Listen to hear Glenn Gonzales as he shares from his 30 years of experience and wisdom! He built up a 4,500 unit multifamily portfolio, formed his own management company, and wrote a book. Most of all though, he's focused on relationships and "doing the right thing".
Table of Contents:
- Where To Listen To The Podcast
- Journey Begins by Doing the Right Thing
- The Opportunities You Get When Doing the Right Thing
- Maintenance Man to Millionaire
- How Creativity Impacts Multifamily Deals
- Culture Is King
- Doing the Right Thing for Passive Investors
- Be Brave and Do It
- Fear Is Normal When You’re Doing the Right Thing
- Outside Business Hours
- The Next Big Stretch
- How to Reach Glenn Gonzales
Journey Begins by Doing the Right Thing
Darin: So how I know Glenn, this is kind of an interesting story. So I actually had Glenn's partner on the show through Episode 12, David Toupin, and I had come in contact with David through social media and set up a meeting. I'm in Dallas and he's in Austin. I set up a meeting with David down in Austin. I actually rented a Harley and drove down there and had a great time doing that.
When I got down there David sent me a text and said, "Hey, do you mind if I bring my business partners also?" And I was like, "Absolutely." So Glenn joined us for that lunch meeting, and I am just so thankful to get an opportunity to meet Glenn. He has a ton of experience and he's just a super guy, so I can't wait to hear what he has to say and I hope that all you listeners enjoy this.
So Glenn, with that, just a high-level recap. I know you've been in the business for a ton of years. How many years have you been in the multifamily business? How many units have you owned in total?
Glenn: Great. Thanks, Darin. I'm glad you enjoyed your trip on the motorcycle, first of all. I like to ride too. It was kind of neat to see you pull up. I'm like, "I don't know who this guy is, but I already like him."
Darin: That's funny. Yes, you ended up telling me that you've got a great Gold Wing and that you and your wife like to ride, so that's fantastic.
From a Maintenance Guy to Owning 4,500 Units
Glenn: We do. Well, kind of high level, Darin. I started off in the industry 30 years ago as a maintenance man, and I was in the industry for years, years as kind of a W-2. I came up through the ranks as a leasing agent, a property manager, and then a regional manager, and really made that my career. Along the way, I got really good at property management. Well, about seven years ago I started buying my own apartment complexes and it acquired about almost just under 300 million in assets, 4,500 units over Texas, and just really had a very successful run at that.
I started off as a maintenance guy and grew to 4,500 units. I started my own property management company and did that in house and later sold the management company. Then I also sold a big huge chunk of that portfolio in the last 18 months, two years. So as you know, the market was really climbing really high and people were paying a lot for apartments. Well, I was selling and they were buying. So it's been a good run.
So, I'm excited to share some of my experiences, both the successes and the failures. I'm honored to be on your show. I'm glad you have a motorcycle.
Darin: I actually don't have one. I rented that one to drive down there, but I love riding.
Age Is Peripheral When You’re Doing the Right Thing
Darin: So yes, it was such a treat to get to meet you. So when I spoke with David on episode 12, he shared with me how you guys came in contact and how you became partners, but I would love to hear your perspective on it. Because David is a young guy, in his mid-20s, and he was just kind of breaking into space, and then you've got 30 years of experience. How did two people like that come together?
Glenn: Yes. How do we even mesh like that? Actually, it was interesting timing, Darin. I think all things kind of happen for a reason. I was on the tail end of breaking up with a previous business partner because we had different sets of morals per se and a different outlook on business and life. So I was going about this and doing kind of my own thing, and I met David Toupin. We were on a mastermind together, a multifamily mastermind, and I got to know him. Neat guy, I call him a kid, and I shouldn't do that.
Darin: I called him a kid on the episode at one point too.
Glenn: The funny thing is he's like a kid in a grown man's world, right?
Glenn: Like a very experienced entrepreneur. I love that. So I got to know him. I loved his mentality. I liked his outlook on life, his ambition, but really what drew me to him was his ability to underwrite and understand the numbers behind this business, and that is such a key thing. But, Darin, I was on the tail end of a bad break up, right? Just like any relationship, you don't want a rebound relationship.
The Beginning of the Obsidian
Glenn: So I met David and I was putting together a deal, and he's like, "I want to partner with you on this deal." And I'm like, "I don't know, man. Why don't we do this? Why don't we just buy this deal together, not as under one umbrella, but you could be my partner on this, I'll be your partner on this one deal. Let's see how it goes."
And I was amazed, you know what I mean? I was pleased. He grasped everything, he was organized, he understood the numbers. There were a bunch of questions that he had, and based on my 30 or 40 transactions that I've done I said, "I suggest we do this, this, this and this." He goes, "Oh, yes. I'm glad we caught that." And so he was really open to, I don't want to say doing things my way. But he's very open to maybe an alternative look at how you do it, how you handle a transaction just based on experience, right?
It went so well. I liked his personality, I liked his morals, and I checked everything out. After that went so well he had the opportunity to do a second and a third deal. I'm like, "Dude, why don't we just partner-partner?" And that's where Obsidian came to be. Obsidian is now David, Glenn, and actually Mike now. There's three of us, and he does the acquisitions. I'm the CEO of the company, the majority owner of the company. David is fantastic, the finance, underwriting.
Teamwork Makes the Dream Work
Glenn: Mike is exceptional at operations and asset management and all that. It's kind of perfect little partnership. We all enjoy each other. I think we might get into this later in the show about good partners versus bad partners. But you really have to enjoy the people you do business with.
Darin: I would completely agree. So you said a couple of things there. One was that he was willing to be open-minded and listen to the wisdom of somebody that's been in the field for a long time. So on my first syndication, I partnered with a gentleman by the name of Raj Gupta out of Chicago, and he's a very experienced multifamily investor.
I pretty much run the point day-to-day in terms of asset management, and I'll come to him and say, "Hey, look, this is what I want to do in this situation." And most of the time he's like, "Darin, run with it." But every now and then, he doesn't say, "Darin, you're dumb." He just says, "You may want to consider this." Right? I think about it and I'm like, "That's a really good idea." And that's because he's got a lot more experience.
Darin: So putting those two heads together is better than making some rookie mistakes.
Glenn: Yes. The partnership really kind of we leverage off each other. David doesn't mind staying up till midnight or 1:00 in the morning working on a deal. At my age and all my experience, so it's like, aah, another deal, right? But he is just so eager and excited. But as Raj did for you, I'll suggest some things to David, it's like if you do this, this and this it's going to save you a lot of time, and effort and energy.
The Opportunities You Get When Doing the Right Thing
Darin: That's huge. Another thing I wanted to ask you was, you've got all this experience. You bought up to 4,500 units. Why did you even join a mastermind? You were super experienced. Why did you even join that group?
Glenn: That's a great thing. I have actually a chapter in my book about networking and relationships. I will tell you that the very first deal I ever bought was a 44 unit complex that came out of a relationship because I was sitting across the table from a guy named John Gibson volunteering my time at an apartment association function. Out of that relationship and friendship came a multifamily deal. Later a friendship relationship with a gentleman by the name of Ed. Sold me 1,500 units, eight apartment complexes because of a friendship and a relationship and networking. So I'll join these groups and I'll participate.
I join these things and I participate, and I love to go do that simply because of the opportunities that come out of networking. Can I share with you one story that was just fantastic?
Darin: Yes, that'd be fantastic.
Glenn: I sold the deal to a gentleman out of Dallas, and he bought my apartment complex. We're sitting around this mastermind. I never met him in person but I'm in a mastermind, I think we're in San Diego, or Las Vegas, and there are 20 people on this little mastermind group. It's not very big, we're doing introductions. This one guy across stands up, he goes, "All right. Well, I'd tell you my name, but really what I want to do is I want to introduce the guy across the hall or across the table."
Footprints From Doing the Right Thing
Glenn: And he pointed at me, and I looked and I'm like, "Dude, do I know this guy?"
And he pointed at me, he goes, "Let me tell you a story about that guy, Glenn Gonzales." He said, "He sold me an apartment complex, and one week before closing the chiller died." These big chillers are pretty expensive pieces of equipment at an apartment complex. He said, "My earnest money had already become nonrefundable, the closing was already set. Glenn could've done one of two things. One, he could've not told me about the problem and we still would've closed, or he could've put a Band-Aid on it and then the problem would be mine." He said, "But you know what Glenn did? He went and purchased a new chiller for me and got it installed and escrowed the money so that the money was available so that when it closed I got a new chiller out of the deal."
And he said, "In this industry when you're buying and selling apartment complexes people are so out to make the ultimate buck and they are so willing to kind of stick it to the next guy that there are very few people in this industry that have the integrity that Glenn did." I don't say that to brag, but here it is. I'm sitting across the room at a mastermind from a gentleman I only knew his name. I never met him in person, and he took the opportunity to introduce me because of this experience that he had.
The Conversation That Meant a Lot
Darin: Wow! That's an awesome story. When you did it you never knew that conversation was going to happen. But what an amazing thing to have happen, and everybody else in the room just looks at you with a completely different, and not that they didn't already have a ton of respect for you, but that's just another example that's like, wow.
Glenn: This is leading up to something that I want to make a point, but I'm going to share with you one other experience that just happened to me yesterday. I was out working on my ranch and a girl named Kim called me. She bought from me a 650 unit apartment complex up in Dallas-Fort Worth.
Darin: Is that Kim Radaker?
Glenn: Yes. Do you know Kim?
Darin: I'm invested in one of her deals.
Your Name Is Your Reputation
Glenn: Yes. She called me yesterday just out of the blue. It's like 8:30 at night, and I picked up, and “Hi Glenn,” “Hi Kim. How are you?” She's like, "I got a quick question. I have a gentleman that wants to buy one of my apartment complexes and he put you down as a reference because you sold him two deals." I said, "Oh, what's his name?" She told me his name, and I said, "You know what? He was a good buyer and I think it would be a safe bet because he performed. He performed on time and he didn't re-trade me. So if you're going to do business with him, I don't think you should be nervous."
She said, "Glenn, of all the people that I have ever spoken or done business with, you’re one of the most standup guys in this industry. If you say somebody is a standup person, I believe you." And I told her, I said, "Kim, that's one of the nicest compliments you can give me, is that you trust me and that I've got a fairly good reputation."
It just really meant the world to me, Darin. I can't tell you how grateful I was because in this industry your name and your reputation are going to win you deals or lose your deals.
Darin: That's huge. When we met and when I talked to David it came out that you had this book, right? Called Maintenance Man to Millionaire. So we were going to be doing this podcast, so I went and bought the book on Amazon and I read it over the weekend.
Maintenance Man to Millionaire
Darin: Look, I don't know if this will come to fruition or not, but I have to tell you that there were a number of times I'm reading this book and I would stop and I would look over up at my wife and I'd say, "Tiffany, I'm going to do business with this guy. This guy is just a good guy."
I mean, so I don't know if it will happen or not. But look, I've had three interactions with you, one at a lunch, two I had the interview with the episode with David Toupin, which he went on, and on, and on about how great a partner you are. He just talked about how humble you were.
I got that sense too when we met for lunch that day. I'm like, you know, a guy with that much experience, he really could kind of lord it over you as relatively new people in the industry. You could treat people lower than you, beneath you, but that did not come across at all. You were very approachable. It was evident that you got along very well with the rest of your team.
Because there was so much great stuff that I read in that book, I do want to spend some time just talking about some things that you talked about in the book. Listeners, I would highly recommend you go out and buy this book. I mean, it's on Amazon, it's called Maintenance Man to Millionaire. It's not a book that's going to take you a month to read. I read it in two, three days, but there's just so much wisdom packed in there.
Glenn: One could sit down and read it straight for like an hour and a half and maybe two hours and be done with it. It's an easy read. I really wanted, Darin, for people to get a sense of my personality through the book instead of just a language or a how-to, right? Because I didn't want it to be too technical. So it is filled with Glennisms or my voice.
Darin: Which fits in great with kind of my approach. When I set up this podcast, most podcasts are kind of in that 25 to 40-minute range. I built this one to be more like an hour, but one of the things that I really wanted to have happened was not just talk about a deal. If you're a passive investor and you're listening to this, what's important to me is that I get to know the people I'm going to do business with.
So it's more important not just to understand the deal and some of the specifics of the deal, but actually understand the person. So that's why I made this podcast longer and that's why we're going to spend a little bit more time talking together, is so that people do get to know you at a deeper level. If you read his book you'll get even a bigger, deeper dive into getting to know Glenn.
Glenn: There are sections of my book that made me cry when I was putting that information in it. Because there were times in my life that I was at a serious, serious crossroads in my life, whether it was being bankrupt or coming close to losing my wife due to an illness.
What Can Happen When You’re Doing the Right Thing
Glenn: All of those things led to who I am today and how I treat people, and why I'm on earth, and my gratitude. I mean, all of those experiences, including being a maintenance man. When big investors or bigwigs would come out to the properties they would talk to the regional manager or the manager but they never gave two cents about its maintenance guys. Well, my approach is those maintenance guys know everything about the property. I go out there, they're the first ones I talk to. I'll go talk to the manager second. I'm going to talk to the maintenance guy first.
Darin: That's smart. Actually, it made me rethink the property that I'm currently managing. I spend a lot of time with the leasing person, we've had a lot of turnover on the maintenance side. It's tough to find a good maintenance guy that wants to stay and doesn't kind of bounce around, but you're right.
They're the ones that are going into all the units and they're the front person on the customer service side. You touched on something that I did want to talk about. I was going to do it later on, but let's hit upon it now. Talk about God's influence in your life. There's going to be a lot of spoiler alerts, just to let everybody know, in this book, but there was a time in the book where you actually came before the church and you surrendered. Then there was a miracle that happened after that. Can you tell that story?
Dramatic Turn of Events
Glenn: I can. Thank you for asking, and I'm going to do my absolute best to not get emotional.
Darin: It's okay. I fought off tears in that section. I'm just being real.
Glenn: My wife had been slowly, gradually getting sicker and sicker. Her lungs were failing and she got so sick that she eventually was on oxygen full time, and then eventually in a wheelchair. Because she just didn't have the strength or energy to get from here to there walking. So of course there were lots of prayers. I had my friends praying. She received priesthood blessings. We would fast and dedicate prayers to heavenly father to change this situation. I just wasn't prepared to lose my wife. So, of course, I'm drawing down all these, every resource I could to pray for a miracle. She was getting worse, and worse, and worse, and really was in July of 2015, or let me back up a little bit.
Darin: She needed a double lung transplant if I remember.
Glenn: Double lung transplant, and she was diagnosed with and put on the transplant list at the very end of June. The doctors said, "Well, she's got a small frame and we could find her a set of lungs but it will be very difficult because the size of her chest cavity needs a small." They said, "Six months to a year and we should be able to find your wife a set of lungs." And at that moment, Darin, it was just very sobering because at the rate she was declining we, both Heidi and I, realized she didn't have six months to live. A year, she wouldn't last that long.
Miracles Happen When You’re Doing the Right Thing
Glenn: I mean, at this point she was 85 pounds on oxygen full time and in a wheelchair and declining daily. So of course I'm looking for a miracle, and it just wasn't coming.
So I went through this emotion of frustration. It's like, why God? And a lot of people go through this. Why is this happening, a bad thing to good people? Et cetera, et cetera. I just really wanted my will to be done. And I came to the conclusion, maybe heavenly father has work for my sweet wife to do on the other side of the veil. Maybe after death, there's something for her to do. Or she's already paid her dues here on earth, I don't know. I came to this conclusion and then I realized I'm not in charge anyways.
There's nothing I can do, he's in charge, I just need to realize that. Really what the word was Darin, was trust. I needed to trust my father in heaven that whatever he did would be done. Let me quote the savior, "Not my will be done, but thine, be done." And when I got to that point, I actually stood up in front of a meeting and made this big declaration. I shared my testimony that I'm not in charge. I trust the Lord, and if he wants to take her home, meaning death, I'm okay with that. I'm not hoping for that, but I'm okay with that.
That was on July the 3rd and she got the call in July, four days later, to get a double lung transplant.
Darin: I just got goosebumps again, and I just read that this past weekend. That's so amazing.
Doing the Right Thing and Keeping the Faith
Darin: What you didn't mention, which I read in the book, was it sounded like you were very angry and very frustrated leading up to that. So that was a difficult process for you to get to that point and then you finally were able to release that, and then all of a sudden the miracle happened.
Glenn: Yes. It was frustrating because here she is, she's 45 years old. She doesn't drink, she doesn't smoke, she doesn't do drugs, she does yoga, she eats really well. I make fun of her because I'm fat and she's healthy. But yet she's the one that's going through this, and it just didn't seem fair. So I did, I surrendered. I turned it over to the Lord and it worked out. It doesn't always work out for all people.
Darin: Right. That's what I said to my wife too. I said, "I'm so glad that the end of that story turned out that way." It doesn't always happen that way, but it sure does feel good when it does.
Glenn: Darin, let me share with you one of my takeaways from this if you don't mind.
Darin: Yes, absolutely.
The Greatest Takeaway
Glenn: It's a principle that can be applied to life. My wife prior to all of this going on and leading up to this, my wife she would drink, she would go get a water bottle out of the fridge, she would drink part of it or half of it, and then she'd set it down.
A little while later she'd go get another water bottle, get it out of the fridge and now there's one in the bedroom, there's one in the kitchen, there's one in the dining room, there's two in the car. I'm like, "Honey, gosh, why don't you just finish the one you open? Why do you open and leave them all over the house?" And she's like, "What is the matter?" I'm like, "Well, gosh, honey, just finish the one that you opened".
But then I thought to myself, what happens if Heidi is gone and there are no water bottles laying around the house? I think I would really miss that. I started thinking about water bottles and really how insignificant is a water bottle relative to companionship with my eternal companion.
Change of Perspective
Darin: Yes. I mean, if you've been married for a while, there are so many different little things that may irk one person or the other. I was reading that and I was reflecting on a number of things that aren't the water bottle situation but similar type things that I really need to let go.
Glenn: Or change your perspective, Darin, because my wife is still the same wife, and guess what? She still opens water bottles and she's got a couple laying around. The difference is how grateful I am that those water bottles are still laying on the house.
Glenn: And really it's part of who she is. It's her character, it's her personality, and it's still here. Now it doesn't bother me. It did before, but it doesn't bother me now. Now I'm grateful.
Darin: Now I've seen pictures of you guys on Facebook. It looks like she's made a full recovery and she's living a normal life.
Glenn: Yes. That's Facebook, it makes it look that way. She takes 20 pills a day. She gives herself a shot three or four times a day. So it's a lot to manage, but she is doing fantastic. This problem will never go away. She'll be on rejection medicines for the rest of her life and her body will never accept a set of lungs from somebody else, not like other organs that will kind of be accepted by the body. A lot of effort goes into where she is and she's doing fantastic. We play with the grandkids, we travel. She does yoga. She's beautiful inside and out.
How Creativity Impacts Multifamily Deals
Darin: Well, great story. Thank you so much for sharing. Hey, you talk about in the book there was one part that talked about the art and creativity of the deal. So I'm relatively new to this space. I've been in the real estate world for about three years and I've read that in other books. I also saw that at one point you worked at Equity Residential in Seattle. So I was wondering if you knew Sam Zell, I read his book, Am I Being Too Subtle? but he talks about creativity. For me, the word creativity doesn't necessarily go hand in hand with real estate, but there is a lot of creativity that can be put into place into making a deal work. Can you talk about that a little bit?
Glenn: Creativity can be applied to so many different aspects of a multifamily deal. It's whether you get creative on how you structure your partnership. It can be how creative you get on the improvements that you do to the apartments. It could be how creative you get in managing and retaining residents versus maybe wanting to turn over residents if that's a thing. There are so many different creative things that you could do. I've talked to people in the past about what will make an apartment complex a successful apartment complex and a profitable one.
How to Grand Slam When Doing the Right Thing
Glenn: When I say successful I mean profitable for its investors. And really there are three things in my world that I've learned that if they are either very mismanaged in a lot of areas, the rents are significantly below the potential rents of the market or the property is quite deferred, right? And ugly and just needs to be improved. Anyone of those three that you could find will make you money. You get two out of those three and fix two of the three, you're going to make yourself a lot of money. Say you find a deal that's got all three of those problems, we call that a grand slam.
Glenn: There are lots of things there, but you can apply the same creativity and retention, and people can have just a great retention program on a nice new apartment complex where you don't need improvements and there’s no bad management. But yet you can just reduce the turnover and people might even pay more to live there because they like the culture of that apartment community. They might pay more than the market rate because of the creative environment that you created. So there's a lot of different ways.
Culture Is King
Darin: That makes sense. So you mentioned the world culture. That was something that was very important in your book, not just for deals but also for building your team, both internal and external, but your company and the people that you hire and the approach that you take. So talk to us about the kind of culture that you're trying to instill in your team.
Glenn: That's so dear to my heart that I don't even know where to start.
Darin: Well, I can start you off. I'll share a story from the book. Then you can kind of use that as a launching pad. So you had a female that was working for you and she was a great worker and helped the company a great deal, and one day she called in, said she couldn't come to work, and instead of just saying okay, you inquired as to why. She said that she had an issue with her car, the battery had an issue.
Glenn: Get to work, yes. That was Leslie, yes.
Darin: Well, talk about that story. Look, that was one event, but then that's kind of the culture that you want to create.
Glenn: Very much, Darin, very much, Leslie did. She called me, "I can't make it to work." I'm like, "What's up?" She's like, "My battery is dead." I'm like, "Okay, no problem. Where are you actually?" "I'm at home." I'm like, "Okay." So I knew where she lived because I had her address, right? She's on the payroll. Dedicated employee, dedicated, and this is a gal that comes in early, stays late and she does all the bookkeeping. She probably had 15 or 20 properties that she did our bookkeeping for. Just behind the scenes, right? Salt of the earth. Well, here she's faced with a challenge, she can't. So I go to her house, I get in and yep, the car won't start.
Just Do the Right Thing
Glenn: You also look around, it's filthy, she doesn't have time to wash her car or even clean it out because she's working all the time. I got in and you could tell she's got the little sticker in the windshield, oil hadn't been changed for a long time. So I said, "Leslie, at least jumpstart your car and see if it'll start." She's like, "Okay." I got it started and of course, I had the keys, I shut the hood and I said, "I'll be back in a minute." She's like, "Where are you going?" I said, "I'll be back. Just go back to work."
I went, I got her oil changed, I bought a new battery, I put it in her car, ran it through the car wash, had the inside detailed and then I went back and I parked it. I gave her the keys, and she could tell just by looking at the outside. She's like, "What have you done?" And I said, "The right thing."
I handed her the keys. Leslie was so grateful but she just cried. She said, "Thank you. You didn't have to do that." And I'm like, "I know I didn't have to do that." But I said, "Leslie, if I step back and I look at all the things that you've done for our company, you've probably made our company hundreds of thousands of dollars because of what you contribute. So a battery and an oil change is nothing, but really what I want you to know is how grateful I am that you work for us."
I even noticed that she had a cracked windshield maybe three, four or six months later, I don't remember the date. While she was here at the same office as I am, I called the mobile windshield repair, gave them the make, model and the year and they come out to the office.
Gratitude Goes a Long Way
Glenn: I asked her if I could borrow the keys and I got her windshield repaired and they left. Again, she said, "You didn't have to do that." But you know how cheap windows are, a windshield? You could buy a windshield for a Mazda for like 300 bucks, 200 bucks. It's not a lot of money but what she got out of that. She's told me, "Glenn, I will never work for another person, ever."
Like you said earlier, maintenance guys are hard to find. If you apply that same logic of taking care of them, people love to feel appreciated. Pay is important, benefits are important, but the culture and feeling appreciation and gratitude, it's fantastic.
Darin: That goes to your reputation too. You've got a reputation in the industry with buyers, sellers, and brokers. Also when you're building a company you've got a reputation for what you do for the people that work for you. So you're consistent across the board. I told you I read the book but I bought two more copies. I’m planning to bring them down to the property and give one to the leasing manager and one to the maintenance manager for them to read.
I think it's awesome how you spend time to educate the frontline employees on not just what they should be doing for their job, but also on why, and the valuation of these properties, how and what they're doing contributes to that increased valuation.
Calculate Your Value
Glenn: It's in the formula. We look at NOI divided by cap rate and we come up with a value. That NOI is directly related to the manager pushing rents and the maintenance guys saving expenses, and now you've got two equal parts participating in building this NOI. But unless they see the big vision, so what I would do is I would teach both the maintenance man and the property manager that formula. When we go over the financials each month, we would sit down and go over that formula. I'm like, "Okay, based on your contribution, how is that NOI driven? Is it going up or is it going down?"
And they got fascinated when they realized that hey, when we took over this building it was worth 10 million and within six months it's worth 11 million. They're like, "We've created a million dollars in value and improved the cash flow." I said, "That's exactly right." One of the maintenance guys is like, "Well, I think I deserve a raise." I said, "If you can teach me the calculation and you show me that next month too and you're right, I'll give you a raise."
You need to know how to calculate the value of you, right? Which leads right into my very first chapter on that book, the value of you. What do you bring to the table and what can you do to help improve. Darin, you're an investor, I'm an investor. We put these little plans together, but who executes the plan? It's not really the property management company per se. Yes, we hire them, but who executes the plan? That manager and that maintenance guy are there every days, five or six days a week, executing on your plan.
Doing the Right Thing for Passive Investors
Darin: You're right. I've learned a lot from your book. So talk about your perspective on making money for passive investors? I talk to a lot of people and reach out to me on Instagram and are looking to do their first syndication deal, and they want advice. I can hear that there's a lot of people that sound like they have the approach like I need to get money from other people to get my deal done.
Maybe because I'm 50 years old, I have another company, I've done well, and this new real estate thing over the last few years has charged me up and given me new energy, but one of the things that have got me really excited is that if I improve the property, help improve the property alongside the property management company, the on-site leasing staff and the maintenance person, it's not just me and my family that benefit in that upon a capital event, whether that be a refi or a sale of the property, it's all the limited partners. I have 44 limited partners and to me, it gets me excited to know that look, when we sell this for a profit I'm going to help grow the wealth of these 44 other families. So talk about how you view making money for passives?
Glenn: I'm going to share a story relative to that.
We had a small 157 unit deal in San Antonio and we were getting ready to sell it and we did sell it, and it came to the point to distribute the money. My previous business partner called the investor and said, "Look, we're about to sell this thing and you're making way too much money, we did most of the work."
Building Trust and Loyalty
Glenn: Yes. The guy said, "What are you talking about?" He goes, "Well, I think you are really not entitled as much money because we did most of the work." And that investor called me, he's like, "Dude, what is up with your partner?" I'm like, "I don't know what you're talking about." He's like, "He called me and said this." I'm like, "Well, first of all, we have a partnership agreement, and whatever we've agreed to distribute to you, which in this case was 75% of the profits, we are going to honor that." And he goes, "Glenn, I knew that if I called you, you would say that." I said, "Of course." I said, "It's our job to make you money.
I can't decide, nobody else can decide whether you've made too much money or not." We, as syndicators, it's our responsibility to make you money, and if we do that, we get rewarded, right? That's why we sponsor deals, that's why we put things together. So I said, "Of course we're going to distribute exactly what the partnership said." He goes, "Thank you very much."
Glenn: I went back to my business partner and I'm like, "Why did you say that to him?" He's like, "Well, I just feel like he's making too much money and we did all the work." Like, it's our job to do all the work, that's what we do. So they get paid first, we get paid second, and if we're successful, guess what? They're going to trust us.
Upholding Commitments by Doing the Right Thing
Glenn: So my point, Darin, is if you're going to take other people's money and you're going to have limited partners on a deal, as sponsors it's our job to be true to our word but also to put their needs above our own. When you do that, that's why I've done 30 deals, right? It keeps coming back because they're grateful that we made them money. Now, not all deals make money, you know what I mean? I've been in three deals that just didn't make money. They all got their money back before we did, and I got a big goose egg. I actually lost money, but that's still not a bad run if you can do 27 highly successful deals and three that were not.
Darin: Right. So on that, I just want to make one clarification that that partner that you're referring to is a partner from a while ago in a different, not your current partnership teams.
Glenn: Yes, that's one of the reasons I left that partnership, is things like that, you know?
Because that's not my reputation, my culture, it's not who I am, and this business is based on relationships. Like I referred earlier when Mr. Black pointed me out and said, "This is the kind of guy that Glenn is and he sold me that deal." And he introduced me to that mastermind. That's why I'm in this business. I'm not in the business for investors to say, "Yeah, your partner screwed me on a deal."
Darin: Right, absolutely. All right, here's another thing you talk about in the book. Be brave and go for it.
Be Brave and Do It
Darin: I talk to a lot of people and look, it's smart to get educated. Read books, listen to podcasts, meet other successful investors, pick their brain, but at some point, you're never going to have 100% certainty, at some point you have to pull the trigger. So talk about that.
Glenn: Let me refer to you on Encinal. It was a 200 unit deal down in San Antonio. I was approached by the bank, this potential investor didn't want to buy it, so the bank was getting ready to foreclose on it. As an operator, they called me and said, "Glenn, what's it going to take to fix this apartment complex?" And I said, "Let me do some analysis." Came back, I'm like, "Dude, you really got to spend a million bucks if you really want to get this property back on course." And they're like, "We're a bank, we're not investors, we're going to foreclose, we're not going to put a million bucks. We'll just take our losses."
And I said, "Hey, bank, why don't you carry a note back for me. Go and foreclose, carry a note back, I'll put a million bucks in the deal." And you know what they said, Darin? They're like, "Well, do you have a million bucks?" And I'm like, "No, I don't have a million dollars. I mean, I'm a property manager." But I said, "Based on my experience I know how to fix this problem and that's why you called me and you want my opinion." And they're like, "Where are you going to get a million bucks?" And I'm like, "I'll ask some people for it."
Every No Is an Opportunity to Move Forward
So Darin, I went and raised a million bucks, but guess what? Out of nine people that I asked, or 10 people that I asked, nine of them said no. You know why they said no? Because it was my first deal.
Glenn: It's like no, no, no, but every no that I got I'm like, "Would you know somebody that might want this because it's a great return?" And they said, "Yes, call so-and-so and so-and-so." But actually, at the end of the day, we raised money from people I didn't even know. Excuse me, that I was not familiar with, but they came from the people that told me no. So you just got to push forward. I tell that story because at one moment the bank said, "Well if we're going to lend you this money and we're going to carry a note back, we want a commitment fee."
And I went and I said, "Well, how much is the commitment fee?" And at this point it was like, I don't know, $75,000. So I went to my wife and I said, "Honey, we have to write a check for $75,000." The commitment fee was 150, right? So the partner was going to up half and I was going to put up half. But Darin, you're never going to guess how much money I had in my checking account at that time.
Darin: How much?
Glenn: $75,000 that I had saved.
Darin: Wow. So it pretty much took you down to, this is it.
Glenn: This is it, right? I mean, this check represented my wife and I's savings. When you're working as a W-2 and you have five kids and a mortgage it's very difficult to get ahead working for a W-2.
Risk-Takers Who Are Doing It Right
Glenn: I talked to my wife, we prayed about it and she's like, "You know what? If we're ever going to do it this is the time to be brave and do it and there's no looking back." And she looked at me, she's like, "Do you feel confident that you can turn this around?" I said, "Yes." She said, "Let's do it." So we wrote a check, took our checking account down to a very, very small balance in our checking account and we were all in.
Then we raised the money, closed on that deal, we sold it in month 12, right? So I was able to survive 12 months on an asset management fee. But you need to understand there that at that point in my life I was living on a shoestring budget in a very small rental house, and I didn't have a lot of overhead. My kids had all kind of left the nest, I was done paying child support. Like my wife said, if we're ever going to do it, now is the time to do it. We sold that deal and I made four times my annual salary at the property management company.
I was making 100 grand a year, right? And I made $400,000 on one deal. It was my cut after the investors got paid and it’s like a 48 IRR, that's why. A big IRR, the investors won huge, and then I won huge because I got to participate in the upside. Guess what happened after that, Darin? The investors that passed on the deal, their friends that they referred them to called and bragged about me.
Turning No's to Clients
Glenn: The one that said no are now calling me like, "Look, I know I said no because it was your first deal, but do you have any more?" I'm like, "Yes, I got more." So now I was able to buy deal two, deal three, four, five, six, and all that other stuff.
Darin: It's fantastic. It's not the ideal to have to empty the bank account and go all in. But it's not just in real estate, it's entrepreneurs in general. There's a lot of stories like that where people had to take a risk to get in the game. Actually, when I spoke to your business partner, David Toupin, that mastermind where you guys met I asked him, I said, "Well, how did you even have the money to pay for that?" He said, "I put it on a credit card." But you know what? He took a risk and then he developed a relationship with you and now the two of you have been running and killing it.
Glenn: You know what's cool about that, Darin? Is because I like David and we did this deal together, and I got an acquisition fee. I actually wrote him a percentage of that acquisition fee to him, and he's a smart kid. One, that was the biggest check he had ever gotten in one time. It was not a very big check. Well, it was a big check. But it wasn't that big. I have to tell you, it was 30 grand. So he put 20 in his pocket and he reinvested the other 10 into the same deal we had just bought.
Loving Cash Flows
Glenn: So he's an investor and we got an acquisition fee, and he didn't have to really take money out of his checking account. He's like, "I like this." I said, "How would you like to do this on steroids? Let's not do this small deal, let's do big deals where the acquisition fee is 200 grand and we're investing our own money into the deal and we're participating right alongside our investors." He's like, "I like that even more. That's cash flow." So David is all over this. I mean, he loves this stuff, and so does Mike, so it's kind of fun.
Darin: One thing that David is really good at is putting himself out there. One of the things that you talk about here is let people know what you're doing. So talk about that a little bit in terms of what your, don't be shy, tell people what you're doing.
Glenn: Yes. That's tough for me, Darin. I'll be honest with you, I don't like the limelight, I don't like to brag. When I came up with this title of this book, Maintenance Man to Millionaire, my wife is like, "It sounds like you're bragging."
Darin: The word millionaire, yeah. I can see that. But you know what? It could attract somebody that would read it that may not have read it if it was a more subtle title, and it could change his life.
Importance of Having a Mentor
Glenn: Yes. I put a lot of thought and prayer into that, "Maintenance Man to Millionaire", and I came up with it because the footer on that book says, "Real estate wealth creation for everyday people." The lessons that are in the book are just for everyday people. I was not very good at stepping out and explaining who I am in limelight and all that, but David Toupin actually taught me the importance of social media. He was with me when I did my very first Facebook Live. It was kind of sad, but he's like, "Push this button to post and everybody can see it and it's live." And I'm like, "This is cool."
So I'm doing more of those, I'm doing these. Like Darin, you invited me to participate in your podcast. I think in the past I would say no. I actually wrote a book because people encouraged me to do it, and I was always like, "Nah, I don't know." You need to because it'll inspire other people.
You just have to have the right attitude about it. Social media is good. I mean, you can inspire people. People inspired me before social media. It's because they shared all of their experience. I had mentors. The mentors that I looked up to, they weren't bragging, they were just good people. I'm like, "Will you mentor me?" And most good people were like, "Yes, I will. Yes, I will."
Doing the Right Thing With Secret X Event
Darin: Yes it's a good point. I fall right there with you. I'm 50 years old and I didn't get involved in social media until three years ago, and I thought it was like a little kid toy like Instagram is for my kids, but I've met so many great people through it. I probably wouldn't have met David if I wasn't on Instagram. And then I wouldn't have that meeting in Austin and me and you probably wouldn't have met.
Glenn: But really David and I are on opposite ends of the spectrum. I'm just getting into social media. He loves it.
Darin: He's out there, for sure. When I was in the episode with him I asked him about this Secret X event that you guys do.
So right there on the show he invited me to come, and when we got off we talked offline and I'm in. So I'm coming in November, I'm looking forward to it.
Glenn: Really a neat event, all right. You go away to a fun destination but you are around other like-minded entrepreneurs. A lot are in the multifamily and real estate world but a lot of them are not. They're just there to really absorb the energy that comes from being around other entrepreneurs that are all trying to navigate through these changing times.
The Secret X Event
Glenn: What a great group of people to be around. I've been to a couple of them and have lots of takeaways, right? They call me the godfather because at that event I was probably the most experienced and had probably the most apartments in my portfolio than most of them. But I had so many things that I took away from these great, great people. So are you going there?
Darin: Yes. So I put down my deposit and booked my plane ticket. Hopefully, COVID doesn't get in the way and I'm looking forward to it.
Glenn: Did they tell you why it's a secret and they call it Secret X?
Darin: No, but I kind of like that I don't have to think about it. I just show up and you guys tell me what to do.
Glenn: Because you're going to get there and you're like, "Where are we staying?" And we'll tell you when you get there. They'll tell you, "Well, what are we going to do? You'll find out when you get there." But you will not be disappointed. So there's some element that's a secret, that's part of the fun. It's part of the anticipation.
Fear Is Normal When You’re Doing the Right Thing
Darin: I like it. So Glenn, talk about fear. We talked about it a little bit when people are afraid to pull the trigger on their first real estate investment, but most people are afraid. Certain things in their life they're afraid of. So talk about how fear has impacted you and how you were able to push past that fear, even though you had it.
Glenn: Yes. I will tell you that this answer is probably not the right one for everybody, but I will tell you about my personal experience. When I was managing apartments for a W-2 as an employee, I had been laid off from two different companies due to cutbacks or whatever reasons. I really wanted to do my own deals for a long, long time, but I had child support, I had kids, my wife and I had kids, and I had a mortgage. And really I didn't step out into this world out of fear.
I was afraid of failing, and it was because of the years that I participated in, and years of learning and experience, and watching other people. There were a couple of things that happened. I watched people that made a lot of money in real estate but I was doing all the property management for them. I just had to write them the check, and that's really frustrating. Then there were other times where I had been laid off from my job. So I'm gaining experience and experience but I just didn't really have what it took to jump in with both feet because I had fear. I think that's natural for a lot of people.
Glenn: Even if you've worked really hard, called it for 10-20 years and you have a little nest egg, you have a fear that if "I invest in this deal it might not go well," which is true. It might not go well and you could lose your money. But if you put your money with a good operator and sponsor, he's going to lose money too. Chances are if he's a good operator, a good sponsor, you're not going to lose your money. At some point, you've got to overcome this fear of loss and look at an opportunity, and that's a tough thing. It's tough for everybody.
Darin: It is, I completely agree with you. I started my other business trading loan portfolios back in 2007 and some people have asked me, what was the hardest part about starting your business? I said, "Signing the lease to the office space." People are like, "Why? Was it a big financial commitment, or was a long-term lease?" What was so difficult about it? I'm like, "No, it wasn't." I think it was probably only a year or two-year lease, I mean, and it wasn't a big office.
I said, "The hardest part was signing that lease because once I did, I had to tell my family, my friends, my colleagues I'm in business. The fear of failure was so hard to get over and to sign that lease and get into business." Now, once I was in my office and I'm dialing for dollars and I'm making phone calls, I realize, "You know what? I'm doing the same thing I was doing at my previous company. But 100% of the profit comes to me and my family versus getting a much smaller commission." But that fear can paralyze you.
Committing and Doing the Right Thing
Glenn: Yes. What you're talking about, the word is commitment. You were committed at that point. There was no looking back.
Glenn: I had these little Glennisms at the end of each chapter of my book. That first chapter was the value of you. One of the things I had put in there is to begin to see your past as a store of knowledge, and therefore value. Give yourself some credit for what you have already achieved. Because we are a series of all of our experiences, and chances are we're probably smarter than we think, we're probably better than we think and we probably have more experiences than we really give credit to.
If you look back at all of that and make a list of all the things you've learned, good and bad, you're probably a pretty smart person and you've probably worked pretty hard for what you have. If you approach it that way you may have more confidence than fear, and that's really what it is, it's a teeter-totter. Where are you putting your energy, in fear or are you putting your energy in confidence? When you made that lease, Darin, or you signed that lease, you may have had a little bit of fear, but guess what? Your confidence was enough on the scale to tip it to commitment.
Capitalizing on the Look-back
Darin: It's a great point. That same thing could be applied to people that reach out, talk about getting into the real estate space. I have plenty of people that say, "You know what, Darin? I think I might just want to start with a duplex or fourplex." And I say, "That's fine." Because anything you do is going to get you in the game and is going to give you experience, but you don't have to do that. If you want to scale up and do larger, you can, but you have to partner with an experienced guy that already has experience.
So then there's a mindset shift that has to take place in that individual where they actually feel that value in themself, that worth in themself that why would somebody that's experienced want to partner with me, I haven't done it before. But you're saying look at everything that you've accomplished up to then. You do have value and you have to figure out how you can add value to that other person.
Glenn: Yes. For your listeners, this may be an opportunity to capitalize on the look back. Let's say that somebody wants to buy a fourplex or a ten-plex and they just don't have the money. Let's say that this person is an electrician or a painter. That electrician, how many homes or businesses, business owners, people you've come in contact with in the last five years that think the same way you do? I'd sure like to buy a little 10, twelve plex for retirement but have no money. Or you're a painter, how many homes have you been in painting for homeowners that are in the same boat.
Finding the Right Crowd
Glenn: I mean, if they are hiring you to paint their home, chances are it's because they have enough money to pay you and otherwise they'd be doing it themselves. So really look back. I mean, there's probably a whole bunch of potential investors that you come in contact with every day that you just haven't looked around, and they're right there with you.
So maybe you just talk about hey, I'm going to do this someday. If they say, "Yes if you ever come across a good deal, let me know." Well gosh, start writing all those down. Guess what? Before you know you got 20 friends that all have $10,000 and you got enough money to buy yourself a little twelve plex. Boom, right?
Darin: That's incredible advice, it really is. There are so many people. You say it at the bottom of your book, you do. It says, "Real estate, wealth creation for everyday people." But I think that there are so many people that they just can't visualize themselves doing it, but you just gave them a pathway.
Glenn: Yes, right there. A good little golden nugget. They're all there, they're already there, a circle of influence of people and they're all like-minded. So if you're thinking about buying twelve plex and you just have a little bit of money, chances are so are all the other friends in your circle.
Outside Business Hours
Darin: That's awesome. So Glenn, what do you like to do outside of business? I know you've got the Gold Wing, you guys like to ride the motorcycle. Is that kind of the main thing or what do you guys like to do?
Glenn: My wife is, she probably thinks I'm a little psycho because I have all these little hobbies that I like, and there's way too many. I've been boating my whole life. So my wife and I have a boat. We've had big boats, we've had little boats. We've had boats for 20 years. I love being on the water and I don't care if I'm just sitting there catching a fish. If I'm pulling kids on tubes, or if I'm just dropping an anchor listening to music.
I love being out on a boat. So I do that. Fortunately, here in Austin, Texas, I have the opportunity to do that nine, 10 months out of the year.
Darin: Do you have a boat on Lake Travis?
Glenn: Yes. I keep the boat in my garage because it's small enough I could tow. It's a 24-foot jet boat made by Yamaha. So it's kind of a wakeboard boat, but it's kind of an all-around boat.
Darin: Awesome. I always say I like to have friends that have boats. So I know that you have one now, so I could call you up and say, "I'm coming down, let's go out."
Wide Range of Family Activities
Glenn: Dude, this is a funny story, but I invite people all the time to go boating with me, and half of them are like, "I'd love to go but I'm just too busy." So I'm like, "Gosh, who wants to go boating with me?" Because my wife is done boating. She's gone for 20 years. She's like, "What are you going to do?" I'm like, "I don't know, drop anchor, tube, fish." She's like, "No, I'll pass.". I can't find a friend to go boating. So, Darin, you're invited.
Darin: All right. Good. I will come down and we'll go out, for sure.
Glenn: I would love that. We also have WaveRunners. This afternoon I'm going mountain biking with my son and my son-in-law, so I love to mountain bike. I've got 100 acres, and believe it or not, the weirdest thing is I love going out there, I love to feed the cattle. Yesterday I was driving the tractor and moving some old lumber to a burn pile. My wife and I like to travel, so we've been to those Secret X ones. The last couple that they've had, we've been to those. We have five grandchildren. So we have sleepovers in the evenings on Fridays and we go do fun stuff on Saturdays with the grandkids. By the way, I don't really boat on Saturdays because it's so busy. So I can go any day I want.
Darin: During the week, right.
Glenn: There's nobody on the lake, got the whole lake to ourselves, the water is smooth. It's so nice.
Darin: That's what I do with golfing. I typically golf once a week and I golf in the middle of the week when there are not as many people out there.
Glenn: Yes. I love to go hunting and I love to dove hunt. I like to shoot pigs and I feel like I'm doing honor to Texas by eliminating pigs if I can.
Darin: So where is your 100-acre ranch? Is it within a short drive of you?
Glenn: It's about a mile from my house. But I keep it in my house. Actually, I just jump on the road and ride them side by side down there. I got a Polaris ATV and I just go down there.
Darin: If you would have guests to your ranch, my son is a sophomore at Texas A&M. Look, we all have different dreams, right? For him, his vision is when he can afford it he wants to have a ranch and be able to fish on the ranch, and have ATVs and all that. That's something that is etched in his mind.
Glenn: Yes. Well, why don't you bring him down? We'll go boating. Bring your son, then we can go out there. Has he ever shot skeets before, a skeet thrower?
Darin: No. He's like, "Dad, we moved here when I was nine, you're not a hunter. I've met so many people that go hunting with their dad." And I'm like, "Son, look. If we find somebody that will take us out and can teach us, I will go." But I don't have the experience.
Glenn: I do. Bring your son and we'll have a lot of fun.
The Next Big Stretch
Darin: What's the next big stretch goal for Glenn?
Glenn: Honestly, retirement. For retirement means that my two business partners, David and Mike, are going to take over the company and I'm going to go from being the percent ownership that I have now all the way down to 20%. They'll own 80% of the company, but we're going to have X amount of units in the portfolio, X amount of dollars in the checking account. Then my next chapter is to try and work maybe two to three days a week because I want to, not because I have to. That's the next biggest thing, right?
Darin: When does that happen?
Glenn: That's on a five-year plan or less. Really what I'm trying to do is get Mike and David to have enough life experiences and actual experiences relative to these multifamily deals under their belt before I step away. Because I believe that my 30 years of experience as I share and talk about transactions with my partners, we're avoiding some significant pitfalls and mistakes that a lot of sponsors are making. I don't want them to learn that on their own. I want to say, here's what I did wrong on this one transaction. We're faced with that again, let's do it this way because that'll avoid.
Focus on Doing the Right Thing
Glenn: I will give you a little nugget. It's not a secret, but in today's environment when we put together deals, we're raising a rainy day fund where there is just excess working capital. That's a hard conversation to have with investors because they're like, usually you have a line item for every dollar that's being spent. Here's your legal fee, here's your appraisal fee, here's your third party fee, here's the acquisition fee, and here's an extra $150,000 that goes to nothing.
What? Yes, it's for nothing. Well, how does that work? Well, I've learned over 30 years that not everything goes as planned every time, and sometimes there are surprises. You can either get caught with your pants down, or you do a cash call, or you can neglect it, but you can't ignore it. Nobody likes cash calls and neglect it, that makes things worse. So you better have a rainy day fund in today's environment for the unknown. Trust me, that's come in handy more times than not.
Darin: That's huge. You approach things a lot differently than a lot of people I speak to. You're just in it for the long game, you just are very relationship-focused. I don't know, you're just focused on let's do the right thing.
Choosing Your Business Partner
Darin: So Glenn, thank you so much for coming on. How can people get in contact with you if they want to get in contact with you?
Glenn: You know what? I'm going to just throw this out there, in my cell phone. I'll put it out there, 512-937-5964 and then my email is firstname.lastname@example.org
Darin: Fantastic. Glenn, again, thank you so much. I can't wait to see you guys in Secret X. As I said. I got chills reading your book and I told my wife, at some point I'm going to do business with this guy. So I hope we can make that happen.
Glenn: I would really like to do that, Darin, and I believe we will. I mean, you're the type of guy that if I have a good deal, I'll put it in front of you and either you can invest or you and your friends can invest. There's a whole chapter in my book about doing business with people you want to do business with. There are people that we feel like you have to do, and you don't. You can do with who you want to do business with.
Darin: Exactly. Well, you're a good guy. I'm so glad that we came in contact with each other. Listeners, I hope you enjoyed that one, and until next time. Signing off.