What is happening everybody? Welcome to Mentorship Monday. My name is Matt. My company is called
the DeRosa Group. Welcome to our Mentorship Monday program, and like I said, my name is
Matt. Mentorship Monday works like this: there's a lot of people out there that want just to
pick a real estate brain, that want to get some real estate advice, that want to talk
out a real estate problem or real estate conundrum that they're facing, or just get some real
estate guidance, whatever that looks like. All you got to do is send an email to helpme@derosagroup.com,
that is helpme@derosagroup.com, and we'll take your real estate question, we'll bring
you on live right here onto the program, and we'll answer your question, we'll chat for
a little bit. I got my cohost, Justin Fraser. Come on in Justin and say hi to everybody.
Hey everybody. What's happening?
What's up, man? How's it going?
Happy Monday. This week, we've got a very special guest, Mr. Chris Giannino. Chris,
what's up, man?
Hey, what's going on guys?
What's up, Chris?
How are you? How are you doing man, Chris? I know you're already in Insiders.
Yeah. And honestly, little plug for you guys right here. I've been in it for about a month
now at Insiders that I've learned so much. So like, I think it's totally worth the value.
So like one, thank you guys for doing this because we have access to see stuff that I
wouldn't see. So thanks for that. And I look forward to it.
Thanks, man.
You're welcome.
We did not pay or ask Chris to do that.
That was no, yes. What's what's on your mind?
Basically, eventually I want to get into buying an apartment complex, similar to you. I'm
in the learning process right now. And I wanted to see for you, what was the pivotal point
where you're like, I'm just going to go do it. Was it a certain amount of units? Was
it, the type of deals you were doing? Like, what was that moment for you?
We were not one of these folks that just took a weekend course on like, Hey, buy it, pay
me five grand and I'll teach you how to buy apartment complexes. We never did that. We
just scaled through it and started small, owned a couple of four families slowly bought
more four families down the block one that one, bought a few things around Trenton. And
then eventually my next stretch from multifamily after buying a couple of four families was
a ten unit it. I mean, that felt like, it felt like buying a hotel. It was a big stretch.
Got my head around that thought about it. Got it good. Then we bought an 18 unit. Okay.
So from there we bought a 49 unit. And from there we bought a 198.
We slowly scaled it to multi and that's what I recommend that you do. So it's listen, it's
not as sexy to be like, Hey, I'm going to go buy a 10, five unit apartment building,
look at me. Right. But I can tell you that there's a lot that, that five units going
to teach you and you can probably own more of it. And you can probably make plenty of
money. I mean, I made plenty of money on my five units my 10 units. All those properties,
so you actually have to give a lot more ownership away, the bigger units. So more units doesn't
necessarily mean more money. Either mind you that's a whole nother rabbit hole we can go
down. What did it for me, as I got more comfortable with the systems and processes that we would
use to manage those things.
And as I got more comfortable with our knowledge of tenant management, because I was managing
it all myself, as I became more present and aware of those things, I just got more comfort
level and I was willing to stretch myself a little bit beyond my comfort level. That's
what did it. But I think that systems processes understanding the rules and regs and understanding
how to manage something a little bit bigger than something a little bit bigger than something
a little bit bigger, is what did it for me. It wasn't like this light that went off that
was like, Oh Matt, you need to go out and buy a 200 unit apartment buildings and this
is how you do it. We grew into it. Unlike a lot of the other folks that are out there.
Okay.
Unlike Justin who bought a single family home. Then he got hit in the head with a lightening
bolt, went I bought a 40 unit.
I had three, I had three single family homes.
I don't know if what I said resonates with you, Justin, but I mean, what you don't have
to tell, what would be your thoughts on, epiphanies, mindsets, whatever it is to go from where
you went to 40 units.
I'm very like how-driven. And so, if you have a strong how-meaning, like you've got experience
in construction or something like something, that you can bring to the table that can help
you skip a few steps, then I don't think that's terrible, right? If you've got a mentor that
can help you out, like I had with this guy.
This guy. Troublemaker over here, I got into it. Yes.
There are ways, the advice Matt gave is absolutely 100% a great way to go for most people because
it helps you figure out what you're good at, what you're not good at how to raise money,
how to do deals, how to maybe partner with someone on that five unit or 10 unit and sort
of grow and expand from there. Maybe you start to bring in property managers and you learn
how to manage managers and all that. For me, I came from the angle of, I've got some real
estate experience. I love it. Let me join a team. And I came in as a team member where,
well, I did my syndication and, and brought Matt on. And then I realized like, Oh, let's,
let's be part of a team. So now I don't have the burden of finding deals or raising the
money.
I just focus on what I'm good at, which is the asset management. And I'm part of a bigger
group doing a lot of big deals. So everyone has their own path and there's no real wrong
answer. I mean, I would say the wrong answer is if you have no experience, no credibility,
no contacts, nobody that can help you, and you're like, I'm going to go buy a hundred
unit property with no experience and no money. You're probably going to have a pretty hard
time.
Irresponsible.
Exactly.
Yes.
But if you have some kind of track record, whether it is business, like your day job.
Hey, I don't care what weekend course you went to, teach you how to do that deal. That
a hundred apartment building's kick your butt, man.
Right. Right. Exactly. And so, definitely. So as far as like the mindset shift though,
Chris, honestly, for me, it was Matt. I was hosting a meeting and Matt was our featured
speaker that night. And he was speaking about his 49 unit deal. And I was like struggling
to find property number four.
I remember that deal. I remember that meeting. I remember that meeting [crosstalk 00:06:03]
the Mexican place up on route one.
I hosted you that night and you came and we had a packed house. Normally the speaker will
come in. I'm not really, but like I was listening. I'm like, you know what? I don't need to go
spend all this time and effort on finding house number four. Why not bring in a 20 unit
or 50 units or something at much larger scale. That's what worked for me and my skill set.
And I figured out the how and the pieces to go do it. But sometimes all it takes to them
that lightning bolt of inspiration to figure out like, Oh yeah, if this guy can do it,
I could probably figure it out too.
I say that all the time, man, if I can make this thing work y'all can too. Yes. So there's
two different ways you can do it. You can scale up, like I said, which is what I did.
Or you can do what Justin did, which is join a team. And I tell people that all the time,
the way you get into multi is one of those two ways. And the scale up thing, a good goal
is to double your portfolio every time you do a deal. And it sounds like not that much,
but that exponential, scales really fast. So just every time you do a deal, double up,
if you got four units by four more, you have eight, then by eight more, you have 16. Then
by 16, if you have a rough goal to scale up, and I've coached a few people through that
process and they scaled up quickly, and they're sitting on a lot of units now just because
they just slowly scaled as they went, Adrian.
Follow up for you.
Yeah. It's a good question. Because Adrian was asking, okay Matt. So did you go and buy
a couple of four families, lever those up and then go buy more and then leverage those
up and then go buy more. No, we still own a lot of the small multi that we did. I rarely
sell. I'm a buy and hold and as long as I can kind of guy. We ended up just attracting
more equity, probably because of the book, raising private capital, partly just because
we've been around for a while. We started to attract more and more capital so that enabled
me to get into larger deals and as we build systems and built teams, that enabled us to
buy more properties, I've sold some stuff, but mainly we've just acquired more. I still
own things that I bought North of 10 years ago.
Real Estate Ced, I bought most of my stuff, local. I believe in buying small local, buying
big remote. That's my 2 cents on that. I mean, if you're going to buy a duplex, I would be
nervous buying a duplex that's a couple of thousand miles away from my house.
I agree.
But if you can find a duplex in your backyard or close to a half an hour from you, great.
I know people in California can't do that as well, but if you can buy small local by
big remote.
So Chris, your second question.
So with COVID happening and everyone kind of working from home and a lot of new normals
like employers are pushing to work from home indefinitely. Do you think the Southern and
Midwest markets might have a nice uptick in appreciation because people might move from
like New York city and all these expensive areas to more affordable areas since they
could work remotely.
I have a lot of opinions on that. That's interesting. It depends on the industry. Not every industry
allows for working remote. I've got a buddy who's an assistant plant manager at a factory
down in Virginia, guy I went to college with. He ain't working remote. I mean, because the
factory is not going to run itself so not everyone can work remote. America is still
going to need to go to jobs, go to work. We're not going to become this ultimate, autonomous
society that we're all going to get to not have offices at all.
That said, I believe real estate that's been around like tech hubs and you know, areas
like San Francisco, whatever that real estate may become less attractive because those companies
may not require their employees to live in those markets anymore. They might allow them
to telecommute in that, it has to do with the age group of the tenant because some folks
would want to just like, okay, if I work in Manhattan and my boss says, I no longer have
to be there every day. Well maybe I can move to South Jersey and just commute in once a
week for a day. And I'll deal with that in exchange for working from home the other four
days. And I can live close enough that I can commute in.
So that industry may yield that. But then you've also got other industries. Like one
of my investors is a computer programmer and he lives in DC because living in DC allows
him to not have a car. And he's an urban-ite, so allows him to be in an urban environment
or whatever. And the tech company he works for is out in California, and he's a software
programmer. He just puts in the hours, does his programming. So you will see more of that.
I would shudder to bet about where they're going to pick because a lot of options, there's
the mountains, it has to do with personal preference, right? So if it were me, I'd be
living maybe at the beach or maybe in the mountains or whatever, but that's me.
There's also super desirable areas that are already overpriced, that are already high.
So it's not like people say, Oh geez. Now I get to live, in a high rise in Miami because
I can telecommute, well, that's already a top dollar market. I think that what you'll
see more broadly and telecommuting is the areas that are a little more remote to the
big cities. Like let's say, look like an hour and a half outside of San Francisco and that
maybe you can live there and go into the city once a week or something like that. That's
maybe where I would look for a boom, versus betting on around you and me, the Poconos
becoming more popular. I don't know that it's, it really has to do with personal preference.
Does that make sense? Long, super long winded answer to your question.
I agree with everything Matt said, I do think that there is going to be more work from him
and it's not just going to be tech in San Francisco. You're going to start to see, I
think sales jobs can be outsourced and there's anywhere in that, maybe could work from home
once a week, once every few weeks before, it might become the new normal to, to work
from home four days a week, five days a week and you're only really going into the office
to like pick up any physical mail and like check in with a meeting with the CEO or something.
There's not going to be as many needs for it because everyone had to adjust so quickly
to working from home, that it's that transition period that might've taken five years, I think
has accelerated to two months. And it's not going to be unusual for people to call in.
What will be unusual though will be if there is, an eight person meeting and seven people
are sitting in the one room and the one guy's home and everyone knows he's like just down
the road. So that might cause a little, but if everyone sort of leaves, [crosstalk 00:12:23]
Yes, he's sat in his pajamas.
Right. Then there's also state income tax to factor in as well. And so if you're in
a high tax state, you might, if you can get away with it, you might want to move to a
lower, no income tax state.
Personally, that's what I think you might see more of. If I had to break out my crystal
ball a little bit more, Chris, I would say that in, you may see people look at this whole
thing as permission to finally move out of high income tax States or high real estate
tax states, example, New York, New Jersey versus Pennsylvania, or New Jersey versus,
Delaware has other benefits and stuff like that. I think it has high income tax. But
anyway, look at States where there's a disparity in tax base. I've heard California versus
Utah, in that, I know very little about it. But there's disparity among state borders,
and so if you see that look for maybe a shift across state lines.
Adrian wants to know thoughts on Northeast Newark. I know very little about that area.
Justin, you may know more about North Jersey. My only thoughts on Newark in general is some
people joke that it's the sixth borough because it's kind of becoming another commuter area
into New York city. So I think anywhere in North Jersey, Adrian, is going to is becoming
more of a thing for people to shoot into the city. So that's my two cents, although I don't
know, regions of Newark or the outskirts of Newark, if you guys do, you can hop in.
I know that Newark is very neighborhood specific. And so there's, from what I've heard from
other investors is you could cross the street and be in a very different type of neighborhood
than you were on the other side of the street. So if you're going to invest in Newark, you
have to know the area and that goes with any town, right? I'm 30 minutes away from Newark.
I would not invest in Newark right now because I do not know the area and that's not any
commentary on growth or cashflow or, or appreciation. I just don't know it. So I can't invest there
right now. So if you're going to invest in Newark, learn it, learn the neighborhoods,
learn the areas, learn the streets, learn the economic factors. Learn the policies,
the economic development plans, look into the proposals for 21 and 22. Where's the city
spending money. Where are they trying to improve neighborhoods? Like all that, that's where
you've got to come in and do the legwork, and that goes for any town across the country.
Words of wisdom. When I first started invested in Trenton, I did everything Justin just said.
I called it the department of housing and economic development for the city, met with
zoning officer. Those folks, that's the public servants. Their job is to meet with people
that want to do work in their town. So they were happy to help me. So, yes, we know this
developer's doing this work here and this is going to be an opportunity zone or this
area over here, a big developers going to come in and do a bunch of work and they're
not going to be like, yes, this neighborhood over here is really sad. They're going to
kind of sell you on why Newark amazing, as they might not tell you where the bad neighborhoods
are, but they'll definitely show you where opportunities are, so Adrian, thank you. Helpme@derosagroup.com,
Adrian fire off that email. I want to see your pearly whites, your shining face right
here on, on this show with me and Justin next week.
He said he promises, so Adrian, we'll see you next week. Can't wait.
I got your word, man.
But for this week, Chris, I want to thank you for some really, really great questions
here and getting into multifamily. And then of course COVID is on everybody's mind and
how that's going to affect everything.
Absolutely. Thank you guys very much. Have a good one.
Thanks Chris.
Good stuff, Justin. This is good stuff. I'm really enjoying these Mentorship Mondays.
Just fire us some questions you can join us live next time. Send a text message with the
word DeRosa to six, six, eight, six, six. We're just go to DeRosaGroup.Com/Insiders.
You've got a half an hour to join us. Justin and I are going to tear up this deal and make
a go, no-go decision on a 300 unit. I can't wait, a lot of great stuff's going to come
out of that conversation.
All right. Thanks everyone.
Thanks for watching guys and have a great profitable week.
[crosstalk 00:16:22] a great and profitable week.