Have you ever wanted to start passively investing in real estate but didn't know how? Start by listening to Jason Robin share his story of how he found confidence and courage to get started multifamily investing.
Listen as he shares his journey as a W2 employee at a technology company in the DFW area, who knew he wanted to start creating passive income but didn't know how. Hear Jason share what it was like when he got involved as a passive investor in his first multifamily deal, and how that experience helped him find the confidence to look for future deals to get involved with.
You don’t have to be an expert or be rich before you can invest in multifamily real estate! Learn what's involved from Jason's personal experience.
Table of Contents:
- Where To Listen To The Podcast
- Creating a Passive Income Through Multifamily Investing
- How Meet-up Groups Helped Jason in Multifamily Investing
- Pooling Limited Partners
- Jason Before Multifamily Investing
- A Piece of Advice
- How to Reach Jason Robin
Creating a Passive Income Through Multifamily Investing
Darin: Jason Robin and his family live in the Dallas area. He is a W2 employee for a technology company. He knew he wanted to find a way to create passive income but he didn't know how. Then he went searching, he educated himself, and he just invested in his first passive multifamily deal.
So just a little bit about how I know Jason. Jason and I came in contact. He had listened to a number of podcasts. Then he reached out. We ended up getting together for coffee and getting to know one another. And then he subsequently went and invested in his first syndicated multifamily deal. Typically I have syndicators on the show that have 1,000, 2,000, 4,000 units with a ton of experience.
But I know that from the listener-base perspective, we have syndicators that are looking to scale up and we also have people that are interested in getting into the game for their first time so I wanted to bring Jason on because he just did it. I wanted to ask him some questions in terms of his mindset and what was going through his mind so that it may help the listeners that are in the same boat. And so Jason, really appreciate you coming on.
Jason: Darin, thanks for having me. I fall into that second bucket that you mentioned about first-time investors.
Darin: So before we dive into some of the detailed questions related to real estate investing, I know you're in the technology space. Share with the listeners a little bit about your background. Maybe your age, what field you're in, what your role is, that type of thing.
Engineers in Multifamily Investing
Jason: I have an undergraduate degree in engineering and I went back to school later after working for a little while and got an MBA. And I found a job after all of that. I work, as you mentioned, for a major technology manufacturing company here in the Dallas area. Just a regular W2 job. I save for retirement, hang out with my family. I'm 40 years old so I hit the big birthday this year and just more than anything pastimes are spent with my kids and my wife and doing family activities.
I found myself in a place where I'm sort of finally no longer chasing myself up an escalator. I've kind of got a house that I own, I've got cars that I own, I've got a retirement plan, sort of where maybe it's a good place to be to get going. And came looking for you Darin and this opportunity to try to see what else is out there, what other opportunities are available for guys like me. As you mentioned, it was my first time and so I've been learning a lot. And just really appreciate all of the time that you and others have spent educating me.
Darin: That's huge. It's funny, you mentioned engineering. I don't know why but there's a lot of engineers in the multifamily world. I don't know why. Maybe it's the numbers thing or problem-solving. I don't know what it is. But a lot of engineers are attracted to this real estate space.
Jason: You know what I've learned is, and I'm not there yet, but I think there's a lot of opportunities to optimize and take something that somebody's been working on and maybe you have a better idea. You have some experience doing other things that you can apply to that field.
Finding the Podcast for Multifamily Investing
Jason: So your engineers are going to be highly analytical and they're going to approach it as a problem to solve. Not real emotional but very analytical. And it's a very engineering mentality to think that I can do better.
Darin: That's huge right there. I can do better. And I haven't heard anybody say that before but I think that probably hits it on the head. Like a lot of engineers have that thought process that I can do it better. When you go into these multifamily investing deals every one of them is pretty much a business plan on how I can take the property from A to B and have it be more profitable and then how that spits out returns to investors and et cetera. So that makes sense.
Jason: If it was a perfect opportunity already or a perfectly run property, you probably wouldn't be interested in it as an investor, right? So I think that gets to the same point.
Darin: How did you even find the podcast?
Jason: We'll get into a little bit of a history here. I have been interested in investing in either real estate or a business opportunity for a couple of years outside of my work. And then you get into this challenge about who do you talk to? Who do you reach out to? How do you even find these people? And what I found was when I found people to discuss this with, if they were a player or they were in some part of the game, they were in real estate or they were owning small businesses in the area, I found them not approachable. Sort of keeping their cards close to their vest. Almost like it's a very clubby atmosphere, difficult to infiltrate.
Jason: That was kind of my background. I then have a little brother in Austin, Texas who invested in a bar. So I thought, "Man, pal, why didn't you call me up and ask me? I would have loved to invest in a bar." Turns out fate was on my side. He hasn't lost everything yet but they've had a cash call and nobody's been paid anything. So you're sitting here watching this kind of unfold and thinking, well, there are risks and that's one of the risks.
But this is a constant conversation between my wife and I and just always keeping our eyes open. Through that, she happens to be connected to your wife Darin and your daughter through the babysitting network up here where we live. I think you had shared a post on Facebook and it made its way in front of my wife and she identified it and said, "Hey, how about this guy?" So boom reached out. Then you answered the phone, returned my emails and we had coffee within days.
I can tell from the get-go that you were different. You were interested in educating. And you were interested in spending time with a guy like me who has no experience and had a lot of discussions on the side with friends, with family, with my wife just thinking about who you were. I got comfortable with you enough to kind of take that step.
Darin: Well, that’s huge. Whether it's me or whether it's somebody else, there are a few things I would say. I'm 50 so I'm 10 years older than you. And I've been in number of different industries.
Educating About Multifamily Investing
Darin: For one reason or another, the multifamily industry just seems to be very inclusive and very educational, and a very pay-it-forward type of mentality. And I think part of it has to do with the fact that these deals keep getting bigger and bigger so there's a necessity to partner with a number people so people don't ever want to burn bridges.
Then the capital raises get bigger so you need more investors involved. I think part of that is for that reason and I think another part is just somebody helped me. Somebody helped the person that helped me. And then it kind of just flows downward from there. Then you want to help the next guy and then you're trying to level up yourself and so you're hoping that the guy above you is going to help you get to the next level. So that's huge.
One of the things you said which I don't think is unique is that you said that you were searching for a couple of years. I think that some people think that they're alone in that. That they should be able to listen to a few podcasts, read a few books, and then boom, make an investment. And some people it just takes a longer period to get that comfort level or meet the right people.
Jason: That's it. It's to meet the right people. For me, it all came together with you and listening to your podcast and your guests. They were very relevant. They're current today in the market where I live for the most part. Once I started listening, there are Meetup groups. A couple of them had specific Meetup groups. Very welcoming, very open. Aaron Katz's meetup group in Plano.
How Meet-up Groups Helped Jason in Multifamily Investing
Jason: Doors are open. Show up, learn, meet people, network. I have no reservations about going to a Meetup meeting and networking at all. For me, it was finding out who they were, where. Maybe it's shame on me for not looking in the right spot earlier, but once I found it it's just like wow, this entire field opens up the opportunity that you can go to educate yourself and then start deciding what's next for you.
Darin: I think it's like this closed society until you get introduced by somebody into it. Whether that's through podcasts or books or Meetup groups or mentorship groups or whatever the case may be. I've been around a lot of wealthy people and until I got involved three years ago I didn't have anybody ask me to participate in one of these private placement deals.
These private placement deals are focused on real estate but they're also focused on businesses, so you're searching for businesses, and in kind of angel networks and startups and that sort of thing. Look, you don't get that invite unless you get to know the people involved. So that was one of the reasons why I wanted to bring you on is I want people to hear that. Like look, there's going to be some people that are listening that they've been looking for a year or two and they're like, "You know what? I feel like I'm just going to keep looking. Like it's hard for me to pull the trigger." So how did you pull the trigger?
Jason: I didn't spend a lot of time worrying about pulling the trigger with you Darin. I got comfortable knowing you. You answered a lot of questions. And you met with me multiple times.
Finally Writing the Check
Jason: Through the network here where we live, our wives indirectly know each other, we have a lot of the same friends, mutual friends. I know you're nearby. You're home. We're fairly close neighbors. I felt a level of comfort there versus investing with somebody in another city far away that I can't meet or talk to. That would have been much more difficult.
There’s a bit of a personal connection that made it easy. When I invested with you it was a bucket of money that I do not immediately need for some other thing. I'm not chasing last month's rent. It doesn't impact how I live one way or the other. Hopefully, it has a positive impact in the future but if I lose it all it's a lesson learned.
Darin: We don't plan on having that happen.
Jason: I know. And so I'm not worried about it at all. Writing the check, actually it was more difficult for me to figure out mechanically how to do it than it was to decide to do it.
Darin: I was there three years ago. So I pulled money out of the stock market and I was transferring it into a bunch of multifamily deals. But I remember I was still nervous. I had people that had recommended me to a number of different syndicators that I spent time with, I met, had great reputations, had a lot of experience. But it's still something different. If you look at the difference between investing in the stock market, whether it be individual stocks or ETF or mutual funds, you can buy $1,000 or $5,000 in one transaction. What can be scary in these real estate deals is the minimum is 50,000 or 75,000 or 100,000 and that can scare a lot of people.
Getting Into Multifamily Investing
Darin: What I can say is from investing in a lot of them, the first one I think was the hardest. Making that investment. After that, I was like, "You know what? This is 50,000 or 100,000 in a $10 million apartment complex. It's not a piece of paper in the stock market that can go down 30%, 40% in a day."
I chose to pull a bunch of my capital out and start doing the real estate thing. But for some people, it may just be, "Hey, I want to diversify and try it out and see how it works." So how did you kind of get comfortable with the fact that it's not a $5,000 stock investment versus a larger investment?
Jason: It's fantastic. Because we live in a place in North Dallas in a very interesting time where the market around us is exploding. So you talk to somebody in our area or Houston or Austin trying to buy a house. It’s really hard to do. You've got competing offers over ask and all of that situation and so it is a seller's market. And so okay, so in real estate, it's COVID. I can put money with my brother in a bar and that may or may not be open or I can come to you.
I can invest in multifamily. People are having trouble buying first-time homes. The price is too high. Rents are going up. I just think inherently there's going to be a very strong demand for multifamily residences in the future and it doesn't appear to be slowing down. Where we live there's a lot of new construction going on. Word on the street is it's taken us a year to break down because there are not enough supplies to build a house.
Real Estate Cycles
Jason: Even if a guy is qualified to buy a home, he may not have a place to buy a home. He needs to go rent an apartment or multifamily setup. I just think that sort of has a trickle-down effect and it impacts the entire industry. That's how I got really comfortable with multifamily here. If I think about your story three years ago, multifamily investing, that was probably a bigger risk at the time because the market wasn't what it is today. Now for us, it feels really obvious, it's a good place to be right now. And it doesn't appear to be slowing down so let's just hope that.
Darin: None of us has that crystal ball. Real estate is cyclical so it does have its ups and downs. And when it does shift it typically takes a few years to clear a lot of times before it heads back up into that uptrend. But I don't know if you've ever heard that saying that 90% of millionaires have become millionaires through real estate. Well, that was interesting to me.
I was chasing the corporate world and then I went off and started my own business in 2007. That gave me freedom of time, but I still was beholden to customers and I was still very transactional. When I got involved with this I met so many people. I was like, "Is this real?" And they're like, "Darin, man, my net worth was 500,000, now it's five million." I'm like, "That's crazy." And it was like one after another after the other. I couldn't see it but now being in all these deals, I see it. But to your point, you mentioned 2018 is when I kind of started investing and we're in 2021 now.
Multifamily Investing Has Inherent Value
Darin: I met some syndicators that were like, "Look Darin, I was investing at 40,000 a door and now the market's at like 80,000 a door." And I was like, "Well, I'm committed, I'm going." And now in today's market, it's 100 or more a door. But when I look at what's going on and the migration of people because of COVID, markets like Texas, the Carolinas, Tennessee, Florida, Arizona are just seeing a huge influx of new population.
Jason: You've got Facebook groups dedicated to people moving from other states to Texas. Like, help groups. How did you do this? Where did you go? And where did you find that? It's an odd time. And maybe it does bubble and it comes crashing down at some point, but even then the beauty of this is that you still own an asset that has inherent value. It does not go to zero. So there is some recovery even if things go very poorly.
Darin: That's a huge point right there. So that's something that you thought about. When you looked at real estate, multifamily versus other asset classes you honed in on multifamily?
Jason: Thought on multifamily investing. I've had friends and family members that have owned rent houses and things like that in the past. When I put a pencil to paper on that it doesn't scale well for me and I can't figure out how you make enough meaningful cash flow until you own all of the home. I have trouble with that. Now I've known people in the past who have tried to build portfolios. I think some people are wildly successful in owning a portfolio of rental properties but I'm not quite in the position to be able to buy a full portfolio of rental properties.
Find Your Value and Bring It to the Table
Jason: It felt like a much higher return for me to be able to join multifamily. Then something you asked earlier, when I was evaluating you and your deal and you shared the information. I am probably on the lower end of investors in your deal.
So I think that if you looked at everybody there, there's probably most of them have more in the game than me. And that's sort of a comfortable feeling too. Because I think I'm treated the same as everybody else but these are smart people who have done this before, who have many, many doors and many, many properties and they are also investing in you. And so I look at that and I say okay, so where do I fall? Do I want to be the biggest guy in that pond? No. But I'm very comfortable being the smallest guy.
Darin: No. That makes sense. It's not a requirement for everybody, but a lot of people that have invested passively in multifamily deals that I've come across, one of the things they look for is, are the general partners putting money into the deal? So I think on that deal we had six or seven general partners and we were all putting money into the deal. Some deals, maybe one or two of the general partners are not putting money into the deal. I'm not going to say that that's a bad deal because it could be that you have a guy who just doesn't have a lot of capital. He may be starting in the industry and he's a go-getter. Then he does the sweat equity and he goes out and finds the deal and underwrites the deal.
Skin in the Game of Multifamily Investing
Darin: And then he brings somebody with experience that's going to put some money into the deal and that has a big Rolodex that he can help raise capital for the deal. That could be okay. But a lot of people look at it and say, I want to know that other people have skin in the game too.
Jason: We had a couple of coffee meetings before I invested with you. And the second one, I spent a lot of time drilling you on, what's in it for you? Walk me through what the general partner gets out of this. I want to understand a lot of fine details about where the money goes. Rent comes in at the end of the month, what happens? Take me through the pieces in detail and you did. That was extremely helpful and valuable and I appreciate it. And that's the kind of transparency that I was looking for and I was fortunate to find it. And so my experience with you is that you were willing to share that. I don't know if that's a common experience or not but that made it very easy for me to decide to move forward.
Darin: Absolutely. In my experience, it's pretty common that the general partner is pretty transparent and willing to answer whatever questions a limited partner is interested in. Because it's a win-win. The general partner needs a lot of limited partners to fund the deal and the limited partner has the cash. Look, I'm a limited partner in a lot of different deals and a general partner in three. On my limited partner deals, I'm like, okay, well once I wire the cash they're responsible for running the day-to-day, I just want them to give me a good return.
Pooling Limited Partners
Darin: And I wanted to learn along the way too. And that's something I think that's important to you as well.
Jason: Darin, you mentioned something that I want to hit. And it was important to me. It was that you mentioned that you need me as a limited partner. That was not obvious to me going in. My mentality was I'm a small guy, I don't have as much cash as others to give you. Why do you want to answer the phone? And why do want to have this meeting with me? Are you real? Is this a scam? Because why are you talking to me? What you have to realize for the guy who's on the fence about a first-time investor is that there are things as a limited partner I need.
I need that opportunity. And I need that transparency. But there are also things that you need as GP. You need that pool of limited partners to invest either in this deal or future deals. So it takes all of us to play. And I didn't realize how important that was going in.
Now obviously if I dropped out somebody could cover my piece. But at the end of the day, this is not the only deal you're doing. You're doing this one and you will have others in the future. And I think it's very important for you to have like you mentioned, a Rolodex, but a pool that is potential investors in future deals. And that is how I got comfortable understanding why you're spending the time educating me. Yes, this is deal one. Hopefully, there will be other opportunities for us to be together in the future too.
Darin: Absolutely. I had that same thought.
Getting Involved in Multifamily Investing
Darin: I joined a multifamily mentorship group and I met a lot of different syndicators. But some of them had been in the business for a long time. I'm like, I'm not going to get access to their deals. Like they already have their pool of investors. Like why would they even want my cash? That's kind of what you're saying.
What I realized after the fact and I was educated on it, was that a couple of things happened. One, when somebody gets involved and wants to get involved in multifamily investing, and it happened with me. I pulled a bunch of capital out of the stock market and then once a month I was getting into another deal. Well, after a while you kind of tap out. You're like, okay, I decided I was going to go the GP route so I was keeping some funds for that.
But people don't have an unlimited amount of funds and these deals are longer term. The business plan is typically a five-year hold. So once you get in and you start getting access to all these deals, you don't have the capital to get into every deal.
So even the senior syndicators that have a really strong pool of investors, well they may have had last year one investor that may have invested in three or four of their deals. But now they're tapped out and they're not going to be able to invest again potentially until one of those deals sells three, four, five years down the road. The way I was told, it's a business of finding deals and finding investors. Because the investors, you're constantly having to find new ones because people get tapped out.
Jason: That's a great point.
Long-Term Goals in Multifamily Investing
Jason: I think that realization I lacked coming in and have learned it along the way. So far through your network and folks, I've met and spoken to everyone of them, welcoming, informational, willing to share knowledge. It's a pleasant surprise. Exactly the opposite of what I expected.
Darin: I agree. And I wasn't expecting that either. The other thing that I found, look, not everybody is like you. That when they find somebody and they get educated they're ready to pull the trigger. So I admire that you were able to do that because there's a lot of people. And I did it as well. But there's a lot of people that just can't get over the fence. But the other thing that I admired about you is after you got into the deal, you ended up contacting me to get back together maybe a month later or whatever and we're in there and now you're already talking about, "Alright, how do I meet other people? How do I get into the next deal?"
So talk a little bit about that. You haven't even gotten the returns yet but you went through the process and after going through the process you got comfortable that okay, this feels real and I want to do more of this. And I went through that same thing so I would like to hear your perspective.
Jason: Sure. High level. Conversations are free. Or even if I bought some coffee, conversations are free and knowledge is everything man. So far again, I've had nothing but a great experience. My long-term plan is to take some cash on an annual basis and continue to look for these opportunities. And it occurs to me that you've got a limited set as a GP.
Getting Comfortable With the Process
Jason: There's only so much you can manage. I probably should introduce myself to other GPs and get a relationship built. Then I think the GP wants a relationship with who their limited partner is. I don't think they want a blind investment with a person they've never met, don't know. That may not universally be the case but what I've found is that I think it's probably really helpful to have that relationship.
And so when you've got an incredible opportunity to go invest and you've got a big pool of potential people, you're going to call me or you're going to call somebody else. I hope that I get the call. And I think that happens with the relationship and knowledge that I'm real. I will have cash ready to go. It's not complicated. That's what I want you to know about me. And the folks that I go out and meet. It's that if I like the deal I'll be ready to go or if I'm not, I'll tell you to point-blank and there'll be no question about it.
Darin: Absolutely. You said it's not complicated. It is different though than buying stocks or mutual funds or ETFs. I remember the first time I invested in a deal. There are like four lengthy documents that you have to sign. There's an LLC agreement, there's a private placement memorandum, there's a subscription agreement and then there's an investor questionnaire. Getting comfortable with those documents and the process and all of that the first time going around, it's different. But then most of those documents are pretty standard as you go forward. One of the things that I wanted to talk about was, you had cash sitting on the sideline.
Learnings in Multifamily Investing
Darin: But I've learned a number of things since being in this group and some people will say, "I'd love to do that but I don't have the money." And what I've learned is that there are big buckets of money that people don't even know that they have. And so if I look at three different buckets like IRAs, $9 trillion sitting in IRAs. I didn't know you could take money from an IRA and then transfer it into another vehicle whether it be a solo 401K or QRP or a self-directed IRA. Just transferring money and then being able to invest in the deal.
So people want to diversify outside of their stock investments. If they have an IRA they could transfer the funds over. That's a huge pool of money. Money market funds. Four and a half-trillion dollars in money market funds. That's money that's making less than 25 basis points a year. But a lot of times those people have money in there because they're afraid. They're afraid to invest. Talk about that. The fear of losing versus the opportunity to get a good return. Because that fear will prevent people and paralyze people.
Jason: Absolutely. Your money's locked in a retirement account of some sort or some long-term vehicle like you mentioned. And it may not be an obvious thought that it's available to go invest. For me at work our 401K plans are untouchable. Can't access them for this purpose. And that's frustrating.
Darin: Existing 401Ks you can't touch. Say you had left a company and you rolled that into an IRA then you can use that. It is weird. I don't know you can't do it.
Jason: Yes. It educated me about how I will make different decisions in the future.
Own That House!
Jason: But yes, if you leave your company and your 401K, you have a certain amount of time to roll it somewhere. And one of the options is hey, put it into a 401K of your new employer. To me, a terrible mistake. Just unofficial advice from me is that it's going at least in an IRA where I can do something with it.
Darin: You have control.
Jason: Yes. That's the word, control. That is huge. So going forward I focus on putting enough in the 401K to gain the employer match and then after that I would rather look for other opportunities on my own. Even if it goes into a self-directed IRA, I have more control. So that's interesting to me.
Darin: Absolutely. And the third bucket, which is a crazy bucket, and we were talking about the real estate market before is home equity. Based in 2019 there was $19 trillion in home equity. And look, I was brought up through the ranks of getting good grades, get a good job, climb the corporate ladder, put 10, 20% away into the stock market, and just let it grow. And pay down your house as fast as you can.
Jason: Yes. Own that house.
Darin: Exactly. And so what's changed in my mind since getting involved with other people in the real estate world is if you have a ton of equity in your house, let's just say over time housing prices, I know they're crazy right now but let's say housing prices go up, 3%, 4% up a year. It doesn't matter if you have an 80% loan on that or if you completely paid it off. It's still a 3% or 4% return on the value of that house.
Darin: So what people have educated me on is, look, if you can have a loan or a home equity line of credit at 3% or 4% and then pull 50 grand or 100 grand out and put it into a multifamily deal and you're getting positive cashflow of 7%, well, now you've got an arbitrage.
So you've got the spread between the cash return you're getting from the investment and the loan rate you're paying on your house. In addition, now you own two assets. So still you're getting that 3% or 4% return on your house, but you're also getting the appreciation on that multifamily property that you're invested in. When people started educating me on what I'm like, it just makes so much more sense.
Jason: I think it's interesting because people have no problem pulling out equity to buy a rent house and charge a tenant rent but they don't think about it with this kind of opportunity.
Darin: They also have no problem pulling out home equity. To buy a pool or to buy a car or put an addition on their house or college education. Whatever the case may be. A lot of those things have no return at all but it's the way that we've been. I don't know who's at the top that is educating all of us to do this but we are trained to go through school, put money in the stock market and just let it ride. I don't even know if you are very aware of or if it was part of your thought process, the tax efficiency of real estate investments. Was that part of your analysis at all or not?
Jason: No. I learned tax efficiency from you and Aaron Katz.
Tax Efficiency in Multifamily Investing
Jason: There are some incredible opportunities for tax efficiency. This is where I have a lot more learning to do Darin. But I don't think I qualify for many of them. If my primary source of income is from a W2 job, not real estate, then there's a much smaller opportunity if any to take tax advantage there. But if you can arrange your situation correctly, you can have a spouse who works in real estate or you can work in real estate, there are some major tax advantages available to certain people on income that they derive from these sorts of investments.
Darin: Absolutely. But even for passives that have W2. The first thing that I would say is, all right I don't know. Let's say you're getting on another investment 7% return. Like in the stock market they say, okay over the life of the investments you should think of 6% or 7%. So 6% probably works better for this scenario. But say you're making 6% in the stock market and you have gains or income. Let's say dividends. 6% of dividends. Well, you're having to pay income tax on that. So now you're 6% turns into, if you're in the highest tax bracket, maybe it turns into 4%.
But in real estate, you're getting depreciation allocated to you. So all of the distributions that you're going to get are going to be covered by your depreciation. So if you get a 6% or a 7% return it's a true 6% or 7% return. You're not going to have to pay tax on that. So now people, to your point, that are in the real estate world, either a full-time real estate investor.
Jason Before Multifamily Investing
Darin: There are additional benefits of being in that where you can take excess depreciation and allocate it against other income which a W2 employee can't do. But in any event, apples to apples, a lot of people don't look at it that way. My grandfather told me a long time ago, he said, "Darin, you should become a tax accountant." And I'm like, "I don't want to do that. It's boring." But he said, "Look, taxes are the largest expense you will ever have to deal with so it behooves you to learn about it." I'm just being truthful.
I thought it was my grandfather. I had it in my head but I did not spend the time to learn how I can save on taxes. And since getting involved in real estate, I've had other people tell me all these things and you're learning now. And then you'll tell your brother. That's how the world works. It's like, you tell the people that are around you. But if you're not in this inner circle you don't find out about it. It's crazy.
Jason: You don't see it. Yes.
Darin: It's crazy. So how'd you, grow up man? Do you have one brother or multiple?
Jason: I've got three brothers.
Darin: Where do you fit in?
Jason: I'm second from the top. So one older brother, two younger brothers. We have lived between Houston, Texas, and Fort Lauderdale, Florida.
Darin: I used to be in Fort Lauderdale too.
Jason: And everybody's back in the Dallas, Austin area for the most part now.
Darin: So you've got one brother that invested in a bar that's been a little bit of a challenging situation. Now you're investing in this multifamily deal.
Brothers of Risk-Takers
Darin: Now, do you guys have conversations? Are people looking at you like let's see how this thing works? Let's see if this is another bar issue or is he going to make money?
Jason: A couple of people think we're out of our minds. Risky. Because again, nontraditional for a lot of folks. And it's hard for them to wrap their mind around. Me and the youngest brother who do it in the bar, he's always interested. Again, he's got a wife with a job and no kids so he's got some extra income on the side that he can play with. And so yes, we discuss openly sort of how it's going, what he learned, what I learned.
And actually, you go back to his situation, he has no information about what he's stuck himself into. It's very limited. Because again, early on when he got into that and I was saying, "Hey man, why didn't you call me up?", I started asking pointed questions and he had a hard time answering them. And I'm like, "Well man, aren't these questions you wanted to know?" And he's like, "Yes, but it was hard to get information." "What did you sign? What did you agree to?" And so we're digging through files trying to figure out in fact, what did he agree to. So he didn't have any idea.
It wasn't really open and transparently presented to him. It was a, "Hey, we're moving fast, in or out?" And he said in. And it was that simple. Then it cost him. So that's a learning opportunity for him is that hey, it doesn't have to be that way. I would not have accepted that. That was like, wow, that sounds scary. I would never have accepted that.
Knowing What to Ask About Multifamily Investing
Jason: You don't have to. But you just have to be aware of what to ask. I think the way you know what to ask is you openly discuss with folks what their experiences are and if they're willing to share, then that's where you learn. Make notes and move on.
Darin: That's huge. Look, I've had a lot of very senior people come on the show and I've got to say that a lot of them had a deal go bad. Or not necessarily a syndication deal but maybe they bought a single family house at the wrong price. I interviewed a guy who wrote a book just recently and he said the first duplex he bought was cash flowing great, but one thing he didn't look at is the comps. And he went to a Meetup and there were a bunch of people that bought duplexes on the same street, way less price because he didn't know any better. So that was a learning lesson for him.
But I think that hopefully we do our homework upfront and get into deals that make sense. But then each challenge is a learning lesson that helps us for the next one. Some of those people did that first deal and they may have had a little bit of struggle but they saw the opportunity made sense to keep going. A lot of these people, it's not like they had a hiccup and they ran the other way. They were like, "Alright, now I know this. I'm going to mitigate that risk but this real estate thing is real. I'm going to keep going after it."
Darin: Another thing that I find comfort on is the financing. So multifamily has some of the most attractive financing terms in the country.
Medium to Long-Term Play
Darin: The reason for that is that one, the government agencies are highly incentivized to keep workforce housing affordable so they have very attractive financing plans. Them and also banks look at that asset class as being very resilient in a lot of different parts of the economic cycle. And that's very attractive to me as an investor and as a general partner investor is that look if people are going to pay for something in a downturn, most likely going to pay their rent.
Jason: Yes. The roof over the head.
Darin: Yes. Food and rent. Now learning. So you talk about learning and you've learned stuff to date and you want to continue to learn. So what's kind of your medium to longer term play in this real estate world?
Jason: My medium to longer term play, I thought after I met you guys, talked to Dustin Miles, checked out some Meetups, talked a lot to you, stick your toe in the water of being a general partner. You mentioned earlier, be a guy who can go out and do the legwork and underwrite. I am not there yet. So right now my immediate future is going to be more limited partner opportunities. But I like to keep an open horizon. Don't want to close any doors. And so who knows. Something might happen where suddenly there's a great opportunity or something presents itself.
I do feel like I'm in a better position now to entertain that than I was before. Around like moving from limited into more general partner arrangement. But anyway, I think that I'm not quite there yet. It's interesting to talk to guys like you or talk to other general partners or listen to your podcast about how they made that move, Darin.
Listening to Like-Minded People
Jason: From interested outside player to passive investor into leaped and I'm drinking the Kool-aid and I'm a general partner and they're doing great. They're doing awesome. And so the one thing I've learned about that is that probably I and most people are their own worst enemy. The self-doubt or being concerned, I use the word fear. Maybe a lack of confidence that you can go out and do it.
You start to listen to these folks who are on your podcast and others and they're all smart but they're smart in different ways. Some of them are extremely pessimistic and take only the most analyzed deals that they are absolutely positive. They're good. Some of them are and I don't remember the name and I don't want to try to generalize it. But one of my favorite guests that you had was, I believe in Pensacola, Florida investing and this guy was a smart guy. But he did not have your traditional college upbringing. And so Jason you went to school, got a bunch of degrees, you must be really smart. Not compared to these folks. You're not.
But what it shows me is that anybody can probably do this. Find the opportunity and educate themselves. And smart comes in a lot of different shapes. And so you can educate yourself, learn and go take steps to do this if this is what you want to do. So that barrier for me has been removed.
There is no longer, oh, you're not capable or you're not smart enough. You absolutely are. Because I can see this field of folks who are already doing it and that's sort of encouraging. Now it just gets over that mental hurdle to take those steps.
Darin: Yes. I went through that same thought process.
Plenty of People in Multifamily Investing
Darin: Like when I got involved in the multifamily mentorship group I met a lot of syndicators and I'm looking at them and I'm like yes, they're smart but if they can do it, I can do it. But had I not surrounded myself with those people, I think I probably would have continued to have self-doubt. So I think that that's important in anything in life.
If you want to achieve something, go out and hang out with people that have done it. Not just real estate but like look, you want to start your own business, go meet a bunch of business owners and find out how they got started.
Jason: Do you want to do that?
Darin: Yes. And sometimes they tell you things that you just didn't know. Before you were thinking to yourself, maybe you have to have a certain knowledge base but everybody comes at it from different angles. And so that's not a fear for you anymore.
Jason: Yes. Do you know what was news to me, Darin? It was in my mind, there's a collection of ultra-rich people who go out and do these things and that's not the case. You have got plenty of people, through sweat equity and legwork and selling themselves, they're able to partner with people who do have the capital to go out and achieve the same thing and they position themselves in exactly the same place. So that was a huge learning for me.
Darin: So my experience is that there's a mix. So like in the syndication world, it's exactly like you said. General partners and limited partners, and you have to bring everybody together to make the deal work. And a good lender and good broker.
Multifamily Investing Team Aspects
Darin: All the different aspects of the team. Last week I was meeting with this firm that they don't do multifamily. They own a ton. They own land, they own huge residential developments, they own retail. All kinds of different things. And I'm meeting with them. Way more experience and been in the business for a long, long, long time. But they explained, when they get a deal, they call three or four people. And they are calling the big guns and they're getting three big checks and their deal is funded.
Jason: Yes. And they have fewer people to deal with, fewer people to work with. There's an advantage there for sure.
Darin: There's an advantage there. So there are those super, super, super high net worth individuals out there that are playing in that space too. But to your point, I didn't know that we could even do this. Invest 50 or 100 grand and be involved in a 10 or 20 or $30 million deal.
Jason: And you think about the education you get there. So I paid at the time $100,000 out of my pocket for an MBA. What I invest with you and then the education I get, it's a similar kind of a thought process. I learn a lot. And not that you have to invest to be able to learn. You guys are so nice that you would talk to anybody even without investing but I wanted to be a part of that process, have skin in the game, and drag myself through it and that learning experience. So that's where I'm at.
Darin: That's huge. What would be your advice to somebody else that's listening that's kind of in the same situation?
A Piece of Advice
Jason: I would say jump.
Life is too short to sit on the sideline and have a bunch of times where you look back and say, I wish that I would have done that differently. My personal belief is that the risk is really low and the benefit, everybody hopes it's high. But realistically the benefit is probably greater than the risk.
At the end of the day, I don't think I lose anything. I think I gain some good financial gain there and gain a lot of knowledge in the process. But I do not want to turn around, look backward, and say, I wish that I had done that when I had the opportunity. I would much rather sit there and say, it was a fun ride and it turned out however it turned out but at least I got some cool experience out of it.
Darin: I think that's awesome advice. I would say to listeners that look, pick your market. So for Jason, he liked the Texas market. It's a very attractive market and it's in his backyard. Pick your market. Have it be a growth market. You want to be where population growth, where income growth, where household formation growth, and then develop relationships with syndicators. So you can do that through podcasts. Whether it be the podcast host like myself or look, every week I have somebody else on. They're syndicators. If you connect with them, reach out to them, Meetup groups, multifamily mentorships groups. And find somebody that you align with in the market that you want. And then the third thing is now you know who you want to work with or maybe there are two or three people you want to work with.
The Next Big Stretch
Darin: You get on their investor database and now it's a matter of having a deal come across that makes sense to you. And I'd say trust your gut. Trust your gut and you got to take action. You won't ever learn unless you take action. So I applaud you Jason for taking action.
You said you're going to continue on the path of passive investing. What's kind of the big next stretch goal? Is it with your company or is it starting your own company? Is it increasing your investments? What's your big next stretch goal?
Jason: My goal would be to generate enough passive income to retire someday early if possible but we're a long way from there. I think near-term, more passive investment, long term would be either so many opportunities that I have enough passive income to decide not to work a W2 anymore or at some point take that next step into GP.
Darin: Yes. Huge. Look, you're further ahead than a lot of people because most people in the corporate world think that they're in the safety zone. They have a safe corporate job. But at the end of the day, there could always be a downsizing, there could always be a merger. That job is always potentially at risk. So diversifying and learning other avenues, other streams of income is extremely important and you're doing that. What about, what do you like to do outside of work?
Jason: Kids and sports are probably my number one love. Coaching kids and watching kids excel.
Darin: What do you coach?
Jason: I was fired as the kids' soccer coach. I never played soccer, Darin. I was a football guy. Houston, Texas.
Jason Outside of Work
Jason: Probably pushed my son a little too hard in football going into middle school here but we have a lot of fun with it. And then we ride a lot of mountain bikes in my family. So we do a lot of biking locally. Bike trips and just try to spend time outdoors. Fishing, camping on the side of lakes, on bicycles. And just family time together. When you have little kids at home, I've got a 12-year-old, a 10 years old, and a six-year-old. Those years are going to go by pretty quickly and I'm going to wish I had them back. So I try to spend as much time.
Darin: You'll see, when they get up to the high school age, your influence, it flows over to the friends. Mom and dad all of a sudden are dumb. You're smart right now to your kids but it ends up switching at some point.
Jason: That's a fleeting year as well. That'll go away.
Darin: Supposedly they come back. I'm hoping to see that at some point. But hey, if somebody is like, "Man, I enjoyed that. I liked hearing from Jason. I'd rather talk to him and get to understand what he went through versus talking to a syndicator.", how could somebody reach out to you?
Jason: So, Darin, I hope you don't mind. What I would love is if that happens if they could reach out to you and you direct them to me. I don't mind if you share that info. What I don't want to do is post my email address broadly. But more than happy to take a phone call and coffee and meet with somebody. Absolutely.
How to Reach Jason Robin
Darin: Listeners, if you want to get ahold of Jason, go to my website and go on the info or you can send me an email at email@example.com and just explain that you want to get ahold of Jason and I will get the information over to him and then go from there. Jason, I appreciate you coming on. It was a different show. I think it was very worthwhile because I wish I had listened to something like this before I got started. Hearing from somebody that just pulled the trigger on their first deal. So I wish you much success, my friend. I appreciate you coming on. Listeners, I hope you enjoyed that one. Until next week, signing off.