Listen to hear Gino Barbaro discuss how he pivoted from restaurant owner to leader in the multifamily industry. Gino and his partner Jake learned how to build wealth through multifamily investing and are focused on giving back by teaching others and making a lifetime impact!
Table of Contents
- Where To Listen To The Podcast
- Introducing Our Guest, Gino Barbaro
- Being a Business Partner and a Mentor
- Multifaceted Multifamily
- The Power of Giving Back
- The Honeybee
- Being Uncomfortable Is Where Success Begins
- Passion for Giving Back
- How to Reach Gino Barbaro
Introducing Our Guest, Gino Barbaro
Darin: A little background on Gino Barbaro before we start the show. Gino grew up and owned a restaurant in New York State. He currently lives in St. Augustine, Florida with his wife and six children. He and his partner own over 1600 units, and they have helped students in their mentorship program purchase over 10,000 units. When I asked his stretch goal is, I love his answer. Feed one million kids by 2030. Focused on helping others.
We had Gino’s partner, Jake Stenziano, on probably about a month back and he gave a great story. And so I'm excited to hear the other side of it. Jake was on his best behavior and he gave a lot of glowing remarks towards you as being his partner, so I am looking forward to this conversation.
This is the first time that Gino and I are talking. We've engaged with each other over social media. As I mentioned, we had Jake Stenziano, his partner, on about a month ago. And Jake and Gino are just leaders in space. They've been around and giving back for a while. When I got involved about three years ago, the first step was educating yourself and I went out and started reading books. Their book, Wheelbarrow Profits, was one of the books that I read.
To start with, Jake had mentioned it, but can you just share once again where you guys are at in terms of how many properties, how many units?
Gino: We are currently at 1600 units right now. Jake and I purchased the first 1000 with just myself, Jake, and another partner Mike. We were able to refi and roll over $10 million out of their assets and buy the next deal. Think of it as a conveyor belt. You buy a deal, it took us 18 months to get into that first deal. That first deal you buy, 18 to 24 months, that deal starts producing really, or you have a liquidity event, whether it's a refinance or a sale.
Learning the Techniques
Gino: While you're doing that, you keep stacking that conveyor belt. We were able to stack the first 1000 units on that conveyor belt and they're continuing to produce. About two years ago we syndicated our first deal, the next 600 units after 1000 we've syndicated.
So it's just one of those tools of the toolbox, whether you're buying, whether you're owner financing, whether you're syndicating, JVing, you have to figure out the deal, the parameters, what you're looking for. I wish we had started syndicating a little bit sooner. It just wasn't in our model, and we just didn't feel comfortable. Darin you said in the beginning, "get out there and get educated". That's what I ended up doing.
I ended up listening to countless podcasts. I had the honor and privilege of interviewing other podcasters who were in the multifamily space doing syndication and giving back. So for everybody out there, don't look at just one technique. Try to learn all of the techniques. That's why we teach buy right, manage right, and finance right. But within those, there are so many different techniques that you need to learn. And learning where you are in the market cycle is going to help you out to utilize those different techniques.
So for Jake and I, we're just continuing to buy and we had spoken off-camera, Darin, about where the market is, where the economy is. What I see right now is these bigger deals are still getting bit up, because there's a lot of money out there, there's a lot of institutional money that needs to be placed. We just closed on a 52-unit back in February. We closed on a 48-unit about a month ago.
Get on With Deals That Make Sense
Gino: We're looking at another 46-unit. Are they sexy? No. But do they pay? Yes. And they will make you rich, which people don't understand. You don't need to be on Instagram closing 300-unit deals. You need to be doing deals that make sense.
Think big, start small. And if that's what the defense is giving you, take the smaller deals because, sooner or later, the economy's going to shift, the market's going to shift, you're in it.
You're creating credibility, momentum, relationships, and then all of a sudden, next year, a 150-unit deal falls in your lap.
Darin: That's a great point. I interview a lot of syndicators on this show. So you sometimes get pigeonholed in one little bucket, and so I think that's a great point. To look at multiple different avenues to finance these deals and put these deals and structure these deals going forward. Each deal may lend itself to one way or the other. And the other thing that you said, which I think is critical for the listeners to hear.
You guys are leaders. You've been in this space, written books, you've got a great podcast. You guys are 1600 units. You've built a ton of wealth. But what you said was, "Hey look, when we wanted to go this other route, we had to go educate ourselves on that other route, on syndication." You were already in the business, but you went and educated yourself, and that's so important for the listeners that you need to educate yourself and surround yourself with like-minded people that have done what you want to do. Whether that goes small, or whether that's going big, I don't think that there's right or wrong to that question. It just is an individual perspective.
Being a Business Partner and a Mentor
Darin: Get in the game, is one of the telltale things that both of us would agree on. So Gino, one of the things that Jake said several times during our conversation was that, "Gino's not just my partner. He's a mentor to me." So you guys have a little bit of a difference in age factor. You were also a business owner and he wasn't a business owner. So talk to me and the listeners and let us know how you guys come together. How did that start? And then how did you end up deciding to go the multifamily route?
Gino: I met Jake back in 2009 through my brother. We owned a restaurant and Jake was a pharmaceutical rep, and he was one of those guys, very rare, who was prepared. He had the days, it's January 16, "Gino, I need a delivery down to the Bronx." The restaurant was 45 minutes away. So I would have his stuff, he was all organized. He worked his day, and people like, "How can you be so structured?"
You need to be structured because you don't need to think about what you're doing. So to me, that attracted me. He was a hard worker – good dude. His values aligned with my values. 2011 comes, he decides to go to Knoxville and I'm like, "Jake if you're going down to Knoxville, there are some good deals here." I didn't know where Knoxville, Tennessee was. I'm a New Yorker back then. You're a New Yorker, you know the Tri-State Area.
So go down there, I said, "Let's start looking at deals together." He gets down there, he goes without his wife. He suffers for six months. And for me, it's the constant hard work.
Divide and Conquer
Gino: The constant getting rejected. It took us 18 months to get into that first deal. When we got into that first deal, it was awesome. But it took a lot of work and we learned a lot. I guess we can call each other mentors because he's taught me a lot of stuff in the business. I've taught him a lot of stuff. The great thing about our partnership is, yesterday he went on a property tour. He wasted half an hour before he even saw somebody. It was a nightmare of a tour because the tenant was showing him around. And he wasted about two hours of his day. I didn't even think to say, "Hey thanks buddy for doing that." Because I'm doing my stuff.
It falls upon my spouse, too. We have a podcast, my spouse and me. It's called The Multifamily Zone. I do the same thing with my wife. I'm not saying that I'm taking her for granted or taking advantage of her, but that's what you do when you're a partner. You're committed to that relationship, and we don't even think about saying "Thanks." It's just divide and conquer. That's what we do. I'm on this podcast right now. He's probably doing something in the property management space right now. So that's what you're looking for in a partner. One who has complementary values. One who is value-based decision making.
For us, we had the same morals. We had the same goals. It was staying in our lane. Not that shiny object syndrome. We didn't want crypto. And we didn't want to flip single-family homes. We didn't want to do vacation rentals. All those are great spaces, but we needed to learn our space, and we needed to conquer that space.
Giving Back With Extreme Ownership
Gino: We're continuing to learn. The Jake and Gino community, it's amazing. We just had an event this weekend. Jake wasn't able to come. So it is “divide and conquer”. He didn't say, "Hey Gino, thanks for picking up the slack." I know he's grateful that I went there, and I would do it again. That's what partnerships are all about. But for us to have that event, we're teaching. But at the same time, I'm learning so many amazing things. Like that conveyor belt analogy that I told you, and the other one, Darin. When somebody asks you, "Is it a good deal?" Well, there are so many answers to that. But really, look at it.
When it's a good deal, our coach Bill Ham said, "What's your cost of capital?" And I love that answer because you're looking at the debt component. The debt is like 3% now, and if you're syndicating a deal, are you giving out another pref for five or six? So your cost of capital is 10%. You're looking between an eight and 10% cash on cash return.
I never thought of that in its simplicity. That's why a lot of deals aren't working because the cost of the capital is around 10, and deals are not yielding that right now. So to my point, it's constant growth. We've created our core values. I'm sure Jake probably shared them with you, but it's people first. It's extreme ownership. I owned it that I went to this weekend and he owned it that he was on the show last month. It is an unwavering ethics. It makes it happen. And it's the growth mindset. That's what our core values are.
Working Hard for You and Your Partner
Gino: We flush them out, and I think when you start a partnership with somebody else, it may be a one-off. It may be, "Let's do one property together and see how it works." Because it is a marriage. It's a relationship. Jake had an unfortunate incident happen with his house. Something personal in his life, and I was speaking to him about it last night, and he can call me. He's not a very personal guy. He is not an emotional guy, but you need that in a partnership.
We've been working together for 6-7 years. It's not just about the numbers. I go to his house once a year and stay for the week. My kids love going up there. The wives get along really well. That means a lot. Being locked in, because what you're doing is committing to him and to his kids. For me to work hard, I'm not only working hard for my family, but I'm working hard for his family and vice versa.
Darin: Absolutely. The other thing that I brought up to him and would like to get your take on is, look you guys partnered together. You were looking to do something different and grow wealth. But then as you started to do deals, you started to branch into different areas. I mean you wrote a couple of books. You had a couple of podcasts. Then you started mentoring other people and putting a lot of education platforms out there. Why did you do that? Why didn't you just stay the silent owners and just build wealth?
Gino: That's a great question. What I've been going through, I've got six kids, aged 21 to six. And every time you have a child, it's an evolution.
Gino: Something changes. And you're getting better at what you're doing, and you're enjoying it. So for me, we call it multifaceted multifamily. We didn't think about it when we first started. That's why I want everyone to hear this. You can always think of the end in mind. We started with that first investment property, and our first stream of revenue was the investment property. But Jake decided to property manage it full-time, because he wanted to get out of his W2, and we wanted to earn some income.
So there are two revenue streams from that first property. After about 18 months from that first deal, we had our third deal, which was 136 units. So we have 200 units now, and I'm on the precipice of leaving my "W2/restaurant." And I'm like, "Jake, let's just write a book." And that's what partners do. We push each other. So we write the Wheelbarrow Profits book, and we start a podcast because it's a lot of fun. All of a sudden being about to podcast Robert Kiyosaki and T. Harv Ecker and all your mentors. I'm having Zig Ziglar's son next week on the show.
I'm having Kyle Wilson. All these people you look up to, and you're able to interview, it's amazing, right? I didn't think of monetizing Jake and Gino. That's the third revenue stream. It's an education platform. I did it more for myself and I just wanted to get out there and have some credibility with the brokers. We write a credibility book, we write a book, we start a podcast, we're able to interview these people.
That starts going, and then all of a sudden, we hire some people for the company and that starts growing.
Giving Back Is an Awarding Process
Gino: All of a sudden, from that, we have a live event in November of 2017. It was the first one we had. 175 people showed up. I couldn't believe 175 people showed up at an event. Was it a great event? Looking back at it, there were a lot of holes there. But you know what? Our investor list went from zero to hero. We had a couple of hundred people on our investor list already. So November of 2018, the momentum, as I said, the second event we have 450 people in Nashville. Our investor list goes to 500 people. And guess what? All of a sudden we're like, "We have 500 people. Let's partner up with somebody up to start Rand Partners," our syndication arm. And the great thing about it, multifaceted, they're all complimentary – giving back. They all work well together.
When I sign somebody up as an education student, I can teach them about syndication. If they want to learn how to syndicate, or they want to become a partner in one of our deals, LP, that works well. So from there, you're creating that third stream, which is the asset management fees and the acquisition fees. From there Jake's like, "Let's start a capital company. We're going to do mortgages for our students."
It grows slowly, but the thing is we are giving back and we can share the pie. We don't need the whole pie. Jake is doing property management from day to day. I'm doing education from day to day. We've got somebody helping us with the syndication. They all come together. And they all work well together. You don't have to do that to become super-wealthy.
Passion to Help
Gino: We just love what we're doing. I could retire right now. I could live off the draws. But I don't want to do that. I mean I'm only 50 years old. What am I going to do? I'm not a beach guy. My mind is going 24/7 all the time on how to create value and how to help students. I mean I have over 30 students that have quit their W2s. Our students have closed over 10,000 units. That to me is the symbol. Everyone always says, "Hey how many units do you want to own?" I want my students to own 50,000 units by the year 2022.
That's what my goal is because if I can create wealth and I can affect one person, that one person's household. How many people get affected by that? Because for me ultimately, people with financial education can change the world for the better. If we can educate people financially and see what's going on right now, that will make them better investors. That will make this country a much better place to live.
Darin: Completely agree. And I can see why you guys are partners. You guys both have a tremendous passion for the business, you guys both love to give back and help other people. You could cash it in, but neither one of you want to. So I think that that's awesome.
Gino: It's always trying to get better though. I think what happens, when I was a W2 and when I was middle class, I was chasing the money. Ken Clothia told me this the other day. I was chasing the money, and an entrepreneur is all about chasing the value and all about creating value.
The Power of Giving Back
Gino: So when you're multifamily and you have 1000 apartment units, you're creating value for 1000 people who are living. They're not tenants, they're residents. And they're not units, they're apartment homes. So that whole mind shift. When you start chasing the money, that's not a good thing.
When you start chasing value and start creating value, everything in your life will change.
Darin: Yes. I think that holds for syndication as well. On the syndication side, some people get caught up and nervous, "How am I going to raise the money or get money from other people?" I'm like, "That's not the way to look at it because we're presenting an opportunity for all these other people to grow their wealth. They don't have to say yes and you just move on to the next person." But I wish somebody had presented those opportunities to me. I was making great money in different industries in prior career paths, and I didn't have any of those opportunities presented to me. It's an opportunity to grow wealth in an asset class that has tremendous leverage benefits, and tremendous tax efficiency.
It's a matter of giving back. I met with a life insurance guy, I'm 50 also by the way. He's like, "Back into when you want to retire, and back into the nest egg you need." I'm like, "You know what? With this multifamily thing, I don't even really want to." If I can help other people grow their wealth. I did one syndication deal, a 76-unit deal, there are 44 limited partners. So as we have a capital event, either refi or sale, it's not just Darin Batchelder and my family that's going to grow our wealth, but all these limited partners.
Chase the Value
Darin: So think about what you guys are doing. When you talk about 10,000 units with your students, you think about how many of those are syndicated deals and how many limited partners are involved in all those deals. It's not just the apartment tenants, but it's all the investors that are involved in that.
Gino: There are a couple of things you mention there. The first thing is, when I think of saving for an event like retirement, that's the middle-class mindset. Let's save for something because that savings will be depleted. I'll give you an example. My daughter is a senior in college.
We bought our first property back in 2013 and we bought it for $600,000. We used owner financing. Two and a half years later, we refinanced that property out. I pulled $160,000 out of that property, me, Jake, and my brother Mark. We pulled out double what we put in, reinvested it. But more importantly, I still own that property to this day. We cost segregated it. We are netting $6000 a month every month for the last year and a half. That's $2000 for me. Now people might be like, "You're not going to get rich off of that."
That's my college savings plan for my daughter. She's gone to school for four years. My son's coming up to bat, then my next daughter, then my next daughter. Can you understand that? So that one asset is paying for all of their college. It's not putting it into a savings fund. And what is that asset doing? It's appreciating. I'm paying down the principle, and I'm just making rips every month. That's what people have to understand. That's very difficult. I love life insurance.
Work on Yourself Before You Can Start Giving Back
Gino: I just got a whole life policy for my wife. It's the vehicle. Vehicles are used for certain places to get from Point A to Point B. The multifamily vehicle is amazing. Life insurance, when utilized properly, is an amazing vehicle. I have had a policy for myself for the last 20 years. I'm putting in five grand now. It's giving me 10 every year. I've got a death benefit and guaranteed cash, which I can collateralize.
My wife, I front-loaded a policy for her. She's 44 years old. I'm using that as a liquidity event. I am becoming my own banker so that I can get the liquidity, put the money in, and pull it out. But if you don't know these financial techniques, you're going to blame the government. It's about time that people take control of their financial future and learn what's going on because these are all out there. I didn't know this 15 years ago, because I was out there blaming everybody else. And I was just telling this on another podcast. I read the book back in 2008 with T. Harv Ecker, Secrets of the Millionaire Mind. I've read the book. I wanted to punch the guy. Then I read it again, and I'm like, "You know what? He's preaching to the choir.”
Responsibility. The fruits are in your roots. You need to step up and work on yourself, work on your personal development and your growth before you can expect to. Because you know what? If you're not ready, you're going to make an asset, you're going to buy that asset, then you're going to lose that asset. So really, working on yourself. Working on personal development. Challenging those ideas of the middle class. Garrett Gunderson wrote a great book, Killing Sacred Cows.
Abundance and Scarcity
Gino: It's abundance and scarcity and it's your sole purpose. That's what it comes down to. When you're middle class, you think of scarcity. You're saving for your retirement. You've got $3 million saved and you're 62 years old. You're afraid to touch that because that money's going to run out. But for me? I'm buying assets that are producing income, and I can sell off those assets and maybe sell a finance note and live off of that.
I have more options, and I'm not thinking about it. And I have a skill set that will translate. When I'm 70 years old, I can still pick up the phone and coach people. I can still speak and write books. And I can still buy multifamily. So it's learning those skills, and finding out if you do want to retire, there's nothing wrong with it.
But just try to position yourself as just not the saver. Try to buy some assets, or try to invest in yourself to learn skills that will put you through life.
Darin: You talked about so many great things there. When I joined this multifamily mentorship group and I met other people that were doing it, I had somebody kind enough to tell me that. "Hey, Darin. You need to change your mindset. It's not about building up a nest egg." Because once you build up that nest egg, and say you do retire. Nobody wants to deplete it.
You spend your life building it up, and now you're going to start pulling it down? So now you're going to live a meager lifestyle because you don't want it to go down. But that's the way so many of us are just trained through the education system.
Darin: So it's great now that there are podcasts and books out there. Not everybody is exposed to it. So we all have a responsibility, even your listeners. You have a responsibility to go tell your friends that there is another way. And let other people know because it is a big mindset shift.
So let's talk about your second book a little bit. I had not read Honeybee when I had the discussion with Jake, but about two weeks ago, right after we had the show, I went out and bought the book, and about two weeks ago I read it. And it's a pretty short book. You can sit down and read it, and I think I read it in a day.
Help me if you disagree with this. I would say it's an amazing book for somebody that is just looking at trying to get into a different business. They're a W2 employee, and they've heard about, "You should have multiple streams of income, but I don't really understand it and why." It's a pretty simplified book, but it's got some great nuggets in it. Great, great nuggets in it. And I really, really enjoyed it. So talk about a few of the lessons in there and talk about how you and Jake came together to write this book.
Gino: Well for us, one of our favorite books was The Richest Man in Babylon. And that's a parable. It's easy. I had most of my children read it. There are simple concepts. Save 10% of your money. Don't work with dirtbags, work with people. Very simple, right? So I said, "Jake." And Jake doesn't like to write. He doesn't like to read. He's an Audible guy.
Gino: I said, "Let's write this book. We have an idea." It was really written for anybody who has a business also. I had a restaurant business and I was implementing these strategies. The strategies were, I had the physical location. All of a sudden my wife and I wrote a cookbook. Then from that cookbook, we started doing YouTube videos and training videos. From that, we started creating physical products, vertical garden bags, and cutlery. And then from there, we were doing catering events.
So it was multifaceted, in a way of the restaurant business. Now if you're a single-family home and you're in that space, multifaceted works there. The Honeybee can work in that also. You're fixing and flipping homes. You may have a real estate license. You're lending private money. You may start an insurance company with somebody. And you may have a title company with somebody. You may do an education in that space.
So for us, it was basically our journey. Noah's in the book. He's a disaffected salesman. He's driving on the road one day. His car blows out. His tire blows out and a gentleman named Tom pulls up. He's in a bee suit. Noah doesn't think anything of it. He's driving a beat-up Ford and gets in the truck with Tom. He goes to Tom's house, and it's Tributary Acres. When he pulls in he's like, "Holy cow. This guy doesn't look like he could rub two nickels and he's got this mansion." Tom's a beekeeper.
The most important part of the story, and I think the way you've got to shift your mind, is Tom is the beekeeper. The analogy is the bees are the 9-5 workers. They're going to the beehive and they're making honey.
Investing in Real Estate
Gino: Do they ever stop and ask "Why am I making honey? Why am I doing it?" No. They're just programmed like most of us in the rat race. It's a human construct. But who's getting wealthy out there? Tom obviously is investing in the beehive. He's taking care of the beehive. But ultimately, it's the long game for Tom, just like us in multifamily. He's the one who owns it. And he's got equity, he owns the draw. So the person who owns the hive is the one who's making the money. Noah starts out as W2. He hates it. Tom says to him, "Start real estate."
So they start renting out a room in their basement. Started a little Airbnb. You don't have to conquer the world. It's the proof of concept. Jake and I started out at a small, 25-unit property. Noah starts out in his basement, rents that out, everything's going great. But then he makes a little slip-up, and that's what it is.
You're going to get those punches to the gut, but then you have to say to yourself, "What can I learn from this?" It's not the asset. It's not what you're doing that's the mistake. You're the one making the mistake. And you have to learn because if you've never gotten into real estate, or you've never gotten into the restaurant business, and you start, don't expect it all to be thumbs up. It's going to be hard. You're going to have challenges. But Noah figures it out. "I hate my job more."
There are two emotions. There's fear, and most times when people have fear, they're paralyzed. I think Noah expressed, like me and like Jake, anger. Once you express that emotion of anger, that makes you take action.
Turning Anger to Success
Gino: I was angry in 2008. I went out and I sought a mentor. I really got burned in a couple of other real estate deals that really pissed me off. So I'm like, "I have to do it the right way." So that anger, I think, drives Noah and then all of a sudden he said, "You know what? I'm going to go buy a duplex. And then I'm going to go buy another duplex." And he's scaling up. He doesn't have time. And what does he do? Goes back to Tom and Tom doesn't say how, he says who can help you? Wow. Let me hire a property management company.
That dawns on him. But he's like, "I can't keep all the money." But you can at least start creating a business. And on the way, what Noah does, he goes into a restaurant, and he invests in a restaurant called Buster's Bistro. That's not his strength. If he had bought the real estate in the restaurant that's one thing. But investing in the restaurant, not knowing anything, he loses his capital.
So that's one of those lessons where you got to stay on the course. Don't go out. If you own the multifamily, don't go out and buy a carwash, unless you can buy the real estate. That's not a complimentary stream of revenue. That's not in your business model. If you want to learn it, that's one thing. That's what they did. So they lost capital there, they got back on track going back and visited Tom and Tom always sharing these words of wisdom with him. He continued to scale up, continued to grow his business.
How Do We Impact Others and Start Giving Back?
Gino: Ultimately, he gets to a point where "I've got all this money. What am I doing it for?" He creates a charitable foundation. That's what we did with Jake and Gino. We have Rand Cares. And ultimately you're making this money, but you want to be giving back. You want to impact. One of them was starting a school. They start school and help kids who are underprivileged. That's what it comes down to. It comes full circle, coming from that W2 employee to buying a couple of assets, to creating these amazing streams of revenue.
It's called Tributary Acres. Because all those little streams of revenue, they're starting out small, but then what happens? Over-time they become a raging river. And his business became a raging river, a raging success, and then you start pondering and going, "What's this all about? What's this all for?" So with the end in mind, we should all think of creating wealth, but at the same time, how do we impact others? How do we help others?
Darin: What a great way to look at things. In the book, it talked about finding your surplus. The way you described the book is very much the way both of you describe your guys' business, and how you talk to new people about getting into the business. Look, you don't have to buy a 200-unit deal right out of the gate. Now some people do that, and I applaud people that do that. In order to do that, you have to partner with other very highly experienced people that can get it done. But the book with that terminology, "Find your surplus," this gives people hope from the very beginning of knowledge and of getting into space, that you can find some way of getting in.
Giving Back Through Creating Entrepreneurs
Darin: In the book, the example was they rented out a room in their house, in the basement. That was like, wow, because I think that reading these books, listening to podcasts, they're great for the person that has made the decision they're going to do it. Now, they're just trying to figure out how. But I also think there's a segment of people out there that have always wanted to be in real estate, but it's just too scary for them, and they think it's too big for them. I think that that book was great from the standpoint, it really brought everybody into the picture. Anybody can get involved.
Gino: For us, one of my revelations that I had going through my journey is that when you're buying multifamily, you're buying a business. And Jake and Gino, our most successful students, become entrepreneurs. So we like to say, "We create multifamily entrepreneurs." Because listen, you're buying a 25-unit property, there's a stream of revenue. There's a little business right there. And if you can look at it from that perspective and not worry just about the land-lording aspect of it. That's one of the parts. Remember to buy right, manage right, finance right. You need to do that. But do you need to be doing that, right? That's the question you can answer yourself.
We have a property management company. We're vertically integrated. We like that aspect. You can go to third-party property management. That's a choice. But I think if you're focusing just on real estate as just real estate and not as an asset, and not as a business, you're going to be doing a lot of harm to yourself because the biggest mistake is, as you start scaling up, you can hire other people.
OPT: Other People's Time
Gino: OPT, other people's time, that's what entrepreneurs do. Look at the massive companies, whether it's Amazon, whether it's Apple, whether it's Tesla. They're hiring other people. They're leveraging other people's time. That's what multifamily allows you to do. Once you get to that 50, 60, 70 unit plateau, you can hire a property manager, and a property maintenance staff full-time. The problem with that is, as you start on your entrepreneurial journey, it's the "I'm A" mentality. I'm sure Jake shared this with you. "Imma do this and Imma do that."
That person needs to start because you need to take total responsibility. You need to learn the business. But, when you get to 60, 70 units, that person needs to start dying and I don't know if it's a little bit of an ego. I don't know if you think you can do it better than somebody else. But if that person doesn't die, you're going to become a burned-out mom and pop landlord who Jake and Gino, and who Darin are going to buy from. That's the reality and it's tough.
For us, it was very difficult. Jake's out there cutting with his chainsaw, cutting the grass while he's working his 9-5. And we said, "We can't do this. We need to start scaling up." It's a progression. That's why I say to people, "You don't have to buy that 100-unit property in your first go-around because you don't know all this stuff because when you buy 100 units in your first go around, all of a sudden 10 vacant units. Do you know how to turn them? Do you know how to advertise for them?" But on our 25-unit property, when we had two or three vacant, we could assume that.
Rip-off and Duplicate
Gino: It wasn't soul-crushing for us and it just gave us the ability to go on. From 25 units, our next one was a 36-unit. So we have systems where we're implementing as we were growing. If you're saying to yourself, "I don't even know how to manage a property." Hire third-party property management and do what Jake calls R&D, rip off, and duplicate. Learn their processes, and if you don't want to have the third party property management take it over yourself, you at least have their experience going in. Join a mentorship program.
At Jake and Gino, we teach management right. Our students sometimes teach the property management companies our systems because we're doing them every single day. A lot of these property management companies for these smaller assets, they don't. They're moms and pops also. They don't have anything online and they don't have online portals. They don't have really good websites and the tools and the systems that we're implementing because they're more of the mom and pop. They're running around, treating it not as a business, like I said. They're just treating it as real estate and as something that's just disjointed.
Darin: Absolutely. So you mentioned whether Jake brought anything up, and he did on that note. He said that you guys were going after some deal. I can't remember which deal it was. But he brought the bank out there and it was the president of the bank or whatever, and he was like, "Don't worry. If I have to come out here and take care of the landscaping I'll do it. I'll do whatever. You're in good hands." And he's like, "You know what? I love your enthusiasm, but you're not going to be able to scale that way."
The Relevance of Having a System
Gino: That was Jim Clayton from Clayton Homes. He sold his company to Warren Buffet back in '03, and it's the same thing. Something very simple as check cashing. Check to the cash machine in the office, you can scan the checks instead of having to run to the bank. And people might be saying, "Oh that's only a couple of minutes every day." Well, getting in the car, wasting time. You translate that among 10 or 15 different things you're doing a day, that saves up to hours and hours at a time. And when I say systems, I'm not talking about something that's overwhelming and something that's daunting. It's just something that you do throughout the day.
Your document. You can either shoot a Loom video. You can record it, where you put the processes in someplace. It's easily replicable. So for instance, at the restaurant, I didn't have any systems. I would hire somebody, they would all answer the phone differently. Very simple. "Hey, Ginos Trattoria. How may I help you?" And let everyone do that. That's a system.
When somebody walks into the restaurant, you have somebody sitting there. Greet them the same way. Grab the menus the same way. Interact the same exact way. That's another system. It's very simple. When you're going to onboard an employee, what are the steps that you're doing? And you know what? You may say to yourself, "I can't get this done. There's a lot." You have quarterly priorities. Every three months, set up quarterly priorities and maybe create three or four systems in your business. You can do that. One system a week. There are 13 weeks. You have 13 systems at the end of the quarter. Times four, you have 52 systems built out.
Gino: It's just, you need to start and don't feel overwhelming or it's daunting. I never started the restaurant, that's why I had one restaurant for 20 years and 1600 apartment units in six years. So you go do the math. It's just a mind shift and it's just the ability to say, "How do I get better?"
Darin: That's great. And sometimes you think, just like you said, you don't have time. But then all of a sudden, there's a question that comes back to you and you have to stop everything you're doing to explain how to do it. And had you just invested some time ahead of time, you wouldn't have had to do that. You could just point right to that process.
One of the things that I love about this business is new people coming into the business and becoming successful. And you guys teach people how to do that. But in the book, it says, "You're capable of much more than you think." That goes along with the fact that the book is written so it includes everybody from just the very, very startup person. I think that's so key because some people just talk themselves out of it. They basically don't think they're worthy of being able to do it. You give them some inspiration.
Gino: So for me, that's one of the things that I didn't even mention: the partnership. The partnership is that accountability piece. When you're out there all alone or you're doing it by yourself, sometimes you're on an island, and you don't feel like calling the broker. Or you don't feel like underwriting. Or you don't feel like getting on a podcast with Darin.
Role of Accountability
Gino: In the back of my mind, I've got Jake saying, "We gotta make it happen. Divide and conquer." So I don't even think twice about it. Did I get to call the broker? I'm picking the phone up. Do I have to underwrite a deal? I'm going to do it because my partner's doing his share.
It's holding accountability, and that's the other reason I like the coaching model. I like the mentorship model because every two weeks, you're on a call with the coach. If you don't feel like doing the work, guess what? You're going to do the work because you're not going to let your coach down. You'll let yourself down. You'll let yourself down every day of the week. But if you have to do it for somebody else, you're not doing it.
So holding yourself accountable with that person saying, "I'm going to get on every two weeks. And I'm going to underwrite the deals. I'm going to get that stuff done." Really is a big thing. I love that accountability piece. And I think, I guess Tom in the book was Noah's accountability. Noah would go back every few months, back to Tom, ask for advice. But it's not just asking for advice. I don't think he wanted to let Tom down.
Ultimately, if you really stop and think about it, you don't want to let your mentor down. And one thing that I always stress to people is, I actually heard this from a friend the other day, he says, "I've never met somebody who keeps asking, but he never does anything with the information. But if that person gives me five grand, and I start giving information, he's going to take my advice because he has skin in the game."
Giving Back to the Right People
Gino: It's the same thing when you're dealing with multifamily. I don't want to partner with somebody unless they have skin in the game unless they have something to lose. So that's really important when you're looking at an investment, or you're looking at a relationship. We both have to be bought into that relationship.
Darin: That's a great point. I interviewed another multifamily guy who I met with him before we had the interview, and he also does some mentoring in addition to purchasing. So I was talking to him about that, and he said, "Hey Darin, here's the deal. I love giving back and I love to help other people but I found myself spending a lot of time on these phone calls. And I spend, say, an hour talking to somebody, and then I never hear from them again. I started to think to myself, 'Well how many of these people that I talk to actually take action?' I want to help as many people as possible, but I want to help the right people."
He said, "Darin, I created a mentorship program and put a fee on it. Yes, it's an additional revenue stream, but it wasn't for that purpose. It was to weed out the ones that really are committed to moving forward and really committed to taking that knowledge and putting it into action." I thought that was awesome because there are a lot of people out there that just look at the value ladder and "How much money can I get from each person and maximize." And it was just a different mindset and I thought that was a great way to look at it and I heard something similar out of what you just said.
Being Uncomfortable Is Where Success Begins
Darin: You talked about how you did books and the podcast. Some of the stuff is uncomfortable, the first time you do it.
Gino: It's still uncomfortable.
Darin: We're going to be in the 20s on my podcast. But when I was first starting, my kids would walk by my office and laugh at me because I was talking into the microphone and they were laughing at their dad. So it is uncomfortable at first. But the thing that gets me is, one, I read your book three years ago before I even invested, and here we are talking and giving back which is awesome. So you get to interview great people and learn from people that are ahead of you. But it's also about reaching people that you wouldn't have reached before. Had you guys not written a book, I never would've read it.
And now it wasn't like I read the book and I called you up a week later and said, "Hey let me invest in your deal." But here we are three years later, and we're on a podcast and I was planning on going to that 2018 conference in Orlando. You guys had built up a social media presence, and I remember reading the book.
I've talked to a lot of syndicators that are in your guys' group. They talk so highly about you guys, how transparent you are, and team-oriented you are. And so I really wanted to go meet you guys and meet other people in the group, and then for some reason or another, I couldn't make it. I had a conflict. But I hope to be at the next one.
Just Wing It
Gino: I think the question is, as I get older I realized that, and this is what one of my coaches told me, we're all winging it out there. Just don't think, when you go on Instagram and you see someone with six million followers, they have it figured out. They just got really good. I got really good at a strategy. It's taken me a couple of years to figure out, and I've tweaked a couple of things. And I think that's what we have to focus on.
I had a strong enough "why" and when my "why" was strong enough and I was clear enough with what I wanted. People would say, "Hey what do you want?" "I don't want to work at the restaurant." "But that's not what I'm asking you. What do you want?" Once I realized what I wanted, I wanted to make an impact. I wanted to get better at something. And that's the other thing with Jake and me, what drives us.
We want to get really good at something. And when you're really good and competent at something, you become passionate about it. You just get better and its compounds. There are two quotes that I like to live by. "Commit, and then figure it out" and "Done is better than perfect." I live by those.
We just had a Facebook challenge a couple of weeks ago. Five days, never did one before. I set expectations low as far as what sales we had. We actually did pretty well. But I'm not focusing on the results. I am not focusing my goals on closing a deal or actually signing up students. I'm focusing on the process. I'm focusing on the person that I need to become to hit those goals.
Commit and Figure It Out
Gino: And how do I become better? I’m doing a Facebook challenge five days. I need to really learn the material well, I need to be passionate about it. And I need to be transparent about it and be a better salesperson about it. That's what it comes down to. I'm going to fail. But I know everyone out there is winging it just like I am. So if I look stupid or I sound stupid, it's okay. I'm going to get better at it.
If you go back five years and listen to our first few podcasts, I'm sure they weren't that great. But I got better at it, and I enjoyed it. That's what happened to me. I gravitate more towards the education space because I enjoyed that. And I enjoyed writing articles, doing conferences, speaking with people. I loved the coaching aspect of it. Jake doesn't like coaching as much. He gets drained.
He's more of a D. He'll be like, "Darin, this is what you need to do. Six cap. This part of the market. 10% cash on cash." I dive in a little deep with people because I know it's more or less it's 80% psychological and 20% mechanical. That's where my skill set is, and that's what I enjoy. As we started growing, he did less coaching. Now he does no coaching. I do all the coaching and he does property management, and I'll jump in on the property management, but that's what it is everybody.
Just commit and then figure it out. Figure out what you want to do. Don't worry about hitting the send button on the email. If it goes out bad, it's okay. We all make mistakes. We can fix it. But if you never hit the send button, you're never going to know what those results are.
Giving Back Is What Life Is About
Darin: That's so key and it hits home with me. I remember when I started on Instagram, just a year and a half two years ago, I was scared to hit the send button. In the first post, what are people going to think? I had hired a guy that was strong on Instagram, and he's like, "Darin who are you going to trust? Someone who has 100 followers or 300,000?" I'm like, "All right man. Tell me the way." He's like, "You have to post every day." And I'm like, "Oh this is uncomfortable." But then, it becomes a habit.
So all those things that you guys have accomplished, and you didn't say it, but it's one step at a time. You make a decision to go after something new, and "All right. What's the first thing I got to do?" And then, "What's the next thing I got to do?" Because if you think about all the steps necessary to get one of these big projects done, it can consume you and it could paralyze you from wanting to move forward.
I remember people asking me, "What was the hardest part of your first syndication deal? Was it the "raising the money" part?" And I was like, "It was every part." The first time doing it. Calling the broker. But as you do it more, it's not as scary, right? So then it opens you up to be able to go after that new challenge, which you guys keep pressing the boundaries, which I love. You guys are going after people that are ahead of you. They're reaching down and helping you, and then you're reaching down and helping the next guy. That's what life's all about.
Learn the Process and Go for It
Gino: I remember the first time we decided to syndicate. Picture this. I'm sitting in the library, I'm working at the restaurant. I don't have an office. Jake calls me. We're pretty successful but we're not there yet. He's like, "Dude there's a $52 million deal in Knoxville." I got this feeling in my stomach that I felt like throwing up. I'm like, "Where are we going to get $8 million or $10 million to do this?" And he's like, "Let's syndicate it." And I had no idea. So that's how we got into syndication. That first look around, we had no shot of getting that deal. But what did that do? That opened up my mind to other possibilities.
He pushed me into that, probably knowing we didn't have a shot at it, but at least taking a look at it and saying, "You know what? We're not ready for $52 million syndication. But let's take a look at it. Let's learn the process." And this is how you scale into bigger assets. So what do we do? On our first syndication two years ago, it was a $6 million deal. It was 130 units. We started small and we were able to raise two and a half million dollars in two days. It was comfortable.
But like you said Darin, it's still a learning process. There are still processes. You still have a PPM, you have to raise money and send out emails. You still have to go down the timeline. It was a different process. We started small. But starting and thinking big and even pushing myself to even consider that, I really felt like throwing up. I'm like, "What is this guy thinking about? We can't go into a $60 million deal."
The Beginning of Giving Back
Gino: But that just started the wheels turning in our minds saying, "Why not? Why can't we look at it?"
Darin: Yes. I think that's a great question. "Why not you?" So many people talk themselves out of it. "Oh, that's for other people." But why not you?
And it's not just about you. It's, "Look, once you become successful, then you could go help your circle." So that's where the impact and giving back comes in. Talk about your childhood. Where did you grow up? How many brothers, sisters?
Gino: Grew up in New York. Born in Brooklyn. When I was three years old we moved out to the suburbs. I have one brother. So I didn't come from a big family. My parents are both immigrants. They're both Italian. My dad opened a restaurant when I was seven years old. I worked with him from the age of eight years old working in the kitchen, probably doing illegal stuff now.
I was working on the fryer, cutting chicken with a knife. All that stuff. And I just remember working really hard. That's what I remember doing. I remember saying, "This is great. I get to work with my dad every day." I thought everyone went to work with their dads at the restaurant. That's what I thought. So that led me to go to college. I was the first one in the family to go to college. When I graduated I went to work for AIG in reinsurance accounting. That was like watching paint dry.
Darin: I never would've thought that you would've gone into that field. I don't know why, but it just doesn't seem like the Gino thing.
Build Your Own Dream
Gino: Back in 92, there are no jobs. You have the pick of the litter right now. Back in 92, I couldn't get a job. One of my neighbors was the controller of the company. He got me a job and it was just not a fun job. AIG was an amazing company back then in 92. They were really crushing it back then. Maurice, he was killing it. But I just didn't like the city. It was pre-Giuliani. It was just not a great place. I didn't like being there. So my dad and I, my mom, my brother, the four of us, we bought a restaurant in Putnam County in New York, and we had that restaurant. We just sold it in February of this year. I "left" in March of '16. I'm gone for four and a half years.
My brother kept it for a couple more years and he just sold it in February of this year before the whole pandemic broke out. He moved to Florida right around that time also. So he's working with Jake and Gino's company also. But for us, we loved the business. I mean I grew up in it. The problem was, back in the 90s and early 2000s, it was a business where it was the middle class where you could really make a living. It was great. We had three families living out of that restaurant. It was fun. We had great food. Expenses were different. There was no health insurance expense and no unemployment. All the bills were so much different back then.
And as the cost came rising, once 08 hits, my father passed away in 07, I stopped and I said to myself, "Am I building my dad's dream or am I building my dream?"
Passion for Giving Back
Gino: I want to have more impact in giving back. And I want a little more stability because everyone thinks of W2s and small businesses. "Hey, that's safe and secure. This multifamily thing? That's risky." Whereas, multifamily has less risk if you know what you're doing. This is a basic human need. It's food, clothing, and apartments. That's what multifamily is. But my W2, you look at the restaurant, 08, what happens? All of a sudden eating habits start shifting. Families start getting smaller. People start going to Panera and other fast food. All of a sudden Whole Foods is making pizza and Taco Bell is delivering food. Everyone's delivering.
So every little piece comes out and everyone's opening restaurants and all different kinds of food. I saw that coming and I said to myself, "I need to do something else." That's how I got into multifamily. I didn't want to fix and flip, I had that job already. So I naturally just said, "You know what? I like working with residents and property management. I've bought a fourplex in New York." Then from that, I said, "Let's start scaling up and getting bigger properties."
Darin: So what is the big stretch goal for Gino?
Gino: The big stretch goal is to feed one million kids by the year 2030, it's with Second Harvest Foodbank. We just started a partnership with them about six months ago.
Darin: How do you track that?
Gino: They track it on their website. We have donations. So we're going to have an evergreen link. It's not on yet. But we've been doing food drives with them for the last two years. So I'm like, "Let's make that evergreen. Let's put that on our site and let's start promoting it."
Stretch Goal: Giving Back
Gino: It's not live yet, but that's one of my goals because of Jake, that's one of his passions. He likes to say, "Kids don't have a choice." Adults, we have choices. But kids are the ones who don't have choices. So that's tough. For me also, working with an orphanage in Honduras. That's another passion project of mine that I want to be able to help out.
And stretch goals? That's a tough one. I don't know the number of units, because like we were talking, what's going to happen with the economy? What's going to happen with valuations? I can't say, "I want to have 5000 units." I know that I want my students to own 50,000 units within the next two years. That's a stretch goal, and the more people we're able to sign in to our community, the more people that are there that are willing and able to partner with others, bring capital and deals, that is where I'm there for. Hopefully being the inspiration and motivation for them, helping them out and giving back, I'll be able to accomplish that.
Darin: Fantastic. I hope you get there. Most of the people that I've asked that question have focused on how many units or "I'm going vertically integrated." I think it's the first person that had a goal of pure charity. So applaud you guys. What do you like to do outside of business?
Gino: I live in St. Augustine, 45 minutes south of Jacksonville. I said, "We'll buy a golf cart." Made it street legal. But I said, "When we move down here, we'll buy a couple of guns." So being the father and the parent that I needed to be, I needed to go out and learn all about guns.
Gino Outside Work
Gino: It's actually a lot of fun. I never shot. We used to shoot 22s. Coming down here, buying a nine millimeter. Buying a 380. AR-15. But honestly, it's important that you go out and you get trained. I went out, got some lessons to shoot. If you're safe, it's an amazing way for me and my son to bond. We love talking about guns and we shoot guns. It's a lot of fun. Love fishing down here and I love biking. I'm about 500 feet from the beach. I love going to the beach.
And I just love, actually, believe it or not, I love business. I love talking to my kids and involving my wife. We have a podcast. We have our kids involved in the business. They're involved and they're actually investing in our assets. I have them talking about investing in our deals. That's what I like. I like business and I just love hanging out with the family.
Darin: That's fantastic. I grew up in Connecticut. I've been in the Dallas area for the last 10 years.
Gino: Where in Connecticut?
Darin: Brookfield, near Danbury. Right off Candlewood Lake.
Gino: Yes. Trader Joes. I used to go to Trader Joes all the time. I know exactly where you are. It's beautiful.
Darin: It's beautiful, but I don't miss the winters. The winters are definitely a lot easier in Dallas than they are there. But I did not grow up hunting or shooting guns or anything like that. Texas is big time into the hunting thing and the father and son bonding.
Doing It Right Is the Key
Darin: I had another guest on the show four weeks ago and he brought up that he had a ranch. I told him, "My son's a sophomore in college. That's one of his big goals is to own a ranch." And he's like, "Well why don't you guys come down and we'll go out on the ranch and we'll go shooting." I'm like, "I don't know what I'm doing. You're going to have to show me." He's like, "No problem." So we're going down in about three or four weeks and so I'll have my first experience with it.
Gino: You're going to love it. We actually had the event, Jake and Gino, last week and I had one of our students who was a trainer. We had a coach's retreat. All our coaches got together, we went to the gun range from 1:00 PM to 3:00 PM and it was so awesome. I mean some of the coaches never shot a gun. Great bonding. But it's just a lot of fun. If you do it safely and you do it, if you're going to do it, get out there, spend money for lessons. Because it's worth learning how to do something for the first time and learning how to do it right is just really important.
Darin: That's awesome. Gino, I really appreciate you coming to the show. If somebody wants to reach out and get to know you better, what's the best way for them to reach you?
Gino: Just go to jakeandgino.com. If you want, I'm holding up the Honeybee right now. I know you can't see it. I know Darin can. Just email me email@example.com and I'll send you a PDF copy of the Honeybee. I know you guys will really love it.
Gino: If you have any questions just reach out to me via email, firstname.lastname@example.org
Darin: Are you saying you're going to give away the book?
Gino: Yes, give them a PDF copy. Because it's starting the journey, right? Because like you said, you explained it. We went into detail. If somebody has that burning desire to get into multifamily or get into a business, I think that's one of the ways for them to start getting into the business.
Darin: If you guys are listening, I read the book. I bought the book on Amazon and he's offering it for free. Just email him. Take him up on that offer and these guys, both Gino and Jake, are extremely transparent. Check out their website, read their book, and we're going to see big things coming from these guys going into the future. So I hope you guys enjoyed that one. Gino, again, thanks for coming on.