Jesse's Guest Appearance|EP59
CPI Capital has developed a reliable system for investing in multi-family properties in strategic markets across the United States. Our offer to our valued Investment Partners is an opportunity to invest in income generating properties with considerable value-add prospects. With decades of real estate experience and over $100M in real estate transactions, our team understands the time and effort required to create generational wealth through real estate. Transcript: Jesse (0s): Welcome to the working capital real estate podcast. My name is Jesper galley. And on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you're looking at your first investment or raising your first fund, join me and let's build that portfolio one square foot at a time. Alrighty. Hope everybody is doing well. My name's Jess for galley. And this week I thought we would do something a little bit different. I was a guest on a show called CPI capital a little bit about my background in real estate from student rentals to assignments, condos multi-family and brokerage. If you find that at all. Interesting, I think you're going to like this episode, I think we touched on a number of things and they had some great questions. Some of them admittedly completely caught me off guard, but anyways, I hope you enjoyed this episode and we'll see, on the other side, Ava (59s): Everyone, welcome to the Canadian passive investing show. I'm your host, Ava bene Saki, and I'm joined by my cohost August. Muniez we have another great show for you today, please, please like, and subscribe as it helps us build our channel and allows us to keep bringing you great content and expert guest speakers. Our mission here at CPI is to empower investors, to create financial and time freedom through passive real estate investing. And today we are joined by Jesse for galley. Got it. Welcome Jesse. Welcome Jesse. Jesse (1m 34s): Hey everybody. How's it going Ava (1m 37s): Now? Jesse, Jesse is a commercial real estate broker and investor that started with student rental properties at the age of 19 as his passion for investing grew. He started investing in single family homes and condos. Then he transitioned into multi-family apartments. So today he focuses on operating and raising capital for commercial real estate. So we believe Jesse is going to bring immense value to our audience to make strategic investments in real estate. So Jesse, let's just jump right into things. If you could start off by telling our viewers a little bit about your background and your involvement with real estate investments, please. Jesse (2m 13s): Yeah, no problem. And I'll, I'll try to hit that high bar there for you guys. I got started in real estate in college or university bought my first rental property, went to a university in Waterloo. It's about an hour and a half west of Toronto. You know, if there are us listeners, it's kind of Canada's Silicon valley. So a lot of good entrepreneurial spirit out there. And yeah, my first investment property was, was wa wa was Walla, was in school. I saw that I was living with a friend that his father and him went in together on the property that I was actually living with. So w I saw myself and friends of mine paying rent to another friend and started to realize that it was a great area to invest. And I kind of had a, somewhat of a background in that. My father who's also extremely entrepreneurial and my mom was well, they had a family friend that had a number of single family investment properties. So at a really young age, I'd always ask, you know, what does Mikey do? He doesn't have a job. What is, what exactly does he do? And that kind of got ingrained to me really young, so long story short. That's how I got into it. This is probably now I was 19, 20 years old. So we're talking about oh 8 0 9. So you don't think of oh 8 0 9 as when you're going through it as a significant time. But looking back, obviously we know now it was a, it was a pretty historic time for the economy and yeah, I mean, going back that far, what I was doing was reading Canadian real estate magazine. If you guys remember that magazine, you know, bigger pockets I think was in its infancy, there wasn't resources, there weren't resources everywhere. And yeah, that, that was my first, first property was a $250,000 student rental property with five female tenants that I pretended were a lot younger than me, but I really was, was young and trying to try to figure it out. August(4m 8s): Great. Yeah. I guess timing, timing is always important rate too. You know, they say luck, isn't it. Mathematical equation is when timing meets opportunity. So you jumped on it. That's great. And also, also another item is here in Canada. I mean, a lot of information and content comes over from the, from the U S where you could buy a home in Texas or Arizona or Florida for 300,000 or 250,000. And you can rent it for around $2,000 a month. So you're, you're already cash flowing from the day one, but in, in here in Canada, especially in the larger cities, Vancouver and Toronto, their rent to value ratios are very low. So that, and the kind of also the entry level to, to get into a single family home is very difficult as well. So talk to us about, you know, early on in your career as a, you know, as you were starting in real estate investing, how did you overcome that particular hurdle to, you know, with the, with the high mark of, you know, the high bar of entry with the low rent to value ratios and also the rigid mortgage laws, our mortgage laws are much more difficult than the U S so Jesse (5m 8s): Go over there. Yeah, it's funny. I just jumped off my podcast with a, a mortgage commercial and residential mortgage broker. And we were talking about some of the differences with Canada and the U S and, you know, we have the portability of mortgages talk to an American foreign concept for them a 30 year fixed rate. They have that foreign concept to us. So a hundred percent to your point about Toronto Vancouver, I think, you know, I say those things together in every sentence on my podcasts that we're talking about expensive markets at that time, the property, I know what just offhand, because you always remember your first property, the gross rent was approximately 2,400, so $250,000, 2,400 in gross rent. So, you know, if you go use a 50% rule as your expense ratio, pretty decent property, if you found those types of numbers today, especially our markets you'd jump on them. So it was still relatively affordable in certain markets outside of the, like the, the downtown cores, but yeah, a hundred percent, it was something where you really had to go look for value, adds student rentals still to this day. You know, the valuations are a little bit different. Cap rates are a little bit higher. You can, you can find those deals, but they're becoming harder and harder to find. So, you know, whether you're in New York, you're in San Francisco, you're in Vancouver, Toronto, you really need to think outside the box. You start, you need to start looking at, you know, the 18 hour cities or the cities towns hour or two hours may be more outside of your general area. But I was lucky at the time. Well, you know, nine, there were still a bunch of deals that were still in our Canadian market. And to your second point about the mortgages, I think at the time I was in the five and a half fixed percent range. And back then, if you guys remember 5% down was still pretty doable, five, 10% down. Now, when it came to student rentals, there was only a few banks that would lend on those. So that's where you had to start, you know, getting more creative with the financing. But at the time I think it was five or 10% down. I went to my dad and asked, so I had a little bit of cash because I worked summers. I said, listen, this is an awesome investment. Do you want to, do you want to sign on this line of credit so that I can, I could purchase it, gave him the numbers. He said, absolutely not. You know, my, my parents were divorced. So what is, what does a kid do? He goes to his mom and says, dad's not signing this. So for me, that's, that's kind of how I got my first start. And I always tell this story because I feel like people, you know, when they talk about how they got started, you, you it's always fuzzy. How did the money happen? And I just like to say that everybody you go to the resources you have. I, you know, I didn't, don't come from a very wealthy family, but they gave me every opportunity, you know, family, predominantly immigrants, very entrepreneurial. But what that allowed me to do was she signed on the guarantee for the, for the line of credit, which added to my down payment, which allowed me to get the space. And then when the second one came around, because I continued to invest in student rentals, then I had, you know, I had a case that the next one, when I partnered on one of them with my father, or I could say, Hey, this is, this is how the business has been doing for the last year and a half or two years. So yeah, that's, that's kind of the background and August (8m 32s): You build that track record and you were lucky enough to have parents who helped one of your parents. And he was like, finished school, finished school, then we'll dock. There you go. And you were, you were 19 years old. So yeah, I was, Jesse(8m 48s): Yeah, just turning, just turning 20. Like I, when I put the co the offer in, I was 19, when it finally closed, I was 20. August (8m 57s): Great, great. And if you could expand on, when you talk about student housing, is that the building or the unit or the home is zone for student housing that you can rent it on for two regular tenants kind of idea. Jesse (9m 9s): Yeah. So it's a good question because it used to be anything that a student occupies and then what started happening in a lot of cities in the states, and in Canada, you would have either municipalities or cities mandate that you have a student license, you know, we're all big fans of the government. And it was basically, you know, a, a tax that you had to pay to have it licensed. Now, I'm not saying that there isn't good logic for it. There would be, you know, fire code, additional things you would have to do to meet that standard. But it was also kind of like a, you know, a, a taxi medallion system where, you know, they only would, in, in this particular case, they would only give so many of the moats. So yeah, that, that's how they were kind of categorized in Waterloo. And I know another areas in Ottawa, we have, I still have a couple student rental properties where we're towns are, are kind of talking about implementing that type of thing, but not all towns do. And yeah, so that, that's how it, you know, they'd be categorized as student rentals, some were above board and some people were doing just, you know, without the license. August (10m 13s): Got it. That makes sense. Just getting back to your point, as far as making strategic investments, and you have to find the kind of diamonds in the rough for it to make sense here in Canada, in Vancouver and Toronto, there are deals, but they're, they're, you know, hard to come by. It's not a scalable business model. It's not somebody, you know, in the U S somebody living in Texas making a hundred thousand dollars a year and they can buy a home for 300,000 and they'd be cash flowing from day one. And, you know, if they do some small renovation and even keep the property, they can, they can, then in a few years, just repeat the same process, buy another property and continue to grow their portfolio. It's very difficult business model to, to do here. And especially doing a part time, having a, you know, a, a, you know, a job or a profession, and then doing real estate on the, on the, on, on a part-time basis to then find those deals, to be able to be an active investor. So that's an great conversation here. Ava (11m 6s): So we've, we've we, we learned about what started you in single family. Now, I'm, I'm curious what made you fall in love with multifamily? And when did you kind of start getting into multiple August (11m 16s): Fell in love with it? Maybe he just likes we're Jesse (11m 19s): We're we're madly in love. Well, Jesse (11m 22s): What happened was w so I finished university over that time period. I, I purchased, I believe it was for single family. So these, but these were kind of spread out there. One was in Oshawa. So if you know, Ontario Schwann, Waterloo, they're complete opposite ends of Toronto. And what happened started happening is, and I'm sure you guys were aware of Vancouver was similar where pre-construction condos became a big thing, and this was 20 10, 20 11. I started to purchase those. And what, you know, a lot of people call wholesaling now, or just assigning the contracts. I did a few times. So w what I did was I kind of kept going down the student rental path. I appreciated a decent amount on a lot of these properties, and then sold them pretty much, not all at the same time, but pretty strategically that I wanted to sell these and have a nest egg to move into the commercial space. It coincided with my job, actually moving from working with the job that I got right out of school to actually a friend of mine kept saying, listen, you'd love this real estate stuff. You know, what are you doing in your current job? You should be in, in commercial real estate. And I finally got a job in commercial real estate for Avison young as a commercial broker. I happen to work in office leasing and investment sales, but it was kind of through that, where you start really opening your eyes to see what people are doing in different areas. You know, my partner, he also works for the company, but he also is an investor in the multi-family space. Multi-family I think the reason I gravitated towards that is it's just more accessible for the smaller investors that when they get their start, if you're going down retail office, industrial, you know, one, one or two tenants, you could really have large vacancy. You need a lot of cash for 10 and allowances, tenant inducements. And then the other thing is in Canada. And I believe it's, it's similar in the states, whether it's Fannie Mae, Freddie Mac in the us, or it's CMHC in Canada, there, there are financing products that are more geared to apartments because it's still considered residential, even though it's five units and larger, which lender looks at that as commercial. So yeah. Accessibility for, for lending and yeah, that's, that's how I made the transition. And we've, yeah, we've kind of focused now, just exclusively on building up the multi-family portfolio, August(13m 44s): Right? So not only your focus as, as investing changed to multi-family commercial real estate, you, you actually switched your profession to also be involved in the commercial space as a broker. Funny enough, Ava and I were looking at a private equity firm and their principles, and just reading about their bio is, I mean, notice every one of the principals had commercial broker on the bottom of their title, even though some of them, one of them had a PhD, but he still had a commercial broker at the bottom Jesse (14m 10s): Of their bio. It's funny, it's funny. They there's a lot of people in our industry and NAIOP is a great organization. If you're interested, especially in Canada, in commercial real estate or north America, that's, it covers all areas. But so many of the people that have started their own firms that are CEOs of brokerages or workflow, you know, workplace strategy, it's funny how further back in their career. A lot of times they were brokers or, you know, leasing specialists and really seeing real estate from the ground up. And I think it's a good foundation as investors, or if you want to have a career in real estate. Yeah, Ava (14m 48s): Definitely. Great. You got your license. I had my license. Speaker 3 (14m 52s): Yeah. I couldn't wait to get rid of mine for 10 years. August(14m 59s): So now I want to talk to you about, let me see, I had a question here for you. Oh yeah. I want to talk to you about, you know, we, we w w w in our research, we are in the space we're in, in Canada and in the real estate of real estate, private equity and, and especially thought leaders in this space who put out content, obviously you came up or you came on on our list. I mean, notice that you are a thought leader in this space. Talk to us about your connection with a bigger pockets and how that came about. Especially one of my biggest complaints with bigger pockets is that most of their content and information is, is a director is for Americans. And a lot of people do read that information. And now have I have wrong information or information that doesn't make sense. They, they believe that 10 31 exchange exists here in Canada, or that they could, you know, part-time be real estate investors and have 20 single family homes or, or, or other also other compliance verbiage that's that's used in the us, which that doesn't mean the same thing on this at our border, and means something totally different. Something like an offering memorandum is a document provided by a broker to someone looking to purchase a commercial real estate, or an offering memorandum here in Canada is a, is a legal document as security emerges exemption that's used. And it's a legal document. So talk to us about your connection with bigger pockets and how they came about, and what do you currently do with that group? Jesse (16m 24s): Yeah, for sure. I think it started from, well, I was on the podcast, the BiggerPockets podcast as a guest years ago. I think that was what started the relationship. I, I really, I don't remember exactly how that relationship started, but it did then. And what it ended up happening is we, we continued communication. Obviously I used a bigger pockets as a resource. And just as a side note for Canadians that are on bigger pockets, even if you have a free account, you can go and put a keyword alerts. And almost always, I have one keyword alert that is Canada Canadian, us Canada. So like you do get chats that are started specifically about CA Canadian investments. You're going to be pulled into those, into those strings, which, or forums, which is great the way I started doing videos for them. I think Brandon and I, we were talking, or I, I had reached out to him a little while after the podcast. And I had said, you don't, you guys don't seem to have a lot of commercial content, whether that's, you know, industrial retail office, larger apartment buildings, it seems to be focused primarily on single family and, and apartments. And I said, what if would you guys be open to me doing videos? And he's like, I guess at the time, they're like, yeah, absolutely. It's, we're, we're missing that piece. So yeah, for a couple of years, I was doing videos on a commercial commercial real estate. That's commercial loans, private equity. You're absolutely right though. When you say that, you know, there's that us Canadian gap and a hundred percent it's, you know, you have American her Canadians thinking that they should buy us real estate and put it in an LLC. Okay. Canada, that doesn't recognize an LLC. You know, you have a certain things, like you're saying what the offering memorandum, you keep hearing, they're raising money for 5 0 6 C offerings that doesn't exist here. So there's all these little intricacies that we need to focus on that when we, when we hear about this type of investment in the states, really need to figure out what that equivalent is up here. And that's what I think we were trying to do to a certain extent there. But like I said, ultimately, as a Canadian, there's definitely Canadians on the, on the forums there, you just kind of have to have to search for it. But yeah, it's a, it's a really good point. August (18m 40s): Great, awesome. Talk to us a bit also about your, your own platform. So aside from working with bigger pockets, I believe you have your own YouTube show and podcasts. Talk to us about that in the process and how you came about, you know, starting your show and how it was, how is it going? Yeah, Jesse(18m 58s): No, it's going great. It's, it's a lot more work as you guys know, then, then, you know, you really realize when you go in, I was just a friend of mine just sent me a stat or a couple stats about podcasts. And it was, I can't remember exactly, but, you know, you know, something like 3% of people go pass episode three, you know, 50%, you know, whatever it is, it's just the consistency. I'm definitely more active on working capital. That's my podcasts. It's working capital, the real estate podcasts. You can get that anywhere, iTunes, Spotify, and the YouTube channel. I just started putting out like a lot of people, the questions you get asked again, and again, and again, a lot of times it's just easier to make a video, send it out and say, you know, this, this answers it. I think that being on the bigger pockets, realizing that, you know, like when you go on their channel, it's like all of a sudden you have, you know, 70,000 views on something and you can't manage comments like that. So I think for me, it was just like, I didn't realize there was that many people out there that wanted this content. So I try to put stuff up on YouTube as, as much as I can, but really the focus for, for myself is more on the podcast side. And then through there, you know, people can reach out to me, you know, hear me on the show. And if it's about investing in the future, investing in other investments that we're doing that we're raising capital for. That's where I would say the platform is, but it hasn't been formalized in, in a way where, you know, it's, it's my day job and that's, what's challenging about it. Right. You're, I'm still in brokerage and I don't think I'll ever leave brokerage completely, but yeah, that's, that's kind of where I'm at right now. August (20m 35s): Yeah. Being a broker is like, you know, the bat, the bat sign put up in the sky when they call it comes in. You've got to go. So yeah, it's definitely a full-time Speaker 3 (20m 44s): Gig. Yeah. Great. August (20m 46s): Just to touch on podcast a bit more, what is the podcast mission statement? So what, what problem are you solving? What message are you getting across and what is the kind of the, the final call to action or, you know, the, the, the benefits it has not only for obviously your, your listeners, but also for yourself. Jesse (21m 4s): Yeah. What I wanted to do is have an educational, real estate investing podcast that where we have guests on, we have them from a range of backgrounds all centered around real estate. So, you know, whether that's a cross border lawyer, whether that's a mortgage broker, whether that's talking to people that are investing in self storage, I wanted to get kind of a round picture of what real estate is and the different niches, or as my podcast guests say, if they're American niches, that drives me crazy, but the different niches in our industry. And through that, I'm what I hope to do too, is when I have people on the show and you touched on it earlier as a Canadian, even though half of the listeners are American, I try every time I can, where somebody is like, well, an FHA loan, and then, okay, well, let's just clarify from the Canadian point of view, it's this. Or, you know, if they say something like a 30 year fixed mortgage at 3%, and I say, well, in Canada, you can do a CMHC mortgage at 1.6. They're like, that's crazy you at 1.6, because a lot of times you hear, they don't believe that our cap rates are 2.9, 3% in some areas like you're in Vancouver and guarantee some of those office buildings are sub three and they're like, well, our loans are three. It's like, no, no, no, no. Your loans are three. Are our loans are not even though it's still crazy low. So there's only all these little like variation. So just a long, long winded way to say. What I try to do with the podcast is try to be a north American podcast where I can have Canadians and, and Americans listen to the show and, and feel that they're both getting talked to. August(22m 36s): Great. Great. So now let's switch the conversation here. Emma has a few questions for you, but let's switch the conversation back to being a real estate investor. As we all know, eventually your real estate investors run out of their own money because they've already deployed it. Or they're looking for bigger projects and a time comes to raise private equity. Where are you at in your, in, in your business currently, are you at that stage that you're, you're raising capital and, and talk to us how that all came about and we can go from there. Jesse (23m 6s): Yeah. So this year, or I guess the end of last year starting of this year is when I first started to raise capital for real estate. It's, it's kind of a scary thing, which I think is a good thing. If, if you are a fiduciary to somebody else and you're managing somebody else's money, I think you should party. You should be a little scared. I think that's natural that you should have a fear of making sure that you're, you're doing the right thing for your investors. So that coincided with a lot of the podcasts I listened to. And again, the guests that I've had on my show where, you know, you get connected to masterminds where they are teaching, raising capital or fund to fund model, stuff like that. And again, it kind of goes back to your point of the offering memorandum where like, you know, we sometimes call it an information memorandum. That's more of a brokerage thing than I think a us thing. But yeah, the offering memorandum in Canada, you're, you're talking about legal documents. And the reason I bring that up is the mastermind that I was in was a us centric mastermind for raising capital. So even there it's like, unless you're investing in the U S it's really challenging to justify what you're spending on that, a mastermind, depending on the cost. But anyways, that got me into the mindset of it, like buying your first property, once you do it once you're like, oh, that I can, I can do that. And that's really what it, what it was for us. Once we started raising capital. So this was the first investment raised a million and a half of equity. So it's not a huge amount, but it was the first time we ever raised capital it, me and my partner. And, you know, the thing is, there's just, you go through these different cycles while you're raising up. Are we going to have enough? Okay, we're good. No, I don't think we're good. And then it got to the point where we're like, you know what, after it's all said and done, you have subscription agreement signed. You're like, I think if, if I was forced to, I think I could do three, I think it could do five. And I think that's the natural progression when you get used to something and you see that it's, it's achievable. That's Ava (25m 10s): Fantastic. And Jesse, I'm curious, what structure do you use to raise private capital? Jesse (25m 15s): So we do a pretty standard limited partnership agreement. So general partner, limited partner with the caveat of having a asset management company, as part of basically the administration that kind of handles everything. So for those that don't know the, you know, the limited partners are all your investors. They have limited liability. This is not legal advice, but they have limited liability in these investments. The general partner in Canada partnership can not own a real asset that they can't own a property. So you need to have sometimes a numbered company or a GP. The general partner as a corporation oftentimes owns the property has title, but the limited partner has a beneficial ownership of the property. And then from there, Ava, we do a very simple split where, you know, you have a certain threshold of preferred return that goes to your limited partners. So return of capital first, a preference turn of a certain percentage. Then after that a profit split between the general partners and the, and the limited partners, okay. August (26m 22s): Maybe you can kind of talk to us more about the deal that you had. So for example, here at CPI, our business model is the multifamily value add and because of their, their higher rental value value ratios that exist in the us on a 70, 30 LTV, you know, we're, we're able to, from the rents we collect, we're able to pay our mortgage payment, pay taxes and fees, third-party property manager, and still have a surplus to pay our investors. Those preferred returns you talk of from day one, because the deals we look at are usually 90% occupied. So they're, they're well above the mark. So now, how do you go about your deals? Are, are, are your deals ground up development? Is it a value add project? Is it kind of A-class talk to us or what kind of deals you guys work on and how are you able to, is there a return given to investors from day one or is there a kind of a capital event where the project has to go through a certain steps before there is any kind of cashflow coming back to the investor? Jesse (27m 21s): Yeah. So for us, I'm constantly looking for off market deals, you know, as a broker, you know, first thing we think is we're not bidding on deals. So for me, I was actually land registry looking for properties off market calling, Hey, Jesse, for galley. Listen, I want to put an offer in, on your property when you consider one. So what D constantly outreaching for off market deals happen to find an off market deal? A gentleman owned the property for a number of years. I think it was kind of retirement time for them there. They were, you know, ready to sell. So for me, this just happened to be a class deal. I wasn't searching for an A-class deal, but it was in probably one of the most expensive areas in Canada, in forest hill and Toronto. It just so happened that when we took a look at these rents, we were, we just saw that it was probably at 60% of what market is. So initially when we went into it, we, what we were going to do. And a lot of our clients do this, where they do what they call condo finishes two older apartments. So you're putting a dishwasher in the apartment in suite laundry and what our initial thoughts were, were to go in, do $75,000 per unit, really higher end upgrades to achieve higher end rents. Now COVID happens. And all of a sudden, Y you know, you have to be careful about trying to just do a class when the market, you know, might not be able to sustain it. So, for us, what we did was we kind of pivoted and decided to do, you know, instead of a $75,000 upgrade, maybe a 40, 45 more conservative rents, and then kind of, you know, turn over three, four suites within a shorter time period. So the structure of the deal ultimately was it wasn't, it wasn't a vanilla deal. It was a bridge loan for two years, stabilize the asset, do the renovations, renovate the L renovate a lease at these higher rates, then switch to a conventional, or, you know, CMHC loan switch to the L to that loan once you've achieved that rent. So that, that basically the mortgage takeout takes out your bridge loan. And now you have a stabilized income. And to answer your last question, in terms of the capital event, this, this deal would be like a development deal. And if anybody has seen, you know, limited partnership agreements, when it comes to the development deals, you get your preferred return. And just as an aside, the preferred is not a guaranteed return. It's a preferred return. And absolutely you try to achieve that, but in a development deal, you know, there's no income. So what happens is that say 7% preferred return a cruise. So your one seven year, two 14, you know, some people compound it. We don't, it's just simple accrual. And then when there is a capital event, say the refinance, then we decide then do we pay investors all back their initial cash, keep them in the deal, or do we sell a property? Has it gained enough that, you know, it looks appealing to sell and pivot or, or buy another asset so that, yeah, we, we, looking back, I would have had a lot, a lot less stress if we picked a more vanilla investment, but that's, that's what we, what we got our hands on. August (30m 33s): Great. Oh, how many units was this project? Jesse(30m 35s): So this one was, this one was seven units, but for anybody that's not in a major market, we're talking about 500,000 plus a unit th the, some that have sold on the street or 700,000 a unit. So this is not, you know, you're not in Boise, Idaho, the first investment, sorry, apartment building we bought was actually west of Toronto and Hamilton 11 unit. And it was a third of the price. So it's just a matter of, you can find expense, more expensive assets, but there definitely has to be a value play there because they're just too expensive to buy. If they're, if they're already stabilized and at full rent. Ava (31m 17s): Awesome. And the whole time, Jesse, what's the whole time that you guys were predicting Jesse(31m 21s): For the, for this one that we're purchasing. So this one, what we have is that to your kind of timeframe, to do the renovations. And then for us, really, we talked to investors, the fund, the sort of the partnership is open for you no longer than that. But I personally, if, if things are where we think they will be in two years in terms of where we want to get the rents, I would love to refinance it, get everybody their capital back and stay in the deal together. And then down the road, because of where it's positioned with a lot of over a billion dollar of Provigil funds in transit. I think we could add another story to it longer, you know, in the long run. So yeah, we have a few options, but I, the reason I bring that up is I hate seeing these investments where somebody says, like paying out their LPs and then buying them out. It's like, you're the reason they got this asset. You can pay them out and then they're not in the deal. Yeah. Ava (32m 17s): Options are key. That's fantastic. Now maybe we can discuss your nurturing process for your investors as it's obviously a very important component of, of syndicated investments. So maybe you can please tell us how you nurture your investors and get that know like, and trust and keep that know like, and trust going. Jesse (32m 36s): Yeah, for sure. I, I can't remember. It was actually a guy in the west end. I think Saskatoon, I had on my podcast and he said, this is very simple. He was, he's like, listen, go on your phone. If you scroll all the way down, if you have an iPhone and you're a contact scroll all the way down to the bottom, you'll see how many contacts you have. It's actually crazy when you're like, how did I accumulate, you know, whatever thousand 700, whatever contacts you can upload those to your computer as a spreadsheet. And you could run through those and really look at who's somebody that haven't had contact with that I could reach out to not to sell them anything. But as a touch point saying, listen, you know, how are you doing? It's been a while, just a general email. So he had like a three-step, you know, general email, a discussion and just not being salesy. And eventually basically telling people, listen, like, you know what I do in real estate, these are the type of investments that I buy. If this is something that you'd be interested at all, when we have one of these under contract or we're purchasing one, let me know if you'd want, want me to share it? And if you don't just let me know as well. And nine times out of 10 people don't say, no, they don't say like, no, no, don't tell me. And you know, you be somewhat strategic about the people that you're, you're reaching out to. And then I think what people really need to do, you're in so many more networks than you think you are for me. I did my masters at university of Toronto and just reaching out, literally getting the class list for my year and go and reaching out to all of them. Because, you know, if they, if they did that in school, they're probably, you know, doing something that, you know, might be a little bit different. They they've made a career change maybe later in life. So you have access where I had access to a lot of people that were like, yeah, a hundred percent sign me up. And some of the people that are in the subscription that, that are LPs were from that. So, you know, I've had people on my podcast that were in law enforcement and they left the force and then they, you know, they had their first indication with 20 cops. So I think you got to look at the networks that you're in and, and don't be afraid to tell people what, they're, what you're doing. Like you, you, you two are doing here, you know, people know when they talked to you August and Ava, like yeah, they're, they're in real estate. So I think being seen as is important, and I know it's not easy for everybody. We're not all extroverts, but it really is an important part. If you want to attract capital and, you know, that's the path you want to take. August (34m 58s): Great. Awesome. And I'm sure your shows and your connection to a bigger pot pockets is also a great cultivation process for, for bringing awareness to you and, and investors to, to your services, but maybe briefly touch on your nurturing process when the investors do connect with you, if it's from your own list or from, from your marketing campaigns or from your thought leadership platform, as they come into your database, how do you keep in touch with them? Do you know if it's through newsletters or other content that you send to them? So eventually when you do have a deal, because as, as us being in the syndication business, we're not a fund, we're not continuously buying assets and continuously raising capital, we look for a great deals and then we present it to our investors, to, to us very briefly about your nurturing process when for your leads or your contacts. Yeah, Jesse (35m 43s): Absolutely. I think for me, part of it is, you know, when you go to working capital podcasts.com and people will subscribe to the podcast, that'll be part of, you know, me reaching out to people and connecting and nurturing through there when it comes to people that I've, I've reached out to that say, didn't sign up for the last syndication, just touch points with them, whether, you know, constant contact or MailChimp keeping kind of abreast of keeping them abreast of what you're doing. And really, I haven't, I haven't formalized it in like to a T for me, it's just been, you know, the list of people that I have that are in my database, on, you know, through my website where we capture all the emails through the, the list that I have when I reach out to people. And yeah, it's, it's really, it's really like that right now. If we move to something more formalized as we, as we continue, you know, maybe that, that will be the path. Ideally, I'd like to get to a point where we're going to have committed capital rather than syndication where you're chasing the deal, chasing the clock, whereas where you can call capital and you have the fun there. Yes, Ava (36m 47s): It's cool. Cause you probably have a long list of people who are watching you on the sideline watching you kind of do your first deal and then your next one. And eventually a lot of syndicators say five years down the road, they've been watching us and boom, they just gave me $2 million. Well, I had a buddy Jesse (37m 0s): Of mine and like really good buddy that I did, that it was in my MBA and he's like, he opted out of the deal and he was just, you know, you know, you get a guy constantly asking you questions like, and then he's like, ah, so, so did that happen? I'm like, yeah, it happened. And he's like, oh, okay. I'll like, I'll, I'll go on the next one. I'm like I told you, man. So yeah. I mean, you just keep in touch and you know yeah, yeah. And it seems August (37m 20s): Your process is much more up close and personal and hands-on, that's always the best way to go about when companies get bigger. You never even get the CEO on a call with your cases is very kind of up close and personal and that's great. That's great. Awesome. All right. Ava (37m 33s): Now, Jesse, let's time to have some fun. We're going to start the next segment of our show. So we like to call this the 10 championship rounds to financial freedom. So please just tell us the first thing that comes to your mind and I'm going to get started. Speaker 3 (37m 51s): All right. I am. I'm set. All Ava (37m 53s): Right. So who was the most influential person in your life? August (37m 59s): Cool. Jesse (38m 1s): Oh, I'm going to get one of the mad probably my father. August (38m 4s): He didn't give you that money, man. He's, you're attracted to the hard to get. Ava (38m 11s): What is the number one book you recommend? Jesse (38m 14s): Oh man. So many, but all I just say, start with no gym camp. Okay. Ava (38m 20s): If you had the opportunity to travel back in time, what advice would you give your younger self start Jesse (38m 29s): Early start, start right away. You August (38m 31s): Started in 19. Jesse (38m 33s): I think just in general with other things like anything in life that you go, I'll do this. Oftentimes you don't do so. Just, just jump in. If, if you know you, you will, you will regret not doing it. You know, that'll August (38m 45s): Be the heavier regret when totally Ava (38m 49s): All right. What, what's the best investment you've ever made Jesse (38m 55s): In my education. Ava (38m 57s): What's the worst investment you've ever made. Let me think your Jesse (39m 5s): Worst investment I've ever made. One, one student rental property. It's tough to call them the worst because you learn from those. But very, a lot of, a lot of mistakes made on that, that, you know, took, took a while to, to, you know, fix and yeah. Ava (39m 21s): All right. How much would you need in the bank to retire today? What's your number? Jesse (39m 28s): Nothing. I, I love being active and working and I don't, I don't find what I do, you know, a job job. So Ava (39m 38s): If you could have dinner with someone dead or alive, who would it be? Jesse (39m 43s): Well, dad's more fun and morbid. Probably Milton Friedman. I've the economist. I've, I've always found his, his writing's really good capitalism, freed and freedom free to choose. Yeah. Ava (39m 56s): Awesome. If you weren't doing what you're doing today, what would you be doing now? Jesse (40m 1s): That's a good question. Probably law. Okay. Ava (40m 6s): Book smarts or street smarts. Jesse (40m 12s): After all my education, I always still say street smarts. Ava (40m 17s): Okay. If you had a million dollars cash and you had to make one investment today, what would it be? I would put it Jesse (40m 27s): In a fund as the GPS Capitol to show our skin in the game and you know, whatever we can multiply off that with, with investors. Awesome. Ava (40m 38s): That's a great answer. Awesome. That's great. Those Jesse (40m 41s): Are so yeah, you don't get asked those every day. Yeah. There Ava (40m 44s): You go. Kind of puts you on the spot and it's fun footings, you know, first thing that comes to mind occasional August (40m 50s): As well, right? It helps others kind of think about these questions and kind of helps them with the process. Hey Jay, Jesse, we really appreciate your time. Thank you for thinking. We know you're super busy. We really appreciate taking the time coming and speaking to us, definitely add a lot of value to our viewers and eventually our listeners listeners when we change this show to a podcast and, Ava (41m 9s): And yeah, Jesse, if you just want to take a quick moment to tell everybody what, the best way that they can reach you, please. Jesse (41m 15s): Yeah, for sure. I mean, aside from a Google search, Jesse, for galley working, working capital podcast.com, you can go there if you want to subscribe to, to get the show or Spotify, iTunes and yeah. Reach out to me there I'm as a broker, I'm not hard to find. So that's yeah. Ava (41m 35s): Johnson, Jesse. Thanks a lot for coming today. Thanks so much. Jesse (41m 47s): Thank you so much for listening to working capital the real estate podcast. I'm your host, Jesse, for galley. If you liked the episode, head on to iTunes and leave us a five star review and share on social media, it really helps us out. If you have any questions, feel free to reach out to me on Instagram, Jesse for galley, F R a G a L E, have a good one. Take care.