83 – How to Raise Money and Syndicate over 1400 Doors in 3 years with Adam Adams

Everybody’s coming up to me these days and being like, “What cap rate are you looking for?” And I’m like, “Screw cap rate. I don’t care what the cap rate is today. I care what can I truthfully and conservatively do over the next few years to be able to help my investors have a safe and secure strong return.”

Hey everyone, and welcome to another episode of the Everything Real Estate Investing Show with Sean Pan. Today we have Adam Adams. Adam is a real estate investor and multi-family syndicator with over 1,400 doors in his portfolio. Adam is also the host of The Creative Real Estate podcast and the host of a top-ranking meetup group. In this episode, we’ll talk about how to get into multifamily syndications and how to properly evaluate an apartment deal. Adam is also hosting a special event in October to teach you how to raise funds for your deals. Make sure you stay until the end of the show for a special coupon that you can use to get 15% off. If you enjoyed this episode subscribe to the show and leave a review. We release episodes every Wednesday and Sunday and release the show notes on our site everythingREI.com. Enjoy!

Sean: [00:01:21] Adam,I’m so happy to have you on the show today. Go ahead and introduce yourself and let us know who you are and how you got into real estate investing.

Adam: [00:01:28] Yeah, my name is Adam Adams. And by the way, thank you so much for having me really really grateful. I love your show. Thank you. And so just kind of back it up and share like how I even got here. My dad’s always been in real estate so I grew up looking at owning rentals, owning storage units, owning land all over and thinking that that was just the normal thing. I was collecting rent when I was eight years old at the duplex that we lived next to. So my dad twice asked me to go and collect that rent. I think I was right about 8 years old. And so I just remember thinking, “Okay. Everybody’s got rentals. This is normal” And I remember my dad used to always tell me that that’s what I needed to do. You’ve got to own your own rentals, you’ve got to invest, you’ve got to save, you got to donate 10% of your income. And so I grew up thinking when I was making a dollar an hour, I was really only making 60 cents because my dad wanted me to have four buckets of 10 cents going to it and I didn’t love that when I was growing up. Now today I wish that I had started that way back then. So my dad finally he said “you got to be involved in real estate.” So he bought a piece of land and then he gave it to me for Christmas one year in 2005. And then because of his taxes, his accountant made me pay him for it and I was a college student. I was working as a server and paying for my books and I didn’t have a hundred bucks. I was like “Dad, what are you kidding me? This was this is the worst Christmas present ever because you’ve turned it from an asset to now a liability.” I’ve got to pay for it. So I had to work a little bit harder to get an extra hundred bucks that didn’t go to my rent. That’s how I started it out. I sold that soon after for $12,000 and I caught the real estate bug back then. Started doing multi family in 2007. Made a million dollars for the owner as a property manager, made a million dollars for the owner in just one year of working on lowering expenses and raising the rents. That got me again to say “Holy cow! Like I can’t believe how powerful real estate can be.” You can buy something for a hundred bucks, sell for $12,000. You can buy something for a million, sell it for two million. One year later, you’re not doing any of the work. You have Adam Adams getting paid ten bucks an hour to do all the work or maybe it was 12 back then I can’t remember, it was 2007. Then I started doing my own multifamily 2008, got hit by the crash. That’s very important because there’s a lot of people that don’t know what that feels like and it hurts. It’s scary. I tucked my tail between my legs for a few years after finally getting rid of that in 2013. It took me until 2015 to get back into real estate. So I had two years completely off. And then I started doing flips and tax deeds and and self storage and mobile home. And I’ve tried it all and the main focus now today is multifamily syndication, which is where we grab a whole bunch of people and we all buy big things together because it’s safer to buy the big things. It’s fund to buy the big things. It’s exciting. You got economies of scale and the passive investors get good money and us as operators get good money. So it becomes a win-win. I’ve partnered now, today as we record this, 1400 units. So very very excited to just be growing and going into my journey since 2015 when I got back into real estate after a big hiatus.

Sean: [00:05:22] Yeah, congratulations on that enormous growth. 1400 units is a lot. How did you even get back into syndication? Like how did you get started?

Adam: [00:05:30] So the main focus was I need to do multifamily. I remember having this mindset and I hope that your listener does not have that same mindset, but I had it. I didn’t have someone like me to come and say “That’s dumb. You don’t need to think that way.” But I thought I have to start with mobile home, and then I can go to a condo and then I can go to a house, a small house out of state. Then I can go to a medium house in a different state, then I can go to finally start to do stuff in my own state. And so I had that mindset, I believed that I needed to do that and I just was growing slowly and I think that really did hold me back. One day I went to RE mentor Dave Lindell, event, where they get you in for free and then they charge you 3,000 for the next thing, they say it’ll change your life, and then they charge you 40,000 for the next thing, they say it’ll change your life. And I remember sitting there thinking, “I do want to do multifamily, but I’ve gotta do this. I gotta do it the small way. I have to do it one house at a time then a duplex then a triplex. Then I can get into a five-plex then a ten. Eventually way down the road and when I’m 60 years old, I’ll be able to buy a hundred unit.” And when I was sitting there in this event, they talked to us about multifamily syndication. They talk to us about how there’s different roles, different hats, different ways that you could be involved in a 100 unit and scale much quicker by doing it with partners. And so I said, this is the best thing since sliced bread. I’ve got to figure out how I can do this. And then they said, “Hey if you want to do it’s only three grand, it’s our whole boot camp. You’ll get a sit down with us for three days and we’ll give you everything.” And so we paid for that. And then they’re like you’re never going to be able to do anything with just a boot camp. You got to have somebody holding your hand and we’re like, “aAl right, fine. Here’s 40 thousand dollars.” So we did that. We had somebody hold our hand and that’s a huge thing for us in our growth to be able to show our coach or mentor exactly the deals that we were looking at. And there were many times, I’ll tell you right now Sean and to the listener, there’s many many times that our coach said, “Heck no, stay away from this.” And we’re like “Why?” And they’re like “Don’t worry about it. Just keep going and look for something good.” Right? So I’m grateful that we did that. I think that eventually we make more money because we made that decision, but that is a decision that we made and I remember it was really hard to make. But that’s that’s the answer to your question is we had somebody in our corner that was getting paid to make sure that we were successful that helped us to get there.

Sean: [00:08:32] That’s good to hear that. Those courses and that mentorship is worth the time and money to be a part of. You want to walk us through your first deals that you actually decide to close on?

Adam: [00:08:41] Heck yeah, I do. There’s a lot of mistakes on the… you mean the first syndication deal or you mean back in 2005 from a real first day?

Sean: [00:08:50] Let’s talk about your first syndication deal after you took the David Lindell’s course and mentorship.

Adam: [00:08:55] Okay. So on that deal, I went on BiggerPockets and I was like, “We’re buying!” I changed my whole mindset. I think one of the reasons why most people don’t ever do anything is because they’re always thinking “I’m gonna be an apartment investor.” They’re saying this thing out loud or in their own head, “I’m gonna do this” or “I’m looking to do this.” In my mindset at that time was like, “I’m an apartment investor. This is the only thing I focus on.” Right? So I hadn’t yet closed on one, but I had the mindset of “This is me. I am this person.” I started to identify with that person and I started to not take no for an answer and I went right onto BiggerPockets and I just started saying, “I’m buying apartments, I’m buying apartments, I’m buying apartments.” And I got one broker said “I just had something come up, if you want to look at it.” And it met this thing called The Holy Trinity in RE Mentor, which means it’s “8-12-1.6 or 16”, right? So 8% cap rate, 12% cash-on-cash in the first year, and a 1.6% debt service coverage ratio, DSCR, which means you make 60% more in net cash flow after you pay the whole mortgage. So these are hard to find, these were extremely hard to find, we were gung-ho, we were looking everywhere and couldn’t find one of these until we looked into a market that wasn’t as famous as Dallas-Fortworth. It was Bridgeport, Connecticut. All right, so you’re swimming upstream. When I say swimming upstream, you’re making life difficult on yourself with the laws that are in place for tenants and landlords in a state like Connecticut or New York or Los Angeles. If you’re going somewhere, there’s ways of making it easy on yourself by going to Texas or Oklahoma or Utah. And there’s ways to make it hard on yourself when you’re talking about maybe going to LA or Connecticut. So that was our first mistake is just focusing more on just what that property could return and not thinking about why is that property returning these higher cap rates? I think it’s returning these higher cap rates because it’s a less desirable spot to own. And so today that deal is going well. But we had three quarters in a row where it was very difficult for us. We fired the manager. We found out that when they did work in the bathroom to fix a water leak, the way that they fixed a water leak and a moldy wall was to put a new piece of drywall over top of the old piece of moldy drywall and paint that piece of drywall and leave the water leaking, so that months later we find that we had to pay for that because the property manager was horrible. We had to pay for that first time and now we had to pay more to rip it out and take care of more mold and finally get that water taken care of. So it was rough. It was pulling teeth. We learned a ton whenever we had to fly out there for a 16-unit, by the way it was 16 units, 1.2 million. I’ll go into some more details why it’s relevant that it’s a 16 unit and why it’s so relevant that it’s a 1.2. But just to kind of get stay on track with the part where we on right now is every time we had to fly out there, you don’t have a direct flight from Denver to Bridgeport, Connecticut, right? You can go to Denver and then you can either go to Chicago or Los Angeles and then you can go to a mini airport or you can drive or you can go to a different one and drive three hours but a direct flight isn’t possible. So that’s the first thing that I want to encourage anyone listening when they are getting into a new property. The first thing that they want to do is make sure that it’s a landlord friendly state. The second thing that you will want to do is not chase the cap rates. The third thing that you want to do is make sure that it’s close enough to you that if you’re managing it that you can actually get there relatively easy. It’s so far away and there’s double flights that we can’t go there in the morning and be back home in the evening. We have to make a two-day trip out of it just to make it work. It costs more to travel there. And when it’s a 16-unit, and this is getting to my next two points that I wanted to make. It’s a 16 unit the for 1.2 million, the net operating income is somewhere around I guess I’d have to do the math but I think it’s 10 grand a month is our NOI, something close to this maybe 8. But one with your flight, you’re taking a big chunk of that just to go visit it when it’s time. But what if you have what I’m going to encourage your listener to do is just get that mindset over with, go right into a 200. Because when you need to fly out there, you don’t even notice it. But with a 16-unit you’re like, “Oh my gosh. Now we have to take another, you know, two thousand dollars off of this month’s NOI because we need to go and see it.” So you’re taking a quarter of that and with passive investors you have a struggle. You’re on offense and you have one side you’re saying, “Well, we have to visit the property. We have to know what’s going on with the property. We have to keep our arms wrapped around it as closely as possible.” But at the same time if you do that too much, you’re also taking away from the net operating income which changes the value of the asset, which makes it more difficult to make money and sell it for a profit. So these smaller units I don’t recommend. The next point that I wanted to make was that it was 1.2 million dollars. And if you can do the math on a 80% 80/20 loan, that’s a $960,000 loan. Just shy of a million. And Sean why does that matter?

Sean: [00:15:29] Because then you can’t get government financing on under a million dollar loans.

Adam: [00:15:32] That’s right. It’s so you want to have these agency debts: Fannie, Freddie, and HUD are three big ones, or CMBS. But it’s very difficult for them to want to give you a non-recourse loan if it’s under a million. So because this one’s under a million, I personally had to sign the dotted line. So if anything happens with it, we can’t just give it back to the bank. We’re personally liable. If we were able to just go tiny bit bigger, just even a tiny bit bigger, and I suggest everybody don’t even look at it unless it’s 3 million dollars or more. But if there is an absolute minimum, 1.5 is going to be the absolute minimum because you want to make sure that your loan is above a million. And once your loan is above a million, that means it can be non-recourse loan. So we learned a lot we I think I gave you five lessons from the first one. We still own it and it is finally performing well. We are working on getting storage units and we’re going to be able to have above market rents for those storage units. And this is going to help our NOI ultimately with the property to be able to hit the expectations that we expected to do back in the beginning a couple of years ago.

Sean: [00:16:57] And so how soon after that first property did you move on to your next one?

Adam: [00:17:00] The second property closed one week later. We were we were simultaneously under contract with both of them.

Sean: [00:17:07] Cool. And what was the second property like?

Adam: [00:17:09] It is an 83-unit in Branson, Missouri. We have a lot that start with B. It has a population of 15,000 that live there all the time. The interesting thing is they are the third biggest revenue maker in the state of Missouri. I think the last time I checked, I think they make like something close to 580 million dollars in revenue from tourists. So a lot of people call Branson, Missouri, a lot of people say it’s a lot like Nevada in Las Vegas. It’s a big touristy place like that. And some of them call it the Nashville of Missouri because there’s a lot of country music and a lot of cowboy hats there as well. But there’s a strip just like in Las Vegas and you want to be as close to the strip as possible. And so that’s the best way to have all of the revenue for the tourist. That’s the best way for the people that live there to serve the tourist best. And so luckily our 83-unit is right on the strip. It’s on the actual street which helps us a lot, for our occupancy has always stayed very very high. Another good thing about that market, and everything about my investing is I focus more on the market than I focus on almost anything else, right? The team’s important and we’ve got that. And so I do all the marketing but I have two people that focus a hundred percent on just asset management. I have another person that focus on social media. I have one person focused on acquisitions. Five underwriters that are focusing on every time we get a deal. So we have a big team and we have a couple people that can focus on just asset management alone, which will allow me to do all the Facebook Lives that people see me do and the podcast and the coaching for raising money for other people so you can do that better. This is where I spend a lot of my personal time, but we’re always working on these assets, this 83-unit. I was going to say the team’s the most important but we’ve got that in the bag. It’s done,right? And then the second most important is the market. The market because you think about airplane. Think about an airplane and your airplane is traveling 500 miles an hour in one direction. In one case if you have a terrible market, if you have a market that’s just not at the right cycle then you have a head wind. So you’re doing 500 miles per hour of effort, that’s how much gas you’re using. But you have a 200 mile an hour headwind, you’re really only moving 300 miles an hour. So instead of choosing difficult markets that have already reached their peak or don’t have people moving in or don’t have jobs moving in or don’t have wages increasing, then you have a head wind. But if you have that same tailwind, if you go and find a really good market, then you can do your 500 miles per hour of effort in your airplane, but with that 200 mile an hour of Tailwind, you will move at 700 miles per hour. You will get a lot farther ahead for the same amount of work. So I always say to everybody, “Make sure that you understand the market really really well”. On that first one we didn’t. On the second one we understand everything about the market. And one concern that we had, the one red flag was that their population was 15,000. Most people want to look for a hundred thousand or fifty or or even a million for the MSA – Metropolitan Statistical Area. But for us in this one instance we said, “I’m not worried about that because of all the tourists, everything that the government is doing”. So we have to call Teresa Darden, you know you have to call the economic development. And I still remember the name from my calls when I was focusing on making those calls to the economic development to understand what’s going on. And recently they just added a whole bunch, I think it’s like a hundred and twenty million that the government in that city just agreed to start developing Branson Missouri, even more, expanding the city. But the thing that I was going to say about this Market is you need to look at absorption rate as well. So what the absorption rate is, is are they building more apartments right now than people are moving in? Or is it the other way around? And in Branson it doesn’t make sense yet to build apartments, but every apartment that’s there today is fully occupied. So there’s a lot of data that shows that over the next few years we have no concerns about occupancy dipping like many other markets like Tulsa, Oklahoma, the market is absolutely going to dip. You look across and when you focus on absorption rate, and you can get this with a co-star report. Anybody can go on and get a co-star report from a broker. If they’re serious enough the broker will be like, “Yeah, I want to do business with you. Here’s a co-star report” or you can pay for it. I think it’s 3,000 a month or something crazy. So anyway, we looked at this co-star report and we saw that they’re not building anything there yet. It doesn’t yet make financial sense because people can’t afford the prices that they would have to pay with all the costs of construction that have gone up. You know, the wood is more expensive, metal’s more expensive, etc. All of these supplies cost more so we’re in a really really good spot where the rents are going to slowly increase as they’re slowly doing a little bit more for the area. And we’re excited that one has and always has started from the very beginning we’ve always exceeded our projections on that second one that closed about a week later from the first one.

Sean: [00:23:26] That’s amazing. And so what is your current buying criteria now? Are you still using Dave Lindell’s Holy Trinity?

Adam: [00:23:31] No, not at all. I’m really glad you asked that question because this is important. I am so angry about this Holy Trinity because it got us into our first three deals which I like all of them. The first one was rough and difficult, but they’re in smaller areas. I believe that we have to begin with the end in mind. So you have to begin understanding who’s your target buyer, not who’s your target renter, that is important too. But I’m specifically talking about when you sell it, who can you sell this to? And in Bridgeport, Connecticut, Branson, Missouri, and Big Spring, Texas, you don’t have a ton of buyers, the cap rates are higher because they don’t have the same amount of people trying to get there. So if you follow just the Holy Trinity, the thing that that can do for you or against you is it can have you going to markets that even though these have people moving in and out of all of the cities of Connecticut, there’s one city of Connecticut that is growing, continuously growing and that’s Bridgeport Connecticut. All of the other cities in Connecticut, people are moving out because of taxes. But we look at all of that stuff, but it’s hard to find a Holy Trinity deal. And now today I think it’s dumb to chase a Holy Trinity deal. It’s smart instead to chase a deal that has a really strong market. So we’re right now, we’re loving Oklahoma City. I told you bad things about Tulsa but Oklahoma City is opposite from that. It’s been growing one percent year-over-year for the past 10 years and it will continue to grow one percent year over year for the next five. The absorption rate is great. They’re bringing in jobs. They’re bringing in wage, jobs that that bring in more money. So when you’re looking at jobs you want to look at not just how many jobs but you want to find out how much those jobs pay. And so as we look at this the wages are increasing in Oklahoma City. So there’s a lot of good metrics to show that this is a great place, but the property that we have under contract the day that we record, it’s a 250-unit, that property is not being purchased at an 8-cap. And in the very first year, it won’t bring 12% cash-on-cash. It’s above a 1.6 debt service coverage ratio. That’s always important, especially if you’re getting close to what might be a market correction. You always want to worry about the DSCR, you always want to worry about what you can do with the property, but I wouldn’t mind buying a property at a 1% cap rate if I knew what I could do with it in 5 years and would make my investors money. As long as I knew that it was safe, I don’t care if it’s a 1, 2, 5, 8, or 10% cap rate. It’s not to me anymore about always buying at 8,12, and 16. Now, it’s more about what can I do in five years. I have a goal to return twice my investors money to them in five to six years. If the pro forma can conservatively give double the money back in five to six years, then we’re interested. I don’t care what the cap rate is. Everybody’s coming up to me these days and being like “what cap rate are you looking for?” I’m like, “Screw cap rate. I don’t care what the cap rate is today. I care what can I truthfully and conservatively do over the next few years to be able to help my investors have a safe and secure strong return.”

Sean: [00:27:19] And so your end buyer, what is their persona? Like are they some big investment fund or these are some just big investor who wants steady cash flow? Who are they?

Adam: [00:27:28] Yeah, really good question. So when we’re focused on our markets, we want to have the most amount of buyers possible. And we find the most amount of buyers possible in the 200 unit range. It’s also hard to find a deal. But if we buy something that’s in the 150 to 250 range, then our buyers can be family offices, it can be new syndicators, it could be locals, it could be California, could be China, it could be Japan, it could be Greece. There’s so many people that want to buy these in good strong markets. If the co-star report is showing that they’re going to be one of the strongest, and Oklahoma City is one of the strongest, and so is Dallas, and so is Salt Lake City, and so is most of the Carolinas, and so is Denver where I live. And actually truthfully so is California so far. We’ll see what happens in the future, but California seems to be one of those places where everybody wants to live and it’s been growing. It might have ups and downs over a few, small period of time but over the long run it’s been going up and up and up. And so these are the types of buyers that we’re trying to attract. We want to be in those same areas. We want to have the best relationship with the broker so that we can see the deal before they show it to other people. And then we want to close on it, execute it, and give that property to a REIT or to somebody coming out of another country who needs to have a really good asset in a strong area and that is growing, that wages are growing, and it has really good metrics. Because those bigger players will buy at smaller cap rates than a mom-and-pop buyer might. So that’s one of the ways that we focused or we try to focus when we’re buying a property, is to make sure that we have the most amount of buyers out there so that there can be more competition, so that we can sell it for a higher price or a lower cap rate, because they’re inversely connected.

Sean: [00:29:45] Yeah, that’s a really good strategy and definitely sets you apart from all the new investors who are just looking for that same Holy Trinity, I-want-8-cap-acquisition. Start thinking long-term like I can just repair it and sell it to a higher buyer in the future. You said that you closed 2 properties pretty much back-to-back. What was the purchase price for that other property you had?

Adam: [00:30:04] I believe it was between four and five million.

Sean: [00:30:07] So basically you closed on say five million dollars worth of property in like two weeks.

Adam: [00:30:12] Yeah. Yeah

Sean: [00:30:13] And it’s your first syndication deal. How did you go about raising money when you had no real track record and did your first deals?

Adam: [00:30:20] Okay, so I have a meet up. My meetup is people call me and they want me to coach them how to do meetups all the time. I do that sometimes because my meetup is one of the top in the whole world. Like we’re world-renowned. We’re number six out of 225,000. So it’s like top 1% of 1% of 1%. To give you an example, I saw eight thousand faces in 2018. So we meet up at the headquarters, flew me to meet up to teach them how to do meet up. So it’s very interesting, the meetup. But that’s what I had is I had a very strong organic group of people that knew me, that liked me,that trust me, and that wanted to be involved in my deals. I have I had been doing real estate since 2005, so I had a track record. I had shown them my success on self-storage, my success on mobile home, my success on on larger houses, my success on out-of-state properties in three different other states at the time. And so they believed in me and when I gave them an opportunity to invest we used a 506B offering which means that I can only bring in people that I know really well. And luckily for me, I knew them really well because I saw them every single week at my lunch club. We have 60 up to 176 people every single week at the lunch club and I am friends and always was friends and I was really connected with them. And a few of them wanted to be involved in the deal. So the very first deal we raised about 300,000 for a 1.2 million dollar property and right after that we were raising for the Branson, Missouri deal. And that was a struggle. We got it all, we got it all on time. But I do remember about three times that my own partners came into my office, into this office that I’m sitting in right now, they came to my office and they said, “Hey what happens if we don’t close?” And I was like “Get the heck out of my office. That’s not even a possible thing to think about. I’m in the middle of getting this finished up.” And they’re like, “Yeah, but we need to raise…” I think the raise was 1.6 or 1.8 or something like that. “Yeah, but we need a raise like one point whatever and we only have 300 in the bank right now, and so it closes next week. So, realistically Adam you’re going to have to answer this. What happens if we don’t close?” And I’m like, “No. We are closing. We will figure this out. I called every…” Because this was another 506B. You have to be really careful if you have a B. You can’t go up to a meetup and say, “Hey, I’ve got this deal if you want to invest”. You cannot say that, you will get in trouble big time, right? And you can’t also call random people because you have to already know them. So I called my mom. I was like, “Mom do you want to do this?” She’s like, “No, not this time Adam.” Right? I’m calling everybody that I that I know and it’s getting difficult. So I started to think a little bit outside the box and I had this really good sales pitch. If you wouldn’t mind I could share it with your listener in case they get into a bind. They might be able to use the same thing.

Sean: [00:33:57] Let’s do it.

Adam: [00:33:57] Okay. Alright, so I came up with this pitch where instead of asking for money, I decided to offer an opportunity, you know. Randomly enough, I think that’s the right approach. So that’s the first part. So I would call you up and I would say, “Sean, I haven’t seen you for a long time. I hope you’re doing well. How’s your syndication business going?” All right, so it’s polite, it’s letting you know that I remember you well, and and it’s talking and it’s always how is your syndication business going? And unfortunately, there’s a lot of people that have limiting beliefs around multifamily like they want to do it, but they don’t believe that they can do it. They don’t yet have the mindset of “this is approachable for me”. and so because of that, because it seems like 99% of the people that I have met that wanted to do multifamily still haven’t yet done one, I had a lot of people say, “Adam, you know, I see that you’re killing it. I see that you’re crushing it. I gotta confess, I have decided not to do multifamily.” And it’s like, “Oh really? Because last time Sean I saw you when we were sitting next to each other you seem so excited. What changed?” And you just ask more questions. And they’re like, “Ah, you know, I kept calling brokers, kept calling brokers, and no brokers are giving me a good deal.” “How many brokers did you call?” And then they would say the answer. “What cities are these in? Are these in…” and then they would answer. And then I would say, “What did you say when you picked up the phone?” And then they would answer, and then I would say, “So usually they would just ask you if you had any deals behind you and you had to say no.” And they’re like, “Yeah”. I said “I bet you, they just don’t believe that you can close on a deal.” And they’re like, “Yeah, that’s what it is. I think that’s what it is. It’s just I don’t have a track record yet.” I said, “Well, why don’t you just do the minimum in this deal that I have right now, get the track record, and you can call that broker back and say hey, I just closed a 83-unit and in Branson and now I want to close in your place and I want to talk to with the best broker that I can in this city as I start to develop my portfolio in your area. Wouldn’t that like give you a little bit more confidence when you called them?” And they’re like, “Oh my gosh Adam you would let me put 50 Grand into your deal?” and I was like, “Of course it’s a win-win. I have a little room in it anyways.” A little I mean I had like 1.5 left, but I got a little room in it anyways. “So, yeah, if you want to do that, I can send you all the information, I can send you the stuff. Now you can get your credibility and you’ll be able to start calling brokers with confidence” And they’re like “Thank you so much!” and then they would invest.

Sean: [00:37:04] Hilarious. That’s amazing. So good. You got to be a little creative sometimes right?

Adam: [00:37:09] Yeah, but remember if anybody’s wanting to use that, rewind this a few times and notice that I only ask questions until I can solve their problem. Don’t try to solve the problem too fast. You will ruin it. So if you’re listening and you want to do that, go back and listen to it a few times, make notes of how many times I’m asking questions, how many times i’m getting into more detail letting them bring up their concerns, their fears, their stresses, and everything that had happened to them. Let them bring that out for them and then say, “Well, why don’t you just do this. Will that solve it?” And they’re like, “Yeah, that’ll solve it. Let’s do it.”

Sean: [00:37:51] That’s the ultimate sales technique. You ask a lot of questions, you position yourself correctly, and then you offer them the opportunity to invest with you and be grateful for doing it and you say “Congratulations!” instead of “Thank you”, right?

Adam: [00:38:02] Yeah. So we closed. We closed on time and we raised a little over a million dollars basically in two days or three days, I can’t remember, but we raised it all. But it all happened at the very very end and it didn’t happen until I got out of the mindset of “I need money” and got into the mindset of “how can I help them get into multifamily?”

Sean: [00:38:26] Yep, and it seems like your meetup group was a big part of your success especially in raising money, right? If you had nothing going on,it would probably be very difficult to raise the funds in the first place. So how long have you had that meetup group going before you actually started reaching out to people?

Adam: [00:38:40] It was around, it feels like for about a year. It feels like it was around for about a year, 12 months give or take six. And that’s where we were. Our meetup became bigger than all five of the REAs that were there and big enough to be notable. Our one group became bigger than all of them combined by the time that I was raising. So I currently have and did have back then the best reputation in Denver for running meetups. People would fly in here just to go and see what it’s like because they’re like, “How is this happening?”

Sean: [00:39:19] And the secret sauce is probably because you having it so often every week with good quality content at a very I guess friendly environment and location.

Adam: [00:39:28] I think the secret sauce is marketing. And I think the secret sauce is using whatever you have and differentiating yourself from everything else. So when you say that the secret sauce is that your meeting every week, I mean I use that to be the secret sauce, but it wasn’t… I don’t know if that has to happen for other people. It’s just that I use that to say, ” Guys, if you really want to be involved in real estate, then you’ve got to start building relationships. Your network is your net worth. And you can go to all those other groups, that’s fine. I’m not saying anything bad about them. But I am saying that it takes you about six times of meeting to start trusting someone enough to do business with them. Now if you guys want to take the next six months going to one of those other REA’s just to be able to connect with people on a level for you to get involved, do it. I’m okay with that if that’s what you need. But we do meet every single week because I want you to be able to build those relationships in six weeks. So you’re getting off the ground a lot lot sooner.” And so that’s like my marketing for them to say, “Well that makes sense. Why would I go there? I’m just going to keep coming here because I can build stronger closer relationships if it’s meeting every week.” But it’s just like whatever the answer is, if everybody else is charging, then I just say, “Guys if you want to pay for this stuff, go pay for it. I’m giving it to you for free. It’s all free. That’s what I’m here for. You know, I’m not trying to charge you. I’m not trying to sell you a coaching program. I’m not trying to upsell you on anything. I’ve never have and I never will when you come to this group. But if you want that, if you want to go and have somebody sales pitching you, go have fun, but here we just don’t do that. We’re different.” Or on the flip side, if everybody’s free, then here’s what I would do. “That’s fine if you want to go with a whole bunch of newbies that don’t know what they’re doing or what they want to do. It’s totally fine if you are that person and that’s who you want to be around, cool. We have a higher level of people because they’re all members. They all pay. They all pay to be here and that way, you know, who’s here is serious and you’re not just going to go with somebody who decided to try this out for their very first time. I want you to be able to have a higher quality of people that you’re meeting. So that’s why we charge for the membership so that you can have that.” So whatever it is, just differentiate it. Just say why you’re doing it.

Sean: [00:42:22] And were you marketing this like on meetup.com? Or how are you like actually marketing your meetups?

Adam: [00:42:26] I love your questions. You are so good at asking the questions that are going to help the audience. Okay, so, how am I marketing? I was marketing on meetup.com. I was marketing on facebook.com. And I was marketing by cold calling on my own cell phone, people that had come before I would call them and say “Hey, do you know we’re going to have this one meeting next Thursday that’s talking about this XYZ thing that you wanted to know? It’s assisted living and I remember you were talking to me about assisted living.” Or “Hey, I know you were talking about ways to get involved into higher cash flowing things. I’ve got this assisted living person coming or I’ve got this multifamily or I got this wholesaler who’s going to come and teach this one thing and I know you’re a fix-and-flipper, and this is just your target audience. You’re going to be able to get there and see 20 people that are learning how to wholesale and you can give your card to all 20 of them and say ‘I’m an actual fix-and-flipper. When you have the wholesale deals bring them to me.’ “And when you sell it to them in the way that they need, then they’re going to go to the next level. So it was a lot of cold calling, like not cold calling I guess, but it’s warm calling, calling my people that I knew would be interested in it. Or Facebook messaging people, “Hey, what are you doing on Friday? You should come check out my meetup. I know you’re trying to get into real estate. You should come check out my meetup.” And then lastly, this is a huge one for anybody who wants to do a meet-up, and I’m giving it to you for free right now. So one thing that you can do is you can go to other people’s meetups on meetup.com. So I’m not saying go in person. I’m saying just the get on meetup.com and you can go through the members of that meetup. And then you can look at all of them and you can search them in order of which ones of those people were there more recently and which ones have been on forever. And you don’t want the forever people because they might not be active anymore. They might not use that email anymore. They might have forgotten about meetup or real estate along time ago. So you just go to the most active ones and you right click it and then you can scroll down and click open in a new tab. And so all you’ll do is just go into somebody else’s meet up, right click, open in a new tab all of the different people, and then and you’ll say “hey, I noticed we’re both members of a couple of wholesaling groups. I read your profile, looks like you’ve been doing wholesales for a while. I would love to meet you in person. Are you going to that meet up on Thursday? Maybe we could talk there.” It doesn’t sound like a sales pitch. It doesn’t come across like “here’s a link. You need to go to this.” It’s just, “Hey, man, that’s cool that we’re both doing wholesales. I saw that you’ve been doing a few of them. I would love to talk to you more about that. Are you going to the meet up on Thursday? Maybe we could talk there.” That’s your pitch again rewind it a few times and just write that down if you’re going to use that. All of a sudden they’ll be like, “Oh, I didn’t know there was one.” “Oh, yeah, it’s going to be at such and such a place. Would you like me to send you a link?” So you got it on the second time you have to ask them, “Would you like me to send you a link?” If they say “no”, cool. Then you know that they didn’t want to anyways, but if they say “yes”, they’re more committed than they ever were before. And then you give it to them and say, “All right. Here’s the link you asked for. And I can’t wait to see you there.” Now they know that you’re expecting to see them and you start to have to remember that person. Put them in your mind so that when you see them, you’re like, “Oh my gosh Sean. I’m glad you came. We were talking on meetup.com. I’m Adam, you know, I would I’m the one who is reaching out to you. So you’ve been doing 2 wholesales already? That’s incredible. How did you get started?” And you just have a real relationship, even if it looks like or sounds like this could be faked or if it’s too much or whatever, I get that somebody could have that view. But in my opinion you are very intentional about actually developing deep relationships with people on meetup.com, on facebook.com, calling people. And whenever you offer them to come to your meetup, you only try to tell them what’s in it for them. “The only reason I’m reaching out to you Sean is because I know you’ve been trying to get into XYZ and that’s who I’ve got coming up this week.” Or “I know that you’ve been trying to meet these types of people and that’s all of my attendees are those people. You’re going to be able to meet them all.” Or “I’ve got one awesome guy named Sean coming. And I just want to introduce you to him. Would you rather me do an email introduction or would you rather meet in person? Because I think in this case it’s going to work better for you if you meet in person. But I need to know can you even come on Thursday?” And they’re like, “Oh, well, I guess I can come on Thursday.” Great. And then you make sure that you remember that and introduce them to Sean when they walk in.

Sean: [00:47:35] Awesome. Thanks for all these tips. Yeah, it’s very useful. Now I also know that you have a very successful podcast as well. What do you think is your biggest driving factor to where you are today? Is it through the meetup groups or is it through your podcasts?

Adam: [00:47:46] I don’t think it’s either. I think it’s probably mindset is the biggest contributing factor out of anything at all. It’s probably mindset and then secondly, it’s probably just loving people and being a human connector. And I think that there’s a lot of tools like my Facebook, my meetup and my podcast. My Facebook, my meetup, and my podcast that allow me to be who I am on at scale. So today I host national conferences. And I’d sound so braggy and I apologize. I’m not even trying to make it sound that way but it’s going to and so I just apologize ahead of time. I have a lot of very famous people that are within the multifamily space, that are very sad or upset when I don’t invite them to be on that stage. The events are so popular and I bring on so many people, they’re like, “Hey, why are you, hey, can I be on your stage?” And I was like, “No, it’s full. ” “Wow, why do you have this one person?” “They’re talking about this one thing. It’s the right thing. They’re one of my coaching clients. I know them personally. I’m sorry I didn’t reach out to you. I can only have 25 people on stage. I’m sorry.” “What? If you’re going to have 25 people on stage and I’m one of the top X Y Z’s, why didn’t you call me?” I’m like “Seriously, I’m really sorry.” So this is what this means, why I’m even mentioning this, why I’m talking about this is I use those conferences as another tool of connecting. So the Raising Money Summit’s coming up, right? So I was able to reach out to five passive investors that have invested passively in more than a thousand doors and they’re going to hear this and they’re going to know that I’m using this ninja trick against them. That’s okay, but hopefully it’s valuable to somebody listening. So I set up all my speakers and then I reach out to five potential passive investors and I just say I’m putting together a passive investor group on stage, a panel where it’s going to help those people that want to raise money. They’re going to ask you what you look for and this will give you more of an opportunity to get some more exposure for who you are and what you do. This will also give you an opportunity to give back. And best of all you’re going to have your target audience in the audience. And so you’re going to have more opportunities set to you and you’ll be able to be a better passive investor because you’ll have more people to be able to diversify with. Now at the same time, as it’s really good for everybody who comes, it’s really good for those that came on stage. I have every intention of buying all these passive investors meals, drinks, smiling, and shaking hands, letting them know that I have a rockstar team at Blue Spruce that can bring their money in, if they are looking for more opportunities. I have every intention of killing a couple birds with that one stone to do more, at the same time always thinking to yourself, “How can I maximize this experience?” Not just for me, not just for the passive investor, not just for the audience, but how can I do more than that’s already going to happen? So when you were asking what’s contributing, is it your podcast or your meetup? I’d say mindset first, and then loving people and wanting to connect people, and then it’s the tools of Facebook, meetup, and podcast.

Sean: [00:51:27] Awesome. I love that answer. So what are your current struggles? Do you have any challenges right now?

Adam: [00:51:32] I have struggles that not everybody else has to experience. I am flying around a lot. I was in four different cities last month. I will be in 6 cities this month and next month I’ll be in 7 cities in September. And I have kids and I’m running a business. So my real struggle is understanding what I should say no to, which things are truly going to benefit my business. It sounds great to go and speak at six different cities in one month because you’re going to get more passive investors, but it can also costs a lot. That’s a lot of flights. That’s a lot of hotels. That’s a lot of miles. But it’s also, you have to try to find how do I how do I raise my two kids so that they have a dad that smiles at them, that I help them with their homework, that I’m doing all these things. So my biggest struggle is probably going to be around time; time management, understanding how to give the most to my audience, how to give the most to my family at the same time, and to my partners at the office.

Sean: [00:52:59] Yeah, I mean at this moment you’re kind of like a little celebrity so it’s kind of hard to share yourself with the world and also have that time with your family. So hopefully you’re able to figure out some fine balance between that.

Adam: [00:53:11] Since December it’s gotten much better. And hopefully I will grow and be better at that. One thing that I’ve learned is, I just said this a moment ago, where I said maximize everything. So when I fly to Utah and I’m speaking in four different cities throughout Utah, and they’re far away from each other but they’re four different distinct cities, but I was able to get all four of them in four days, right? So I made one flight to Utah and I’ll be in Salt Lake, I’ll be in Provo, I’ll be in Ogden, and somewhere else. That’s helping me, right? So when I’ll fly to LA and I’ll speak at three different meetups around LA, I won’t have to fly three different times. So it kind of condenses it so that the trips away from the kids are a lot less.

Sean: [00:54:02] And speaking of going out and speaking at conferences, you have a pretty big event coming up pretty soon. Do you want to share with the audience what that’s about?

Adam: [00:54:10] Yeah, thank you. I have the Raising Money Summit and I guarantee it’s going to be an amazing event. It’ll be the second annual Raising Money Summit and it goes through the process of raising money and it goes through the biggest part of the process that most people miss which is branding. It’s what Sean’s doing right now on this podcast, what I try to do, what I’m doing right now also on the same podcast, right? We want to get our name out so that more people can know us, like us, and trust us. It’s very important for people to know you, like you, and trust you. So at this conference, we will share strategies to systemize your influence with the world. And we will also help you get over limiting beliefs that are like, “Why would I have a podcast?” I know a couple of people that started multifamily podcast before they ever owned a multi-family and then they started podcast and it propelled them so much and now they own 300, 600, 900, or even 1400 doors, and I’m one of those people that started my podcast right when I was starting my syndication. We got 1400 or so. Anyway, to try to sum this up, so we start by how do you get out there so people know you, like you, trust you. Now, how do you have a giveaway. And we make it easy, we systemize it and automate it so that it’s like a blueprint, it’s a strategy that you can just copy and paste, where you can create a giveaway that will be a lead magnet and opt-in magnet that your specific passive investor wants to know. They will put their email in so that they can get that value from you. So we go through how to do this and we make sure that you have that ability. So we go through how to make people know you, now how to get people on your list. Now, how do you manage that list and stay in front of them because they’re so much noise right now today in 2019-2020. There’s so much happening. There’s so many different syndicators that passive investors have so many options. They’re going to go with the squeaky wheel. They’re just going to. They’re going to go with the person who stays in front of them. So we teach you how to stay in front of your target audience, how to massage and grow and water those plants so that they can be nurtured, and then we teach you how to psychologically sell, how to call the capital. Kind of like I did earlier in this interview, we teach you ways of actually calling in for the capital to make it easier on you so you can raise more money in less time. So that’s Raising Money Summit. And it’s coming up October 3rd, 4th, and 5th. And I will give your listeners a 15% discount as long as they get it during September. So it is 15% off and they’re promo code when they go to RaisingMoneySummit.com, and they check out and they get the ticket that they want. And as they go to check out, they’re going to put in “EVERYTHINGREI”. Spell that out, caps don’t matter, but put in “EVERYTHINGREI”, that’ll get you 15% off of your ticket to the Raising Money Summit. I swear on my life, I guarantee you, you need to be there. It will change who you are and how you raise money. I’ve had so many testimonials, I wish I could share them all with you right now, of people that came last year and now they have a podcast and they own a bunch of multifamily, because they just went last year. One guy Rama Krishna has three million dollars committed to him for his next deal. It’s just ready to go. It’s sitting there for him to have in the next deal because he learned how to get pre-commitments at the last one. So RaisingMoneySummit.com, it’s October 3rd 4th and 5th. And if you want 15% off your ticket, just get it right now. Type in Sean’s specific special promo code “EVERYTHINGREI”.

Sean: [00:58:08] Cool. Thanks a lot for that. And where is it located by the way?

Adam: [00:58:10] Denver, in my backyard.

Sean: [00:58:13] Denver is a beautiful city. I can’t wait to go back and check it out. And how can people contact you?

Adam: [00:58:18] The best way is just to go to realbluespruce.com. So I’m in Colorado. The Colorado tree by the way is the Blue Spruce and we’re the real blue spruce. So just go to realbluespruce.com. You can find my bio, you can even find more about our events, about all the deals that we own, how to invest, my podcast is attached to realbluespruce.com. So that’s really the hub that they can go to.

Sean: [00:58:44] And what’s the name of your podcast?

Adam: [00:58:45] Creative Real Estate podcast. Creative Real Estate podcast.

Sean: [00:58:49] Creative Real Estate Podcast. I’ll go and check that out. Adam, thank you so much for your time. I really appreciate all the tips you gave us especially on multifamily, raising money, and creating an awesome meetup group.

Adam: [00:59:00] Thank you.

Sean: [00:59:00] Thank you so much. Take care.

[00:59:01] Here are some of the key takeaways from this episode. Mentorship is worth it if you can get with the right people. The Holy Trinity isn’t a good buying criteria because it makes you buy stuff in bad areas without looking at future potential. And when looking at a property, it should be at least $1.5M so you can get at least a 1 million dollar loan. And don’t worry too much about the present cap rates. Instead focus on your exit strategy. Can you double your investors money in five years? And are there a lot of investors who are buying that asset type? When raising money position yourself for success and instead of asking for money offer an opportunity. And finally Adam thinks that mindset is the biggest contributing factor to his success. Work on having a great mindset and you will succeed. If you’re interested in attending the Raising Money Summit in Denver on October 3rd, 4th, and 5th, use the code “EVERYTHINGREI” for a 15% off. You can get your tickets at RaisingMoneySummit.com. Hope to see you there. I hope you all learned a lot from today’s episode. You can find the show notes on our site everythingREI.com. Thanks, and have a great day!