Five Multifamily

Darin: Awesome.

Jimmy: That would be fun. Yes.

Darin: Hey, if somebody wants to reach out to you, what's the best way for them to get ahold of you?

Jimmy: Man, just hit up our website. It's highfivemultifamily.com, H-I-G-H-F-I-V-E multifamily.com set up the requests, we'll get back to you real quick.

Darin: Fantastic. So these guys, Kathryn's not on here, but I will have her on at some point. But Jimmy and Kathryn, they were some of the first people I've met in the multifamily mentorship group. I think great people and doing great things. And I love the fact that they've got the guts to go after some of these tougher deals, and you heard the returns, man, double the money in less than three years, so that was pretty darn good. So I wish you guys much success. I hope that we do business at some point.

Jimmy: For sure.

Darin: And listeners, I hope you enjoyed that one. Look, Jimmy can do it. He's got guts and he's got a lot of experience, but just know you can come from any background and get involved. So listeners until next week, signing off.

How to Reach Jimmy Edwards

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Darin Batchelder

Wealth creation through real estate provided me with a new passion to get the word out and let others know that they have an alternative to investing in the stock market.

If I can inspire and educate just one person to take action that results in life changing wealth creation then the work to launch and grow this podcast is well worth the effort.

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