Are you looking to build a valuable leadership platform?

Gary Lipsky built several successful leadership platforms that include webinars, online conferences, a podcast, and a best-selling book. He leveraged his previous experience building an education platform that catered to the needs of 9,000 children. Gary is invested in 5 multifamily properties as a general partner with over 400 units.  His leadership platforms are focused on multifamily operations.

If you want to know how Gary Lipsky created his own successful leadership platforms then listen to this episode!

Table of Contents:

• Where To Listen To The Podcast
• Implementing a Leadership Platform in a Short Timeframe
• Working With Someone Who Helps Build a Leadership Platform
• Building Some Kind of a Leadership Platform
• How to Manage a Leadership Platform
• The Right Mindset
• A Leadership Platform That Is Not Just About You
• How to Reach Gary Lipsky

Implementing a Leadership Platform in a Short Timeframe

Darin: Gary Lipsky lives in sunny Southern California, and he invests in Arizona multifamily real estate. He's always been an entrepreneur. He is a guy who just goes after it. He got into multifamily real estate about three or four years ago and has already done five syndication deals as a general partner for over 400 units. He's also already implemented several leadership platforms in a very short timeframe. He is making money and he's making money for his investors.

Gary: Thanks for having me, Darin. I really appreciate it.

Darin: Just a little bit about how I know Gary before we get started. Gary and I were part of the same multifamily mentorship group, and Gary is a key principal in my first syndication deals. Since him coming on as a KP on my deal, he has been off to the races. He's doing deals, he's building platforms, he's doing all kinds of cool stuff. So Gary, I usually start with how many properties and how many units are you currently invested in?

Gary: As an active investor, right now we have five properties and about 440 units. We just sold a property a couple of months ago, and we have one in escrow. That'd be complete in about five weeks or so.

Darin: What did you do before you got involved in real estate?

Gary: I was an entrepreneur growing up. We shoveled driveways during the winters, we washed and detailed cars during the summer. I started a restaurant delivery service, like a DoorDash in college. Obviously, I didn't have the vision. I wish I did, many years ago.

Millions Versus Billions

Darin: You're making millions now, but you would have been making billions.

Gary: Certainly I didn't have the wherewithal then, but it was definitely an idea before its time. I co-produced three independent films in my 20s.

Darin: What kinds of films?

Gary: Straight to video type films, one was like an action film. There's some names and faces that you would recognize. We sold some foreign rights to get the movie done. Jennifer Tilly was in one, Joan Rivers, Aida Turturro, I did that. I was writing scripts, developing scripts, I had one with MTV and Michael Keen's company. But with real estate, the numbers make sense. You sell this, that, and the other. With the script, you're never finished, you're never done. You don't know, someone might say it's good, someone might not believe it. So you never know where you stand with film.

That was frustrating to me, because I wanted to know if I did X amount of work that I'll get X amount of return. Now, there's no guarantee, there's got to be obviously a leap of faith. I was having a kid, and I had worked a lot of nights on film shoots and stuff. So I thought, I needed to start something else that may fit what I enjoyed doing and having a purpose. I started this outdoor ed, leadership development, and afterschool program.

We didn't start doing all three, we started more on sports and adventure stuff. I did that for 15 years and I sold that at the end of 2016. At that time, we were serving 9,000 kids daily throughout Southern California. I had a staff of over 700 employees and another 700 independent contractors.

An Education and Leadership Platform for 9,000 Kids

Gary: The business was doing great, but I've been doing that for almost 15 years. I had great people on my team and it was time for me to take my next challenge. That's when I got into real estate full-time. I had been investing in real estate prior to. But this gave me the time and some money to play with and really go full steam ahead.

Darin: Would you say that was an education platform for those 9,000 kids?

Gary: Yes, we did sports, we did tutoring, we did music, we did a lot of leadership development, outdoor education. We had portable rock walls, we had kayaks, we had camping gear, we brought adventure to the schools. Mostly, these are inner-city schools, in the worst parts of towns throughout Southern California. We took them outside of their one mile square radius that they were used to, and taught them life skills that they can apply. It really opened their eyes to what is out there. So really rewarding work. We were a for-profit in a mostly nonprofit world.

Darin: I didn't know that background that you had. I've seen you on the real estate side, like come out with one platform, after another platform. You started a webinar series, then you ended up doing an online conference. Then you did a podcast, and then you wrote a book that I believe is a best-selling book on Amazon. Now it kind of makes sense because you had this experience before and you leveraged that. Did that help you?

An Iceberg Analogy

Gary: Absolutely. That iceberg analogy, people only see the top, but it's all that work that you put into building that experience. Then, that all plays into where I am today. My mistakes along the way, my lessons learned, all that played into it. They gave me the confidence in anything I set my mind to that I can be successful at. Certainly there were a lot of other people that helped play a role to make me successful in where I am today. That's really important because you're only as good as the team.

Darin: Talk about some of those platforms that you put together. Why'd you pick one over the other to start with and which one has had the most impact on your business?

Gary: We started with a webinar series. When COVID hit, everyone started doing the webinar series. We went away from that, we focused on an online conference, and we met a guy who had done one. Actually, we were planning to do a live one first and then we shelved it. Then we're like, you know what, COVID isn't going anywhere. Let's just do it online. It would reduce our risks quite honestly because we didn't have to put down payment for a conference room and all that goes into it. We could do it fairly cheaply. Let's do it for free and get advertising money versus charging 300 and not knowing how many people are going to attend. Have great content, great speakers, and not worry about selling anything.

Darin: You had a lot of really well-known speakers in the multifamily industry as well.

Working With Someone Who Helps Build a Leadership Platform

Gary: We went after some big names. Most of them said, "Yes," and we did that conference for over two weeks. A few hours a day for two weeks, and make it bite-size for people. Because after a three-day conference, you're spent and you start fading out. We just wanted to do something different, and we were working with someone that helped build our platform for us. That's what he suggested. It was way out of the box, and we went for it. We just said, "All right, we'll go for it."

Darin: You're one that will take a risk and put yourself out there. So was it successful?

Gary: We had over 1,800 people sign up. We had a lot of good sponsors, so it was super successful. Everyone really loved the content. We had a VIP upgrade, so people can have a Q&A with the speakers every night. We'd have two speakers in the room, and we had a room of 10, 20 people to an intimate setting. Where any of the people that went for the VIP package can ask the speakers anything they wanted. So that was great, and then they can get access to all the recorded videos as well. That went really well. We did another one this past spring. That market got flooded too. A lot of people started copying, and I get it. We had a little over a thousand people on our second time.

Darin: Still a lot of people. How did you market that to get that many people sign up?

A Learning Opportunity

Gary: Social media, our email list, we asked the speakers to promote it as well, and some did, some didn't. We spent a little bit of money on Facebook in the last couple of weeks. The cost per registering was like $10 a person. So that wasn't the real main driver, but it was using our network. We had our podcasts going, so we could promote it on that as well. That's great because it was a learning opportunity for us as well. We could bring on speakers that we wanted to hear, ask the questions that we wanted to ask. It helps me become a better operator.

Darin: I've told some people recently, like with this podcast. There's some people that may listen to one or two or three episodes and they're like, thanks to you, I got a lot of value from that. But I listen to everyone, because I'm interviewing everyone. I learn from every single guest, and I'm very thankful for that. When did the podcast come about?

Gary: I forget when, what started first. We move forward on a lot of different things. But we started the podcast in early 2020. We just came back from a conference, IMN in Dallas and that was like early March, then everything shut down. So we just went full board with everything, podcast, the book, the summit, and just worked every single day, cranked out as much stuff. I had a partner, we were working together on it, just banging everything out. When you have a team, you can accomplish a lot. There was nothing else to do at that time, so we just kept working.

The Podcast That Serves as a Leadership Platform

Darin: The podcast is geared mainly towards the operation side. After there's so many education programs out there and podcasts that talk about how you get your first deal and how you, but yours is more, once you get the deal, how do you run it? How do you operate it? Talk a little bit about that focus and some of the lessons learned.

Gary: Again, that's utilizing our entrepreneurial skills from all these years, that's kind of like my secret sauce. I wanted to learn from others too. How can I get better and bring on experts? The podcasts are short, 10, 12 minutes long, and just hyper-focused on one aspect of asset management. We'll have six, seven questions banging out and that's that, very specific from disposition, accounting, or value added strategy. Just little tidbits for someone to take away and jot down on their notebook and then implement.

Darin: Top two or three lessons learned from guests that you could share with our listeners.

Gary: Neal Bawa is always great, the data scientist. For him, it's always about breaking every single thing down. I love that strategy, because, let's say leasing, you can't look at leasing as a whole. You've got to break it down per unit type because you might be 90% occupied. But almost all your units are occupied except one type of unit that's causing all the problems.

Unless you break it down, you don't know that. You can raise the rents on all the other units but on this unit type, you might need to lower the rent. Or figure out, maybe it's in a bad location on their property, whatever it is.

Find Bottlenecks and Reduce Timelines

Gary: You take that mindset and you apply it to every aspect of your operations, and break every single task down. So you could find bottlenecks and reduce timelines, and maximize your NOI.

Darin: Did you ever get off a podcast and you're like, I'm going to go do that at my property?

Gary: Absolutely. Merrill Kaliser is another one. He talked about KPIs, and certainly we had some KPIs before that. After that podcast, it was like, if we're going to be players and do this along for the long haul, we need to invest in a really good KPI system. We did that. We’ve spent the money to build it out and use it for every single one of our properties. It allows us to make better decisions, quite honestly.

Darin: What is that platform? is that separate from the software that you would use from the property management software?

Gary: Yes. We use RealPage. I think Merrill uses something else, there are others out there. It connects to Yardi, which is our property management software, and so it pulls all that information. Now, certainly there are some KPIs on Yardi and whatnot, but it's a really hard tool. What RealPage does is it paints a really nice picture for me.

We have the dashboard of all the KPIs, we have on top, we can delve into it. And we can look at it in a number of different ways. I forget the cost, it's like $1 per unit, per month. So if you have 100 units of property, it's $100. For the cost of a year, $1,200 is nothing if you're making much better decisions. It really is a no-brainer.

Two Different Voices on One Leadership Platform

Darin: After all that, you guys wrote a book. Talk about the book. That's a big undertaking.

Gary: Huge undertaking, and we have two different voices.

Darin: What's it called?

Gary: Trying to meld the two different writing styles, quite honestly. I'm the type of writer who likes to throw things down and then keep fine tuning it. The guy I wrote the book with, he wants to write it once and have it perfect the first time. I'm like, I don't work that way. I like to massage what's missing. So you're working together on that. We had an editor, we worked with a company that coached us and managed us through the process. They did the editing for us. They'd send it back to us. You're reading this book 25 times and fine tuning it.

By the end, you're pulling your hair out. It’s a long process, it was 15 months. But when it's done, it lasts forever, and it's awesome. A lot of the stuff that we've learned, we've taken away from the podcast, from the conferences. It's so much information in there, and then we also supply resources for people. The things that we use, they can go online and access some of the stuff as well.

Darin: What's the name of the book?

Gary: Best in Class

Darin: Best in Class, focused on the operation side. Am I correct in saying that it's the best-seller on Amazon?

Gary: It is. We actually accomplished that on the first day it went on sale. So we were pretty stoked about that.

A Lot of Different Platforms

Darin: That's a lot of different platforms. We talked about the book, about the podcast, about the summit, the online conference, and also the webinar series. One, why did you do all that? Two, of all those channels, which one do you think has had more impact?

Gary: I guess, for investor awareness, probably it's the conference. Having that leadership platform, that one did the most for investors. For us, as far as operators, I would say the book, because we had to make sure that there's no guesswork. With the conference, you're putting it all together. You throw it against the wall and see what happens.

With the book, you're putting it out there for perpetuity. It better be right, and your systems better be good. So it pushed us definitely to be better operators. If we didn't know something, we had to make sure we got that information and did it right. You're putting yourself out there as an authority figure. You better know your stuff.

Darin: You also have a Meetup group.

Gary: Yes, we actually had a couple of Meetup groups. One in Los Angeles Downtown, and then one in Phoenix. We are always out there looking at properties. We're like, we'll just have a Meetup in Phoenix, at the end of the day after touring properties. We did it every third Wednesday. I wouldn't say we would have done all of it during COVID.

But with COVID, it was easy just to combine the meetups online, nice and easy, and I didn't have to travel anywhere. So we are pushing forward on all those different platforms, except for the webinar series. We ended up discontinuing that because we had the online Meetup, which was essentially the same thing.

Building Some Kind of a Leadership Platform

Darin: All those platforms, when you get into the space, you learn how to syndicate. Then people talk about building some kind of leadership platform. I found that there's really two goals for that. One is giving back and helping other people learn what you've learned. There were plenty of people that helped me along the way.

Whether that was directly face-to-face, or at a Meetup group, on the phone, or through a paid mentorship program. Then, there's a secondary piece where you're hoping to introduce the concept. Bring more people into the fold that may invest alongside you. Did you have that dual goal in mind? On the passive investor side, which of those platforms really brought more people into your deals?

Gary: They all help. I would say 50% of my investors I've already had a relationship with for a few years. Whether it's for the activities that I'm involved in, or Meetup groups, or whatever. Maybe a quarter of it is from the podcast, the summit, maybe the book. It reinforces that they see me as a potential, decent sponsor. Sometimes it's just because you're on social media, people may think that you're a decent sponsor.

But really, good investors need to do their homework. Not just because they're on social media, they are actually doing a good job. Then, the quarter of percent, a quarter of my investors come from referrals. A lot of investors come back and they'll bring other investors with them the next time, which is awesome. A lot of different ways, one helps the other. The book is just a great piece I can give to any potential investor.

A Better Operator

Gary: It really pushed me to be a better operator to write it all out and improve our systems. The podcast was another great way for me to learn. Through all these different methods I'm able to bring in more investors too. It's not like a watershed, it's not like it's an endless supply of investors, but it helps. People gain more confidence in your ability because they hear you and on a couple of different platforms.

Darin: Also, just personal growth, you think, I want to get into multifamily investing. Then, I'm going to learn how to do it, and then you cross the finish line. But it's not like that. All of a sudden somebody else is like, now you got to step up and do this thing. You're like, but I don't know how to do that. Now you have to get uncomfortable again.

You just learned how to do this, and now you got to go and do something else. So I applaud you that you kept charging ahead, because each one of those things is a challenge. It's something new, it's something you haven't done before. I talked to some first time investors, and I remember the first time I did a passive deal. I was scared to do that.

Now I'm in a ton of different passive deals. I'm not scared to do that anymore. But I was scared to start the podcast. You wrote a book, I haven't written a book yet. I'm actually trying to, I'm in the process, but it's a long process. One of the things you talked about early on was that you were an entrepreneur in your mind, even from a kid. You talked about shoveling snow.

An East Coast Guy

Darin: I know you didn't grow up in Southern California. Where'd you grow up?

Gary: New Jersey.

Darin: So you're an East Coast guy, I'm an East Coast guy too. I'm from Connecticut. When did you end up in California?

Gary: I had been going back and forth in my 20s, when I was working on films. I moved out here permanently when I was 28, about 23 years ago.

Darin: Are you 51?

Gary: Yes.

Darin: I am too. Usually you have all these young guns here, like 30 something. I'm so glad to have somebody my age. I know from your background that you've done single family investing. You've also done some ground-up construction. When did you get started with that, and why did you make the leap into multifamily?

Gary: When I bought my first house for me to live in, it was house hacking. We didn't have any money down, we had debt, and we converted the garage. I helped build it with a guy who was handy and converted into an office space for my business. We opened up the kitchen and we did some different things. That was my start of real estate investing. Then, years later I turned our residential home into a rental and we moved out when we bought a new house.

Darin: You bought your first house. When you moved into your next house, you kept the first house and rented it out?

Gary: I sold that one. But my second house, that's when we rented that one and moved into a third one right down the street. That's where I started getting comfortable with rehab, and numbers, and dealing with GCs.

Thinking Small

Gary: I had an eye for that when I moved into a multifamily. You take one and you multiply it by however many units you have. Originally I was thinking real small, to get experience. I was looking at a 12 unit, but not until I partnered with some other people. We bought a 42 unit for our first property. You're much better off partnering with others. Having that confidence, are you seeing the same thing that I'm seeing? Let you know, let's go in together, and you can make big jumps that way. Because our first property we bought was 1.65 million. The next property we bought was a little over 15 million.

Darin: That's a big jump.

Gary: Yes. We had so many partners that said no to us in the beginning. They didn't like the deal, they weren't comfortable with the deal. We're now selling that deal. In under two years, it'll be over 2x to our investors when we close, assuming everything goes through.

Darin: When you and I started around the same time, I remember meeting people. Some people that had been in this space, they're like, I was buying 30, 40K per unit. I'm out. This is back in 2018. We're at the top. I'm sitting out, and I'm like, I'm going to do this thing. But I wasn't completely naive. I didn't know for sure if we were at the top. But a lot of my deals now from 2018 are starting to turn over and making very good money. I'm glad I did it. There's definitely risk and a leap of faith to get in. But if you don't, you may never do it.

A Leadership Platform Is a Perspective

Gary: I know some guys out here in Los Angeles that have been saying, the cap rates are too low since 2015 and haven't been investing. It's just different times. You look at all the international people investing here and our cap rates have dramatically reduced. They're looking at our cap rates and they're like, it's fantastic. You're at a four cap, that's great.

So it's perspective and there's a lot of capital out there. It's the best risk adjusted returns out there. You get the tax benefits. I know everyone keeps saying, they're afraid, it's too late. It's never too late. Over time, if you're in it for the long haul and if you manage well, you're going to give yourself a great shot for being successful.

Darin: A few things to add there, in terms of getting started, everybody starts with one. Whether it's a single family house or whether it's a multifamily or duplex or fourplex. You have to do the first one before you can get to the second one, you build confidence off of that. What you did with the single family home, not the first, but the second one that you ended up turning in.

I've had a couple of people here that focus on the military. They catered towards helping enlisted folks learn how to get involved in real estate investing. A few of them, that's how they started. Like, they are at a base, they buy a home and then they would get transferred to another base. Rather than sell the home, they would rent it and then they would go onto the next one.

How to Manage a Leadership Platform

Darin: They started to learn about how to own property, how to get it done, and how to manage it. Then, how do you scale? How do you go bigger? You just build off of that confidence off of your experience. You did that, not only on the investing side but also on the platform side, which is remarkable. What markets do you focus on?

Gary: I focus on Phoenix and Tucson. I love the population growth, the job growth, the rent growth is almost top in the nation. It's been phenomenal.

Darin: What's been the rent growth in the Phoenix area?

Gary: It's almost like 17% in the last year. Tucson has been 7-8% the last couple of years. Every report is a little different. It's funny when you're putting together your investment summary. One says one thing, one says another, but the rent growth has been crazy out there. So many people moving there, a lot of job creation. The prices though have skyrocketed since two, the cap rates have really compressed in those two markets. It's hard to find deals. Last few deals gone is by solving problems, someone else wasn't willing to solve.

Darin: Give me an example of how do you solve a problem?

Gary: The one we bought in February, it was student housing. He was at the time, just really struggling, he had owned some student housing elsewhere. We were out to dinner with the broker, celebrating our previous purchase with him. He told me the size of the units and the cost basis. I'm like, that's a no brainer.

A Phenomenal Deal

Gary: We'll turn it into a multifamily, and if we have any luck, we'll chop up the units and add more units. So he told us 7:00 or 8:00 that night. We went back to the hotel room, underwrote it the next day, put in an offer and spoke to the seller the day after that. We closed that deal within 45 days. It's been phenomenal. We bought it at the end of February. We just had all the students turn at the end of July.

We're at 85% occupied already, well above our proforma, and probably within six weeks, we'll be close to 95%. We are working with the city right now to chop up. We have a bunch of four bedroom units. Ideally, we'll chop up those to a two plus one and a one plus one. If we can add 10, 15 more units that really increased the NOI and the value of that property even further.

Darin: That's huge. So you kept it as student housing?

Gary: No. We changed it to market rent. Changing the use was really easy with the city. Again, there were some risks involved, we hired a lawyer, we had a team of people helping us move everything forward. We just switched it from student housing to market rate, and that was fairly easy process. The next process is a little bit more time consuming as far as being able to chop up units.

We have to do a whole parking plan and this and that. Most likely it will get approved in the next couple of months and continue to add value. Then we can refi out. Give a big return to our investors, and continue holding this property for a while.

The Primary Strategy of a Leadership Platform

Darin: Is that your primary strategy, to do a cash out refi and keep the property?

Gary: Each deal is a little different. We sold two, one we sold and the other one we're selling. It just made sense to sell those, one was a 42 unit. We really maxed out the value at that point. It's a velocity of money, but on some of these bigger properties, if it makes sense, then we can refi and hold, we can sell.

We keep all of our options open to see what's the best, figuring out with our investors the time of their money too. Can we keep driving the NOI up? If not, then maybe it is a good time to sell because we've maxed out. The return only goes down for each subsequent year. Obviously, you have to consider the tax consequences as well.

Darin: When I got involved, I'd go out on these tours. All of a sudden, I see somebody I knew that was selling a property, and then somebody else I knew that was buying the property. The first thing that comes to my mind is, the buyer is the sucker. Without knowing how the business works, you could think that.

The first investors are going to double their money and this new group that's coming in, they're going to get taken to the watershed. But then some people educated me. The first group they came with, say it was $2 million worth of rehab. They put that money in and they executed their business plan. Now they've increased the rents. But they can't take it to the next level because they don't have another two million.

There’s a Winner and a Loser on a Leadership Platform

Darin: This new group comes in and then they invest additional capital to take it to the next level. That's when I was like, now that makes more sense. Like at first you just think, somewhat there's a winner and a loser, but it's not necessarily like that.

Gary: In the beginning, I was hung up too on what the previous buyer had bought it for and was selling it for. Like, they made a killing in two years. You're right. I'm the sucker and you got to push that aside where you can take it to, and focus on that. That's what you need to be.

Darin: Where you can take it too and the existing group most likely can't do that, because they don't have the capital. They're running the property the way they're running it. But they don't have excess capital to keep putting new improvements on the property.

Gary: That's why we always like to over raise anyway and have extra money so that we can pivot. It's not a major pivot. But if a year into the property, if we wanted to paint it all of a sudden, and that costs $100,000, we have extra money in our reserves to do something like that. If we think it's going to be a real boost to our NOI.

Darin: Talk about mindset. That plays a lot when you get into these bigger multifamily deals. A lot of people that I talked to, they're just trying to get in. They think like, I got to do duplex, fourplex, eight plex. Then, all of a sudden they listen to my podcast.

The Right Mindset

Darin: They contacted me and we're like, you have all these people that do 100 units, 200 units, 500 units. How do they do that? You just talked about your first deal, it was 1.65 million. Then your second deal was 15 million. Talk about how you have the right mindset to be able to scale into larger deals?

Gary: My mindset is so important and that's something you have to work on all the time. I was thinking small when I started out. Like, I was looking at a fourplex and then I was going to do a 12 unit deal. I realized through other people and platforms that it’s actually much easier to go bigger and work with a team and feel more confident. Versus you being on your own and not learning from others on your team, not sharing that responsibility and skillsets.

It's actually easier to go bigger, to scale. You have to go through your comfort level, whatever that is. Obviously, you don't have to make the leap that I did and go smaller.

But we felt that a hundred units or more was the space to play in, and it just made sense. We had a list of all the different people that we could potentially partner with. When we were working on this deal, we asked a lot of people on that list. A lot of people said, "No," and didn't like the deal. We kept to our conviction. We felt that it was really well conservatively, underwritten. Other people agreed. Eventually, we found partners that we really enjoyed working with and took down the deal.

Improving Operations and the Leadership Platform

Gary: Certainly there were a lot of hiccups along the way to the very last second. Once you get that deal done and you can start focusing on the real work and improving operations, that's when the real fun starts.

Darin: You wouldn't have learned those things had you not taken the step forward. I think that people get stuck in the sense of, you just talk about going 100 units or more and it just makes sense. In our world, it's about getting around other people and learning from them. From the listener's benefit, when you get to a property that has 60, 70, 80, 100 units, now you can afford to have a full-time leasing person on staff, a full-time maintenance person on staff.

When you have smaller properties, you can't afford to have them at the property all the time. You have to have them part-time. Let's just talk about leasing. Somebody drives by, wants to possibly lease this unit in a 12 unit, they see the phone number, they call. They have to schedule a time to come back to look at that unit. Then, the leasing person has to show up and sometimes the person that called that doesn't show up.

That's a wasted effort versus if you have a full-time leasing office. They just pull in, go talk to the leasing person. And they say, "Oh, we've got this unit right here," and they go show it. They can actually sign the lease the same day. That's part of the reason why Gary's saying, "It's actually easier to go bigger."

Being an Entrepreneur

Darin: The financing is also another reason why. If you talk about being an entrepreneur or small business owner, getting a single family loan, or a duplex, or triplex. It's a lot harder to do that than to partner with four or five people or three people and get a large deal done. It sounds crazy, but it's the reality.

Gary: On these bigger loans, you could get a non-recourse. There's no personal guaranteeing, where on the smaller stuff, that's more likely to happen. So yes, a lot of benefits. You pool your resources with others, and can take down bigger deals.

Darin: What kind of habits do you have? Do you have a morning ritual? What kind of habits have you instilled to make sure you keep on plowing forward?

Gary: It starts with goals, you've got to write it down and review them. I was just reading The Slight Edge when I was away on vacation, and it was a really good reminder.

Darin: I like that book.

Gary: Great book. Really easy to apply. Just the ability to look at your goals every single day to remind yourself of that is really important. It just keeps you on track, and its timelines. I have timelines for everything, because you're getting pulled in so many different ways, different deals, or a podcast. You've got to stay on your timelines. That's a really important thing, and write everything down.

We use Google Drive for a lot of stuff. So we can share with anyone who’s part of our team for any different project and share all that information. It's there for everyone to see, who's responsible for what, when is it due. Otherwise, things get forgotten, and go by the wayside.

How a Leadership Platform Differentiates People in the World

Gary: You spend three months, six months, a year and that's not getting accomplished. If you put it out there and for everyone to see, more likely than not, it's going to be accomplished.

Darin: You said it three times that you need to write down your goals. That alone will differentiate most people in this world. Most people will not take the time to write down their goals. I have a vision board, I don't know if you use a vision board. But I have pictures up there with my goals and I have to stare at it every day. I think to myself, what am I doing to advance that goal? Am I going to hit that goal?

If I didn't have that in front of me every day, it's very easy to let one week, one month, one quarter, one year go by. All of a sudden you're like, maybe next year I'll try. That's key, to write down your goals. The other thing is to think bigger. I had a guy on and it actually hasn't come out yet. But he said, "My goal was to do eight units in the next year. Instead, I changed it to 800 units." I'm like, you changed your goal from eight units to 800.

Where'd you end up? He's like, 440 units. So he didn't hit 800 units, but had he kept the eight unit goal, he probably would have only hit eight units. Instead, he had 440. Talk about freedom and what that means to you. People talk about that word all the time, like freedom of time, freedom of money, I want to live a life of freedom. What does that mean to you?

How a Leadership Platform Offers Total Freedom

Gary: I work my butt off, so I don't have total freedom. But I do know that if I wanted to stop, I could stop and live a very good life. It's the freedom to travel, to take care of my parents or whoever I want to take care of. It is having that freedom to do what I want to do, when I want to do it. Now certainly I have responsibilities to my investors and my properties and whatnot. But certainly, I have more sense of control over my own destiny. I can work as long as I want to, and get the rewards as much as I put in. That's the reward I'm going to get out, but I am in control.

Darin: That's the thing. Having to be told when to be somewhere and how long to be there, and exact and trade time for money. Versus most people that I know that are successful in the real estate world, they are driven. They don't necessarily want to get to a certain point and then just sit on the beach. But they know that they're doing what they want to do. They're driven and they're doing what they want to do, when they want to do it.

You were telling me how you were in Maui last week, and you were closing three deals. On vacation, you still had to do some work, you still had to sign some paperwork, you still had to talk to a few investors, or lenders, or brokers. But you're doing what you wanted to do, and you're having fun at the same time.

A Leadership Platform That Is Not Just About You

Gary: I didn't have to be in an office, I could do it wherever I was. I told the lender, I'm going to be in Maui. So I can either sign before I go or send a notary to me. They're like, we'll send a notary to you. I'm like, all right, let's do it.

Darin: The other thing that I love about this business is that it's not just about you. If you get into syndication, you need other investors to get involved. But you're presenting them with an opportunity to make money that they can't make on their own from their investments. They get involved, you grow your wealth, but you help grow the wealth of all the other investors that got involved in that deal.

You talked about your Phoenix deal, in less than two years you're going to double investors' money. Typically, you can't do that in the stock market. Now, if you bought at the low of COVID, it's come back double now. But there's very few investments that have the tax efficiency and the leverage that real estate does.

Gary: The beauty to the investors is, it's pretty much performance-based. I'm going to make my money if we do well, if they do well, I will do well. If we're not doing well, then I'm the one that's going to suffer. I make most of my money at the end. Unlike other things, this is a true performance-based.

Darin: That's a great point. Some people think they're getting paid an asset management fee, they're getting paid this fee. But really the true money, at the end of the day, is either on a cash out refi or a sale. Talk about fear.

Start Your Own Leadership Platform

Darin: There's so many people that are afraid to do things in life. One of them is to get involved in real estate investing, or start your own business, or scale up. But we all have fear, and I'm sure you were scared of some things. Talk about when you were afraid and how you overcame that.

Gary: Not as much fear, I guess, obviously you want to perform well. It's doing your homework to mitigate that fear. Fear is when you're putting hundreds of thousands of dollars of hard money down on a deal, and working through the particulars of the contract and whatnot.

Worrying that this deal is going to fall apart, and I’m going to have to walk away from this deal, and lose hundreds of thousands of dollars. That's a little bit of fear. Once you get past that point, then it's a matter of executing your business plan. But that’s the hardest part of this business, putting all that money on day one.

That's why when you do big deals, you can pad your budget quite a bit and make sure you have all these different buffers. Because nothing's going to go perfectly. So we'll put a few hundred thousand in there for the HVAC and the roof, even if they are in perfect condition. You never know what's going to happen. I can sleep well at night, knowing that I've got a few hundred thousand there to use. If not for that, then I can use it for something else.

What a Lot of Passives Don’t Understand

Darin: You brought something up that a lot of passives don't even understand. Some passives are like, is this syndicator just trying to get me into a deal? Well, that syndicator, whoever that syndicator is, in order to get under contract had to put hundreds of thousands of dollars of their own money to get into contract. Then, they're only going to do that if they have confidence that the deal is strong enough to attract capital from other investors.

Because if they go out, the syndicator goes out and says, "I've got this deal under contract. Are you interested in investing?" And nobody shows up and the deal falls apart. The only person that loses is the syndicator who put up that hard money. A lot of passives don't realize that syndicators have hundreds of thousands of dollars that are locked up that are at risk until the deal closes.

Gary: The bigger the deal, the more money you're putting down, and it's day one. That part is a little scary, but that's part of the business.

Darin: You build confidence, that I doubled investor money on the last one. So I'm pretty confident these guys are going to come in on this one. They've already indicated to me that they want to continue to roll it over with me. So that's important. What do you like to do outside of work for fun?

Gary: I love to be active. So I play beach volleyball early in the morning, twice a week.

Darin: This guy lives in a really difficult part of the country. He lives in Manhattan Beach, Southern California. You're at the volleyball court at Manhattan Beach?

Doing Real Estate for a Long Time

Gary: Yes. So 6:45 every Thursday morning, when I'm in town, and Saturday morning, we have a big group that plays. Sometimes during the summer, we might have three, four courts going. I love it being on the beach and exercising, you can't beat that.

Darin: It's harder to play two-on-two, or larger?

Gary: We play twos.

Darin: You're my age and you must be pretty fit to be doing that. Because that's tough, covering that much ground.

Gary: I stay pretty active, I try to walk as much as possible. So the days I usually walk, the next day I'll walk a few miles. I average about two miles a day. I've been doing that for five-plus years. I do twice a week, I do like a core mobility workout. So I can play beach volleyball and stay injury-free. That really helps to get my shoulders moving correctly, to use all the muscles correctly and keep doing this. Because I want to be doing real estate for a long time. I want to be playing volleyball for a long time. Health is really important to me. If I'm healthy, I will do a much better job business-wise.

Darin: You're living life, and that's something that is fun and important to you. So that's huge. What advice would you pass to somebody that has never invested passively, who wants to get involved?

Gary: They should get to know their sponsors, see a lot of different deals, and try to understand.

Darin: How do they even meet them?

Do Enough Research Before Building a Leadership Platform

Gary: Go to Meetup groups, and get on deal lists, and don't invest with the first person you meet. They could be a great sponsor, but make it a goal of meeting 20 sponsors first. Because on the first deal that I invested with, it was a bomb, quite honestly, and I made the mistake. I didn't do enough research. So there's a lot of information out there, much different than it was even four years ago.

So look over a lot of different deals. There's lots of different ways sponsors can tweak the numbers. You really need to spend a little time educating yourself and knowing the differences. There's a lot of free resources out there. So there's no excuse, you don't have to spend any money to get a good amount of education.

Darin: If you don't know how to get involved with Meetup groups, there's an app you could find on your phone, it's called Meetup. Just plug in apartment investing or multifamily investing. In most major metropolitan markets, there's going to be Meetup groups that are focused on multifamily investing. When you go to that Meetup group, the first time you go, you don't know anybody. You're nervous and you're scared.

There's a lot of other people that are going there for the same exact thing. Just introduce yourself to the people you sit next to. You'll find out that this person is there for the same reason you are. This person has been coming and are glad that you came, and how can I help you? Then, all of a sudden, you meet other passives and you meet other syndicators. You start the ball rolling and it's just one education after another.

Who’s Doing Deals

Darin: Another great way is to get involved with multifamily groups on Facebook. Just start looking at who's doing deals. You could private message that person and then set up a conference call with them. How do I get involved, how do we get on your investor database? Then, you start looking at deals. It's one step after the other. So it is free and it's easy to do, but you have to take action.

Gary: I'll add one more thing to that. When I started, I think that this happens with a lot of people too. There's so many different ways to make money in real estate.

It's like the squirrel effect, that looks interesting, and you've got to focus. Focus on one aspect, and then after you get educated, then you can go to the other things. But if you're looking at 10 different things, you're not going to be able to move that ball forward.

Darin: When you say that, meaning like, fix and flip, Airbnb, self storage, multifamily, mobile home parks. It's too much. You're going to be just reading stuff and never doing anything. If people want to reach out to you, what's the best way for them to reach out to you?

Gary: I'm on social media. Otherwise, you can also email me gary@breakofdaycapital.com. Happy to respond and talk about real estate. If you go to our website breakofdaycapital.com, you'll get a free passive investors' guide as well.

Darin: Gary, I appreciate you coming on, appreciate you being part of key principal in my first indication deal. I love all the success I see out of you. Can't wait to see what else you have in store.

How to Reach Gary Lipsky

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