Start investing in multifamily real estate without conforming to conventional wisdom, as we have one of the experts in this niche Jake Stenziano on the show today! He’ll share why cash flow is king, the value of being aligned with your goals and values, and one piece of advice about your first deal. So, make sure you don’t miss out on this special episode!

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The power of determination and perseverance
An overview of Jake and Gino’s 3-step framework
Why you should focus on cash flow and the profit per unit (PPU)
How to thrive and scale during market downturns
Should real estate investments still be considered alternative assets


Be a part of the Multifamily Mastery 5 Conference. Register at and get a $200 discount!


Jake Stenziano, MBA, is the best-selling author of two books, Wheelbarrow Profits, and The Honey Bee. He is also the co-founder of Jake & Gino, the only multifamily real estate investment education company that teaches investors the three pillars of sound apartment investing; Buy Right, Manage Right, and Finance Right™. Jake is a multifamily investor, operator, and mentor. Jake is also the founder of Rand Property Management and co-founder of Rand Capital and Rand Partners. Rand Property Management is the first property management company with a focus on “modern affordability” and vertical integration.





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Full Transcript

Jake Stenziano  00:00

We have similar values that are in alignment, your investors have values that are in alignment with yours. And that’s why this stuff works. And that’s where Wall Street falls apart because the values aren’t in alignment. There’s no relationships anymore. Everything we do is a team sport. People know your names, they’re able to reach out and talk to you. There’s a difference there and I think the results show for themselves. Welcome


Greg Lyons  00:18

to the passive income brothers podcast.


Jake Stenziano  00:20

Here we take the fear out of real estate investing using real life stories of everyday successful investors. Let’s go Welcome to another episode of the passive income brothers podcast. My name is Tim Lyons and today I am joined by two rockstars, one of which is my brother Greg, how you doing today, buddy? Tim? I’m


Greg Lyons  00:37

doing great. And you know today is really special because one of our earlier episodes when we were virtually unlistenable, we had Gino Barbro the G daddy on the podcast. And now we have the other or better half. I’m not sure, Jake. Oh, no. We have Jake stanziano vlog today, the other half of Jake and Gino, and it is just going to be a great day.


Jake Stenziano  01:04

That’s it. So when Greg and I first started, we didn’t know exactly what to do at the time, Greg had a rental property in Virginia and I had a three family property that I was it was my first and we kind of felt like landlording kind of wasn’t our thing. And we were searching for that next thing, what’s going to move the needle? Where should we put our money? How are we going to become investors and Greg and I came from just outside of New York City, we had massive, massive limiting beliefs about paying for coaching or mentorship or trusting literally anybody because everybody’s guilty till proven innocent kind of and you know, we came out of verify. Exactly right. And, you know, it’s we finally came out of our comfort zone, and we got coaching and we got mentorship and we found our tribe. And we always say that like that was like a pivotal point in our life. So Jake and Gino, the Jake and, and the wheelbarrow profits education platform, it really transformed where we are today. So we are so happy and grateful to bring on Jake stanziano is with Jake, how you doing today. I am so excited to be here because I see that Duncan right there. And the first thing that you said to me this morning, you know, I got three kids. I’m working two jobs. And we’re doing the show today. Dude, I’m in the sweet spot right now because one of our underground core values that we don’t talk a lot about is a blue collar work ethic. And that Duncan screams blue collar, you know, you’re a firefighter, you’re out there doing your multifamily. And I love that because I came from a small town in western New York, I always had 234 jobs at any given moment in my life. Grandfather was a police officer, my uncle was a cop grew up in a very small town, the only thing that they had was this like chair factory. And I never even knew anyone that owned a business. And on top of that I’m from New York. So I’m right in alignment with your you know, you don’t trust a lot of people. I didn’t know people that actually own their own business. So you know, especially this multifamily stuff just feels like this pie in the sky. So everything that you just said, there’s such an alignment there that I can relate to. I think one of the big moments for me though, is as I grew in my journey, as I got coaching, you start to realize that your dollars need to be doing the work. And you can work as hard as you want. But unless you have a solid plan and a solid strategy to make your money work for you, it doesn’t really work out because there’s only so many hours in the day. And that was one of those big aha moments. And that’s why Gina and I like to joke now that we’re all about creating baby money soldiers, right? You got to have a job for the dollars you got to put them to work and you got to employ the right strategies. And that’s overtime, what the coaching and the personal development has got for me because man, I’m with you, I would go to a conference and I’d sit there and I’d look around and be like, Who’s this creep next to me? He’s probably trying to steal my money or something. I don’t trust this guy. What does this MLM element what is MLM or some shit? Right? Because I had guys back in the day pitch me on this stuff. They take me to a diner. I’d like a guy that said, Oh, you’re into business. Haanas what is the shit? So I met with this guy in a diner and he’s pitching me on this MLM where if I sell this, you know, and then I get another guy to sell it for me and then it all dude, there’s some Kryptos out there. You gotta be careful, man. So that’s it. And you know what I think so powerful about your story, Jake, is that you came from a W two, right? You came from the blue collar work ethic. You know, go to school, get a good grades, get a good job, sock away your 401 K, you know, and then one day you’ll be able to live this nice little life. Right? And from just hearing your story over and over. That wasn’t good enough for you. Right? Dude, I thought I won the lotto. So I’d like to challenge that because I thought that 50,000 was the benchmark coming out of college and if I could make 50,000 I’m there I’m making it right. I was like the worst kid in my high school. They didn’t really think I was gonna be able to get into college had to go to like a JUCO school played a little football but actually started getting good grades all of a sudden after being like one of the worst students ever, but had a really good work ethic. So I actually landed a sales job after working for like moving companies I worked at UPS once a 2am to 6am doing like the Christmas shift, when they will just hire just about anybody right and at that point, I’m making like 12 bucks an hour. I got this sales job. And I was the number one sales rep in the Rochester district for this company I was working for. And then I finally landed a job in pharmaceutical sales. And you want to talk about feeling like you won the lotto. I’m talking like six figures, I got a company car. And this is a kid from a very small town that like, that was the pinnacle. I couldn’t imagine anything more for myself really. But then as you start to get acclimated, and you start to get more exposure to business, and you see what’s going on, you’re like, wow, there’s other things that are possible. But then at that same time, there’s something called the Sunshine Act. And it’s when the whole pharmaceutical industry really started to change and a lot of restrictions placed down. So I came into something that was this really great culture. And I had learned these kind of these higher level business strategies, because enrolled in an MBA at the time, I also enrolled in these different programs that were growth strategies within my organization. So I was getting exposed to business planning, and just some really cool stuff. But then at the same time, the company started to transform because it was all about regulations now, and you saw an amazing culture, turn on a dime like that to a terrible culture. And I was like, I’m stuck. Now. I’m never getting promoted, I was a perfect fit for this place. And now they hate me. And I’m a liability to them. And at literally, I would go to these annual conferences and things where they bring you talk about the new products that were coming out. Every time I would go to these things, I was worried I was gonna get fired. Because I’d raise my hand, I’d speak up and I’d challenge and say, why are we doing this. So I was fortunate to get out before the axe landed, because as these reforms started coming, they started doing layoffs, like every year around Christmas time. So you want to talk about like a values transformation, where it was like, they would be elevating you, and you’d be going to these year end events, and they’d be given awards and all this stuff for the top performers. And then it was like, well, we’re just gonna back off that and just start cutting the Salesforce every year at the end of year. And that happened for like, three years before I got out. So kind of wild. That


Greg Lyons  06:50

absolutely is. And when you say getting exposed to business, you know, I like to get out there and have a cup of coffee or drink with someone once a week. And when you do that you learn so much about what people do and what’s out there. What’s possible, because a lot of us, you know, get a good job sock away some money. Hopefully you have enough when you retire. But when you expose yourself to different people and cultures and ideas, the world is it can be unlimited, and your paycheck can be unlimited. And your earning potential can be unlimited. If you just kind of step out of your comfort zone. And I think you and Gino to a certain degree or to a large degree, you guys stepped out of your comfort zone. And you went from Gino having the restaurant, you being a top salesperson, and you said I want something different and tell the listeners kind of what that something different was for you. Yes.


Jake Stenziano  07:43

So when I was at the pharmaceutical company, I was doing catering. So Gina was doing all my catering for the different doctors and things like that. And again, I was going back and I was scared that at some point I was going to lose my job. I was also fed up with living in New York, I was sick of the high taxes sick of the weather. So it started off with me kind of ranking the states. And I was looking for the most value that I could find. And so I was looking for better weather, no state income tax, law, property taxes and I wanted to be able to get back and see my family in a reasonable amount of time we landed on Tennessee, I was able to get a lateral transfer there. And right before I left Geno’s brother Marco was like you got to talk to my brother about real estate, he’s really looking to expand, he’s looking to you know, buy some apartments. And for myself, I was looking for an out not necessarily knowing all the benefits of multifamily at that time, but I was looking for different business ventures that I could do because I really thought my numbers gonna get called and I’m going to be left without a job. And so, you know, during that time I transitioned to Tennessee Jean and I were looking at multifamily properties. The first two years of that I was this bull in a china shop, I was really being aggressive with the brokers, I looked at the brokers as the salespeople, and in my experience, I would always beat up the salespeople, I’d be like I want a better price, I want this, I want that. And I actually got kicked out of a broker’s office for acting inappropriately early on. And so I’ve never unfortunate been to work with that guy again. But I think one of the big inflection points in the beginning for me was realizing that the brokers are not the sales reps, I need to be able to sell the broker and why I’m the person to get that golden goose. Because ultimately, like we don’t even like to sell our properties. When we get them we value them so much that we want to hold them forever. And so if I’m going to be able to get something that is going to give me great tax benefits pay me for the rest of my life. I need to be a very mature presentable person going to the broker that they can count on to close the deal without giving them a hard time. And that took me two years to figure that out. That was a very tough pill to swallow. But we started to figure that out. We finally got our first deal done after looking for two years. So I think the one of the best things that we did early on in our career was we did not quit because so many times again i Gino is the only person I know that owns a business. We’re both trying to get this extra income coming in through multifamily. And it’s been very easy to say this is too hard. This is not real. This is not for us and just give up but we hung in there and then we got that first deal done. And then within two years, we’re up to 200 units. So started rolling very quickly, once we got in the game, and that’s the thing, I think that first deal for so many people is crucial if you can get a reasonable deal on your first deal, so it doesn’t take you because that’s the thing. If you overpay you buy shit the on your first one that can be super detrimental. If you set your buy right criteria up on the front end, you get a solid deal doesn’t have to be a homerun, you get a nice be on that first deal, you can start to build from that and a lot of doors will open. brokers will think you’re credible, you’re starting to build a portfolio you’re in the game, so to speak. But also for you, your mind starts to shift because wow, this is attainable. This is possible. I’ve done it once. If I can do it once I can do it again, if I can do it two times, I can do it three times. And that’s exactly what happened for us. So that was a huge change. The crazy thing is you’re talking about these different strategies and the things that open up, I had one thing in mind. And that was cashflow. That was positive cash on cash return. And we built our business on that. And I’m so fortunate that I didn’t know about all these other things because I might have been looking for things differently. We had a very solid foundation looking for cash on cash return early on. And we built our business on that. And so it was fortunate that I didn’t know much about bookkeeping, I didn’t know much about accounting, the one thing that matters, do you have positive cash in your account at the end of the month. And so we were built around managing the cash, managing the bank statements. And we’ve continued that with our property managers today. So I think we’re built a little differently like that just from our core. And I think it’s really proven us to be a top performing organization, because what we look at every month when that drill report comes out as PPU, that’s profit per unit. And literally, if you asked me like, what’s your underwriting look like and it sort of intuitive now, because I have this large portfolio, I can see what’s performing. And then we just look for ways to duplicate things that we already have in our portfolio, and we go after it. So it’s a lot on for us right now. A lot of it’s based on vintage. Okay, how old is the property? What’s the makeup? You know, we really like two bedroom townhomes. There’s certain exteriors that we prefer, we like washer dryer hookups, and then we look at what we have, we benchmark it against that and we sort of attack. Alright, there is there’s so much I want to unpack out of that last like three minutes. It’s not even funny. But a couple of things that really stood out to me was listen, this is about relationships, real estate, right? Or actually any business. It’s all about relationships. And I think you know, coming from the New York, that was a great. I’m being honestly I was aggressive, right? Yeah, right. Well, we’ll keep the swear words out of it. But I really wait to aggress from freaking people out well, because when you go buy a car in New York versus Tennessee, it’s like probably a different experience. Right? I’ve definitely freak some people out since I’ve been down here. So I’ve had to


Greg Lyons  12:40

do your car buying stories. This podcast? Oh, yeah, they are amazing podcasts that is almost Comedy Central. But I digress. You


Jake Stenziano  12:50

know, you have like, all these different things about making a list about where you want to live, the weather, the taxes, the culture, right? It’s been intentional about what you want to do that you get down there, you realize it’s about relationships, you don’t find a deal for two years. I mean, how many people raise your hand would have given up after the first year be like, You know what, it’s not possible can’t do it. No deals, nobody likes me. Whatever the case, that’s the biggest factor in this that people don’t get though, that right there. That one hurdle. If all the listeners out there can get past that one component, they’re gonna be in the game. That’s the biggest light switch that anyone can turn is getting that first deal done. I think, like if I could give one piece of advice on this entire show, stay in it until you get that first deal done and see what changes for you and your life in general. That’s it and then like, you know, you guys coin but after you get that first deal, you guys coin manage right? Well by Right? you finance it right? And then you manage it right? I mean, that’s a three step. It’s a three legged stool, man. It’s a three legged stool. I don’t want to oversimplify it. But when it comes to managing your business, managing your portfolio, okay, multifamily is a three legged stool, you got to buy, right, okay, and you have to accept certain criteria. My criteria is probably different than your guys’s criteria than the next guy down the road. But find out what are you looking for? What vintage? Are you looking for? What cash on cash return are you looking for? Are you just looking for appreciation is different for everybody, but you line out that by right criteria. Okay. And then the financing is huge. Right now financing has changed a lot. We finance for the long term, we’re looking typically minimum of 10 years. Okay, once we send it out to pasture, right, once it goes out to Fannie or Freddie, we’re looking to minimum 10 years on it. Great IO, low interest rates non recourse? Okay, so it’s getting the financing component dialed and I think that’s probably one of the easier ones once you understand your strategy, but a lot of people can make mistakes, because if you’re going to be syndicating and then turn into property and selling it, do you have a prepayment on there, how are you managing the prepayment, what are you doing, you know, loan to cost you doing bridge loans, so it does get very complicated once you get to the higher level deals, but it’s you get that dialed in and have criteria for that. And then once you own it, once your financing there for the long term, it all comes back to the management. And that’s what we’ve worked on, day in and day out. It’s where most of my time is spent. It’s having solid KPIs. It’s building a good culture and We’ve been through all the different coaching when it comes to EOS scaling up, you name it, we’ve purchased it, we’ve spent hundreds of 1000s dollars on this stuff, because that’s what’s going to drive revenue. That’s what’s going to keep us in it for the long term. And we’re actually getting our folks invested on deals right now. And one of the things I’m most proud about, we’re having conversations, we had a meeting last week, and the people that have been with me for the longest now are starting to see higher returns higher income, from their investments that they’ve done with our company than they are on their W two. Do you know how excited those people are and how that’s changed their lives. And now, when they’re looking at these deals, and we’re invested together, you think that buying has changed, you think they’re looking a little bit more closely at the expenses, and now it’s a unified front attacking this together. It’s a beautiful thing. I mean, it is a beautiful thing, if and when you get to that point, if that’s something you’re interested in, and so Jake, just keep on going though, like right now we are in mid October, right? So we’re in mid October, we just got a new print on the inflation highest in 40 years, I feel like we’ve been hearing that month after month. There’s blood in the streets, kind of where we have the sense of impending doom investors have a record amount of cash on the sidelines, just their portfolios are getting destroyed in their 401 K’s right. There’s a lot of uncertainty out there. The capital markets. I don’t know about all that. I blew that up a long time ago when I challenged conventional wisdom. And here’s the thing, guys, and I’m gonna get to that. But in my career, there’s stuff that Wall Street tells you there’s stuff that society tells you this is the way it is. That’s why I went to get a W two job and thought I won the lotto. That’s why I put money into a 401 K and thought I was doing the right thing. That’s why I got an IRA and thought I was doing the right thing. That’s why I was buying term insurance and thought I was doing the right thing. I blew all that shit up. Okay. And then when it got to the point of me having a family, okay, you got to save, you know, and put money into whatever the hell fund they want the government to control your money in and then you got to send your kids to public school, you got to do this. None of my kids go to school. They’re all homeschooled. Well, they go to school, but never go to public school. We don’t save for things like that. We don’t save for college. If they want to go there, that’s fine. But you know what pays for that as I buy assets? Okay, the assets then pay for events in my life. Okay. So there’s a different world out there if you’re open to hearing it. And by just challenging conventional wisdom has changed my life completely. I have ultimate freedom and control over my time I work from home, my kids are right there. Their nannies here they have a homeschool teacher, I got a gym below me right now. And I’m living life on my terms. And it’s because I challenge conventional wisdom. And if you get caught up in all this bullshit that is going on right now there’s blood in the streets, your 401k is going down the this that that the other thing. Where’s your mind that where’s your concentration? What are you focusing on? My life is no different now than it was 60 days ago than it was 120 days ago, okay than it was 240 days ago. I’m focused on my plan and doing what I know how to do. Okay, that’s take care of my family, that set of businesses for the long term that’s working on my plans and my goals and ultimately, okay, so you’re saying rates are up? Okay, rates were up when I started in this game, and we did just fine. Okay, our sellers less interested in taking a lower price, because rates have gone up and their properties are worthless right now. Yes, that may be true, but I’m putting an offer in on a deal today. And I think I got a good shot at winning it. I’m very excited about it. And I think that I don’t want to like talk about it on the air because there’s certain things but I think I’m getting some shit for free. Okay, and I’m actually giddy about it. So like, No, but seriously, and so Okay, so I’ll do a little loan to cost with it. I’m going to do my little rehabs go ahead and do what we do. Maybe I sent it out in two years to Fannie and the rates are 7%. Maybe they’re eight. Okay. I think I’m buying it right. I think I’m buying it well enough. So if that happens, I’m going to be fine. And I really do. So I’m looking at that. But I can sit here and shrivel up like little arrays and all the world’s falling apart this then the other thing. What I said before we built this city on rock and roll baby. No, we built this city in cash, okay, and the cash flows there and everything I’ve done up to this point, my debts not coming 246789 10 years from now. Okay, I have nothing and Penny. So right now, look, things are nice. And I bought right at that time. So if I have to refi those in the future, maybe I don’t cash out. But if I’m at a higher rate, minimum $175 A month profit per unit. And guys, if you’re not looking at profit per unit right now, you don’t have a good draw report. I challenge you start managing the cash. Look at the cash start managing the cash because we don’t want to sell we just want to build our snowball month over month we have one syndication in our portfolio 1500 units. It’s direct joint venture ownership, if you want to call it and we did some syndications. But I ultimately prefer that because it gives me more control and stability over the long term. And it’s not reliant on a big, you know, Oh, I gotta improve the property and then cash out my cash out is based on the income approach, not what someone’s willing to pay what the banks willing to give on the refi and then I sit on it for 10 years. I think if you’re fearful of impending doom, challenge what you’re doing, maybe there’s a better path for you and I told you know this a long time ago, and he’s invested in crypto and I’ve given him a lot of shit for it. And I was like, Look, I don’t No, really, I don’t understand it really that well, you know, was listening to Warren Buffett saying that if if someone purchases all the crypto, right, it’s worth nothing because it’s dependent on somebody paying more than the next guy for it. And I said, it’s not going to give me the cash flow, it’s not going to give me what I want, it’s not going to give me the returns on my goals. And I like things that are basic human needs. That’s why I love apartments. That’s why I love multifamily people need a place to live. And if you’re looking at an ST I’m buying in a market where there’s population growth, they’re doing the right things from a business perspective. There’s jobs coming into the area, people need that resource, okay, we’re literally talking about trading resources. I can’t keep up with tech that’s way beyond I’m lucky, I’m on the Zoom call right now, I’m lucky that you know, I gotta get this computer set up. I am not smart enough when it comes to tech, nor do I have any interest in I actually hate it. You know, I barely can use the iPhone. And that’s just me personally, I’m not saying like, you know, maybe start a tech company and do all that. It’s just not for me. And so I told you and I said, Look, I’m either doing multifamily apartments, or I’m going to buy land that has water on it, and a spring and I’m gonna bottle some water up, and I’m gonna sell it to people, because I keep it simple. I want to make sure that this shit is easy, and I can understand it and that there’s a need for it. And if I can fulfill a need in the marketplace, and and provide service better than next people, we call it being the Chick fil A of apartments. We work day in day out on basically what is our customer service, making sure that our folks are renting our apartment homes are being treated with the highest level of service, we put them in, in a customer journey. There’s little gifts and things that we do along the way we reward people for staying with us for the long term. So I know I’m like kind of ranting right now. But I just don’t think looking at things and being fearful is going to do anybody any good. This is an opportunity right now where the market is shifting. If everyone’s fearful, there’s going to be opportunities because someone’s gonna Oh shit, I gotta sell now, something’s gonna come to market that I’m going to be able to, you know, treat as an opportunity. And I think it’s not chasing the shiny object shit. Like if you’re doing crypto today, or the markets falling here have a clear path of something that’s sustainable for the long term. And you can nestle in because it took me three years after that first deal to leave. So I’m into it for five years swallowing pounds and pounds of shit with no reward. Okay, probably three years of zero pay, and then it started actually stack up and then we got some big reifies. You know, once we got into it, best thing we did, I said before we stayed in the game, and we focused on building the business around the cash. So Jake, I mean, our listeners are the one on one crowd. Right. And I think what are the ones that you hold on? Tell me? Well, one, I don’t know that. They’ll tell me about that. So the beginner the one on one, I gotcha investor one on one. Yeah. So you know, so I think right? Well, we all got to start somewhere. Right? So you know, you are the asset manager, right for Jake and Gino for Rand properties, right. And that’s kind of I think, your your forte, so you know, you just had to take your company through a pandemic, right. And that wasn’t easy. there was uncertainty, there was fear, kind of like some people are talking about now. So when we talk to investors right now, a lot of them, you know, Greg, and I don’t like to convert people to real estate, like, if they don’t understand it, then they need to do some more education, and they need to get on the same page. And then when they have those high level questions like then let’s have a conversation, right. But when they get to us now, and they’re like, Well, what about this? What about that? And I say, Look, you know, we just went through a pandemic, right, a big black swan event, and we came out on the other side, right, and we cashflow the entire time and blah, blah, where their ups and downs. Absolutely. But can you talk to the listeners right now about maybe some of the challenges that you found during a downturn during the recession? We haven’t 2020? I’ll be a small recession, quick recession, but a recession nonetheless. And how does multifamily fit into that profile? When there is a downturn and when there is no uncertainty? Yeah, I think you need to focus on how you’re built and your fundamentals and their goals and aspirations. Because if there’s no alignment there, then there shouldn’t even really be a conversation. Because we went back to a minute ago, the stock market is getting crushed right now. Okay, multifamily is cash flowing, rents are going up. It’s still one of the fastest paces, we’ve seen it work celebrating the lease in our markets. So if you look at the fundamentals you’re looking at, are we invest in an area where there’s job growth, there’s population growth, and there’s demand? Are people renting more or less? Okay? Is this a true asset? Or is this something that speculate, is this gonna be based on appreciation? Or is this gonna be based on cash flow, and if those goals are in alignment with the people that are placing their dollars, okay, and those values and those goals are in alignment, there really should be no conversation because you haven’t changed at all. We set on the front end, here’s what we’re out to set out to do. We’re continuing to do it, and we’re looking for more of it. So if you want to ride the roller coaster, which is Wall Street, and Wall Street, as we know, isn’t it for Wall Street, not the quote unquote, customers, then I don’t really think there’s a conversation to be had there. And granted, people will want to ask you questions, but think of it comes back to here’s your fundamentals. Here’s our strategy. Here are the goals that you told me on the front end, this is how we’re still aligned. You know, I think that’s kind of a non issue at this point. unless something’s not performing. We’re running to bumps in the road and we have to, you know, kind of work through the strategy of the plan. Maybe there’s a management that turned over and you’re working through That or something. But, you know, ultimately, I think it’s still very similar to it was back in 2020. And we were, you know, referencing some of the coaching that we were going through on our systems and things. We had a quarterly planning meeting and a guy came in and had a great experience with him. And we said, look, we feel very confident we’re in a strong cash position, we have plenty in reserves, our baselines, we have something baselines, you know, for each of our accounts that we will not let the account drop below. And that’s how our withdrawal report is set every month. And then we have a CapEx reserve, as well. And then on our agency deals, we have the additional reserves there. So I think we’re always in a strong cash position. And, you know, don’t freak out like, Oh, my God, COVID is coming. And we’re having a quarterly planning meeting with our executive team. And we had our coach in there that was working through this. And I said to him, I said, Look, we have a very clear plan, we’re staying the course, okay, we have strong cash reserves, and we plan to operate through this. And we’re going to show up to work every day, and we’re going to get the damn thing done. And I said, That’s the message. And I said, I don’t want you to really veer from that. And he came in with this bullshit, oh, my God, I know your emotions, I know you’re feeling this. And I’m like, bro, I know, the Tony Robbins stuff works at times, but not here. And lit, I had to fire him after that meeting. Because he came in and literally raised everyone’s emotions, and then tried to like pivot from it. And I said to him, I said, I told you at the beginning of this, we need to keep our team down and focused on the goal at hand, not the bullshit that we’re hearing out, you know, from society. And he didn’t do that I really liked the guy. And they offered a ton of value. But that was towards the end of the relationship that time but I literally had to fire him after that, because it was not in alignment with what we’re looking for. And you kind of freak the team out. So when you know these higher emotions, at times can lead to lower intelligence. And I think people that are pivoting right now are making drastic moves that are in real estate. That to me is a mistake. You know, we said before you buy, right, you make sure you get your criteria, you finance for the long term, and you manage you go to work, that’s what this is about. You don’t run from things you fix them. So I


Greg Lyons  26:57

think a lot of the lessons that you just learned and apply to your business during the pandemic is especially applicable now. You know, blood in the street’s inflation. Hi, I think, you know, when we set out with our investors, we work with only the strongest operators. And I think right now only the strongest operators. Yeah, only the strongest operators are going to survive. Because there’s so much more to navigate now than just raising rents, right? I mean, every Tom Dick and Harry became a real estate investor over the last four or five years, but now we’re gonna see who’s swimming with the bathing suit on as the tide goes out. And you being a strong operator, so when I would trust with my capital, where do you see multifamily in five years, right, we have some uncertainty right now sounds like you’re gonna stay the course the same way you stayed the course, we’re


Jake Stenziano  27:46

even going against the we’re going against the tide even harder. I’m in 230 acres right now of built for rent developments that we’re going through, while everyone else is pulling out. Like if they’re backing out, I’m going in. And that’s just that’s been the story of our lives, like, no one wanted to buy multifamily in 2011, we’re like, give me as much as we can get our hands on. I know, like, even at the time, we didn’t, you know, have the level of expertise that we do now. But we knew what we wanted. And right now, you know, we have some models, we started a development team, we’ve got a guy in the team with general contractor’s license. And so we’re looking at it a little bit differently. And you know, we have, we’re going through some zoning stuff right now, and very, very excited to different parcels. And I’m actually working on a third right now. So we’re going all in, I know, there’s demand in the markets that we’re looking at. And I think we’ve got some stuff at some very deep discounts, we paid cash, the banks willing to finance the development going forward. So I mean, we’re not going anywhere, we’re looking to grow and expand. And I said before, there’s a certain type of product that we really love that we do well with, and we’re looking for more of those. And if we can’t go out and buy it, we’re gonna build it. So dude, I love that, like, you know, so Jake, I don’t know if you know, but Greg and I are registered representatives of a broker dealer, we got our securities license, that’s how we raise capital for deals. So you guys don’t even know what that means. Do you guys like years ahead of me? So what basically as you know, like in multifamily, right, commercial real estate, you got to build a team, right. And one of the team players is capital, right. So that’s our specialty. We got our licenses to do so. But, you know, one of the things in the securities space is you know, real estate is considered a alternative asset, right. So, you know, what, books? Exactly? When you see the textbooks or the, you know, the Wall Street marketing machine, alternative assets is like under the risky column, right. And, you know, Greg and I, that’s not part of our investing thesis. You know, our thesis is people need a place to live right food, clothing and apartments. That’s what Gino and humans you know, we have kind of preached. And you know, when you look at it, and you look at the macro and the micro of, you know, markets and say, look, here’s the housing demand, there’s X amount of units on the market right now, they are short, this amount of units. There’s jobs coming, there’s population growth, you know, it’s really Not that hard to kind of see where the puck is going and trying to skate over to it. Right. So and I think there’s a real paradigm shift happening occurring, especially with people like older millennials, like myself, even though I don’t tend to identify as a millennial, but you know, people in their late 30s, what year were you born? 1982? Did I was born in 82. And we’re not millennials. We’re on the fringe you got to look for right? You got to look at the right demographic definition. We’re not okay. We’re I think we’re Gen X. All right. No, put me in that bucket. Right.


Greg Lyons  30:28

I can’t even believe I’m in this conversation with millennials. But keep going. You’re not


Jake Stenziano  30:32

You’re not. Today, Jake. Today, I’m gonna identify as genetics are with you. Okay. But that’s how I identify as a generation. I’ve never said that before. So here we are now, like, you know, alright, you could do the same thing you’ve always done, you can do whatever your parents did. Or you can now you know, have your buy box, right? This is what I want life. I want cash flow. I want appreciation. I want stability of capital, I want preservation of capital, I want to, you know, I want my little monies. I want tax benefits, right? I mean, you know, before I got into this my tax strategy, Jake was to get enough medical leave from the firehouse so that, you know, we there’s a little medical leave, when you have when you go on medical leave, you have a little tax benefit. It’s like, you know, I don’t know, 30 bucks a year. It’s crazy. That was my tax strategy. Right? was, you know, I mean, to get $1,000 back every year was like a win, hey, black tax strategy was to leave New York. So it worked out pretty well. You know what I’m saying? So, but anyway, so like, you know, I know you guys don’t do a ton of syndications. But, you know, what do you when you talk to other investors, you know, how do you see the landscape changing from the old school or accumulation model now to like this alternative investments? You know, like you said, you blew up before, okay, you know, I, I’m hearing a lot more of that these days, are you getting the same? I think that folks are able to access information much quicker because the internet and folks like yourselves with you know, these amazing shows providing real life stories of what’s going on and what’s going on with people’s lives? Because, look, when we’re 20, where the hell are we hearing this from? Like, we can get a little snippet from Rich Dad, Poor Dad, probably right? Or maybe when we were 25, whenever that book came out, but what were the sort of resources or places to go to find this out, and there weren’t a whole lot of them. So I think the opportunities right now, for folks like yourselves, that are sharing this great information are more abundant, and people are becoming more aware. And I think the people that are seeking a better life have opportunities, like they’ve never had before, to understand how the game is played. And it’s just sitting here laughing inside when you’re talking about alternative investments and risk and thinking about the roller coaster, which is Wall Street, and my dad right now who’s retired, who’s depending on his 401k. And that shit has dropped like a rock. And now he’s freaking out and saying, you know, what do I do, it’s later in life, and he wasn’t in the risky buckets, right? They put you, you don’t know what you’re investing in. But it’s like, you can do bucket A, B, or C high risk, medium risk or low risk, right? And it’s like, What the hell does that mean? And think about it, you’re depending not on yourself. And remember what I said before, the more people that are invested into our company in our investments that are actually working in the property management company, the higher we’re performing, because the level of care is there, you’re talking about a CEO who’s going to be there for two to five years, who’s worried about his exit, and how he’s going to get paid. He’s not worried about you. He doesn’t know your name, okay? The folks on my team, we know each other’s name, we’re working for one another, to build this thing for the long term. Or if you’re working for yourself, and you’re going out and buying a 10 unit, or if you know, if you’re looking to someone like Tim here and you’re going to do a syndication, you know His name, He knows your name, you’re fighting together to make sure that asset is going to win, the bigger you get, okay? Yes, there’s gonna be more resources to you. But also, it’s going to be Hey, what’s in it for me sometimes at the top and then make sure I get my golden parachute on the way down. So I don’t want to rely on a CEO. I want to rely on myself and I want to take care of my team members and the people that are in my circle, just like you guys are doing with your syndications and your investments because I’d much rather be able to speak to someone like you that what’s going on know their values, know what they stand for, than just turn my money over and not know what the hell’s going on and rely on the roller coaster. That to me should be an alternative investment. You’re investing in someone else, not yourself, a group of people that will never know your name. I don’t want to be part of that I subscribe to in the beginning because that’s what I was told to do. I quickly pivoted blew it up, took the penalty, and was able to do things with the money that would have never happened been in real estate, not even close. And I’m just a dumb kid that, you know, barely graduated high school. So Well,


Greg Lyons  34:40

I wouldn’t call you that. Because as we sit here and talk about your company and the way you invest, I hear things come out of your mouth like we are the Chick fil A of apartments. We take our tenants on the customer journey,


Jake Stenziano  34:53

and they’re not paying it’s the residents. We use that word and it’s language matters. We don’t have employees. We have team members. We don’t have to And it’s we have residents, and that’s part of the we’re the culture and I love me some Chick fil A and everything is my pleasure.


Greg Lyons  35:08

It’s true. But like when you get so dialed in and great at what you do, there’s a confidence there’s a way of doing things. But there’s a confidence for investors, there’s incompetence for people placing their money with you. So people like Jake, yourself, people we work with, it’s so incumbent to have that backbone and that foundation, when you’re dealing with people’s lives. And if you’re giving them a great experience, they’ll be with you for who knows how long. So values


Jake Stenziano  35:36

based decision making, we have similar values that are in alignment, your investors have values that are in alignment with yours. And that’s why this stuff works. And that’s where Wall Street falls apart. Because the values aren’t in alignment. There’s no relationships anymore. Everything we do is a team sport, people know your names, they’re able to reach out and talk to you. There’s a difference there. And I think the results show for themselves.


Greg Lyons  35:57

There’s no question about it. There’s no question about it. But this was another just knowledge dropping on a stem, I would say. But to be mindful of our time, we’re gonna move on to our three questions. This will be the millennial edition of the three questions. Who should say, Don’t don’t love this? This is so much fun. I love it. All right. Gen X. Number one says to millennial number one, Jake, when you talk about real estate, you’re on podcast, you have your own podcast, which is wonderful. When you hear people say investing in real estate is too risky. What do you say to them?


Jake Stenziano  36:29

I mean, I think it’s a problem for me, because I’m probably so insulated amongst people that I’ve selected that I don’t really hear that too often. But if I you know, someone did come up to me and said real estate was too risky, I would ask him, you know, what the framework was. And that’s how we started to really create a duplicatable machine, you know, time and time again, and process. And that’s where the by right managed, right and financed, right comes from. If you have a process that you’ve done time and time again, then things start to get predictable. And I think if you’re going into real estate, and you haven’t educated yourself, and you don’t really know what you’re looking at the same way 99% of America invest in Wall Street. Okay, let’s take a step back. Did I invest in 401k? Wall Street? Yes. Did I know anything about it? Should I’ve been placing my money there? No, in my opinion, because I knew absolutely nothing about it. I’m like reading it and tranex sophisticated and talking to these brokers. Brokers didn’t know shit. I didn’t know shit. We’re piling our money in there together. It’s gambling. All right, I could have done just as well in Vegas. Alright, so I think the thing is, if you’re saying real estate is risky, do you understand real estate? Do you understand what you’re looking for? Do you understand population growth? Do you understand? You know, market selection? Do you understand job growth? Okay. And you understand how to select the right operator? Those things actually matter? Do you understand that? And guys, this is getting very repetitive. What do we say? It’s a three legged stool by right managed right and financed, right? If you have parameters and criteria, real estate can become predictable. If you don’t know what you’re doing, and you’re throwing money out there, real estate can be risky. Crypto can be risky. I think crypto has been very risky. Wall Street’s been very risky. Wall Street crypto and real estate, who’s performed better? Just saying, just saying like, yeah, and I love that and I’m totally with you on the crypto thing. I don’t understand that. I know I’m gonna remain ignorant on that. 100% good being ignorant with a dude, I told you if it doesn’t work out for me, I’m buying water. So keep it simple over here. The second question from Jim Rohn. He says that a formal education will make you a living and a self education will make you a fortune. And I’m pretty sure we’ve covered this today. But just a couple of thoughts on that, guys, it’s not even close. And this is something that I haven’t shared very much. The most interesting use of my time when I was working for the pharmaceutical company is I was going to get an MBA, I went got my MBA while I was doing it in the evenings. I remember one thing from the entire time and that was a Chick fil A customer service video that they showed us and that’s when my whole Chick fil A obsession started. That’s the only thing I remember. You know what made me the money. I’ve listened to probably 100 audiobooks, because I was going back and forth from like Dutchess County to Westchester where I was working, and I was doing that hour commute. I would listen to business audio books, and I did it for about eight years. And I would just absorb content throughout the day. You want to talk about a real education. I was getting blasted with stuff that I would never have considered okay, and that was trying to apply it and then when the door for entrepreneurship opened up for me, all the stuff that I heard and then I had Gino over here who’s getting real estate, mentorship and education. You put all that together and it’s like he was a you know book junkie as well. Some magical things started happening all those things I was absorbing for an eight year period, time and time again in the car started to come to fruition. I’ve said well I can actually apply these strategies because I’m not handcuffed from a W two Corporation. Now I can start to implement things that I’ve been learning for the last eight years and you know, even books People won’t consider like Atlas Shrugged. It taught objectivism and Steve Jobs autobiography, just fun. I love autobiographies. I love the one from the guy who did Nike as well. And these, some of these are like 20 hour books. And I had the time while I was making money to consume content driving around in the car. And so all that lead up to then get into real estate, but also, we’ve spent hundreds of guys I’m not like we’ve spent hundreds of 1000s of dollars on self improvement education. And there’s very few times that I look back and say, I didn’t get my money back on that very few times. And even though I had to fire the guy that were doing the scaling that year that we spent with that company, 10 extra money and 10 Extra systems and our growth. I couldn’t have, you know, the negative vibes being put on my team at a time when, you know, people were already on pins and needles, but that’s okay. No regrets. Right. I think we learned a ton and there was a huge value transfer there.


Greg Lyons  40:53

No doubt that Nike book Phil Knight, the have that it’s called Shoe Dog, Shoe Dog. And that was really good one. I just recently read that one as well. You


Jake Stenziano  41:03

know, those books are so enjoyable, but also so rich in content knowledge. It’s amazing. Oh, the


Greg Lyons  41:08

entrepreneurial journey. Phil Knight in particular. This time was fantastic. So


Jake Stenziano  41:12

the Walmart one like the McDonald’s, one that some really good, really good stuff out there.


Greg Lyons  41:17

Absolutely. Absolutely. Our last question in the millennial edition here is from Robert Kiyosaki. And he’s


Jake Stenziano  41:24

getting some shots fired at him these days. Oh,


Greg Lyons  41:27

yeah, big time. They’ve talked but you said, savers are losers and debtors are winners. What does that mean to you?


Jake Stenziano  41:35

You know, I think it’s a big component of everything that the three of us are doing right now. Because again, going back to, you know, when I had the 401k and I was look, my life right now and I’m not trying to brag I literally live in a mansion on a lake. You know, I have multiple acres, I have a shooting range down the road that I take a TV to, I have a fitness center downstairs, I got a condo downtown. I have debt, but non recourse debt, I don’t carry personal debt at this time in my life, okay, the cars the house paid for, right? But we have non recourse multifamily debt, and we have loan to cost debt with our, you know, deals that were kind of turning around, okay. When I was in New York, I lived in a one bedroom apartment with my wife, okay, it was a C Class apartment, and we saved. The difference in my life now is that we’re able to utilize nonrecourse business debt, not personal debt, you know, and I’ve had personal debt in my life, I’m not saying it’s a bad thing at times you need it. I like nonrecourse business debt. And I like initial loan to costs, recourse debt that we do through our community bank, when we’re buying a deal, and then we send it out to pasture. There’s no way that any of the stuff that we’ve done would be possible if we were not able to utilize non recourse business debt. It’s just not possible. And then the really cool thing is like, we just did a deal. 67 adore. We went and we gutted it. Like literally, you know, half of it was that we went gutted, it kept the brick, new roofs, new parking lot, you name it, we’re into it for maybe 15 a door. Okay, so say we’re 80s, low 80s We just got an appraisal for 154,000. Okay, there’s a gap between that at that we’re at an 154 I’m not taking all of it off the table. But some of its gonna come off the table and the rest is gonna go out to pasture. Okay, and so what are we gonna be able to do, we’re gonna more than be able to recoup our money. We’re gonna have solid in place debt on it, okay. And then we’re gonna be able to take those baby money soldiers that had a job, and there’s to produce more baby money, soldiers. And now they took over that property. And now the new baby money soldiers are gonna go just like the game of Risk and start taking over more and taking over more multiplying and have new baby money soldiers. That’s how this game works. Play the game, you can hate the game. That’s how it works. Baby money, soldiers, everybody. All right, just remember that. That’s what it’s about. That’s my mixtape dropping next month. Jake, listen, I mean, I could probably talk to you for hours. I think the listeners are gonna get a ton of value out of this one. I really want you to take a minute and just tell everybody about multifamily mastery five coming up this November 2022. Down in Orlando. Tell people a little bit about what that is. And how special that event is. Did it it’s so cool. So this is the multifamily conference of the year bar none. And you know, you want networking you want to be able to expose yourself to ideas that you’re not going to get in school. Okay, you’re going to learn ways to learn about cost segregation, you’re gonna learn how to be a good operator. We even have one of our senior maintenance techs is going to be there talking about the life of a maintenance man. Okay, this is stuff you don’t get elsewhere. Okay, we got Ryan serhant. Who’s going to be coming down former you know, Super Bowl champion Julius Thomas is going to be there we got Luke Ren, Gino myself, we’re gonna be sharing our journey. We’re going to be there you know, shaking hands kissing babies, and it’s just going to be rich knowledge and I’m super excited. We got a special event Saturday nights. Just gonna say that Gina is gonna be doing a little opera. But man I am so pumped. I think we’re what are we two three weeks out and we just eclipsed 950 tickets sold So I think we’re gonna land somewhere between 1050 and 1100. So I mean, there’s gonna be a ton of people there and you’re going to be around people that are doing this at a very high level like yourselves there’s going to be you might be in the room sitting next to somebody that has not done a deal yet or you might be sitting next to someone that’s done 1100 units they might be a multifamily broker. We got a ton of brokers coming down it’s just gonna be a badass event I’m super excited November 5, and sixth you got Jake Ford slash m m five. And we hope to see you there we’re gonna be kicking some ass Jake I’m gonna do one better I’m going to put it in the show notes with a special that Gino and you gave us for $200 off your ticket. So he got one. He’s just He’s killing me. You know, this is a new I know I don’t know how much this event is gonna cost but it’s a lot more than six figures and I hope we’re able to recoup with his discounts here so so head down to the show notes everybody grab your ticket, meet Greg and I and meet Jake down there. It’s going to be a phenomenal event. We went there last year, I had the opportunity to actually get on the stage and tell my story and it was just incredible. So wasn’t I am so grateful for another week with you guys. If you can just please leave us an honest rating and review. And we look forward to seeing you again next week. Thank you for listening to another episode of the passive income brothers podcast. We would be grateful for your support of our podcast by giving our show a five star rating and review and subscribing to our show on your favorite podcast platform. Don’t forget to take inspired action after listening to this show, so that you can start building out your passive income streams. Finally, head on over to cityside to connect with us and find out more information about how to get started passively investing in real estate