Jens is from Denmark but has been living in the U.S. since 1996. He’s a multifamily investor and a coach. In today’s show, Jens tells us his real estate journey of how he has been able to syndicate apartment buildings and now own close to 800 units.
Five years ago, after working in IT for many years, Jens decided to make a change as he didn’t want to spend his entire life working for somebody else. He saw real estate as a way to invest in generational wealth.
So he reached out to some brokers and bought a couple of 4-plexes in Albuquerque, New Mexico.
Jens lived in South West, Colorado, a small town with not a lot of resources. When he started his real estate journey, he reached out to a friend and asked him some powerful questions. Through that friend, he got connected to a broker in Albuquerque, New Mexico who showed him some properties that Jens decided to buy.
The 4-plex was the first property Jens bought for $117,000. After putting in a new roof and other things, it’s being rented out for $500-600 a unit.
A few months later, he bought another 4-plex in the same area for $145,000-150,000.
Following that and not wanting to keep buying 4-plexes, he quickly decided to scale and found an 11-unit deal 6 months later. It was listed as a seller-financed deal because the unit wasn’t good which made bank financing unlikely. Because of that setup, after putting the down payment, they didn’t have to make payments for a year while they fixed the property.
Jens had the capital to finance his deals because he had been putting money in the stock market for many years and made some good gains.
When it came to financing, Jens got the traditional 30-year financing with 5% interest. Banks usually want to know who they’re dealing with, so Jens was lucky enough to get introduced to a loan officer by someone he knows who lives in the area.
For those wanting to purchase a property out of state and without any connections, it’s better to call many different banks and show them that you’ll do good in the underwriting.
Since his recent relocation to Santa Fe, New Mexico, Jens is now partly retired as he is down to working part-time in his job. He finds it a comfortable path to him as he didn’t have to take too much risk.
In the beginning, time management was crucial while he juggled his job and investing in real estate. Early mornings and late evenings were devoted to making calls to brokers.
It’s better to plan out your day and make real estate a part of your routine. Otherwise, you won’t get any results because you have to work towards your goals.
Jens did a joint venture 2 ½ years ago. He then started syndications in the beginning of 2019 after getting involved with a coaching mentorship group. He found a way to add value to them.
So people began doing deals with him. He set up a monthly mastermind call and showed them that he could help them close their deals. Through this, they became his team, so he didn’t need to find and join another team.
With his team, he was able to buy a 205 unit, Class C+/ B- apartment building located in Atlanta, Georgia. Typically, it is what is called a value-add deal.
Later, he bought another building with 212 units in Phoenix, Arizona. It was considered a rougher property with a tough tenant class. But since the area is in the path of progress, he’s been working on turning the units and improving the tenant class.
His latest 2 deals were for properties in Erie Pennsylvania. They were a 205 unit and a 137 unit building. Appreciations in that area are a bit slower though, but he is looking for more deals there and in Cleveland, Ohio.
He prefers finding opportunistic deals in growing markets to diversify his portfolio. Plus, he can just hire a property management company. But eventually, his team will focus on a specific region in the future.
During his investing journey, Jens has faced some issues about the expenses for repairs and maintenance. Since then, he has learned that for older properties, he needs to have a budget for repairs and maintenance since unexpected things can come up when they start renovating.
What is estimated at the beginning may change later on; so it’s better to have an allowance set aside for that.
Back in March-April, they were worried that nobody would pay rent. But they had strong rent collections, which could be due to the government stimulus.
When it came to their syndication, they decided to preserve their investors’ equity first. But since things didn’t fall apart, they have started rehabbing again.
There’s a need to be more diligent when stress testing their deals because of the current climate. Also, as there are not a lot of deals coming up now, it’s been a challenging market trying when it comes to finding the right price.
If Jens could start at the beginning, he probably would have been more open to partnering with people early on. Maybe he’d even make bigger deals sooner. He also would have signed up earlier to get coaching and education.
For him, it’s all about what your goals are and what you want to achieve. Your decisions will depend on what you want as there would be different models to follow. With some investors, he sees a disconnect between what they want to do and what they are actually doing.
Having the confidence to go out and make broker calls is the one thing that stops new investors from making progress. They are also afraid to start talking to potential investors because they think they shouldn’t since they don’t know anything. But Jens believes that if you can talk passionately about what you want to achieve, people will see you as a thought leader
Another mistake done by new investors is analysis paralysis. Because of this, they end up not taking any action.
Right now, because of the current climate, Jens targets deals that could give him 6-8% cash on cash returns within the first few years, so he can pay back his investors.
He prefers to cash flow quickly without needing to do a crazy amount of work. When it comes to cash flow, he wants to get at least 50% of their capital and investments from that cash flow.
This is because cash flow is more important for him now than new equity.
Jens owns a small mobile home park, and he is interested in finding another mobile home park that he could invest in.
Since he previously invested in an agriculture deal in Central America and in some private debt for an expensive house in California, both of which didn’t do well, he plans to stay away from deals he doesn’t understand.
Get some education and find somebody to help you get started.
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