In this podcast episode, Jacob Blackett, one of the founders of SyndicationPro and HoldFolio, talks about his investing journey that started almost a decade ago. After doing some fixes and flips back in college in 2010, Jacob has come across many learnings along the way. Learn about what's important in the world of syndication and real estate investing. What do you need to know to stay ahead of the curve? Find out here.
The journey started with a nice wholesale fix and flip model, which led to holding property and finally entering the multifamily investments. Since then, it has expanded to real estate, syndication, partnerships, etc. The approach of sourcing money online was used after the jobs act was passed in the States. Some of the first-ever real estate crowdfunding sites also came online, and that's where syndication was born. And thus, license software was given to colleagues, friends, and people to help them manage their syndication businesses.
“For doing syndications versus a portal or an asset management software platform, is like a whole kit and caboodle. But, if we can integrate more tools and more functions of syndication business into one platform, that just drives bottom-line value for our users and for our business. And that's our approach, our vision, and what we've been doing.”
According to Jacob, managing the syndication business is a big affair. Providing a service to the investors and streamlining the back office requires a lot of automation, tools, and in-built streamlined processes. SyndicationPro takes a pretty holistic approach that starts on the front end. SyndicationPro allows Sponsors to streamline the process of converting leads into potential investors by capturing all their details from the website and facilitating building a stronger relationship with them via its built-in CRM. SyndicationPro is fully vertically integrated with a hands-on approach. It has licensed contractors, property management, real estate brokerage and manages most of its properties itself.
How Do I Get Started?
In the words of Jacob Blackett, the beauty about real estate is you put in the front-end work to identify those assets, especially buy and hold multifamily, and you can support a plus team to operate the business. He keeps his argument with an inspiring story: The last property that they purchased was in South Carolina. They partnered with a group out of New York that had other properties in Columbia. So the property was considered a B plus type asset. It was built in the late nineties. And it was an opportunity for direct growth, a suburban area with newly built properties. So, they presented the opportunity to go ahead and provide the next level of renovations in order to make those units more comparable to some of those newer builds. And it was a nice value addition.
High occupancy spending, roughly 8,500 per unit on renovations, doing things like rephrasing cabinetry, hardware, granite countertops, putting nest thermostats, and bringing up the common areas to today's standard, repositioned a B plus asset to what anybody would consider as a minus.
What To Keep In Mind?
Real estate comes with its own challenges. Out of which, Multifamily is the most challenging, Jacob implied with an example - A property was purchased from an owner who had owned it for about 30 years. It had deferred maintenance. It was built in the early seventies and was classic in value. The task was to turn a C class deal into a C plus. But, a mistake was made. All of the users were scoped in, and cash flow was tight for the first 18 months. So, every single expense was tracked every single month. They also dipped down into their network and collected feedback. The condition of the house was not good, and it needed heavy renovation. But in the end, the property was sold along with a return principle plus profits to everyone.
Real estate comes with its risks and benefits. But, here is how anyone can crack the best deal for themselves:
Try buying homes for $10k-$20k. Then, completely renovate them for $80k-$100k. These are older and vintage homes, and sell them in the neighborhood for $200k-$280k. It is wonderful to see how renovations could spice up the price of a crumbling house. And at the time of exit, the seller can get close to the 300 grand mark on those exits.
In conclusion, the session ended with a crisp piece of advice: Real estate is risky, transactional, and volatile. So, leverage existing people. Never try to do anything by yourself. Find someone who's successfully doing what you're doing, especially if you're just trying to get started. Then, see where you can fit into that puzzle, even if it means providing some capital and getting someone involved.
Check out the podcast here.