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From Jamaica to Baltimore: A Story of Success in Real Estate | All Roads LTR Podcast | Ep. 39
43 Plays5 months ago
Join Matt, as he sits down with Caleb Jackson, founder of Lion Development, one of the largest residential portfolio holders for Johns Hopkins University Housing. Caleb shares his inspiring journey from a rebellious teen in Jamaica to a successful real estate entrepreneur in Baltimore. Discover how his unconventional path from training with the Jamaican Olympic team to founding a successful nonprofit at 17, has shaped his unique perspective on real estate investing. Tune in for a story of resilience, inspiration, and courage to follow your own path.
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Transcript
Matt Rine on Social Media and Personal Use
00:00:10
Speaker
Hi everybody. This is Matt Rine and welcome to the next episode here of All Roads Lead to Real Estate. We were just mid conversation a second ago about my distaste towards almost everything social media. I can't help it, but that's the way I feel. I liked your idea there. You said, I use it, but only on my terms.
00:00:30
Speaker
Yeah, it's a beautiful thing. I have a Instagram story. Yeah, that's just been like every day from college. So I have people that have literally been following since 2016. Just the journey every day. But I'm looking to get in that same phase two of I need higher quality thinking, you know.
00:00:49
Speaker
That's one way to do it. I just think it sucks me down this rabbit hole and I just don't want to put my mind in that space. And it's like a time suck of time sucks. I don't know. So I've been anti social media and I was in college when Facebook came out like good old, you know, Facebook days. And so I know no one uses it hardly anymore, but that's the only one I still use if I use any.
00:01:11
Speaker
Everyone has like that generational tool.
Introducing Caleb Jackson
00:01:13
Speaker
Yeah, you know like those who used Facebook some people use tiktok I've never logged in tiktok once I don't know if it's because I don't want the CCP didn't have my information out there anyway Yeah
00:01:27
Speaker
I should properly introduce you so folks know who I'm talking to. So I have a special guest today. His name is Caleb Jackson. And so basically what happened here and how you managed to arrive after having just met me into the studio is that we were having an organic conversation at a happy hour the other week.
00:01:47
Speaker
And it was just fascinating conversation and I was starting to get to know you because I just met you. And I said, what better way to get to know you and stop this conversation? Sure, let's do it on the podcast, because, you know, as someone who does residential real estate all day, every day, you know, your journey isn't standard.
00:02:07
Speaker
And so I think you have a unique perspective and I deal with investors, which you are all the time. However, I still think it's a unique perspective you have. It's kind of a little bit more advanced than the traditional investor that I run into.
00:02:22
Speaker
And so I think people will be interested. So first off, thank you for joining me. Thank you. And thank you for your kind words as well. Yeah. Well, we'll see. I'll reserve full judgment until I get to know you. But as of now, I'm impressed.
Caleb's Real Estate Journey Begins
00:02:34
Speaker
And so basically, you know, I want to get to the root of your journey and your story, but
00:02:40
Speaker
You are a founder of Lion Development and you're here in Baltimore, Maryland. And so the crux of it is that you're one of, if not the largest portfolio holders for Johns Hopkins University Housing. Is that correct? Yeah. So we'll be the largest residential portfolio, close to 300 student rental units, July 31st.
00:03:01
Speaker
Well, congratulations on that. For those of you not watching this, you're not an old man. You still have some youth on you. I feel like it. Yeah. So that's one of the reasons I'm inspired by it. It's because some folks feel like you have to have all the experience in years under the sun to be able to be successful or to get your foot in the door.
00:03:26
Speaker
When I always challenge that, it's like you just have to have the idea and the courage and the belief to be willing to fail and to go after it and to learn after your mistakes and keep doing it because I imagine through your story, I can't imagine every single thing you've done is worked out perfectly. Right. It's kind of right. You kind of have to figure out where to go and what to do and and walk, be willing to walk through that door. Absolutely. I've had
00:03:50
Speaker
And on the real estate side, we've seen phenomenal success and some of the entrepreneurial endeavors leading up to it. I had some boom and bust periods, which also that just translated to being more effective on the real estate side. So we'll dig into all that. Well, start off. So that's kind of what you're doing. So if you're listening to this and you own one or two rentals or you're thinking about it, that's pretty much where most folks are. If they even want to be an investor, most people, specifically folks that listen to this,
00:04:17
Speaker
I've had a lot of comments that say that they aspire to be investors and they're not exactly sure where to start or where the path might take them. I feel like you're a path that some people don't realize is an option. And to have 300 units at a university as prestigious as Hopkins, you know, it's just in our back door or back, you know, backyard, so to speak. And so it's a natural fit, giving that you're from Baltimore.
00:04:41
Speaker
Absolutely.
Influences from Jamaica
00:04:42
Speaker
But it's still an incredible feat and I can't wait to hear more about it. So before we get into all that, help explain a little bit where you're from. And I know you're here in Baltimore, but your roots and all of that so I can have some understanding as to what's going on with that head of yours before we get into today. Yeah, absolutely. So born here in Baltimore, Maryland, was born at Sinai Hospital to be exact. I spent the first 15 years of my life in Owings Mills, Maryland.
00:05:10
Speaker
So my mom, this comes from an island called Tobago, Trinidad and Tobago. We could see Venezuela, you know, seven miles from, like, my grandma's house.
00:05:19
Speaker
and then my dad's from Washington, DC. And so I was a wild kid. My grandfather, growing up, I would say it was my best friend. We just had an amazing relationship. It wasn't about business. I wasn't really exposed to really anything that he was doing in the business world, but that was my best friend growing up. And so going through, I guess, whatever adolescents go through, it was very, very volatile.
00:05:48
Speaker
And my parents, I went to go live with my extended family over in Kingston, Jamaica. So I actually was at what age was that? So I went to that was 15 years old. So I went in the middle of height of I did like a couple of months at Oings Mills High and then left in the middle of that year. Was that Pike's Hill Middle before that? And that's an instrumental for a variety of reasons, but.
00:06:13
Speaker
in terms of as soon as I went to Kingston, Jamaica, is around that same time my grandfather was actually diagnosed with cancer.
00:06:21
Speaker
And he essentially passed away maybe within like a month of me being in Jamaica. And so that when that happened, it really was a formative experience for me. And I just decided that I was going to succeed in real estate. He was in real estate as well. There was no inheritance event or anything like that. But just the inspiration of because he really took the Jacksons to a different level.
00:06:49
Speaker
you know, based off what he's coming from and he had a harder life. So I just wanted to build upon that vision. And that's just where the foundational inspiration came from. When I lived in Kingston, Jamaica, it was one of the greatest experiences of my entire life.
00:07:05
Speaker
It was amazing. A 15 year old boy from Owings Mills living in Jamaica. Did you instantaneously develop an accent? I'm there for a long weekend. I feel like I kind of put one on.
00:07:20
Speaker
Oh no, I mean this voice has carried me everywhere I've gone. So it's never fit in there and it doesn't fit in here either. But yeah, it was awesome. I lived in the mountains. Kingston is very mountainous. I lived on the top of a hill with my whole family, cousins and all. It was amazing. Wow. Well fun fact, we got engaged in Jamaica. We were in White House Jamaica.
00:07:46
Speaker
Okay, you've ever been there. I haven't been to white house. I spend a lot of my time. I'm guessing that's what in the grill White house. I should know but I honestly honest that was so many years ago We've never been back because we go to do we try to rotate and go to see everything go to Portland, Jamaica Oh, yeah, that that's where it's at. Just hang out with your family. Yeah, maybe I'll be inspired a hundred percent I mean, so when I when I was living in Jamaica, I'll
Educational Strategies and Mindset
00:08:11
Speaker
just kind of talk about it because it's a character trait. That's yeah
00:08:15
Speaker
Probably been like the most impactful in real estate so when I moved to Kingston I actually went to a high school that originally only had five people in my class It was a very very small class The principal of the school and I'm friends with with them and my first business teacher today as well, but it was more of a place where youth go to get discipline and
00:08:38
Speaker
Sure. And, you know, I had this experience where I like just left school in the middle of the day to get some food. Everyone was wondering where I was. Yeah, whatever. Yeah, exactly. And long story short, I got suspended, got my phone taken away for like six months or something like that, or at least it felt like it. And then I also got paddled once. And when I got paddled, I think that that was like the last straw.
00:09:05
Speaker
I heard that there was this school called Hillel Academy and I just heard about it, but I heard it was a great school, heard that's where all the pretty girls were. Yeah. And I actually skipped school, you know, my second year in Jamaica and walked to Hillel Academy.
00:09:27
Speaker
Spoke to the admissions person, introduced myself. They said, hey, come in on Monday with your parents and had to go to home, explain that I skipped school and essentially got myself into one of the best high schools in Kingston.
00:09:45
Speaker
with no paperwork, all from just like going direct to the source. So like from real estate and just how the story evolves, that's just been like an attack mindset that I've had from that from that period in time. Did you end up graduating from that high school? Yeah, yeah, I graduated there. I mean, you were in Jamaica for a while then. This wasn't a summer. This was several
00:10:08
Speaker
in several years. I actually trained with, so there's something called CHAMPS, which is the fastest high school track meet on the Western Hemisphere. And so I was training to actually represent my school at CHAMPS. And so I would take myself in the morning to this field at the university there and just train myself. And what I found one of these mornings was that there was all these luxury cars that were just like leaving the environment.
00:10:37
Speaker
And this is right after the 2012, well, my years get kinda messed up, but it was right after the Olympics. And I realized that this is actually where all the Olympians trained. So I came back on another day, introduced myself to the head coach, essentially asked him, hey, can I train with you guys? And trained with the Olympic team. The Jamaican Olympic team. Jamaican Olympic team. So the fastest woman in the world at the time, Cheyenne Fraser, used to pick me up every morning from training.
00:11:06
Speaker
And so that was just a really transformative period in my life as well. Were you fast enough to hang with them or are they next level? Absolutely not. They're next level. The training is the most intense of my entire life. But the thing is is that when you look at these track meets and you'll see some of these Jamaicans having fun as they're beating the competition to really feel the work in the background.
00:11:35
Speaker
the three day time of day trainings, the vomiting and all that kind of stuff. I think that's really that also that mentality also really helps with closing deals. Watching like Hussein Bolt, he had a guy, I assume it was a documentary on Netflix or one of these networks, and it was describing that he looks like he's having a great time at the meet. He said because I put in all the work. Yeah. And he is like it was the first time I had ever known I thought he was just that gifted and he could just have a cheeseburger and show up and be that good.
00:12:05
Speaker
But did you see the special I'm referring to? I saw it and we had like the Kenyon's training. He was just the crazy like he went hard and he just said how hard he would work. And he was miserable. He wasn't having any fun. 100 percent. And he was miserable. But he said that's the real work. And he's like if you do that when you practice going like you actually enjoy the meat. Exactly. And like even when it comes to a deal or anything or even speaking about an investor or whatever.
00:12:35
Speaker
So much work is put in. I spend my time training for moments. So for that moment when it's time to close, for that moment, whatever, I'm always preparing myself so I can step in with confidence when that time comes. Well, I've had other business coaches that'll describe that's the difference between a professional and an amateur. It's not what you do at the moment when we're trying to make a deal, it's that the professional is practicing. The professional puts in the reps. Absolutely. And they put in the work before it's game time.
00:13:04
Speaker
Absolutely, that's what a professional does in an amateur just it's like rec league basketball. You just show up and play the game, right? You know, that's not what LeBron does That's not you know what the best of the best are doing there They're putting in the the hours and the work and the weight room and all the rest and then then they get that fun at the game exactly
00:13:20
Speaker
And so, I mean, it's apparent based on just your track record that you've clearly done that. And so I guess, so you graduate from high school in Jamaica, and then what do you do? So the thing is, is high school in Jamaica ends in the 11th grade, and then you have, because it's the British system, you can do something called the sixth form, which is 12th and 13th grade, or you can just graduate from 11th grade, right? So sixth form,
00:13:47
Speaker
It tends to give you like college credits in terms of its intensity. But the thing is that I was never a good student and I, you know, people will tell you today that I read a lot of books and everything like that, but I hated with a passion school. Never. Why do you think that was? Is it?
00:14:05
Speaker
So the thing is that my parents were academics and doctors and physicians to be more specific. And I think when you don't when you're not succeeding from from in those metrics of success, it didn't come as easily to you as it probably did to them. And I also just didn't give a damn. Yeah, you know, it's like they say I have ADHD, whatever. But, you know, for me, it's about the context, right? It's just like I wasn't interested and I just didn't care.
00:14:32
Speaker
And so I knew that I would fail in terms of standardized testing, SAT for example. And so I found this little loophole where essentially if you do one year at a community college, you can actually transfer, you can go into university as a transfer student versus
00:14:54
Speaker
taking the SATs or whatever. So I said, OK, if I do my 12th grade year at a community college, I can like catch up with my classmates and get into university that one time. So my parents at the time moved to Delaware. And when I was and I went to Delaware Community College for a year. But the thing is, was very important about that period in my life.
00:15:19
Speaker
was that when I was leaving Jamaica, I had such an amazing time. I told myself that I would not stop working until I find my way and I would not stop working until I'm free.
Early Career and Real Estate Insights
00:15:30
Speaker
And so I didn't leave America under the best terms. It was a huge anxiety point coming back into the unknown. And so I just knew that I was going to keep the intensity on full blast until I made it. And so what I would do is that I would email CEOs and I would say, hey, my name is Caleb. I think I was like 16 at the time or 17 at the time.
00:15:53
Speaker
You know, can I just interview you and just ask you questions and stuff like that and my brother he went to a school called Tower Hill High school in Delaware and I was coaching their track team and one of the athletes you were coaching their track team at age
00:16:10
Speaker
Well, I was one of the coaches. At 18? 17. I was younger than 18 because I started my nonprofit, which we'll talk to at 18. So it was within that filler year, so like 17 and some months. And so I'm one of the coaches of the track team, and one of the athletes says, hey, my dad owns a construction company. And I said, hey, I'd love to interview him because if I can learn how to build a house, I can build it cheaper than the next guy.
00:16:36
Speaker
And so Doosan Construction Company is the is the construction company's name. They build, you know, 10 million dollar plus custom homes in Greenfield, Centerville, Delaware. And Tim Doosan, after that interview, the interview went so well that he offered me a job on the spot being an intern where he was rotating me around estimation, laboring.
00:17:00
Speaker
It was the first time I looked at like a rent roll, all the different facets of a construction company. And he only had a high school diploma. So he only had a high school diploma. He's the most successful guy that I know at that point in my life. And I was really attracted to the variety.
00:17:19
Speaker
that a developer can have, right? You can be in the woods for one second driving your car in the woods. And then the next second you're at a board meeting. And I think that really just kind of was like the mental stimulus I was working for. So that was a really powerful moment in my life. And had to go back to Jamaica that summer.
00:17:38
Speaker
And I said, man, one of the things about the developing countries period is this concept of brain drain. And I actually felt a sense of guilt extracting so much from Jamaica as a non-Jamaican citizen and not giving back at all. And so I said, hey, I'm going to go feed the homeless. Let's just do a homeless project. And within 48 hours, we got 300 volunteers.
00:18:07
Speaker
And so that was the genesis of an organization called Operation Health of People. Our first project, it was like a fully viral project. We had some of the Olympians donating. We had a- Well, who helped you with that? How would you know at 17 to even know it's possible and to know how to even get it started? I think one thing I do is I follow my inner voice.
00:18:36
Speaker
I may have not, I do have a lot of people giving me advice and stuff like that, but that was just purely just like internally I got an instruction to do something and I just execute on it.
00:18:46
Speaker
And it just there was just so much built in like momentum. Like it wasn't like I planned like, hey, I'm going to go have this whole strategy. I'm going to go and execute. It's like I put it out on Instagram. Instagram is my weapon of choice. And you got 300 volunteers and 48 hours and it's like, OK, well, now you have all these people that want to be helpful people because I didn't even know how to send proposals or anything. And everybody chipped in.
00:19:10
Speaker
Everybody chipped in, we formed a team, cousins helped. It was my first time on national television. I completely got nervous on stage, whatever. But the project was a raging success. We distributed like 2000 meals, 2000 care packages, three locations. We cooked our meals at Bob Marley's house.
00:19:34
Speaker
So like when I had another Jamaican, it landed in Delaware. No. Yeah. Yeah. Yeah. So when I actually watched the movie, a lot of the guy who played young mob Marley was actually a volunteer. Oh, yeah. Rita Marley is we paid. We cooked the meals at her house because I went to high school with some of the grandchildren that were super supportive. Yeah. And that is when I found power that I found that I have a lot of power today.
00:19:58
Speaker
It's like I don't have to wait until I'm 50 years old to make this impact on the world. I can go out and I have an idea. I can implement it and make it happen today. And I got rabidly addicted to that feeling. And I was really an entrepreneur from that moment going forward. I was gonna say, so what gives you the courage to even have the notion that you can do what you want? Do you just believe that's from your parents or your grandfather? Or was that just inherently, well, I think I'm gonna go do it. So I'm just gonna go to that school and just get myself in there.
00:20:28
Speaker
So where do you think it comes from? I think it comes from always being a misfit, always especially growing up feeling like there was something wrong with me or I'm not intelligent or blah, blah, blah. And just saying, you know, screw, you all have to say like I have this internal. The thing is, is that, you know, and we'll go into college and my story now, but all those options of those paths exist today.
00:20:56
Speaker
But if I did not go full in, without a doubt, I wouldn't have had the luck for the opportunities that we are today if I had missed those moments in time. But I think it was just more so of a situation of understanding like, hey, this is always going to be an option here to go down this road.
00:21:15
Speaker
But this fire in my soul is just not allowing... I just rather do everything, you know? And I think another thing as well is when you look at appearance or physicians, right? So being able to look at that and I was just like... I now have learned to articulate it. Freedom is my number one value.
00:21:38
Speaker
And so if I don't have freedom, what does that mean that you I just want the freedom to explore my ideas to be able to do with what I want with my time and it's not really about like wealth and material things. I just want the option to do so because the thing is like I was looking at.
00:21:57
Speaker
a Jamaican dollar bill one day and a US dollar bill. So a hundred dollar Jamaican bill is like one dollar US. A hundred dollar bill US is a hundred dollar bill. And I thought to myself, I was like, hmm, it probably costs the same amount to print both of these pieces of paper, but this piece of paper has a hundred times more value than this piece of paper. And there's just, I don't want these pieces of paper. I only have one life to live and I don't want to not be able to go after what I want in life because I don't have pieces of paper to do so.
00:22:25
Speaker
And so that's just been the internal monologue. I don't know where it came from, but I'm happy about it. Well, you answered your question in a very roundabout way. Yeah, sorry about that. I don't know. I think it's there. We don't have to sing dancers all the time to how we're driven. I think just hearing your story, it sounds more or less like...
00:22:45
Speaker
you just feel like you can do it. It's just an inner confidence that just says, I'm gonna do it. You say what drives you is a similar way. I don't phrase it the way you do, but I just think it's choice. I wanna choose to do what I wanna do. I like being an entrepreneur and self-employed. It is not the easiest path, by the way. There's a lot of risk, there's a lot of sleepless nights, there's payroll, there's things that aren't fun.
00:23:10
Speaker
but the alternative is horrible. The alternative is what we call like a normal life. I didn't like normal, but I want the power of choice. I want to choose to work at 65 years of age, not because I have to, but because I want to. And I'm assuming that's your, like you just want to choose. If you want to choose to do something different in five years, you want to be able to do it. Absolutely.
00:23:31
Speaker
And money just unlocks a lot of these doors, which, unfortunately, we all it's just it's necessary 100 percent. And it sounds like I don't know, I can relate to you in that in that way. Yeah, I mean, it's.
00:23:48
Speaker
Yeah, and I think it's like being able to work hard at our own conveniences, right? Well, it's like I've heard it before. If I could just say that we're all gonna have troubles and pain as you go through life. 100%. You get to choose yours though. And so you can choose what your issues are or what you complain about to a certain extent.
00:24:08
Speaker
Absolutely. You were just excited when you first walked in about hitting a good appraisal for an investment deal that you're doing. It's like that could have gone the other way. And now you would have been really upset coming in here. I'm thankful it went your way. Better, better, better mood right now. But the point is, it's like there's there pain points, but you got to choose the pain points that you're in right now.
00:24:27
Speaker
100 and from that from that point of my life as well not having like Entrepreneurs I can call on like within the family or whatever the case may be. Yeah, I just Dedicated that period of my life. I just said hey It sucks right now. I don't have any options. I am just willing to completely throw away this portion of my life and we'll get into the story as we're going on into it, but um, I
00:24:53
Speaker
It was just a conscious decision like I'm going to sacrifice this section of my life and I just hope that at the back end of my 20s that I can have the freedom that I'm optimizing for and it has come around full circle. How did you in your in your mind throw away your early 20s by doing what exactly?
00:25:08
Speaker
So the thing is is that and I'll advance the story a little bit just so we can just so I can share with you how I got to that point. So when the nonprofit went fully viral and was successful, my friends from middle school caught on to it. And because I went to Python middle for that one year.
00:25:29
Speaker
And then i got in the howard university as well so remember i moved out of my parents house at fifteen. So that whole like first time out of the house thing partying in clubs and all that kind of stuff i like i did that like i got all of that and more out of my system.
Transition to Wholesaling
00:25:44
Speaker
And when i'm catching up with my friends his name is ben moshell at the time he's talking about how he's in real estate.
00:25:51
Speaker
And so I would take the bus from Howard to Baltimore and I'm seeing them wholesaling tons of properties and owning hundreds of properties. So one of the partners ended up scaling up to like 600 units.
00:26:07
Speaker
Explain to people what wholesaling is. I might go right over someone's head. Yeah, absolutely. So you're a real estate agent for real estate investors. And instead of having a standardized contract where you may get like a three to 6% fee,
00:26:28
Speaker
You are arbitraging your contract value with the amount you're able to assign that contract for and I don't know if that's making it any more simple Probably not now. Are you listens to do that? No, exactly. Yeah, he's the real estate agent. I'm sorry. Help me. Help me Yeah, that's what I meant. Sorry. I'm not licensed. I was trying to make it. Yeah. Yeah, so Essentially my first deal
00:26:51
Speaker
Well, yeah, the first deal that I did was a $50,000 house in Eastwood, Baltimore. I got it under contract for 50K and I sold it for 60K. So I made that $10,000 spread. My third deal first year, I got a deal under contract for like 350K.
00:27:10
Speaker
and sold it for like I made over two hundred thousand dollars. Yeah. Arbitraging that deal. And so that's when I really found the power of being able to buy deals correctly. Right. And then things started to take a life on its own.
00:27:27
Speaker
And so to expand on what you were just describing, wholesaling has a very dirty connotation in my mind for a lot of people because it can be really bad. It can be very negative and I'm interested to get your thoughts on it.
00:27:43
Speaker
There are people out here specifically in our neck of the woods in Baltimore that might go to grandpa's house, whose house might be worth 200,000 in the city. And if he goes, listen, I'll pay you 75 grand today, I'll buy it exactly as is, just get your stuff out. He might agree to it, but it's worth 200. That's why, by the way, most people should not be licensed if they want to do wholesaling, because you can get in big trouble for that.
00:28:06
Speaker
If you are licensed, I don't choose to be a wholesaler for those reasons. For litigation purposes, it can be real bad. But you can take advantage of people if you choose to. But there can be good forms of wholesaling. So if I secure it for 75 grand, I could then flip that paper, so to speak. I could take that contract. That's why it's a non-standardized real estate contract. Because if you use the Maryland Association of Realtor Contract, you cannot assign it. You cannot flip it.
00:28:33
Speaker
It says it in bold letters everywhere. So it can't be a standardized real estate contract. You can do a single piece of paper. I can write it in crayon. It can be anything. It's enforceable and you can then assign that piece of paper to anyone else that places a higher value and you make the difference.
00:28:50
Speaker
And so that's what, so people usually that don't have a high degree of knowledge and they're just starting out and they don't have the assets or resources, they like to start out in wholesaling because you don't need, all you need is time, energy and the giddy up to get out there and find opportunities.
00:29:07
Speaker
Yeah, 100%. So I know that it can have a negative connotation. But you're solving problems for other people. That's why, and as long as I think- You're the bottom feeder of the market, for sure. You can be, but I just say, yes, we're all in this to make money, but I am vehemently against taking advantage of people. And I could have done it a hundred times over by now, because I get people, they learn to trust me.
00:29:32
Speaker
And I could offer them some crazy low number. They might take it based on having met me and I could make 100 grand. It's just like for me, ethically, it's challenging because I would rather make a measly couple percent on it and sell it. But then they make the difference. Right. And so I'm stuck in that weird space. That's why I don't do any of it because I don't need to morally mentally want to get into that side of that option.
00:29:56
Speaker
I mean, a lot of it has to do with the context of the situation, right? So, for example, my most profitable deal, the one I talked about from the wholesaling perspective, that was actually a deal on the completely opposite end of the spectrum where
00:30:12
Speaker
That seller was doing so phenomenally well with their medical marijuana business and like being a supplier for at that point in time, I think like hospital systems and PA that they were actually a lender that foreclosed on the asset and they just wanted to get it off their books quickly.
00:30:31
Speaker
And that's referencing the problem that you get to solve as a wholesaler. That's why I speed. That's why you don't wanna always have that, you don't wanna paint with that big paintbrush because you're solving that problem and if his exit price of making up numbers was 300 grand and you could get him that money and get it done in two weeks, you solved a big problem. 100%. And then if you don't make, there's no guarantee you're making money either, right? No, yeah, so I had one. So you assume some risk.
00:30:57
Speaker
Yeah, well, luckily it was a team, right? So my partners that I was with, you had one guy who was really good at operations, one guy that was really good at numbers. And then I was able to really build my skill up from the floor from like, how do you do a cold call correctly and getting comfortable with that down to how do you prospect and quantify? And I was more so digging up the the lead opportunity on the front end of the spectrum. So we had a really good system there.
00:31:25
Speaker
We ended up scaling up to 12 employees. We were burning about 30,000 leads a month. Now, I wasn't I was never doing 30,000 leads a month. Yeah. It's like phone numbers. Yep, absolutely. So the thing is is that we had the vision behind that behind that system was to be an omnipresent system.
00:31:47
Speaker
So every single probate lead in all court jurisdictions across Maryland, every single code violations, I have personally driven every single solitary neighborhood of Baltimore City, Washington, D.C., Howard County and Baltimore County and have driven for dollars and have looked at every single solitary block and put so whether it's driving for dollars, code violations,
00:32:15
Speaker
Probate opportunities being whatever like it was we were trying to just be everywhere But part there was a couple different challenges with that number one The number one thing that I wanted from wholesaling was the ability to learn how to buy correctly The goal was always
Growth and Income in Real Estate
00:32:33
Speaker
to own real estate. You're not doing that when you're wholesaling and then as you were exponentially growing that business and
00:32:42
Speaker
Our close rate was not exponentially increasing. Right. So let me I just want to expand on just something real quick. Please don't lose your thought. But I want to just reference because this might have gone right past somebody, but it was gold, what you just said. And when when you're driving for dollars, you're looking for opportunities.
00:32:59
Speaker
That's called earned income. And so earned income is something that you do for work. If you go to your work and they pay a salary, that's earned income, earned for your effort. Your goal was very wise, which is I want to own real estate because what type of income would that be? Passive.
00:33:14
Speaker
passive income and so passive income is the goal everybody so you don't earned income is fabulous i know a lot of physicians that make great earned income and they are not wealthy people and i think it upsets them when a guy like you and i can out have substantially more wealth than they might even though we don't have maybe the formal education to the extent that they do or
00:33:35
Speaker
because I get that sometimes where they just focused on their income and whereas you can focus on the wealth side of the equation, which is what you very astutely already figured out. I mean, I think it was a mental challenge for me as well because I think, you know, well, and I kind of jumped over some parts of the story in college, but it's like self worth and the monetary numbers, right? It's like if the goal is to make 100K a year in theory
00:34:03
Speaker
And then you're now trying to negotiate. By the way, that's the number one goal I hear when I talk to people about their financial goals. Financial goals is 100%. Every time it's that number somehow. Magically, I don't know why this country breeds all of us to think that that's the number we have to hit, but. Yeah. And then now all of a sudden you're trying to negotiate this real estate deal, but the numbers are so much more than like your psychological value.
00:34:24
Speaker
to the Capitol as well. I think that really holds a lot of people back. And I also think the simplicity of it as well, because, you know, to be a physician and, you know, I'll come from a physician family. My brother is also on that road as well. So I don't say this in a disparaging way. But you spend 12 years post college.
00:34:43
Speaker
Um if especially if you were doing it if I was doing like if I was trying to be a doctor for money Which is what I was at one point in time the mortality rate at any hospital would just go out the roof But uh yeah because I wouldn't have been cared about the patient. I would just been thinking about whatever, but it's real estate is simple
00:35:01
Speaker
But that doesn't mean it's easy. You know, it's like buy something at this price and blah blah blah, but we can dig into all that. It's a bold law, by the way, for the Keller Williams people out there. That's called a bold law. It's simple but not easy. Yeah, simple but not easy. Yeah, well, it's true. The people that I know that are exceptionally successful, not all of them, but quite a few of them are not formally educated.
00:35:22
Speaker
they were willing to take a chance, and you don't have to be a genius to do this, but it's a level of work, and what I hear from you in your journey, it's like you had the determination. Oftentimes it comes from, there's no other option. I know people that have fallen into this because they didn't have another option, and by you actively chose it at a young age, which makes it more powerful in a weird way, I think that that's impressive. I chose real estate when I was 21,
00:35:49
Speaker
When I was in, I sold to these physicians, that's how I know so many of them. I was in medical sales when I was young and real estate. And so I got to see both sides of it simultaneously and I left the medical side of things by, I think it was seven years in, I retired by the time I was 27. And I just said I can't, maybe I was 28. I just, I was done with corporate America. It was not for me. Way too many rules and too many bosses to kiss tail to and I couldn't do it.
00:36:14
Speaker
Which is funny, now I have to kiss tail to 120 people a year and my son's like, you don't have a boss, dad. And I'm like, I have a lot of bosses. Everybody got the big man at work. Everybody can fire me. Every single one of my clients can fire me at the drop of a hat. So I have a lot of bosses. But the way we all get to this space is interesting.
00:36:37
Speaker
You started wholesaling, like I said, that's a very common approach. But your goal, like I said, was to go into ownership. And so it sounds like that's the route you started to really focus on. Do you still drive for dollars?
00:36:50
Speaker
Well, I have it all by hand now. I mean, well, that's really how we hunkered down on Johns Hopkins. And I'll speak about the journey, but like my mentor's company is really
00:37:07
Speaker
i was really inspired by the quality that their brand has from day one because you know and also in wholesaling as well it's you know sometimes you're in dangerous situations or whatever the case may be or you know in certain neighborhoods and it's like i from day one i just want to own quality and so by understanding one of the sayings in baltimore is that if you want someone to overpay for your property find a dc investor
00:37:31
Speaker
And, um, having that understanding of all 200 neighborhoods of Baltimore city. One of the things I love about what we do about at Johns Hopkins is it's quality real estate from day one. I mean, it's a unique, uh, lease up strategy and renovation strategy, but, um, it's quality, quality, real estate. Um, how do you signify it? What's the, what makes it quality view? So in terms of the,
00:38:00
Speaker
Resident demographic that we cater to It's not like distress undergraduate students undergrad undergrad and grad and professional we actually have professors We have students we have post grad and we have staff and we have nurses Those and we also have Young families as well So it's
00:38:23
Speaker
I'm surrounded by hand in Guilford, Oakenshaw, Tuscany, Canterbury. These are some of the highest priced per unit properties within Baltimore. It's a great storehold of value.
00:38:36
Speaker
And then a lot of these properties are built in the early 1900s. Our competitive edge is that we are a private equity company with a private equity capital stack, but we're also competing in residential markets. So when we do step into a property, we're able to go into that property full force with 100% of the property's needs.
Investment Strategies at Johns Hopkins
00:38:59
Speaker
If I need to gut it down to the studs,
00:39:01
Speaker
Um, we capitalize on a case by case basis for that. So what does private equity mean? So I, I didn't come from wealth or family office or anything like that. Um, so I raised, I, I, I, I.
00:39:17
Speaker
I generate cabbas, so I'm what's called a general partner, so. Do you have a private placement? I have private placement memorandums, yeah. But early on, and we're really just now getting out of the friends and family space, but I guess I should also talk about like who's my partner. A friends and family space is dangerous if you didn't know. Most of the lawsuits come from friends and family that I've been told. Yeah, we have green insurance.
00:39:44
Speaker
No, but I mean, we put our investor stuff first. But to answer your question, I raised capital from private individuals, high net worth individuals. To be honest with you, so I studied all of like the Forbes 400. I essentially put everybody in like five categories. Private equity, real estate, you own your own business, tech and like something else, right? And so I said, okay,
00:40:09
Speaker
Private equity and real estate are where a majority of wealth is created in America. But one of the issues are accessibility to those offerings. Because generally, if you want to be a limited partner in an established operator's deal, you have to come to the table with 250K, 500K, whatever the case may be. Starting out, investors were able to come in with us at 25K, 50K. Do they have to be accredited?
00:40:32
Speaker
sophisticated in that situation. Now they have to be accredited for our offerings, but because we were under 100 investors and they were also the true definition of friends, we didn't have to do that in the earlier stages, but now we have to do that.
00:40:50
Speaker
So guys, a private placement memorandum, a PPM, it's simply a way to raise money. Oftentimes, there's two ways to qualify, sophisticated investor or accredited. And so unless the guidelines have changed, so I've been investing in different
00:41:05
Speaker
versions of this before, but I always went the accredited way, because you can have more accredited investors than you can sophisticated on a given deal. So you have to have over a million dollars of assets, excluding your primary residence. Exactly, or 250K of annual income.
00:41:21
Speaker
Yes. And so it's essentially making sure you don't take, you know, grandpa's money and, you know, he's only got 100 grand to his name and he's retired and you're going to take all of it right and put it in a deal that could potentially get, you know, messed up or messed up. And so it's a way to protect people. And can you advertise these opportunities online?
00:41:40
Speaker
So I haven't actually, no, I can't do the non-accredited offerings through advertisement. And a lot of everything has just been from banging out the phones. That's what I wanted to highlight. You always hear this, well, Matt, how do I get into these? And I'm like, unfortunately, you're not gonna see them on Facebook. You're not gonna see these opportunities just exist out in the ether.
00:42:06
Speaker
because of the legality related to all the restrictions. And if you get caught doing it, watch out. They will come after you. Yeah. And so there's so much protection. It's just to protect people. Yeah, essentially. Yeah, 100 percent. So yeah, we try to make it accessible. But I know we're jumping. But but yeah, that's how we do it. Yeah. So I mean, it's so it's great. So so you've been raising money. How much money have you raised so far?
00:42:31
Speaker
So we'll be at 45 million at the at the end of July. It's like over five. I mean, I actually need to sit down and like calculate it again because we're raising again right now. I'm closing on another deal next week, another one the week after that. And we're doubling. So I actually need to go back and calculate the amount of equity raised so far.
00:42:52
Speaker
So in most of these guys, they raise, are you giving 50% to the investor side, 50% to ownership side? Yeah, so the way that we do is we actually, a bulk of our offerings actually have preferred returns. So it's like a 7% preferred return. And essentially what that means is before we're paid a penny, investors need to make a minimum of 7% on their money. And then after that, there's a split thereafter. That promote would end up being like 50-50.
00:43:20
Speaker
We also are a lot more meat skin in the game in our deals. We co-invest to the extent possible. So, yeah, everything has a preferred return and then there's a split thereafter. Our business plan. So what's the average effective rate of return someone might expect? Nothing's guaranteed. That's a fact. But what do you what is your performance normally indicate?
00:43:42
Speaker
So the thing is, is it's all about under promising and over delivering, right? That's why I'm curious as to what results. Yeah. And I know per deal it can. Right. There's some amount of educated guessing that goes on here. Well, I think it also depends on what your value system is, because if you're an IRR driven individual, if you're an internal rate of return driven individual, you're looking to get the highest percent possible, even if that means you exit the deal in three years or two years or whatever. But on a percentage basis, you're trying to make that number as wide as possible.
00:44:11
Speaker
When I was speaking with one, I have a lot of mentors and I was speaking with one of them about what's the difference between a private equity operator and a family office. One tends to, the private equity families tend to focus, I mean, groups tend to focus on IRR. The other ones are just focusing on the total return.
00:44:28
Speaker
So we underwrite on a 10 year plus basis, we underwrite down to a 12 percent IRR and a two X multiple on capital. So if you're invested in one of our deals before I am actually interested in a deal and we go after it, are are you making on average 12 percent compounded in the deals or or at least yet annually? Does that include the include your projected exit at year 10?
00:44:56
Speaker
That includes that as well. However, I mean, we're smashing that in terms of moving ahead of schedule. So, for example, there's a deal that we closed on a couple of months ago. We rose like 800 K. By the end of this year, we're looking to return 600 of that 800. A lot of our deals, I mean, the deal that we're closing on in a month's time
00:45:21
Speaker
has a 35% IRR, 4x multiple on capital on it, but we still underwrite down to the 12% because I think you can exit and flip a business. But for real estate, amortization is super important. And we're also just, it's about long-term control. And I want to highlight something what makes these deals very, very attractive to people is because when he says return of capital,
00:45:46
Speaker
What he's referring to, if I gave you 100,000 to invest in one of your deals and he's able to refinance, usually it's value add, you go in, you improve the property, you lease it up, you improve rents, you do your work, right? You put in the work, that's front loaded typically, you do capital improvements, blah, blah, blah. That's a part of, that's why I won't invest in one of these unless I know you as the manager side. A, have money in it. I need to know you also have money in it.
00:46:13
Speaker
and I need to make sure it's enticing to you to put your time and energy into it. And if it works out, if I get my capital back, there's a chance I can get half or even sometimes all of my original 100 grand back in a couple years. If you refinance it, let's say the deal's three million, you manage to exit it and it's improved double. 50% or 100% increase in value, and you could give me my money back, but we don't sell the property.
00:46:40
Speaker
you're giving me essentially at that point free money, houses money. It's like at the casino, you ever won 500 bucks and you started with 500? Yep, and then you're just amortizing on that. I put that 500 back in my left pocket and I don't play with the casinos money. Exactly. And to me, that's the sexiest part about these type of deals is if it's good enough where you can give me my capital or most of it back, I'm playing with the houses money.
00:47:00
Speaker
And that's what we focus on. So we focus on how fast can we get our LPs capital back. We're OK deferring our promote until that happens. I mean, we even we're playing my partner and I are playing, you know, a lifelong game. We even restructured our operating agreements voluntarily, where we're actually going to be deferring our cash flow above that seven percent to just accelerate the pay down.
00:47:26
Speaker
of our limited partners, so then that way they can keep having firepower to grow with us. Because the key, and this is why I think it's all above board. This is what I love is because you want to give me my 100 grand back because you said the next deal that you want to have participation in, you want me to reinvest it. Exactly. And then not just do the 100, well, man, damn, I'm doing really well. I'm going to give you 200 this next time. And raising capital becomes easier.
00:47:52
Speaker
Life gets good, I mean, it's like for me in the residential side, I want a client, I'm most interested about your happiness long-term, not if I maximize my individual return on your purchase, for example, and sell you the very first house you see. I'm like, I want referrals, I want repeat. That's long-term vision, which builds a real business as opposed to you're gonna milk this Baltimore market for three years and go back to Jamaica.
00:48:17
Speaker
No, no, no. And I mean, and I mean, another thing as well is because our business plan is actually around scale in a community. Sorry, someone just keeps trying to call me a million times on back. Our management costs have also like halved as well, which also makes cash flow go up. And because we also we do the hard thing up front. You know, we got that house. We put in the new plumbing system up front. We were like we do that.
00:48:45
Speaker
Because I don't want to when I get into stabilization phase. I just want to there's properties that we bought in 2021 I don't even think about them and they cash flow. They're consistent. There's not The the margin is not eaten up in repairs and expenses the headache you get a better quality tenant Exactly. It it's I always say you're we're choosing our problems. Well, I'm choosing a different problem because it's not the infrastructure and
00:49:08
Speaker
But it is more capital intensive up front. There's more planning. It's front loaded. Absolutely. Exactly. But you're excited about the property. You just got it yesterday. So you're excited. Let's start the work. I agree with you. That's what I choose to do. I think it's all about a quality tenant and not having the tenant turnover. And you want it to be a place people feel comfortable in. Exactly. There's some lords out here in Baltimore, which are plenty of them. That's not a model I want to replicate.
00:49:34
Speaker
And not only that, you know, you can have a property that has high cash flow. You can't exit it, though, for anything. And it's just it's just not how I want to spend my life. I really just don't. I just want to do quality from day one, quality locations and provide a genuine service. So our brand is called Hwood Living.
00:49:52
Speaker
Go to hwoodliving.com. Hwood. Yeah, so Homewood, Johns Hopkins Homewood campus. So we created Hwood Living, which is our student housing brand focused on Johns Hopkins University students. But our whole thing is, you know, some of the projects that we're delivering, we're going to have the best kitchens and best bathrooms in the whole market.
00:50:12
Speaker
Do you have to have any blessing whatsoever from Hopkins? Could I start a division tomorrow? Yeah, you can start a division tomorrow. I'm going to call it a derivative of your name and do it tomorrow. Can I just call it Hopkins Housing Matt Ryan? Yeah, you could. Do they get involved and say, hold on, you're using our trademark here or our brand?
00:50:34
Speaker
Yeah, we're I mean we're I mean H wood Homewood is not Hopkins. I mean we do deal with I mean there's a lot of stuff active I'm just saying for someone who might get into this market anybody find another damn University I'm just kidding The cool thing is that we cemented our position and
00:50:57
Speaker
Yeah. So it's like, hey, come, come and boost the prices up. I'm just kidding. But no, good thing. That's the facts. If it does get more competitive, by definition, pricing goes up, your deals, the deals you have are already that look better. And and so, you know, my partner, you know, he, my business partner. So he was a student housing operator out of Lehigh University.
00:51:23
Speaker
Just to kind of like backtrack a little bit. And his whole thing was, you know, you have these student housing operators that are charging students an arm and a leg. If you look at Johns Hopkins even more specifically, they're being charged an arm and a leg, but the quality of the housing there is actually trash. Tell me what to expect.
Challenges and Opportunities in Student Housing
00:51:42
Speaker
I'm going to go there next year. Tell me what would I expect if I went through Hopkins to go off campus?
00:51:47
Speaker
Well, yes, if you went to the Hopkins, they'll just show you the properties in that jurisdiction. But the general quality, so they have a above 29th Street between, you know, Abel Avenue and, you know, North Charles Street is a priority for undergrads, right? And if you just look at the general product there, listing on Hopkins is like listing on Zillow. And you'll just see the quality of the competition there. But,
00:52:17
Speaker
for the price that they're paying and the premium that students are paying, they deserve better. And so that's the whole thing. I'm trying to figure out what I would pay. Is it two grand a month for a three bedroom? No. So if it's a three bedroom, three grand. Wow. Yeah. If it's a five bedroom, five grand. About roughly because you assume you have roommates. So it's about a thousand. A bed. Yeah. Yeah. That's the average. OK. And you're paying that for not, you know, not the best.
00:52:46
Speaker
What do you do with safety? Is safety a concern? Because Hopkins is like in a little bubble. You get outside that bubble, not so safe. We stay in that bubble. We are so strict. Like I have a line, I've been offered deals across that line and I won't go an inch, but within that line I'll go full force. So all of our properties have security.
00:53:10
Speaker
We're also investing within the infrastructure that Hopkins is already invested in. I was going to say, explain to me what a traditional property looks like. Are you doing onesie twosies still? If the deal makes sense or do you only look for multifamily? What are you looking for?
00:53:26
Speaker
So Hopkins is kind of the perfect storm because you have a top 10 university in the country and not a single acre where new development can take place. So even if you look at the newest development that just took place, that's actually a hotel delivery, not an apartment delivery. There hasn't been a new apartment building delivered over the past two years.
00:53:47
Speaker
And when we were looking at Hopkins versus University of Maryland College Park, we chose Hopkins because these developers can just come and pick up and build 600 units of Johns Hopkins. I mean, not Johns Hopkins, University of Maryland, no problem. The problem with Hopkins is that the asset sizes are so small.
00:54:08
Speaker
that we had to be those crazy guys. So why doesn't a big hedge fund not with 40 million, but how about 40 billion dollars? Why don't they swoop in and just take out blocks? The thing is, is well, that'd be 40 different negotiations.
00:54:24
Speaker
which is like what we're literally doing. So to assemble control of a block, you have to negotiate with all those individual sellers. That might have lived there for 40 years. But another thing is that Hopkins, well not Hopkins, but that neighborhood is tremendously anti-developer. And so even some of the most profound developers in this area that have development slated,
00:54:50
Speaker
Have had challenges being able to execute their entire business plan Because the community is just so against it. So everything that we do is by right. That's a risk that we aren't willing to take But yeah, yeah
00:55:05
Speaker
And then now it makes sense because we had to go and do all these different negotiations, and then now we have the efficiencies of stuff. But that barrier to entry is like, okay, if you have $40 billion of assets under management with world global reach, are you going to go and spend your time
00:55:22
Speaker
negotiating with sellers on $300K. Well, what I was referring to you, the one we met the other week, was how I used to be in non-performing mortgages. And so I was saying the opportunity in that space and the notes, it's like notes. You can buy notes and there's courses on it, you learn all about it. But when I started doing it years ago, it's because nobody wants these onesie twosies
00:55:43
Speaker
It's kind of like what you're describing, the Hopkins market. No one's explained it to me the way that you just did, which makes sense. The guys with billions of dollars don't want to do what I had to do to find the performing notes that I thought could perform. So I'd buy them undervalued, get them performing, work on it. I'd reduce the amount of debt that they would owe because I bought it at a discount. I'd get them reestablished. I'd recast it for 30 years and I'd get them, you know,
00:56:08
Speaker
I'd take that note and hand it with a servicer and I'd collect the monthly payment without owning the real estate, which by the way, is a fantastic business model in a different market. Our market's way too good. It's been too good for too many years. That's why I don't do it anymore. One of the guys, you know Barry Sternlick? So he's like a CEO of Starwood Capital Group. And one of the things he says is that the debt guys are smarter than the equity guys.
00:56:32
Speaker
So yeah, that is a fabulous thing. No one says a bank is dumb. Amortization, if people don't know, it's an amazing tool. Whoever thought of that idea is fantastic. It's where you pay your mortgage and predominantly you're paying interest for the first five to seven years. It's almost all interest. And then it starts to slowly go towards more and more principle. And then the last five to seven years, it's pretty much all principle. Exactly.
00:56:57
Speaker
And so it's you're paying a lot of interest and but you overall you've expanded your the time to for repayment for 30 years instead of 10 or 15 And so your overall payment is lower per month And so that's what's attractive to people as in as just in you know individuals lower payments Yeah, that's why people want a seven or eight year car loan when not that many years ago it used to be like four years was average and
00:57:22
Speaker
Nobody buys a car with four year loans anymore. It feels like it's all seven to eight. Yeah, you gotta try to stretch it out a little bit. You wait. I know, speaking of this, the next book you need to read has to be on the auto world and how I don't think gasoline engines in seven years will be worth $5. So the industry, the financial industry that preys on people with these seven to nine, like these crazy long terms, it's gonna be,
00:57:48
Speaker
bankrupt. Yeah, I don't know what's going to happen, but you're not going to be able to sell your big ass truck that gets nine gallons, you know, or what is it? Nine miles a gallon. You're not going to tell me worth anything. And these electric cars are coming. You've heard of the X. It's called an X graph.
00:58:05
Speaker
I mean, I know I haven't heard of that before. I'll just explain this one piece. I know it's a tangent, but it's it's it's applicable to all things finance and all things money. Every new invention has an X graph. And that's, by the way, why Twitter was renamed X. It's because of this concept. So it's an X. So one of the best analogies is is a horse and buggy.
00:58:27
Speaker
So the reason why New York City couldn't expand any further in the early 1900s is because there's only so much place to put the
Technological Transitions and Market Impact
00:58:34
Speaker
manure. It was all horse and buggy, and so it was 99% horse and buggy, and that's what it was, and walking, that's it. And so when the gasoline combustion engine was introduced,
00:58:45
Speaker
it, there was 1% gas engines and 99% horses and it's not, you know, just a couple percent more each year. Within a 10 year time horizon, it was 99% gasoline powered engines and it was 1% horse and buggy.
00:59:00
Speaker
And so if you did that, if you put both of them on the same graph, it's an X. One market declines right there. Correct. And it's quick. It's like within a seven to 10 year time horizon. And they if you look this up, there is a million examples as to how this works. It happened with smartphones. It's happened with just almost every game changing invention. The X graph plays out to be true. What is already started is the electric cars. Electric cars currently are representing around seven percent of all new car sales.
00:59:30
Speaker
and you have 93% gasoline-powered cars, and I firmly believe you're gonna see the X happen, and Elon's calling his shot with Tesla. He's saying that the X is gonna happen. So it's not just Tesla, but there will be no more American cars made outside of Tesla for the most part. You'll have a few, but not many. Isn't that crazy to think about? It's 95%. He didn't estimate it. He thinks about 90%, roughly, of all cars will be made out of China.
00:59:59
Speaker
Well, that's, man, that's scary. But in terms of- And it won't happen slowly. It's gonna happen quick. That's why there's 100% tariff just announced on Chinese made vehicles coming to the United States because if I'm crazy enough, I'm just a realtor. If I know it, there's some people that know substantially more than I do.
01:00:20
Speaker
We're terrified that our whole section of our economy is going to go completely soon. So I mean, I mean, isn't that crazy? 100% tariff. I think there's legislation that's either already passed or is passing where it's like 2028 or something like that. A lot of these car manufacturers can actually not even manufacture gas powered engines.
01:00:41
Speaker
I think that's going to also- It's around 2035. Yeah, so something like, it was some, yeah, it was like 2020- Maryland adopted it, but it won't matter. All this stuff, they should stop giving out free money for people to buy electric cars. It's pointless. It's inevitable. It's inevitable. It's going to happen. So it's free money for these car manufacturing companies.
01:01:01
Speaker
Not to silo the whole thing, but it's just the way, it's just like everything's changing. Well, the same thing is actually being argued for universities. It's actually called the demographic cliff. And so that's why we're not
01:01:15
Speaker
taking our strategy and doing another university.
Demographic Shifts and Expansion Plans
01:01:20
Speaker
There's certain criteria that we have to stack on for a university, but I feel like if you're not in the top 50 universities, it's definitely a death zone. We should consider Delaware. I went to University of Delaware. There are some developers out there, but I don't think that the infrastructure is nearly there.
01:01:40
Speaker
Yeah, I mean, we Hopkins, the ones that are back, I mean, at the end of the day, they have a seven percent acceptance rate. You know, 17000 students can only have 2800 on campus happen to have this amplified model for students, but we travel target traveling nurses. We're in a quality neighborhood, anti developer.
01:02:00
Speaker
just like all those reasons, Hopkins. But we're actually really looking... So what our portfolio will be worth by the end of this year, we're actually looking to do on just one deal a year on a forward moving basis. And we want to go into markets where the wind's really at our back, especially in terms of landlord friendly environments. Sure. So if you look at the DMV,
01:02:22
Speaker
Virginia is the darling child of the DMV at the moment. I was in Dallas, Austin, Miami, you know, like a couple weeks ago, and then I went to Tampa to Sarasota. And it's very, very clear to me that there is an opportunity even today right now. Miami, I can't compete.
01:02:44
Speaker
Um, Tampa to Sarasota, AKA, Tampa to Orlando, um, is competeable. Um, so we're interested in growth markets like that. Interesting. So are you going to be able to utilize what you've done here as like your backbone financially to go to these other spots? Yeah. I mean, I think what's really awesome is my current mentor has a national real estate firm.
01:03:07
Speaker
And we essentially have an understanding where anywhere where they have an office nationally They would do a deal with us as our co-sponsor in that environment and so we're already with their point guys and
01:03:22
Speaker
Tampa area in Florida and then, you know, looking around Virginia. So really excited about that. Well, I think it's incredible. And, you know, I just, you know, I want to be cognizant of a time. We're already at an hour. Oh, boy. I'm talking. Time flies, but I'm fine.
01:03:38
Speaker
You know, what you do is I have a good friend I went to college with that is essentially doing exactly what you're doing in Philly. And Philly has a lot of universities around UPenn. So he's done this model and what attracted him to this as an alternative. I first introduced him to, you know, like triplexes, like three unit buildings. And so he has a small portfolio, not too small, but a decent amount.
01:04:02
Speaker
And he's making good income on that and then utilize that experience to go to the next level, which is what you're doing, raising capital because from your standpoint, you're utilizing other people's money, right? OTP was an OTM. It's in, but you get the ownership, but you're putting it all together. So a guy like me, if you don't have time, but you have capital to invest, it's a perfect marriage.
01:04:23
Speaker
Yeah, absolutely. And I mean, yeah, I mean, we would definitely welcome people to come in and join the party. Yeah, because we know our John will not know investment term, but because we're so confident in what we're doing at Johns Hopkins, we're just trying to plant a seed with as many people as possible or where we just know they can get strong performance.
01:04:42
Speaker
And at the end of the day, my partner and I talk about this all the time, where if we were ever in a nightmare deal where the returns wasn't that 12% at exit, we would dilute our promote to satisfy investors to the highest extent possible. We're playing this generational game.
01:05:00
Speaker
And you can only go as far as your reputation. If you're not performing for people, if you're not implementing your business plan and getting things done, you can't grow. If you had even just one tanker of a deal, just something horrible happened and it just blew up. You'd rather take nothing on your side. I'd rather take nothing than lose my reputation and or I'm a man of honor. I read the Bible and I try to
01:05:25
Speaker
um strengthen myself spiritually, but one of the things that stands out to me is like a man of integrity walks securely and so um We just want to just bring that bring our best foot forward and make it happen Well, that's incredible. So now if someone's interested to learning more have a conversation with you. Can I I'll put the links in here. Yeah, absolutely I am so available. I answer the phone pretty much around the clock and um
01:05:50
Speaker
At the end of the day, it's just about adding a switch value. So if someone chose to say, okay, I wanna see what options I might have to invest with you, but listen, I don't have a million dollars outside of my primary residence. Can they still qualify as a sophisticated investor? Do you have options for them? Yeah, we do have options for them. And then we're also opening up and trying to create vehicles for non-accredited investors and just be more open. I mean, I don't wanna collect a million 25Ks.
01:06:19
Speaker
But yeah, we do our minimum investment threshold. I don't know if this is an advertisement now But I wouldn't go in too many details. Yeah. Yeah, you know it's an advertisement. I don't want to Yeah, then the SEC is banging at my door, and I'm like a billions episode
01:06:35
Speaker
Yeah, listen, this isn't exactly Joe Rodin's podcast. All you need to know is you have smaller amounts available. Yeah. Yeah. Yeah. And it's just about I also see it as a service as well. Like real estate is what I do full time all day long. I don't spend my time on anything else.
01:06:54
Speaker
And this is one of the great wealth drivers of of life, you know, and so being able to have an entry level opportunity for people to be a part of something where they're in the number one, they're with the number one operator of that market. Yeah. I think it's just a real service that we try to provide.
01:07:12
Speaker
Yeah, and I think it's a good alternative. So what I sell is different than what you sell. So I sell, my rate of return is abnormally, my standards are so high. So I want to return roughly 36% annually is my expectations if I gave you my money, which that's why I don't invest in private placements anymore personally. But I have to get my hands dirty. My level of participation is significantly higher.
01:07:37
Speaker
I like the leverage component of owning the house directly. So I get to apply leverage in a meaningful way. I was this morning in Baltimore, I told you in Fels, like she's in Hopkins, she's getting her second PhD from Hopkins.
Wealth Building and Learning in Real Estate
01:07:51
Speaker
And instead of renting a place, she now owns a place with equity upside and she's able to put very little down. She's leveraged using other people's money like how you do in her own way. And I convinced her right in a year or two, she's gonna rent that out and do another one.
01:08:08
Speaker
And it's just, to me, no matter how you do it, that's why I wanted to have you on, there's lots of ways to do it. There's ways to participate. You don't have three degrees in real estate, nor do I. It's like, you can just learn. And the terms, if you're overwhelmed with the terms and the terminology and all this stuff that we're speaking about,
01:08:26
Speaker
You weren't born with this knowledge, right? You went out there and started having conversations, started reading, right? It's a lifelong pursuit of understanding. So like, for example, I went to a BizNow, you know, conference. So and
01:08:44
Speaker
When I was at the conference, I heard them use the word capital stack. I said, hmm, never heard that word before, but it sounds damn important. It sounds good. So I went and I just studied from that one sentence of hearing that word capital stack and not knowing what that meant. Yeah. Took that one word and then researched it and then learned about all the different types of equity, all these different types of debt, all the different types of things that go into a capital stack.
01:09:08
Speaker
Um, which then proved to be like the foundation moving forward. So I think at the end of the day, it's just, um, by the way, that's how I know everyone with ADHD, like you very well. So do I, by the way, probably have it, but you're very interested in that, right? You see it as a key to unlocking something important to you. And you had no problem researching and learning exactly. It's the formality of school, learning about calculus or something like, how am I ever use this? This is not for me.
01:09:34
Speaker
I mean, I mean, so the what's interesting is so I never finished Howard. And I remember because I was to get into business school to pass apply calculus.
01:09:45
Speaker
I failed the class, 80% of the class failed. They actually ended up finding their professor, but I'm like, damn, I'm not gonna be a five year. I got my life to live. And I remember looking at the finance credential, was it syllabus? And I said, well, of these 60 credits that I have to do left, like only 30 of them are like kind of business related. And I'm already reading like three books a week. Like, you know, I could either, I think I calculated my working years
01:10:12
Speaker
And I think I came up with some number, maybe like four percent or something like that would be the extra two years. Or I can start now, eat shit. And maybe when I would have graduated and that would be day one as an entrepreneur of two years experience. And I actually closed on my second real estate deal when I was supposed to be going to commencement.
01:10:34
Speaker
So that's where I kinda just learned, I think it's just getting into the weeds, asking the hard questions, but at the end of the day, it's like accumulate the information. Yeah, and there we go from there. Yeah, well, I did make, I went to college and I did get that finance degree and I never use it. It doesn't apply hardly to anything I do, but I felt like it was required. I don't know, I just felt obligated as the way I felt. I didn't have any of that. It's a society.
01:11:03
Speaker
Yeah, it's just I felt desire and I don't I'm not gonna put pressure on my kids to do anything in that regards Just as long as they pursue I want them to have the passion the way you describe what you do and what that's what I want for my children is passion I want them to be excited about what they do and learn to be great at what they do I don't care what that is. I don't care. You know, it's just this is what we chose. I
01:11:24
Speaker
Right. 100 percent. Have you ever heard? I forget what his name is, but like he's like Music Kid Max or something like that on. I got to send you, but there's like this incredibly gifted guy. He's like he's like he's like seven years old and his musical genius that his parents like have fostered is like beyond most professionals at that seven year old age.
01:11:48
Speaker
So I think when you're just trying to turn, you know, you know, it's not a one shoe fits all. No, but it's it's something if if we did nothing else, I encourage people to learn more about it, learn different options. It's a heck of an option. It's something at some point I want to participate in. Maybe I'll work with you in one of these deals. Absolutely. And I got good books. Recommendations. There you go. So Zekendorf.
01:12:13
Speaker
One of the greatest real estate books I've ever read. Spell that? Zekendorf. Z-E-Z-E-C-K. I'm just putting you on the spot. Yeah, Z-E-C-K-E-N-D-O-R-F. Boom. So, Zekendorf. Am I being too subtle? Have you ever heard of Sam Zell? So, Sam Zell actually said that Zekendorf was one of the best books. I actually got that book from his book.
01:12:38
Speaker
where he actually outlined that that was one of the most important books I've ever read. People are just gonna go to chat GPT and just select, yeah, what does this book mean? Put it in 2000 words. No, no, no, you can't, you can't. That's correct. When people do that, I'm like, it's not the same people. You need to hear the explanations and the stories and the... You have to sit down and read Zekendorf like a textbook. And then the other one, there's another book called The Encyclopedia of Real Estate Advice.
01:13:05
Speaker
very thick book but very well done and it will go through everything from how do you do due diligence to how do you raise money to how do you do this and how do you do that and then everything else is personal development but I have I have a lot of book recommendations but yeah well that's a good place to start and I want to thank you and wrap this up and thank you for your time no thank you it's a heck of a way to get to know somebody
01:13:27
Speaker
There you go, shaking hands. Well, thanks for joining me on this episode and hopefully I'll do a follow-up with you as you start taking over all of Baltimore. No, no, no. We're just going to own Hopkins. That's where we're going to own. Yeah. Yeah. I mean, lower taxes, you know? Let us not be the highest tax jurisdiction in the state and then maybe we can expand more. There we go. All right. Well, thanks again and I'll talk to you soon. All right, cool. Thank you so much.