Listen as David Toupin shares how he broke into the big boys club. How he learned to do multifamily networking with the players that are getting it done! This guy is in his mid 20's and has already completed 8 deals for over 900 units. He has next to no fear and just puts himself out there. What I love is that he has two goals; one is focused on massive personal growth and the other is working to inspire others. Listen in as this guy knows how to inspire!
Table of Contents:
- Where To Listen To The Podcast
- Grow Your Multifamily Networking Group While Helping and Inspiring People
- Finding the Right People to Partner With In Multifamily Networking
- Success Takes a Lot of Focus and Sacrifice
- Sourcing Deals From Multifamily Networking Groups
- A Secret Multifamily Networking Event
- Real Estate Lab, A Multifamily Acquisitions Platform
- A Split Between Physical and Virtual Multifamily Networking
- Multifamily Is More Resilient
- How to Reach David Toupin
Grow Your Multifamily Networking Group While Helping and Inspiring People
Darin: David Toupin grew up in Michigan. His father was a dentist, and he grew up as the middle child in between two sisters. He started a landscaping business at the age of 13. He graduated college with a finance degree but always knew he would go the entrepreneurial route.
David is 25 years old and has already closed on eight multifamily deals for over 900 units. He has a goal to add on another thousand units in the next year. Another goal is to grow his net worth to over $10 million in the next two years. He wants to do all of this and maintain a focus on helping and inspiring others.
David and I know each other. We actually connected first through social media, through Instagram. Then we also connected over Facebook and watched each other just as social posts come out and whatnot. This guy is in his 20s. I don't know exactly how old he is. I'll ask him in a minute, but he's a young guy, and he is killing it.
He's just put himself out there, and he's doing a fantastic job of getting into the right positions with the right partners. And he’s putting himself out there and making a name for himself. David, just at a high level, how many properties are you in and how many deals have you guys syndicated?
Show up in a Sweet Red Convertible Corvette
David: A number of deals. I'm up to eight now, eight or nine, as a primary sponsor GP, a little under 900 units past four years.
Darin: Crazy. I mentioned that you were in your 20s. How old are you?
David: I just turned 25 last week.
Darin: 25 years old, guys. There's no excuse for it. We first connected over social media, and then, I wanted to have David on the show. But I wanted to get to know him a little bit better too. He's in the Austin area. I decided to mix a little business with pleasure. So I rented a big bad Harley and drove down to Austin to meet with David.
It was great because when we met up. He not only showed up, but he also brought his business partners with him. We had a fantastic meeting. I could vouch for he pulled up in that sweet red convertible Corvette that you may have seen on social media. It is real. I saw it.
David: It's real. It's not rented.
Darin: Exactly. Where are you from?
David: I'm from Michigan. I grew up born and raised in the suburbs of Detroit, Metro Detroit.
Darin: Did you start investing in real estate in Detroit?
David: Not in the city of Detroit. Something I'd probably never do, but out in the suburbs. It's a lot different. I'd say it's actually very similar to Dallas suburbs where I was investing from the A minus areas to the C areas. It's a similar type of market there. My first couple of deals, I started in that C-minus type product.
Darin: Help me understand. Did you go to college?
The Internship That Led to Multifamily Networking
David: I did, I went to college barely. Actually going to class, it was less frequent, I got a degree in finance. I started off like pre-dentistry.
Darin: You do not seem like the dentist guy.
David: No. My dad's a dentist. That's why I originally went into it. Since I was 13, I was starting businesses. Business was the way for me.
Darin: Fantastic. You graduated college with a finance degree. Then, did you start to work for another firm or did you go right into real estate?
David: It was my junior year I did some internships in investment banking. I worked for Big Four consulting for six months too. Took some semesters off to do some internships and just worked a lot, saved up some money. During that time, I'd started listening to podcasts, reading books. I read Rich Dad Poor Dad.
One of the partners at one of the firms actually owned multifamily. I approached him saying, "Hey, I want to buy apartments at some point. Can you help me figure out this number side of things." I came to him with a spreadsheet I built. He helped me look at some numbers on his properties and stuff. The last day of my internships, I got some job offers.
I actually turned them all down on the spot because I already knew I wanted to go into real estate. A lot of people said I was crazy, but I went right into it at the end of my junior year in college.
Darin: That's fantastic. One thing that you said which I think is key is that you found somebody that had already done it. Then, you went, and it grabbed a hold of you.
Taking the Plunge With a Non-Existent Capital
Darin: You went and said, "Look. You've done it. How do I do it?" Did you end up just getting some quick conversations, education with him that point you in the right direction? Did he actually mentor you, and did you end up partnering with him on any deals?
David: It was mainly quick conversations. The stuff he owned, he just owned some small ones. He owned maybe 40 or 50 units. He knew I was a really hard worker as an intern. He ended up taking a couple of hours just walking me through numbers showing me some financials and stuff. Just teaching me a little bit, but beyond that, I just went back and kept doing my thing. I kept looking at deals and talking to brokers and stuff after that.
Darin: How did you have the capital to invest at that stage in your life?
David: Capital was non-existent. I was sitting on maybe five grand. I'm paying my meal plan and paying rent and trying to pay my car payment. I had no money, zero.
Darin: What were you thinking?
David: I was thinking that I was going to get somebody else's money and fund the deal. And I was going to take a piece of equity for putting it together. Honestly, that was 2016. Syndication has been a thing for a long time. It didn't just show up, but it has exploded in the past three to four years.
From when I started, I maybe knew of one book about it and maybe a podcast or two. Now, it's just so widely spread syndication. Back then, it wasn't. I just stumbled into it because I didn't have any money.
Finding the Right People to Partner With In Multifamily Networking
Darin: You were a young guy who believed in yourself. You actually believed that you could find other people that you can convince. That it's in their best interest to partner with you and put up the capital.
There's not a lot of people at your age who believe that they can go out and attract that. It's pretty awesome that you were able to come with that mindset.
David: To be honest, nobody was going to work harder for the money than I was. Nobody had more to prove or more time to put into it. I don't have kids or family. This is what I've got, this is my thing.
Darin: The first partner that you partner with, talked to me about how that came about and what that deal looked like.
David: First deal, it was 12 units. Before that, a little failure. I had a 44 unit contract fell apart. Then I went back to the drawing board. I got two 12 units under contract at essentially the same time, two different brokers, same street. They're a block away from each other.
I had a guy locally, I was doing some whole selling with him. He flipped a lot of houses, he had enough balance sheet to sign on the loan. Then pretty much went out and raised, I think between the two, it’s like a little over 300 grand. I didn't really start raising until after I had them under contract.
It’s a little tough not having any contacts. I didn't go to family. It’s all just other small business owners and real estate people locally that I went to. I convinced people to put 15, 25, 40, 50K into each deal. That's how it was put together.
There’s So Much Wealth Generation in Real Estate
Darin: Well, that makes sense. I talk to people of different age groups. I'm sure you have a ton of people reach out to you on Instagram as well. I turned 50 this year. I'm a little bit older than you are. But when I talk to younger people, I say, "I wish I had started much younger." Because there's just so much wealth generation in real estate.
The compounding effect over many years and the tax efficiency is just amazing. I said, "But when I talk to these young people, I mentioned that, 'Look, one of the things I did have was capital. I had a bunch of money in the stock market that pulled out and I was able to invest in a bunch of deals. And I had a track record in other businesses, other industries.'"
When you're just starting out in your 20s, I said, "The challenge for you is that you don't have that big of a network. You don't have capital. It's a challenge. But you have to hustle. You have time, and you have hustle. The other piece though, I mentioned earlier, is mindset.
There's a lot of people that are younger that feel like they're not worthy, that they can't do it. Nobody will take them seriously, but you overcame that in your mind. Then, you were able to go out and make that happen. You're in the Austin area now. How'd you end up moving to Texas?
David: I joined Rod Khleif's Mastermind Multifamily Boardroom. It's like a real estate multifamily mastermind for high-level investors. I was the youngest and probably the smallest owner in the room in terms of the amount of doors. Maybe one of the smallest at the time.
Signing on the First Deal
David: I met a guy named Glenn Gonzales. He was the biggest owner in the room, a real cool guy. We just got along really well. He was selling off, he had about a $250 million portfolio around 4500 units here in Texas mainly. He’s selling it all off. It's top of the market. They're selling everything.
He's like, "I want to rebuild after this is done." We got along really well. He found a deal in south of Houston about an hour and a half in a little tertiary market. He had me underwrite it. We looked at it together. He's like, "I want to hire you to manage this transaction process."
I was like, "Well, Glenn, with all due respect, man, I'm not really for hire. But if you want to partner on it, I'll partner with you." He's like, "Heck, yeah. Let's do it." I was a minority piece of that first deal, but I put my own money at that point. I'd already done about 120 units on my own. I put some amount of money, signed on the loan with him.
He's like, "Okay. He's got some skin in the game," and that deal went really well. It's funny he describes it. I manage the whole transaction process which is what I'm really good at, and the investors and lining up financing.
He's like, "Dude, Dave ran circles around me." He loved it. We really worked well together.
Darin: You were still in Michigan at the time.
Darin: Now, you do that first deal. You guys decide to, "Hey, let's do it again."
David: Exactly. Like any business partnership, I've been in a couple of partnerships now specific deals and businesses in general.
Multifamily Partnership Is Like Getting Married
David: You got to date first. It's like getting married. Partnerships like getting married honestly. There's a lot of money involved, a lot of assets.
Darin: You've not been married yet. You don't exactly know.
David: It's like dating, it's like finding a girlfriend. You date her first. I don't exactly know, but really, that's how it is. We tried it out first. It went really well. We're like, "Okay. Let's start a business together." I moved down here to Austin where he's based. Now, we're all here.
Darin: That's fantastic. You mentioned that you joined Rod Khleif's Mastermind. You're a young guy. You've got a few deals under your belt. You don't have a ton of money, but you choose to invest in a mastermind. Why?
David: I paid for that on a credit card. I didn't have the money to pay for it. It was within a month before I closed on my first two deals. He's like, "You got to join us." I was like, "All right. I want you to figure it out." And I did that. I closed my first two deals and used that acquisition fee to pay off the mastermind.
Darin: Why did you do that? Why did you put it on a credit card to invest in this mastermind?
David: If there’s anything I’d learned by that point in my life, it’s that knowing the right people will get you anywhere you need to go. Especially if you're providing value back to them. I'd already had a lot of good connections. I was like, "Man, imagine if I was in a room with specifically multifamily investors. How crazy that's going to propel me."
Making a Change in Your Multifamily Networking Circle
David: Like I said, I was the smallest owner in the room. When I joined, I had 24 units. It was awesome being around that group of people. I met some really great people.
Darin: I absolutely love that you had the balls to do that. A lot of people will find every reason why not to go to conferences, why not to go learn this. Even for myself like I've been in the loan trading business since 2002. I have had my own business since 2007.
I've traded over four billion in residential, multifamily and commercial real estate loans. I had people that were like, "I joined a multifamily mentorship group here in Dallas."
People were like, "Darin, man, you already know multifamily. Why are you investing that money?" I'm like, "Yeah. I know how to trade large portfolios. But I don't know how to buy a large apartment complex and be surrounded by like-minded people." You can't help once you start getting surrounded by those people. Looking at them and being like, "They could do it. I could do it."
Tell me if you didn't think that. You're the youngest guy. You have the least amount of units, but you're in that room. You're looking around, you're like, "You know what?"
David: It was dope, it was awesome. I loved it. 24 months earlier, I was living in a frat house. It's like I just changed my whole networking circle. I moved back home with my parents, I was living out of my childhood bedroom. And I didn't move out until I bought a little over $7 million in property. I was focused like low cost, keep my costs low, and just focus on buying good deals.
Success Takes a Lot Focus and Sacrifice
Darin: Focus and you're willing to sacrifice. That was a sacrifice which I would say the majority of the people that I know have graduated. They get good jobs, they climb the corporate ladder, they make more money. Then, every time they make more money, they either buy a nicer car, get a nicer house. Go on a nicer vacation.
Then, even if they're unhappy, they don't have the flexibility to take a chance. To start a company, to invest in real estate. They keep on upping their lifestyle to their income.
Darin: You took a sacrifice by moving back home with your parents. Were they supportive?
David: They were very supportive, fortunately. I don't know if they ever knew it would work out or it would go as it has. They were like, "All right. Well, if you want to try it, try it. You can always go back and get a job at any point." They knew. When I was 13, I started my first business. I had so much energy, I have ADD, and mom's like, "You need to get some of your energy out."
I was never a good student, I never could sit still in class. She's like, "Why don't you mow the neighbor's lawn?" I did that. Then, I think she said, "Oh, one of the other neighbors wants you to do it." Then I was like, "Okay, I get this now. I just need to start talking to myself."
Then I started picking up more and more clients. I built a landscaping company through high school and did that from 13 to 17. I stopped doing that when I went to college. Just being an entrepreneur, it's in my blood.
The Difference Between a Good Partner and a Bad Partner
Darin: Now, talk about partners. You talked about dating, your partners and getting to know each other. Talk to me about the difference between having a good partner versus a partner that isn't as attractive as you'd like?
David: I've had both. Somebody I worked with in my first couple of deals did not turn out to be a great partner. What I learned from that are the two biggest things going into a partnership you need to be aligned on.
Number one, obviously, is your goal for the company. You can't have different goals for the company. You're both going to be taking actions that lead you in different directions, and they conflict.
One person is going to be thinking, "Oh, why aren't you doing this?" You're like, "Well, because we need to do this to go in this direction." And you’re like, "Well, that's not the right direction." You need to be on the same page. Your focus needs to be on the same page.
Obsidian Capital, me and Glenn and our third business partner, Mike, we're a multifamily acquisitions development company. That's what we do. We're not going out looking for commercial deals or retail and stuff like that. Same page.
Second thing, and I think this might actually be more important than the first, is your values. If your values don't align with your business partner at their core, you are not going to have a great long-term partnership. Because if I value relationships over all else and integrity and I have a business partner making decisions and they’re not reflecting those same values, you're going to have problems.
A Multifamily Networking Circle Built on High Integrity Relationship
David: You're going to be very frustrated with the things they do and the things they say. And the way they maybe rub people right or wrong. Your goals, and your values are almost just as important as your morals, like your character. What type of people are you? You can’t have a Jackass shifty salesman partnering with somebody who's a good old high integrity relationship type of person. It's not going to work.
Darin: I could say I sat down and shared a meal with you, guys. It's evident that you and Glenn, you have a mutual respect for one another. You guys are different age groups, but still value each other and what each brings to the table. That's huge to be aligned in that fashion. You mentioned Obsidian Capital. That's the name of your company. Help us understand the roles that each of the partners play.
David: Glenn's been in the business for about 30 years now. He started as a maintenance man. Anyone listening, you should check out his book. I'll plug it, Maintenance Man To Millionaire. That's the name of the book, Maintenance Man to Millionaire.
You can find it on Amazon. Contrary to the title, he's actually one of the most humble people I've ever met in my life. It was all the people around him that were like, "Yo, you should use that as the title." He's like I don't know if I want to."
Darin: He seems like a super nice guy.
David: A real good guy. He is knowledgeable in every aspect. I would say there's very few people who I can really say are an expert in things. He's an expert in everything when it comes to multifamily. He has done 28 deals full cycle 4500 units.
A Team of Like-Minded People Working in Synergy
David: He's owned a management company with about 7000 apartments under management. He has been president of management companies. He's been leasing agents. He has been an on-site manager and regional manager.
He's hired hundreds and hundreds of people, he's got every single part of the business down. He has worked with family offices, private equity, every type of loan you can imagine.
He bridges the gap which is great between me and the third partner which is Mike Woodfield who just came on. Glenn's son-in-law who worked with Glenn's former company for about five years as the main operations asset manager.
Mike is very good at operations asset management managing the construction process, managing the GCs. I am very good at getting properties under contract, getting capital lined up, making sure we close on time.
Making sure all the pieces are aligned to acquire a property. Then, Mike takes over at closing. Glenn bridges the gap between both of those as a CEO. It's actually perfect.
Darin: It's great synergy. You rattled off a ton of things that Glenn has done. I could just speak for being there like he doesn't come across as this looking down. With all that experience, he could look down at people that are coming up. But he doesn't come across that way at all.
David: He's a humble man.
Darin: I've had some listeners come back and say, "Hey, Darin! You've got all these people that have done a crazy amount of properties and units." You talk about getting the deals. What about the performance afterwards? Can you talk a little bit about some of the performance on some of the deals after closing?
A Really Generous Split
David: I've done to date, five full-cycle deals. Every deal beat our projections which is great. I feel like I've been really conservative. Obviously, we've had a good market over the past four or five years. My first two deals, my philosophy is I don't think a lot of people want to get into their first deal.
A lot of times, you're not going to have just this grand slam double your money in two years on your first deal. Those come, but it takes time to find those. Really, if you're being a little bit conservative, go out there and find a deal that makes sense on paper. And maybe like what I did, I self-managed.
Instead of charging a 10% management fee which I probably should have, I charge 4%, and I charge a little lower acquisition fee, and I gave the investors an eight pref and an 80/20 split. They got a really generous split on the back end.
Because of all that, I didn't buy these first two deals at an insane price. But I still got them a really good return. I was hitting 8-9% cash on cash for them. Returns were in the mid-teens on an IRR basis when I sold them within two years. Good deals not great.
Next deal after that was 96 units, I bought it for 4.2 million. I sold it for seven million a year and a half later. I only renovated about 30 units out of the 48 I wanted to. Sold it and almost doubled investor's money in under two years ,about 18 months. That was a grand slam.
Darin: That was a fantastic one. I listened to some of the stuff that you put out on social media.
Sourcing Deals From Multifamily Networking Groups
Darin: Talk about how you source some of these deals. I'm involved in a network that most syndicators I hang with go after marketed deals. Fully marketed deals through strong brokers in the DFW marketplace or San Antonio or Houston or in the Texas marketplace.
I remember seeing something where you guys were actually marketing. Trying to build relationships directly with property owners and source some of your deals that way.
David: We have a pretty amazing team. Systems for acquisitions are strong. We have a lot of broker relationships. Most of the deals I've done have come from brokers but off-market. I haven't really bought fully marketed. Actually, one deal is fully marketed, but it's a very tired deal. It's on the market for eight, nine months, not a great broker. We bought it and got a good deal.
Darin: Nobody else was looking at it.
David: Exactly. But the rest of them I've got two great deals from mailers and then cold calling. I've gotten one deal. Then, the rest are off-market broker stuff where they come to us directly. They say, "Hey, I've got a deal or they went to maybe three or four people. We ended up getting a bid on it."
But in our office, we send out about 500 mailers a week. I bought a machine. It's a couple grand, but it stuff's envelopes. We send out mailers every week ourselves directly to owners. And we have a team of 10 people that cold call owners every single week. It's all commission-based. You find a deal. I'll bring in on it, and I'll give you a piece of the equity and a fee.
The Market to Focus On
David: I provide them with the list. Their goal is to make 50 to 100 calls a week. We're making 500 to 1000 calls every week, direct owners. I call them every Monday, I coach them a little bit, educate them. These are younger people or people that want to get into the industry into the business.
They're ambitious. Maybe they have a full-time job, but on the side, they want to make some calls to try and get in on a deal. We've made thousands of calls, gotten a lot of great leads. We're really close on a deal right now that we've called the owner on.
Darin: What markets are you focused on?
David: Mainly major cities in Texas. I'm not a huge fan of tertiary markets to be honest. They scare the shit out of me.
Darin: From what perspective? Population growth? Income growth? From being able to find another person to buy the property when you want to sell? All of the above?
David: It's just from my own experience. That first deal, I bought with Glenn, we did really well on, but we sold it. Then, we bought it when it was like 92% occupied. When we closed on the sale, it was 75. Now, that market's at below 70% occupancy. It's a chemical-dependent town, it's called Freeport.
We did very well on it. But we got in and out at the right time. We sold that deal within six months actually. That was the fastest. It was a crazy story on that one.
Darin: That's crazy. Talk to me about social media. You have really put yourself out there. On Instagram, I think, you have over 70,000 followers. How do you look at social media?
You Can Create Out of Nothing
David: I love inspiring other people. There are so many people out there that really want to do what I do and what you do. I want to show them that it's possible, but I also want to show them that it takes a lot of hard work. I'm trying to just show that story and that journey along the way. The hustle and the hard work and not just the good, but the bad. And show them that you can create out of nothing which is what happened.
I do that. It's really a way for me to easily connect with a lot of people. I got a lot of people to hit me up that want their coaching or mentorship, whatnot. It's really a way for me to mentor thousands of people at once, but then also grow my brand. I've raised probably two to $3 million just in the last 24 months from social media for deals.
Darin: That's awesome. I feel the same way. Social media is more right up your alley. You grew up with social media. That's what you guys did in school. You all had it. In my generation, it wasn't that way and I only got on Facebook three years ago.
David: I like it. You got a good presence now.
Darin: Well, thank you very much. It was only because I would invest in going to entrepreneurial conferences. I kept hearing very successful people say, "If you're not on Instagram, you're just dumb."
I thought to myself, "Man! My kids, they started playing with Instagram in their middle school." I thought it was just a little toy app for the kids.
A Way to Inspire Other People
Darin: But what I realized is, it's a way to inspire other people. To educate other people that you wouldn't have been able to do otherwise. I live in the North Dallas area. You live in Austin.
If we didn't have social media, we would be resigned to just people that we physically met. But social media allows us to talk to and educate more people about what we did and share that with other people. It’s amazing, but I didn't think that prior to three years ago.
David: I've met some of my closest friends now as my circle's changed even more. All my friends now really are people that do what I do and inspire me. I like to be around people that inspire me as much as I inspire them. I've met a lot of them through social media, and that's been really cool.
Darin: I didn't talk to you about it when I was in Austin. You're involved with something called Secret X Event which seems very, very exclusive. Talk to us about what that is.
David: It's a secret. I can't tell you. No. It's basically a networking travel event mastermind type of thing. It came from my buddy. Now, it's a group of four of us. He owns a bunch of franchises and apartments. I met him at an event. We got along really well. His name's Kevin Easterly. We started this Facebook page.
We got a couple of thousand people in it. Then, we're like, "Man, why don't we get like a bunch of cool people together, and go to Cabo?" We planned this trip to Cabo with 25 people basically.
A Secret Multifamily Networking Event
David: Just charged people like at cost, but we're like, "Hey, why don't you just Paypal us or Venmo us 2500 bucks? We got everything planned. Don't worry about it. Just get your flight this day."
In doing that, we didn't even realize that we didn't really tell anybody what they're doing. They’re just people that we either had met or people that knew us over social media. They wanted to hang out with us, other entrepreneurs, and successful business owners.
And they showed up and they're like, "This is awesome. We're here. What's going on? What is the plan?" We're like, "Oh, shit, we forgot. We didn't even tell people what's happening." We just impromptu plan this, we get there. We're like, "Man, this is cool."
Nobody knows what's going on. We called it Secret X, kind of like a secret experience. Basically, it's a business networking event. We tell people the location, not even until like after they've already applied and said they want to go.
Then, we tell people the location. We basically tell them where to book their flights, and that's it. You show up. We've got a boutique hotel booked for everything, events.
We had a 150-foot yacht one time. Now, we've done Cabo, Aruba. We're going to Jamaica next month in November. It's just twice a year type of networking thing that we do.
Darin: That's a lot of fun. That exclusive kind of mystique to it.
David: You should come to the next one. You'd be a good fit. Rod Khleif is coming to this one. I've got a pro-NBA, former NBA player, Kevin Bupp is coming. He's got the Mobile Home Park Podcast. A lot of cool people.
Why Choose Multifamily Networking
Darin: I might be. See, this is where mindset comes into play. I'm thinking to myself this guy doesn't want to invite a 50-year-old. He wants to hang with all his millennial buddies.
David: No. You wouldn't be the oldest person there. It's a good group. Rod Kleif will take that one.
Darin: All right. Good. We'll talk about that after the show for sure. Why multifamily networking? Real estate, there's a ton of different asset classes. Why did you pick multifamily?
David: Originally, I have an uncle who's into commercial big-box development and stuff. I was like, "Oh, that's really cool." And I thought maybe that's the way to go. I remember talking to him. He doesn't really like to talk about too much real estate stuff.
Darin: Why? Why does he not want to talk about it?
David: Very, very successful, but I don't know. He's giving me some advice along the way. I remember he was the first person that ever told me, "David, real estate, you make money when you buy."
At first look, I didn't really get it, but then I got it after that. It made sense, things like that. But I think it was like he owned a lot of stuff with family. It didn't end up going so great in the end.
Darin: I think there are some people that are a little gun-shy about telling family and friends because there's risk. My wife said the same thing to me when on the first syndication. She was like, "Don't present it to friends and family." I'm like, "Why?" Well, what if it doesn't go right? I'm like, "I'm just not wired that way."
Starting Some Kind of Software Deal
Darin: Look, if we're going to put money into the deal, I think it's a great deal. Why would I not at least present the opportunity? They say, "No. I just move on to the next person." But why do I want people just for my multifamily networking group to benefit and not help other people? I have met people like your uncle.
David: The type of people that they don't even have a Facebook. You never know about them, but they own 20-million square feet of commercial billion dollars.
Darin: Super, super wealthy. But for some reason, they’re either fearful of hurting somebody else or just not interested in going through the education process.
David: It was okay. He always gave me advice if I asked. But I also didn't want to go to my family at first. He hasn't invested in my deals. I don't expect him to, but I didn't go to my family at first anyway. My first couple of deals, I wanted to prove to myself I didn't have to.
Darin: Good for you. With some of these deals, I'm like, "You better contact me on some of these deals with these returns that you've got." You mentioned you developed a spreadsheet. We talked about you starting some kind of software deal. Help me understand what that's all about.
David: In the beginning, when I mentioned I met with that partner at that firm, I built a little spreadsheet. I went to him, I was like, "Hey, what do you think of this?" Because when you do investment banking, you're playing in spreadsheets all day, probably 80 hours a week. It just evolved over time.
Resolving the Barrier Entry in the Analysis Process
David: Every time I found something new, that was like, "Hey! I want to add the ability to refinance and make it easy for myself to calculate." What's it going to look like with a new loan any number of years that you want to choose?
I would just build it for myself really. Then, at some point, it was maybe like a year and a half ago. Somebody approached me and said, "Hey, can I buy that from you? I'll pay you 250 bucks if you give me a copy."
I was like, "All right. Sure." I ended up putting it on my website and starting to talk about it a little bit. Just word of mouth. I've sold almost a hundred thousand dollars' worth of a spreadsheet in the last two years.
A lot of people buy it. They switched over from the less useful Michael Blanc's spreadsheets of the world. And other people's spreadsheets that I really think are just a little cluttered and not as user-friendly.
A lot of people are switching over from other ones, and they love it. I really had always wanted to turn it into software, not just a spreadsheet. I think Excel is dated in a way.
I think there's more things you can do with software than you can do with Excel. Really, a lot of people don't end up getting into the business because of Excel in a lot of ways. It's either they're not familiar enough with it. They're not an analytical type person. That's a barrier to entry for a lot of people in the analysis process. I wanted to solve that.
Real Estate Lab, A Multifamily Acquisitions Platform
David: I started a company called Real Estate Lab, I just finished a million-dollar angel round of funding for the company. I'm about halfway through the process. It's going to be another six months to build out the actual software. I'm going to launch Q1 next year.
It's going to be a multifamily specific acquisitions platform. Track all your deals. Underwrite online in the spreadsheet. Upload your T12s, rent rolls. It'll automatically read the data, pull it out, put it in the analyzer for you, make assumptions.
Darin: All web-based?
David: All web-based, cloud-based.
Darin: Does it include all the documents you have to sign when you're signing up as a passive investor?
David: No, it's not for investors. It's not for passive investing right now. Just acquisitions process, underwriting the deal, tracking your pipeline of deals, sending offers, sharing the deal, generating financial reports based on your underwriting. Eventually, you'll be able to finance deals right through the platform and more.
Darin: You mentioned the spreadsheet that's available today. You said the first copy, somebody bought it for 250. Is that what you sell it for?
David: It's still 250 for that. I have a free one on my website too.
Darin: I don't know, but there are so many other programs out there that you don't get access to a spreadsheet unless you join a program. Then here's an ability. There are certain people that they don't have the capital to do that. They hear I need to underwrite deals, but they don't have the starting point.
$250 is extremely reasonable for somebody to invest in and start underwriting deals in their market. I don't know the answer to this and I probably shouldn't ask you, but I'm going to anyway.
The Middle Child Advantage
Darin: Does it come with any kind of example so that they can copy and use that as a sample?
David: I have a PDF that walks you through how to use it. Then, I have probably four or five videos on my YouTube channel. It's like an hour or two walking through step by step how to use it. It is the easiest way to get in and start actually analyzing deals.
Darin: That's a very low cost to get in. That'll just be a piece of it. Then, it'll have other components that are latched on top of it.
David: Correct. There'll be a lot more to it.
Darin: Talk about your childhood. I know you talked about a little bit. You started companies as a 13-year-old. You grew up in Michigan. Were you an only child? Did you have brothers and sisters? Were you wealthy? What was your upbringing?
David: I have two sisters, one older, one younger. I'm in the middle.
Darin: Middle child getting in trouble.
David: Yup, I was always a hyperactive kid. I never got into too much trouble. Always get into trouble a little bit in school and stuff. I could never sit still, I was always really active, always had to be doing something.
That's part of what really drives me in entrepreneurship. I always felt like as a kid being reflective back on what it was like. I’ve always felt like I had a different opinion from everyone else.
Everyone would tell me not to do something or don't do it that way. Then, I would do it that way. It would end up working. I feel like it's just like a lot of entrepreneurs.
How Thinking Differently Can Become a Blessing
David: We clash with the typical. I don't say average, but the average mindset. I’ve realized that more and more, I've always thought really differently than people. I always was told that it was not a good thing by teachers and whoever, by friends. But I think it's been a blessing in the end. It's been a good thing.
Darin: Coming up, everybody wants you to be a conformist. Your parents want you to listen. Look, I'm a parent now, and I still want my kids to listen to me. Teachers, coaches, et cetera. But having that outside of the box thinking is key when you're trying to start something new and create value from nothing.
When you were younger, was there ever a time when you thought to yourself, "I'm going to be successful." Can you picture that? And how would you have defined it back then? Paint that picture.
David: All the time. I just figured there's no way I won't be successful. I’ve pictured in my mind being able to do whatever I want, whenever I want. Money not being an issue, and that's not how I was raised. I wasn't born with the silver spoon at all.
I bought my first car, and my parents put me to work, like I said, when I was 13, stuff like that. But I grew up well off. My dad was a dentist. I went to a Catholic school kindergarten through 12th grade. I definitely have a good family. They're good people.
I was raised with good values. That's why integrity is so important to me and just respecting other people and building really good relationships.
Where Did the Passive Investors Come From
David: All that were just good values I got from my family. But it was difficult to break the traditional mold of still getting a job and conform. For 99% of people, that's how it is. I really had to push outside of that, for sure.
Darin: Did you ever have that red convertible Corvette as one of your goals that you were shooting for as a little kid?
David: Honestly, no. I never thought I'd buy a Corvette. Well, I just hadn't really thought about it at all. I moved here to Austin. And I was like, "I want to buy a sports car." It's something I couldn't have done back in Michigan where you only get to drive it for five months out of the year.
I was driving to Houston. We were touring a deal. My buddy works for me. He was in the passenger seat looking up some cars for me while we're driving and showing me some stuff. He sees this Corvette on his phone, he looks to the right. We drive on the highway past the dealership and see the Corvette in the parking lot outside the dealership.
I was like, "Dude, that's a sign. You just saw it at the same time. You're looking at it on your phone. It must be a sign." We went back there at the end of the day when we got back from Houston. I was just like, "I'm just going to take it." We'll just buy it on the spot. Done, so game over.
Darin: Where have most passive investors come from you? You mentioned social media. You mentioned in some of your earlier deals that you didn't want to go to friends and family.
A Split Between Physical and Virtual Multifamily Networking
Darin: Where have you found most of your passive investors for your deals?
David: At first, I was just pounding the pavement like every person I can meet asking for referrals. Then, it spider webs a little bit. You get one person. It goes, "Well, they tell their friends." I'd say now, it's pretty evenly split between people I meet in person, new contacts, relationships. Then, the next part would be people that sign up on my website, and a lot of them come through podcasts.
I've done a little over 100 podcasts in the last year and a half. Then, I'd say the rest of them are from social media.
Darin: Talk about fear. You don't sound like you're somebody that lets fear get in the way. I know that even the challenging things that I've gone through, I was scared. But I pushed myself to do it anyway. Talk to us about a time where you were afraid, but you did it anyway. How did you push yourself through that?
David: We're just talking in general like getting started in this. I don't think I had any fear, I was almost too naive, too young to know what the risks could be. I just went in head first, and I had to build up my confidence a little extra. That's kind of how I took it on at first.
I don't really have any financial fears to be honest. And I think most of my fears are like fear of regret. I don't want to go through life and have any regrets later on. That's why I'm going all out now.
How You Do Anything Is How You Do Everything
David: I'm afraid of not being loving to my family and one day they're not there. Then I don't have the chance to do that anymore. I think more things like that, I love putting it all on the line being a good person. Really, how I do anything is how you do everything.
Darin: You're one of the few that I've talked to that has had no fear. I don't know if you play football, but in football, some of the younger guys, they would excel. Because they were trying to prove themselves and, like you said, head first. They would just sacrifice their body every which way they could to try to prove themselves.
Then, as you climbed the ladder, and you were junior, senior year, well as a senior, you know you're not playing in college. All of a sudden you're starting to be like, "Well, I don't want to get hurt" When you're a freshman or sophomore, you really aren't thinking that.
Maybe later on in life, when you're past your mid-20s, you'll see a little bit of fear. We're still in the middle of this COVID crisis, so I don't want to get too deep in COVID. We're about to come off the four-month moratorium on rental evictions. There's a big question mark in terms of what the next stimulus package might look like coming out from the government.
It seems a little bizarre to me that we have all these unemployed people but the stock market keeps going up. Multifamily, it went on hold for two months but now it started reselling, and it's reselling at pre-COVID levels.
Target Multifamily Networking in Larger Markets
Darin: It just seems to me like there's a lot more unpredictability in terms of the future. Some of that unpredictability should be priced into assets and into the stock market. But it doesn't seem like that is. What's your take on all that?
David: You can't ignore the facts. I can't go into deals and look at them the same way as I was six to nine months ago. Or, I guess, seven or eight to nine months ago, pre-COVID. You just can't do that. We're being more conservative with our underwriting, our stress tests, stuff like that.
No rent growth in the first year or two, expecting higher vacancy, our economic vacancy. Really accounting for the changes in financing which is one of the big changes. In general, our properties have done really well the past couple of months. A lot of that is certainly thanks to stimulus money, Uncle Sam throwing checks.
I don't know what the next stimulus package is going to look like. But I do know that most of the tenants at the properties that I own are still working. We don't have any properties where there's like a nearby factory shutdown or something that left half our tenants unemployed.
We buy in areas where there's larger markets. Where it's a diverse enough economy and workforce base so that I'm not as concerned about that. It's one of the reasons why I don't like tertiary markets. You just never know what's going to happen. There's one big business there that goes down that could take your property down with it. We're baking in big rainy day funds, and I still think that there's always good deals to buy out there.
Sometimes Short-Term Money Is Better Than Taking the Risk
David: I've pivoted a little bit and said there's about 400 units. We're under contract down right now and instead of buying them, we are flipping some of them. One's a portfolio, one's a big property in Fort Worth. Those are decisions that we made just because sometimes that short-term money is better than taking the risk.
If people are willing to pay the high prices and why not? We got offers that we couldn't refuse. That's why we ended up doing that.
Darin: That makes sense. One of the things that through this process, I've started thinking about more and more is that different markets could benefit. Texas is one that could definitely fall into that camp if you think about what happened. More people are working at home and more people are looking at their cost of living.
If I'm in California and I moved to Texas and I'm still able to work from home, I could save that much more money. Companies are thinking about the same thing. They’re like, "Hey, look. We have all these people at home. Why not move the office from California or New York and move into Texas?"
It could be an additional boom to states like Texas and Arizona and Florida and the Carolinas. They have a lower cost of living that could benefit from other areas where people are moving out. But time will tell, I guess.
David: Everything is affected in this country right now. There's not a single thing that's not affected, maybe not Amazon. But they're affected in certain ways. They've had to probably establish new procedures and policies around their workforce and whatnot. Everyone's affected.
Multifamily Is More Resilient
David: The way I look at it is what am I buying, and how resilient is it to change? I think that's part of the reason why I got to multifamily in the first place, and not commercial because it's very resilient. Everyone always needs a place to live. I'm not doing class A, I'm doing class B.
B-minus type product where the rents are 800 to 1200 bucks a month, 800 to 1300 bucks a month. There's always a pool of people that need to live in places like that in the areas that I buy.
I look at it that way. Like I said, we're particular on the markets we buy and the type of properties we buy. Quite frankly, also the price we pay, we're very conservative. That's why I've been fortunate and the deals have done very well. We're not hurting right now in any way.
Some people may have gotten a little too aggressive over the last year or two, and they're not in the same position because of that. There were a lot of high prices that were paid for properties. We went almost 12 months without buying a property from April like late spring 2019 to early 2020. Didn't buy a single property. I've made over 100 offers.
Darin: That could be difficult because you have, once you start building up an investor, database, your investors are like, "When's the next deal?" They want to put more capital to work because you made them money. You've doubled their money. Now, it puts pressure on you to find the next deal.
David: Just tell them to sit back and wait.
The Next Deal Is Going to Be a Slammin Deal
David: You know the next deal that's going to come from us is a good deal because I don't do deals just to do deals. I don't do deals for fees, I invest in every single deal that I do. Sometimes, the biggest investor in the deals we do, quite often actually. With that said, I'm not going to do a deal that I wouldn't personally invest in.
A lot of investors are really close friends. I'm very, very careful with the deals. So is Glenn, we're very careful with the deals that we put in front of them. If they have to wait a little longer and they put their money somewhere else, that's okay with me. All I know is the next deal that comes from us is going to be a slamming deal. That's going to be good.
Darin: Another confident statement from David Toupin. What do you like to do outside of work?
David: I love traveling, I travel quite a bit. And I love going on the lake, wakeboarding, jet skiing.
Darin: I've seen a bunch of stuff out with you out on Lake Travis.
David: All the time. I love being outside in the summer, I love traveling. And I have a girlfriend. We hang out a lot, hang out with other friends, people that are doing this. But honestly, I work a lot. I work 60, 70, 80 hours a week, I love it. I love what I do, I have fun every day, I wake up excited. It's a cool business to be in.
The Next Big Stretch Goal
Darin: What's the next big stretch goal for you? You got in a big multifamily. You're in it now, you got a great partner.
You go after things that most kids your age, I said kids, mid-20s for me, you're a kid. But most guys, they can't fathom what you've already accomplished. How do you up the bar on yourself?
David: My personal goals in the next 24 months, I want to have a $10 million net worth. A lot of that comes into play with the software and continue to do good deals, bigger deals. I want to do larger deals looking at 500 and 550 units right now that we're pretty close on, stuff like that.
Probably, I'd say another this year. At least in the next 12 months, another thousand apartments bought. Then I'd like to invest over the next year as well about a million bucks into different various deals.
Darin: You mentioned the software company. You got the apartments, and you got the software deal. You've already raised a million dollars for the seed capital on that. You're well on your way. That's fantastic. If somebody was to ask you, "Hey, I'm new in the space. It sounds awesome. How do I get involved as a passive investor?" What do you tell them?
How to Get a Passive Investor
David: The best way is to go to my website obsidiancapitalco.com, and you can register there on our platform and set up a call with me. If you want to hit me up directly too, you can go to my Instagram page, @realestatejedi. Send me a direct message. I try to respond to everybody, and then you can also email me firstname.lastname@example.org.
Darin: Once we stop recording, I'm going to ask you more about that secret mystery event. I think that you are an inspiration to your generation to prove that you can get it done in your 20s. Anybody that's trying to break in the space, I tell them you have to partner with somebody that already has done it.
Finding an experienced partner is key to get into the large multifamily networking space. You went from being a little guy and then you partnered with the big guy. That's fantastic. I appreciate you coming on. Look forward to seeing what you have going on next. Listeners, I really hope that you enjoy that one until next week. Signing off.