From Restaurant Owner To 1,000+ Door Apartment Owner With Gino Barbaro

Episode 328: From Restaurant Owner To 1,000+ Door Apartment Owner With Gino Barbaro

 

To become successful in real estate, you must buy right, finance right, and manage right. In this episode, Host Mitch Stephen interviews multifamily real estate investor and educator Gino Barbaro. Gino provides personal experiences and stories about his first deal on an apartment complex. He also shares the three pillars of real estate to create real wealth in real estate. Going into detail into some of his works, he talks about his unique framework which he is currently utilizing with massive success in the current real estate market. Join Mitch and Gino in this episode as they show why getting into the apartment business, buying and holding multifamily assets, is the best way to generate passive income, create wealth, and build your real estate empire.

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I am overjoyed here because I’m here with Gino Barbaro. We’re going to be talking about apartments and how to make money in the apartment business. What’s the three-legged stool, Gino?

Buy right, finance right and manage right. That’s what you need to become successful in almost any endeavor in real estate, but multifamily especially.

We’re going to get deep into that. Tell us a little bit about your history. 

I was in the restaurant business for twenty years in New York. I bought it on ‘94 with me, my dad and my mom back many years ago. It was awesome. We made money. It was a great business back then. The great recession comes and then all of a sudden, everything changes. You’re working harder and you’re making less. You have regulations and you have healthcare. You have costs and a $15 minimum wage coming on. It’s overwhelming. I’m saying to myself, “I need to do something different.” I find my partner, Jake. He’s in New York. He moves down to Tennessee.

Long story short, we start buying apartments back in 2013 but the whole genesis of that is I knew what I wanted. I didn’t want to be in the restaurant business and I wanted to create some type of passive income. I wanted to start small and make a few dollars a month to pay for my family. I’ve got six kids so I’ve got to put them through college. They got to get married and all that. This bill is coming due. I said to myself, “I can’t keep doing what I’m doing.” I don’t like what I’m doing. I don’t want to look back when I’m 74 years old and say, “I didn’t take a chance. I hated my life and it didn’t hit my life. I hated what I was doing. I didn’t feel like I was having any impact.” I wanted to change that.

It’s been my experience and the experience of most of the people around me that while working with family sounds great, it’s very difficult sometimes. Did you have the same experience?

I was the older brother and I was always leaned upon. I was the guy in the kitchen. I was doing the dirty work while my brother upfront was having a little bit of fun. You get a little resentful. If the dishwasher doesn’t show up, I’m washing dishes. I’m on the cooking line and it’s 90 degrees. It gets a little frustrating at times but that wasn’t one of the reasons why I got pushed out. I blame him but I ultimately would have to blame myself because I wasn’t stepping out. I wrote a cookbook. I was trying to do branding with the restaurant. I was getting on Facebook. I was doing physical products. I was creating a brand. I had the kids in the garden, shooting gardening videos, trying to teach families how to get around the dinner table. I was starting that before I started Jake & Gino. I love that portion of it. My brother wasn’t on-board with me and he wasn’t there yet. I said, “I’ve got to go somewhere else.” If we had done that and created a nice pizza sauce with dad’s name on it and all that, we were creating a nice brand, but it didn’t take off because he wasn’t there with me.

 

It takes a team and part of the problem is people got different ideas. I’m saying this for the people that are contemplating getting in business with family. The problem with family is you can’t fire them and replace them. That will ruin the relationship. I have a lot of people who said, “My daughter can work for us. My husband can work for us.” I said, “No.” In my mind I’m going, “I have to have someone I can cut loose at the drop of a hat if I don’t like what’s going on and not affect the rest of my relationship with all my other people.”

It’s funny you say that Mitch because I had cousins who wanted to work for me. I had my brother-in-law who wanted to come. I said, “The wives aren’t working there. Our kids are all great. Our kids can work there, but no extended family members.” I was born into it. I was raised that way and I had a strong Italian dad. My dad in his deathbed was like, “You’ve got to take care of your brother.” What does that do to you? It kills you. I was always the responsible one and you have to be wary. Cut him out of the operating agreement. Make sure it’s you, your brother or whatever and anyone you hire. The biggest mistake that I made in business was not firing quick enough and not hiring it right. Even worse is when somebody’s there and it was cancerous, not firing quick enough thinking about that limiting belief of, “I can’t replace that person.” It’s going to be hard for the first two or three weeks. It’s a short-term pain and long-term gain. Trust me, that’s the biggest mistake I made.

That’s why I’m not in the restaurant business anymore because I’m stuck in the kitchen. I’m saying to myself, “These guys are killing me. It’s me but it’s them, but I didn’t think I could replace them.” That was the biggest mistake. From one restaurant, we own over 1,500 apartment units in five or six years. What happened? We learned how to hire. We learned how to implement some systems and we learned how to scale a business. We thought of multifamily as a business. Your business is a business. Everyone thinks real estate as real estate, but it is a business. You have to implement systems. It’s customer service. There are a lot of things going on that I didn’t do in my single restaurant but I’m doing it now in the real estate space.

I don’t want to take away a whole bunch of time with this but it’s an important topic. What I like about this show a lot of times is the spontaneity. I didn’t plan to talk to you about this, but I think it still needs a little bit more conversation. I say that family is tough. I have family all in my business and that’s how I know. My daughter has worked for me for 24 years. She has closed every deal in and every deal out for 24 years. The reason why people go with family a lot of times is that the auspice is, and it’s usually correct, the wife or the daughter is going to care a lot more about your business, your money, your name and your reputation than anyone else in the planet. That’s a given.

Having that said, my wife keeps track of all the books, the bookkeeping and finances because she’s good at that, but it has caused some major problems. I have fired my daughter for up to a year and a half. It took her five years when she came back to get back to what she was making before she got fired. We laugh about this now. She wouldn’t make it to work on time and she never made it to work on time. I told her, “If you do it one more time, you’re out of here.” I guess she didn’t believe me. The bottom line was family started clicking in my business when they figured out that I had an ax. I wasn’t afraid to use it. If you didn’t want to follow me then you’re probably going to be looking for a job somewhere. If you want to hang around, I’m the leader of the ship. That sounds pompous and maybe narcissistic or whatever. It’s hard to run an army with too many generals.

You have to tell your daughter or my son or my daughter. My daughter works for us. She edits podcasts and does videos for me. My wife is a life coach so she works with some of the clients we have. My son is seventeen years old. He’s sending out mailers, sending out cards and calling up investors for certain reasons. I tell them, “If I tell you to do something, it needs to get done. If it doesn’t get done, Josh and Jennifer are going to see that. Everyone in the team is going to see that you are slacking. I’m giving you cut and you slack. It doesn’t work the other way around.” I’ve already set the expectations. You have to set clear expectations that, “If you can’t be at work by 9:00 and you’re there at 10:00 every morning, we can’t work together and it’s no hard feelings. I love you. You’re my kid, but this is not charity. Go out and make $10 an hour working out in public. You can do that.”

This business doesn’t care how much we love you. It doesn’t give a crap how much we love you. It does not care. This business is ruthless. It’s black and white. It’s plus or minus and that’s all there is to it and it didn’t matter. Let’s get on with the apartment section here. Tell me what first raise your head to real estate in general. How did you go from the restaurant business? What all do you go through to find that land on real estate? We’ll talk about what made you pick apartments.

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My parents were both immigrants so they both had a little extra money and they’re like, “What do immigrants do? They save and they invest.” I bought a fourplex back in 2002 in New York. I said to myself, “I don’t want to fix and flip.” I didn’t even know about lending private money. I said, “I want to buy an asset. Let me get some cash flow. I can’t do fix and flip. I already have a job and I don’t want that transactional money. I don’t want to raise my tax base.” I just say, “Let’s buy this fourplex.” I loved it. I said, “This is great. I can make a few dollars.” It was right next to the restaurant. I was using it as a storage area so I hit a homerun with that property. I moved over and I did a mobile home park deal.

I had a little extra money. I always tell people, “The person with money is the person with experience. The person with experience gets the money and the person with the money gets the experience.” It happened to me. I didn’t know what I was doing. I had no due diligence experience. I had no idea about the sponsor. He had been doing it for years. I had met him through a personal friend but still, you think I should get on a plane and find out and take a look at what I’m buying. I made all those mistakes. That motivated me into getting to real estate, into life coaching and into finding out what this real estate gig was. If I’m going to be doing it long term, I need to invest in my education. I’m a huge believer in that. I said, “I like multifamily.” You can’t buy it on the internet. People need a place to live. It is becoming a renter nation. It’s becoming a renter nation many years ago right around the great recession. Once people started losing homes, it just flipped. I said, “Let’s go into apartments.” I said to my partner Jake, “We can both buy a twenty-unit together while we’re working.” He was working as a pharmaceutical rep. I had the restaurant and that’s why we landed on multifamily.

You were holding onto the restaurant and keeping everybody a paycheck and even eking out a paycheck yourself. You can see it was not going to weather the storm for you. You started doing it part-time. I want to make this point, very few people jump off into the real estate game 100% and just dive in. It would be foolish anyways. There’s too much pressure. You got a gun to your head. Almost everyone I know did a part-time, including myself and Gino here. You keep some kind of base and people don’t get this, but you’ve got to burn the midnight oil. After you get off work, you got to go to this other thing and go to work. If you’re not on fire with the prospect of what you’re doing after hours, it isn’t going to work because there are too many hours in a row.

We homeschool our kids so I’d get up in the morning, homeschool my kids for about 45 minutes, go to work at 10:00 and have lunch. At 2:00 to 3:00, I do real estate and 3:00 to 9:00, restaurant. I come home at 9:00 and do another hour or an hour and a half. I was doing podcasts at that time. I was underwriting deals. I was going crazy for a couple of years and I weaned myself off. In February of 2013, we bought our first deal. July of 2013, we bought our second. February of 2014, we bought our third deal. It took us eighteen months to get that first deal but within that first year, we had 200 units. I’m looking at myself saying, “I can do this.” My epiphany was, I’m in the restaurant. I’m in my storage shed. I’m putting away those containers.

I’m doing $10 an hour work and I’m on the phone negotiating an $11 million, no money down deal. I stopped and I say to myself, “What am I doing here?” I felt like an idiot. I have pizza bags next to me. I have sacks of flour next to me and I’m talking about an $11 million, no money down deal. We closed the deal in August of 2015. In October I said to myself, “It’s time to burn the ships.” If anybody out there knows that feeling, it’s scary because I have six kids. I live in New York and my taxes are $30,000. I don’t know if I can do it. Doing something for over twenty years, it’s ingrained in your physiology. You do this every day and all of a sudden, you’re going to say to yourself, “I’m not doing this anymore.” You lose your identity. That’s a hard thing. I lost my identity as the pizza guy, as Gino’s Trattoria and switching over to Jake & Gino, the new multifamily identity. That was scary. In October of 2015, I told my brother, “I’m quitting during the week. I’ll work Friday, Saturday, Sunday for the restaurant but during the week it’s the apartments.” For six months I did that.

During the week it was apartments. It was Jake & Gino. I was underwriting deals. I was going to Knoxville. I was doing whatever we had to do, but I loved it. I knew what my why was, I had clarity. If you have clarity and you have a strong enough why, you’ll figure out how to do it. It wasn’t all this “I’m going to quit everything and do it.” I was the responsible one. If you’re young and you’re getting into it, get your real estate license and go full time. If you have known things, try to buy a duplex house and do whatever you can to become financially free or to lower your bills. Become a producer, don’t become a consumer when you’re young. If you want to consume, consume knowledge, education and someone who can mentor you, but don’t do the other stuff. Become financially free and then you can set yourself up and buy whatever you want when you’re a little bit older.

You told your family and everybody, “I’m only going to be at the restaurant on Friday, Saturday and Sunday.” You clipped along at a pretty good pace once you purchased the first building. What took the eighteen months? 

 

When Jake moved down there, we have Barbaro and Stenziano in Knoxville, Tennessee. Call it what you want. We’re only doing business down here. You’ve got to meet the brokers. You have to go down there. It’s unsteady. You look at deals and deals don’t make sense. You’re a little afraid. Jake goes on, he has to buy a home. I’m like, “Jake, what are you doing? I know you’ve got to satisfy the wife.” She comes down. It’s slow and when you first start out, you don’t know that these deals that are coming at you. They looked too good to be true. You’re on the right deals. You talk yourself out of deals. You’re not sure, “Jake, are we going to do this or we aren’t?” All of a sudden it clicks. You buy the first mom and pop deal. We like to call them the mom and pops. They are motivated sellers. They’re burned out. There are no systems in there. They had no website. They had weekly renters. It was a beautiful little 25-unit property with cottages, a six-plex and two duplexes. I fell in love. Don’t fall in love but I fell in love with the numbers more than anything else. It was a value play.

You probably fell in love with what you envisioned. I also like the before and after visuals. I also like the optics of the before and after income cash flow. Both of them have a part with me because I find it a lot easier to turn something around if it can end up looking romantic somehow, looking well, straight and clean. That’s a fun part for me. Do you have systems? Do you have management companies now or are you managing it on your own?

What happens is in the last few years, we’ve scaled up. Jake, my partner and Mike, the three of us bought the first 1,000 units ourselves. We refi that over $9 million for those. That’s how we continued to buy. Like I said, produce don’t consume, continue to reinvest. Multifamily like your business is a long game. You’re the farmer planting seed. You’ve got to water the seed and let the seeds grow. You just hope to God that it doesn’t get a hail storm, you don’t have a correction and you got to be lucky. Luck and hard work go hand-in-hand. The harder you work, the luckier you get.

For us, we did that. We created the property management company. We self-manage our own properties. We created the Jake & Gino education brand. We have an education company. We created a syndication company a few years ago. We started syndicating deals. We syndicated the last 600 units we’ve bought with investor money. We’ve done three syndications. I’ve created an asset management company. We’ve created a capital company where we’re doing mortgages. We’re doing something that’s very similar to you. We call it multifaceted multifamily. We have multiple streams of revenue from one entity. When you’re buying a property, you can manage it, you can educate and teach on it, you can lend out to your students and you can start raising capital and buying these deals through our syndication.

I’m always telling people the hardest thing an entrepreneur will ever do is to find the one good idea and finish strong. I’m as guilty as you. I’m a super triple-A entrepreneur and I recognize the potential of all these different businesses. I have eight businesses. They all feed off of each other. I had to slap my hand into my partner or I had to slap each other going, “No more. Stay with the ones we got. I understand it could be a big winner. We already got eight big winners or at least out of the eight, there are four big winners. You just need to stay there.”

The thing with us is with our syndication company, we brought another partner on. He does investor relations. He does day-to-day. We had 600 people on our investor database and Gino can’t call them all because I have students to take care of. I do education day-to-day. Jake does property management day-to-day and we underwrite deals and everything. We needed somebody to come on board to call those 600 investors, to cultivate those relationships, to actually have lead sources and have funnels so when we underwrite a deal, you can call people up.

We have those substantive relationships and also our partner Dylan. He’s underwriting deals. He’s going to Louisville. He’s making connections with brokers. It’s very hard to do everything yourself. When I was doing everything in the restaurant, I was doing everything myself. I couldn’t grow. I didn’t like what I was doing. I love what I’m doing now so I can focus on the education aspect. The education aspect helps the syndication aspect because I have students who want to invest with us. I have students that we can teach how to do. We do live events. It is a symbiotic relationship.

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You can help them find deals that they can’t handle or don’t know what to do with it.

We can help students to close deals down. The great thing about it is we’re at the top of the market. We’re underwriting 30, 40, 50 deals and nothing’s working. We don’t have to force to do a deal. We have other businesses that are complementary and that’s the important part. No deal is better than a bad deal. I’m telling my students, don’t rush. It might take eighteen months to find a deal, but you’ve got to find the right deal. Most people want to get into real estate and they want to do a deal. The problem is when they do that deal, they have a bad experience. They’re like, “Real estate’s risky.” The real estate is not risky. You’re risky if you don’t know what you’re doing.

In every single one of those businesses I have, I partnered up with a person who is perfect for running that business. They needed something I had too. It’s like you said, “The person with money needs experience and the person with the experience needs the money.” It was pretty much that one way or the other one way and the business I was trying to start. Still, you have to agree with me. You’re not silent on any of them. There are issues and sometimes problems come up. 

Mitch, do you love what you’re doing? I love what I’m doing and we have level-ten meetings. I have about seven or eight meetings a week, whether it’s marketing, syndication, property management or the education. I love what I’m doing. We’re creating that culture and that brand where they work together. The hardest part is to get them to work as a cohesive unit. It’s hard because you have younger people and they have different personalities. If you as the leader can show that, “I’m not taking money. I’m cutting back and I’m putting your money back into this because I believe it.” You’re a strong leader and you’re out there. You can put all these people together and you’re ultimately coaching everybody. That’s what you’re doing with these entities. You’re not just coaching, you’re listening to them and you’re trying to guide them. They’re going to want to work with you and they’re going to want to be part of that growth. That’s what I found but you’re right, nothing’s passive in life. If it was passive, it wouldn’t be worth doing.

There’s this definition, “Financial freedom happens when your wants and your needs are exceeded by your passive income.” I struck the word passive out, but it’s when it’s exceeded by your cashflow. There’s nothing passive about anything. Even if you have $1 billion and you can put it in the bank CD and make 1%, you can be passive. I said, “Yes, just take your eye off it. Don’t look at it ever and see what happens. Don’t watch it and watch what happens.”

It’s funny, the word financial freedom and retirement. I thought when I become financially free a few years ago when I left the restaurant. I said, “I’m going to retire.” I move to St. Augustine, Florida. It’s beautiful down here. I thought I was going to sit by the beach for a little while. That gets so boring. If you’re an entrepreneur, you sit around for a week or two and you get edgy, that’s worse than having money in the bank and not having any purpose, any driver, any clarity and not knowing what you’re doing. That’s worse than being “retired” at 46 years old. That sucks. I don’t know why people want to be retired. That’s the worst thing in the world.

I checked out for about two years, but I didn’t even completely check out. I made my life easy for two years and I came back. Tell us about how you found your deal for your first apartment complex. Tell us the size, the dollar amount, more or less and where did you come up with the money.

 

This was the first deal back in ’13. If everyone remembers, that part of the cycle was probably in the recovery phase. The recession was about 2008 to 2011. The second part was the recovery phase. Deals were out there. It’s funny there was no money back then. There was no end and there was no sentiment. Rents were $350 for one-bedroom. The economy sucked. We were growing at 1% and no one liked it. For us, deals are on LoopNet. There were people out there who want to sell. We found this deal on LoopNet, but we found it through a broker. Multifamily broker relationships are everything. If you can create a relationship with brokers to have you fund those deals and find those deals for you, it’s everything in multifamily especially in this part of the cycle. We work towards expansion/hyper supply.

You need to focus on those broker relationships. We found that $600,000 on LoopNet. It was a 25-unit deal. We had 10% owner financing on this first deal. We were able to get 10% from the seller. The bank will allow that because the bank had held the note on this deal and they were flipping out. We came up with about $87,000 with closing costs because we need to come up with 10%. I had my brother, my partner Jake and myself. We each come up with $27,000. That number is ingrained to my head forever. I’ll never forget that closing statement. It was exciting, weekly renters. In the first six months, our septics crapped out. Some lady passed away in one of the units. We had guy sue us for his bed bugs.

It wasn’t easy but I figured, “Let me do it on my own.” I don’t want to take investors. I want to do a proof of concept and I should have probably started syndicating sooner. We didn’t. We kept buying ourselves because this is one of those limiting beliefs that, “I’m afraid that if I can’t return my investor’s money, what am I going to do?” We continued to buy but that deal was awesome. What ended up happening with that deal in December of 2015, we refinanced it and we pulled out $160,000 on that deal. We put in $87,000, we pulled all our money out, we use a little bit of that money for CapEx to fix up some more roofs, to fix up some more exterior. We love that deal. We still own it. It’s still cash flowing about $3,000 a month. It’s an awesome little deal.

The cool thing about real estate investing in apartments in particular, because an apartment is a forever strategy. I create notes as a strategy. That’s a temporary situation because those notes are going to expire. Granted, they will be around for seven to fifteen years. If you plow it back in, there’s plenty of cash flow but it’s not going to last forever. Apartments will last forever. My forever strategy is self-storage. I wholesale and flip and make temporary streams of cashflow in the form of notes to create wealth. I go out and I buy mini-storage or boat storage around the lake where I live. 

You should look at the RV. The RV is going to be the next spot. If you’re looking at demographics.

I’m doing 383 units in a highly-populated area. You chose a forever strategy of apartments. My point was when you get an apartment deal right, it’s yours for as long as you want it. It gets even better because if you’re doing it right, that’s going to go down over the years. Income’s going to increase because your rents don’t stay the same, they go up. You look up one day and ten to fifteen years go by like a snap.

That’s right. It’s amazing. If the term on that note all of a sudden is coming to due, what do I do? Do I refinance it? Do I sell it? But that’s the thing. I want to share with your audiences the three pillars of real estate. You have to look at the market cycle, the debt and your exit strategy. You need to work on all three of those other than the buying right, the financing right and the managing right. If you’re looking at the market cycle, we bought our properties right back in 2013. We were able to refi and roll, we call it. We can refinance these properties as we did.

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Right now, this type of the market cycle depending on what market you’re in. San Antonio is a hot market. You have 24,000 people that moved there. It’s crazy. Your cap rates are a lot lower. You can’t refi and roll in this type of market. You’re going to want to buy better class assets, get long term fixed-rate debt financing on them, four or five years of interest only, you can do that. That’s the type of cycle. You have to know where you’re buying in the market cycle. The next thing is what’s your exit strategy? Are you going to hold for the long-term or are you going to buy and then in 36 months, like a lot of syndicators do, flip out? Know what your exit strategy is and the third one is the debt. Are you going to get long-term fixed-rate financing? Are you going to get prepayment penalties on this? Whether it’s defeasance or step down, you have to have all three of those.

You have to think about it because everyone’s always asking me, “Is this a good deal?” There are so many parameters to what makes a good deal. You have to figure those three. Once you cap all those three, you have to figure out how to buy this right and how to finance it right and then ultimately it’s all about managing these things. You have to raise the income, lower the expenses and look for the value that ultimately drives these things.

Go to 1000houses.com/WheelBarrow. You also can get over there a free copy, a digital download of the book Wheelbarrow Profits. I see Gino behind a wheelbarrow full of money that he’s taken to a bank. I don’t know if that’s the cover but that’s what it looks like.

Jake was out there one day cutting grass. He’s a chainsaw guy and he’s sitting there and he looks at the wheelbarrow. He’s doing landscaping and he’s like, “The back of my leg is the buyer right.” That’s fixed. Once you do that, it’s done. The finance right, once you get your financing done, you’re done. The wheel of the wheelbarrow is in constant motion. That’s the one that always works. You want to get the shovel and throw deals in there. That’s what the wheelbarrow. If one of those is a little loose, a little tippy, your wheelbarrow is going to top over. I’ve had deals that haven’t had one of those three parameters met and I’ve got into trouble.

Go to REInvestorsSummit.com/Wheelbarrow. You can get the digital book on Amazon and find out how Jake & Gino are looking at this opportunity and the strategy of buying apartments. That’s where you get to slow down a little bit and learn what all these words mean exactly. How they fit into your life? How they fit into the scenario and the strategy? It’s just like anything else. If you’re going to plan to make a fortune at something or even make a living, you’re going to have to get some education, slow down a little bit and get yourself boned up on what the rules of the game are. You can’t even play Parcheesi or Monopoly if you don’t read the rules and understand what the rules are. We just got to understand what the rules are.

With every day, you get smarter and smarter with every deal and every conversation. There’s a lot to be learned on the internet and podcasts like this. When you decide this is what you want to do, quit looking at everything else. Drill down and get someone like Gino. If you’re going to do apartments, get someone. If you want to do owner financing and single-family houses, call me. That’s what I do. Don’t call me for apartments, that’s not what I do. If you call me for apartments, I’ll tell you, “Go talk to Gino.” Because that’s not what I do. I’ve stayed for 22 years in this one little segment that everything revolves around with my little strategy. Gino’s doing his strategy and everything that he creates revolves around that little world that began with the one apartment complex where he had to write a $27,000 check along with his other partners. Tell us a little bit about this book Wheelbarrow Profits that you’re giving away.

It’s our strategy. We take a deep dive into each leg. What are the buying criteria? What do you need to look for in multifamily for buying criteria? We look at cash-on-cash returns. We look at cap rates. We look at debt coverage ratios. We show people how to buy these apartments. What you’re trying to do in multifamily. Do they manage right? We have a three-step reposition framework. It will tell you how to manage a property because if you’re not managing it yourself, you don’t have to, you’re going to have to hire management companies. We show you how to hire a third-party property management. The finance component is all about the agency or community banking. We talk about that.

What’s great about creating a capital company is we’re up to date. Our mortgage guy from Rand Capital, Nick, they’re lending a little bit less, now they’re getting a little more funded. Now we’re learning about CMBS because it is the hot thing in the multifamily, whereas a few years ago they weren’t. You can be an educator all you want, but you need to be doing it, not just selling the education, which is exciting because the market is constantly changing. Multifamily, the average when they talk about cap rates and calculation, is always going to be the same. There are new strategies that are being implemented. The cycle is constantly changing. Technology is constantly changing. For anyone who’s educating out there, the best way is you learn, you do and you teach. Once you become a teacher of it, you start learning it because you got to immerse yourself and learn the space that you’re in.

People ask me, “If you’re so successful, why are you still on this podcast and teaching?” I said, “I learn more being the front and center guy or the educator.” I’m talking to students all over the country. I’m on top of my game. It’s helping my businesses. It keeps me engaged. It keeps me up to date. It keeps me in the know. It helps me find private money. It helps me do a lot of things. I don’t want to be sitting on a beach 365 days a year. It’ll drive me crazy. I like to be wherever I want to be, whether I am playing golf or at the ranch riding around on my golf cart hunting hogs or whatever it is I’m doing. When the phone rings, I pull over, answer the question, solve the problem, connect A and B, give a reference, give my take on it and then we hang up. 

My business keeps running with the newfound answer to the question and I get to keep hunting. The first phase was always how do I make money? For me, it was around $250,000 a year because I couldn’t spend any more than that. It would throw me into a higher tax bracket. I didn’t need to go into a higher tax bracket if I was going to drink the same beer and eat the same baloney sandwich. It didn’t matter if I made money. The side note of that is you start doing everything else in your IRA for the rest of the year or your solo 401(k), but after you made money, the next challenge was how do I make the same amount of money or more but don’t do all of what I’m doing now. That’s a whole another challenge of life. I got engaged in that and immersed in that like, “I mastered making the money that was at least enough for me. I was satisfied.” You measure by, “Could I make some more this year or not?” For me, I didn’t want to measure it anymore by if I work harder, I can make more. I was going to try this plan that I’d heard about, “Do less and make more.” I didn’t understand that. It didn’t make any sense to me. How do you do less and make more?

Ron LeGrand stood that out at me one time, he has a book called that, The Less I Do, The More I Make. There’s a concept and every concept of my life when I first looked at it and said, “That’s interesting,” I didn’t get it. I didn’t own it in my heart. I wasn’t sure that they weren’t full of crap. If you start to get into those theories and strategies that seem a little upside down at first on the surface, you start to figure out why people are saying that. People have a chance to get behind the curtain and see how that works. Like you said, first you got to buy right. You got to look at the numbers. People will tell you anything in the world. You have to figure out that the numbers they’re telling you are the right numbers because every seller on the planet is a liar 99.9% of the time.

People have to figure out there are two ways to do it, either pay to play or seek to serve. You have to find people who are successful because successful needs clues. If these people are saying that and they’re super successful, they’re not making it up. They’re living by it. If you find somebody who’s living by that mantra and I agree with it. The funniest thing for me was the whole Bob Burg mentality, The Go-Giver. I’m like, “That’s a bunch of bs.” Anyone who thinks about themselves, when you go to a sales meeting and you’re thinking about what you can get from the prospect, the prospect knows that.

That’s what happens if you’re out there listening to them, finding impact together, selling and trying to solve their problem, the more problems you’ll solve as an entrepreneur. I always say that entrepreneurs solve problems, politicians exploit problems. That’s the big difference. We’re here, you and I, trying to solve as many problems as we can, whether it’s for our tenants, our students and our employees. The more problems we can solve, the more impact we can have, the more money we’re going to make. I don’t think either me or you right now are motivated by money anymore or motivated by having a good time.

The reason why we still buy 120 houses and we’re the most competitive single-family housing markets in the world right now is that everybody and their dogs are investors or house flippers. It’s incredible. When I started out, no one knew anything about it hardly. It was very quiet.

Nothing is passive in life. If it was passive, it wouldn't be worth doing. Click To Tweet

Give it a couple of years, it will shake out. You’ll go back to the cycle where everyone’s going to lose their shirts and you’re going to be scooping up 500 homes a year.

What I was going to say was what’s made the difference is when I go to someone’s house, I’m trying to figure out what do they want. If they’re calling me because they’re in a corner, they want to keep the house but they don’t know how, I’ll put my mind first and foremost to say, “If you want to keep the house, let me see if I can figure out how you can keep it,” which means I’m not going to buy the house, which doesn’t matter. 90% of the time, I can’t help them keep their house even if I want to but I can try and at least I can put the effort forth and ask the question, “If you had this or if you had that, you could keep your house.”

Every now and then I’m able to help someone see something that seems pretty obvious to me but it’s not obvious to the common person or to an elderly person. I’ll say, “I figured out how you can do it. You need to do this. Do you want to do it, or do you want to sell the house?” They say, “I want to keep my house.” I’ll say, “Great, let me get you with my attorney. They’ll get this all done for you. You’ll be able to stay here probably until you’re not here anymore. You’ll be able to live here until you don’t need this house anymore.”

You have a happy client and then also that client refers you to somebody else. You’ve done the right thing and things grow.

There’s something about the aura or the energy that you put off when you go in to help someone that is recognizable by the other person with no words. The way you carry yourself, I don’t know what it is exactly. You can call it whatever you want, karma, special sauce, radiation, I don’t know what you want to call it, but it’s picked up on and they won’t sell it. They may not come to the conclusion that they need to sell their house that day, but they won’t sell their house to anyone else but us because we went in there trying to help. Most of the time, they’re sunk but at least we try. Other times, it’s obvious, “I want out of here. I’m gone.” Any words of advice to someone who’s probably contemplating, reinventing themselves and maybe apartments are what they’re looking at? 

It’s very simple. Slow down. Maybe seek out a life coach. I became a certified professional life coach. I love life coaching. It gave me a lot of clarity. It gave me the reason why. My why was I wanted to have impact on my life. I wanted to be a great role model for my kids. I wanted to work with my family. I wanted to build something powerful. It leads you to how and how do I do it? I figured out that multifamily could do that for me. If you want to get into multifamily, if you want to get into flipping homes, figure out why. The second thing is to get clarity on it and then invest in your education. Don’t do it all alone.

If you’re going to go to college for four years and spend $100,000, find somebody you could spend $10,000 or $15,000 with a mentor or with a coach or whatever and focus on it. It’s not spending money, you’re investing in your education. You will always have that. That will always be with you and surround yourself with like-minded people. Join a community. Your environment is huge. You’re identifying as that person that you want to become. If you’re stuck in the kitchen and you’re surrounded by dishwashers and all, how are you going to grow? How are you going to get to the multifamily space? You have to step out, go to events, surround yourself with other people. When I met my partner, Jake, he was my mastermind. We both worked well together and that’s what saved me. If you want to do that, become sure of why you’re doing it then figure out how to do it. It’s not that hard.

 

I can promise you, you’re either going to pay the mentor or the coach or you’re going to pay the street. The street is ruthless and it will crush your hopes. It won’t give you any encouragement. You may lose a career early on because you’ve made a few wrong moves quick. I was almost a victim of that. I almost quit a business that has made me millions and millions of dollars that I’d been so happy in because I didn’t have anyone to help me. I did what I thought was right and it almost chopped my head off. I like to tell everyone I graduated from Calle U. That’s the street in Spanish. It’s the most expensive university in the world. It’ll take all your money and it doesn’t give a damn. There’s no fight song and they don’t have a mascot. They’re just going to take your money. Thank you, everybody for stopping by to get you some Gino Barbaro. I want you to go to get the book Wheelbarrow Profits at 1000houses.com/WheelBarrow. Get your dreams done. If you’re on the fence, get some consultations from somebody. Start talking to people. Find out where you belong.

 

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About Gino Barbaro

Gino Barbaro is an investor, business owner and entrepreneur. He has been investing in real estate for 15 years and has grown his multifamily portfolio to over 1400 units in just 6 years and over $90, 000, 000 in assets. He has teamed up with Jake Stenziano to create Jake and Gino.com, a real estate educational company that offers coaching and training in real estate investing. He is the best selling author of “Wheelbarrow Profit s ”. Gino is a graduate of IPEC (Institute for Professional Excellence in Coaching) and is a Certified Professional Coach. He is also the author of the best-selling cookbook “Family Food and the Friars”. He currently resides in Florida with his beautiful wife Julia and their six children Gabriella, Michael, Sofia, Veronica, Cecilia and Laura. To learn more about Gino visit his website Jake & Gino or Gino Barbaro

Jake Stenziano is the best-selling author of Wheelbarrow Profits and co-founder of JakeandGino.com, 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 also the founder of Rand Property Management, the first property management company with a focus on “modern affordability.” As creator of the multi-media, multifamily investing framework, Wheelbarrow Profits, Jake is a leading expert on investing in the multifamily space and currently owns over 1400 multifamily units.

 

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