GI158: Investing in Multifamily Properties as a NYC Firefighter with Timothy Lyons

GI158: Investing in Multifamily Properties as a NYC Firefighter with Timothy Lyons

Timothy Lyons is a 16-year veteran of the New York City Fire Department and currently serves as a lieutenant in the borough of Queens. His company has co-sponsored over $280 million of multifamily assets including nearly 1700 multifamily units.

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Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Timothy Lyons. Tim is a 16-year veteran of the New York City Fire Department and currently serves as a lieutenant in the borough of Queens. His company has co-sponsored over $280 million of multifamily assets including nearly 1700 multifamily units. So thank you so much for being on the show. Timothy,

Tim:
Charles, thank you so much for the opportunity to be here today.

Charles:
So you have a very interesting story. I’d love to dive into it. So give us a little bit background on yourself, both personally and professionally prior to getting involved in your, your real estate investing career.

Tim:
Yeah, so, you know, I’m 39 years old. I’ve been I kind of quote unquote within the dream for a while now. Two jobs that I absolutely loved you know, I, I’m a New York city firefighter and now I got promoted one, I’m a Lieutenant and I’m in a great firehouse with great people and I have the biggest smile on my face going in for every 24 hour shift prior, and also prior to getting to real estate, I was an ER nurse. So I went back to nursing school when I was a young firefighter. And you know, a lot of guys have second careers, a lot of guys do, you know, tradesman kind of work, you know, plumbing, heating, roofing contracting. And I just don’t have any of those skills. I just didn’t grow up with them and, you know, I just didn’t have ’em.

Tim:
So so I was working 12 hour shifts in the hospital and, you know, it was an exciting career and a pretty cool, you know, side, side hustle to have, I guess if you could say that, but I found myself working 70, 80, 90 hours a week. Now I had three little girls, 10, eight, and two, and I started to feel stuck, you know, like a lot of, you know, 30, 40 something professionals and real estate kept on coming up on the screen as something I should be doing. I just didn’t know how to get started. I didn’t know who to trust. I thought I needed more information. I needed more podcasts, more books, more conferences. I needed more capital. I didn’t understand how it works. So what is a confused mind say? It says no, right. And it just kind of moves on to the next thing, but you know, eventually it, it, you know, I read rich that the book, rich dad, poor dad, which is the book that a lot of real estate investors kinda read and they credit with, you know, turning their journey and, and pouring some diesel fuel onto that journey.

Tim:
And that’s what it did for me. It really got me focused on real estate. It really got me focused into listening to more podcasts, more audio books, getting into meetups, meeting, more people, networking, you getting a coach, getting a mentor. And before you knew it before I knew it, at least less than two years later, I’m like approaching well we’re over 300 million now and we’re over two, 2000 multi-family doors and millions of dollars raised. So I’m sure you want to get into some of that, but that’s kind of the little backstory of my real estate journey.

Charles:
So tell us about your first real estate investment. Did you, did you jump right into syndications? How, how did it work?

Tim:
So, yeah, so, I mean, I read the book at port in July of 2019. And by November of 19, I was closing on a three family rental property that I was gonna self manage. And I held onto that for exactly two years. I just unloaded it a couple months ago because I doubled my doubled my investment and, you know, I think that was the catalyst that I needed it. I think my wife and I, we needed the proof of concept. Yeah. You know, real estate was a, a big deal to us coming, you know, out of pocket and putting money down and, and being a landlord and not doing it, you know ever before in our lives. And then, and then doing it, seeing how it affected our taxes, seeing the cash flow, it was exactly what we needed.

Tim:
And I really wanted to have that landlord experience on a, on a three unit or I should say, you know, more than one more than one tenant, I wanted to have that multi-tenant experience. And what I found was that I really liked the multi-tenant properties and I kept on hearing about multi-family, but I wasn’t sure how that worked. You know, I kept on hearing about net operating income and spreadsheets and profitable loss and economic vacancy and, you know, all these different terms. And I, it kind of seemed too confusing for me at the time. That’s until I, I found a mentor and a coach, and I made an immediate pivot to, to multifamily.

Charles:
Nice. So what is your company’s current investment criteria and strategy?

Tim:
So Cityside capital was born my brother, Greg and I were both principles of Cityside capital. And, you know, what we found was that multifamily was a team sport. You know, where being from like New York city, I thought I had to do everything by myself. I had a lot of limiting beliefs about partnering with people and you know, being part of a, a team and trusting and relying on people. But you know, what I found when I got deeper into the Mo commercial space was that you really need to have a team built out. And because I live in New York and my brother’s in Virginia, and we wanted to invest in, you know, better, better multi-family investment locations like Phoenix, like Austin, San Antonio, like Sarasota, Florida, like the Carolinas, you know, we weren’t, I wasn’t gonna be moving my family and neither was he, so we weren’t gonna be boots on the ground.

Tim:
We weren’t experienced underwriters. But what we found was that when we partnered with more experienced people by networking and we had an opportunity to raise some capital. What we found was that we were able to raise, you know, money for these deals, our just our family and friends, our, you know, internal network, our ecosystem was in such a position that they were looking for something like this to invest in. And they were kind of coming from the same place of, I don’t know who to trust. I don’t know how to get started. So when the lions brothers started doing, you know, these real estate deals, people just wanted to know what we were doing. And because of that, we ended up going down the securities licensing route and we got our series 82 and our series 63. And now we hang our license with a broker dealer that is focused specifically on private placements in multifamily and like self storage opportunities.

Charles:
Interesting. Okay. Wow. so you, you, you got you, you got license and how does that, because that’s something we haven’t really spoken about. So it was your 62. And what was it?

Tim:
Oh, it was the series 82 and the series 63. Yeah. So basically those two licenses are the 82 is all about, you know private placements and other types of investments. And because, you know, because the reason why we did this was, you know, I mean, there’s a lot of reasons, right. But a few of them, the main points are that you can’t just raise capital for people’s deals and then, you know, speed date other sponsors and raise money for their deals. Do people do it? I, you know, I think we, we all know it probably happens. But it’s not the, it’s not the best way to do it. It’s not the most compliant way to do it. It’s not the legal way to do it. Right. Cause you’re essentially selling securities when you’re raising capital from other people, but the promise of some sort of return, you’re really kind of selling securities.

Tim:
And they’re very clear about that. So Greg and I, when we got more educated on the capital raising process, it just made sense to us. We wanted to sleep at night. We wanted to be able to, you know, do the right thing, be compliant, be legal. And we also wanted to kind of raise the bar for our investors because, you know, we’re held to a higher standard, you know, suitability standard for our clients and our investors. And it also opened up the door for us to not only invite individual investors onto the real estate journey, but also institutional investors. So family offices, registered investment advisory firms other private equity firms that want to have exposure to real estate. We’re able to, because we have our license, we’re able to structure contracts with them so that we can share in commissions and stuff like that.

Charles:
Interesting. Okay. So with you taking down larger deals and you’re having a job, how do you, how do you and your brother structure your time? Because obviously you’re probably working two to three days a week, 24 hour shifts. How are you guys structuring your time of what you’re taking care of? So what’s like your role on a daily basis.

Tim:
So because we hang our licenses with a, a broker dealer we are, we have access to pretty much nonstop deal flow. And what I mean by that is that when operators wanna raise capital, they can raise several million, you know, depending on the operator, they can raise several million by themselves. And if they need more equity to close the deal, they’re kind of limited, right? Yeah. They can go find some capital razors or maybe they want to get one check. So they’ll go to a family office or a private equity or a perfect equity firm, but then they tend to lose, you know, some autonomy in the deal because those types of entities, even though they’ll write one check and it’s easier for the operator to raise that capital, they tend to come in as a joint venture and not a limited partner. So then they want some voting rights in the LLC and they want the right first refusal on some of the decisions.

Tim:
And I think the operators realized that although the check comes in one fell swoop, they kind of lose, you know, their decision making capability. So there’s pros and cons to that where we come in is we’re that middle market equity component, you know, so we have a cost of capital that’s, you know, probably less than the big boys. And we don’t have that. You know, those decision making kinda contractual decision making possibilities with the operator. We don’t, we don’t do that. So we just bring, we we’re basically a connector of, of individual investors, institutional investors with the operators, when the operators are onboarded onto our platform, they go through a, a due diligence period where, you know, they apply to be on our platform to have access to our capital. And when I say our platform is 17 groups like myself on this platform, and we were able to raise collectively over a hundred million last year in 2021.

Tim:
So we do our firm does due diligence on each individual sponsor. And if they pass and they’re invited onto the platform, then each deal that they do also goes through a due diligence period. So we have an underwriting team, we have a compliance team and we have a due diligence team. So once a deal kind of comes to us and it goes through our pipeline, you know, if it’s, if it comes out okay, and the reports are okay, and one of our principles takes a trip down to the property and gives us the site report. And we decide to do the deal. Then our investors know that this has been like a doubly underwritten type of deal. It’s an institutional quality asset and we’re able to market that deal now.

Charles:
Wow. That’s great. Other than, other than getting licensed, what actions did you take in your business that have really allowed you to go so big? So fast?

Tim:
Yeah. Great question. So you know, it’s only been about like less than two years, and I think I coming from the blue collar type of community of first responder and, and ER nurse, I didn’t have a ton of business experience. But what I did have was an insatiable appetite for, you know, information and I’ve always had that. So, you know reading books on economics and, you know, law and reading the wall street journal, and I was a little bit of a, like a market buff, you know, I think that’s kind of helped me to transition into this role. But really it’s, it’s, it’s connecting with other people it’s networking with other like-minded folks. You know, I didn’t invent the broker dealer model. It’s been around for a long, long time, but I did, I was able to network with somebody who was focused on multi-family and self storage, you know, and that was tremendous for us in our business, cuz it, it kind of fit exactly what we were looking to do. So I mean it was really networking. It was, you know, getting around other high quality operators who were doing the thing that we wanted to do with a product that we wanted to put in front of our investors.

Charles:
Interesting. Interesting. What were some of the dis difficulties you encountered when trying to scale,

Tim:
You know, it’s really kind of stepping into that investor mindset, you know, and like shedding, you know, the Tim, the fireman, Tim, the ER, nurse, you know mindset that I, I used to have. I mean, because, you know, a lot of people knew me as a firefighter or, or a nurse or both, and a dad, a little league coach, you know, a rec basketball coach. Like they didn’t know me as a real estate investor. They didn’t know me as owning a, a small private equity firm, you know, so it was really kind of changing the paradigm, not only for myself, but you know, coming outta my shell and kind of telling people what I’m doing these days and being a little more active on social media and building our email list and having tons of conversations with people to kind of, you know, update them on, on the direction that we’re now going in.

Charles:
Nice. Okay. So the mindset being one of the really pivotal factors in your change in, in your scale and everything like that

Tim:
Big time.

Charles:
Nice, nice. So going back to the money raising, because being a broker dealer, that’s one part of it and that keeps you all above board for what the business model is that you have starting off raising a couple hundred thousand dollars for deals now, raising millions of dollars of deals, what changed. And it’s been a very short period two years. You said what has changed in that time from when you start it to now, I imagine how you raise money, how you speak to people, how you network cuz networking with operators is one thing. But now we’re talking about networking and raising capital from actual LPs.

Tim:
Yeah. Great, great question. And this is basically the lifeboard of any business like my own, you know we have to, you know, I, I always talk about real estate having a marketing problem, real estate investing specifically, you know, there’s tons of gurus out there. There’s infomercials, there’s HGTV, there’s, you know, seminars and people think that they’re gonna be driving a Maserati by next week. And that’s not how real estate investing is designed to, you know, build wealth and, and provide cash flow streams and stuff like that. It takes time. Right. And it takes building out a network and a team and building that trust. So I am actually pretty I’m grateful for the, the growth that we’ve had. And I think what really happened was I think everything kind of came together all at once, right? COVID started the market crash. People are looking for yield.

Tim:
Inflation is on the rise. People are scared of the stock market. They don’t understand it anymore. Right. It’s too volatile. But people know by and large that they should be in real estate. And I think, you know, prior to 2012 private placement in, in like what we’re doing in multifamily syndication, it wasn’t able to be marketed. It wasn’t able to be out there on social media. You know, the jobs act of 2012 really kind of opened up an expanded definition of 5 0 6 C and 5 0 6 B offerings. So, you know, you, where you, you used to have to know somebody who was doing the deal to be basically included, you know versus kind of understanding that this is out there and available to a lot more people. So that kind of helped us as well. And really just putting out like educational content, like, you know, we have a YouTube channel where you have a podcast called the passive income brothers podcast, you know, and really kind of putting out blog posts and connecting with people and giving them free information that they can know that this is available to them.

Tim:
That this is something that a lot of wealthy families and wealthy individuals have been doing for a long time that really helped us kind of grow and scale in a short amount of time.

Charles:
Nice. Yeah. That’s that’s great. So being around so many real estate investors, because like you said, I think when you talk about real estate investment, everybody thinks to go down the traditional route like you did. And like I did starting off with a small multifamily property and going that way and all the fun that comes with owning something like that, managing it. But you, you know, we went to the next level in evolve with syndications. So what are common mistakes? You see real estate investors make on all different levels. Obviously you look at a lot of deals. You talk to a lot of operators, some being a little bit novice and some being very experienced.

Tim:
So I think it comes with, you know, my mentor has a very simple equation that says education times action leads to results. Right. And it sounds elementary and sounds kind of cliche, but if you jump into anything like real estate, Hey, all right, I have a hundred grand, I’m gonna go buy a single family property because I know that I should be in real estate, but I only do some back of the napkin math, and I kind of just, I’m gonna wing it. Right. I’m gonna build my parachute on the way down the whole way. You know, I think people can get stuck, right? Because maybe they’re not, they’re not educated to the point where maybe their underwriting was off. They didn’t have enough reserves. They didn’t factor in that they’re gonna have some deferred maintenance on the property or some vacancy or, you know, and all of a sudden they get stuck and they’re like, you know what, real estate stinks.

Tim:
It’s too hard. It doesn’t work. Not for me. And I think then they have this sour feeling and then they kind of tell other people around them in their little ecosystem, that real estate is not, you know, is not what old it’s cracked up to be. You know? And then all of a sudden, like everybody else kind of says, ah, you know, nah, I’m not gonna do it. You know, I think that’s a huge mistake and there’s a whole business around, you know, distressed sellers, right? People wanna scoop up those properties for pennies on the dollar because they know people are hurting like that. You know, what I would say is, you know, get really clear on your goals and what you kind of want to have done. And people think real estate is a strictly passive investment and it’s not, if you’re gonna be the landlord taking care of the property, you know, doing all the things yourself.

Tim:
I mean, there is definitely a way to do that and make it passive by hiring property management and getting systems in place. But, you know, I think it’s when people don’t prepare and they just jump into it, that’s when they can get hurt. And the same thing goes with syndications, right? If you, if you hear somebody on a podcast and you sign up for their email list and all of a sudden they send you a glossy, you know, super sweet looking PDF investor summary promising tons of returns, and you just don’t do your due diligence. You don’t look into the market, you don’t go the extra step and say, Hey, is there population growth? Is there job growth? You know, let me make some phone calls. Has anybody else invested with these people? You know, I think then you can get hurt as well, right?

Charles:
Yeah. No, that makes perfect sense. So closing up here, we spoke a lot about mindset. What are some other factors, main factors that contributed to your success other than mindset in your journey?

Tim:
You know, I think it’s my ability to, you know, take action, right. You know, I’ve always been an action taker. I’ve always been onto the next thing. And you know, I’m also a very conservative guy, right? So like I won’t even play, you know, you know, blackjack at the casino. Like I just don’t want you to lose, I don’t wanna lose 20 bucks. It’s just, it’ll kill me for the rest of the weekend. So, you know, it’s, it’s being able to take action. It’s being able to, you know, understand what it is in life that I wanted to do. I wanted more time with my family. I wanted to work from home. I wanted to get outta the hospital, which I did two years ago. And I’m just not ready to leave the firehouse yet. I love that job. You know, there’s gonna come a day where Cityside capital is gonna be my full-time job.

Tim:
But you know, it’s it’s creating the life that I wanna live and it’s also serving other people and having an impact. I just, I love the fact that my friends and family, my college roommates, my coworkers, my former colleagues in the hospital, you know, they’re able to get into real estate now and have this passive income coming in. And I think after COVID a lot of my medical, you know, colleagues, you know, especially the people who were surgeons or GI docs and those who get paid on procedures, you know, they realize that their income source was gonna dry up very quickly and they felt very vulnerable. So I think, you know, that also contributed to our growth, right? Because you know, word of mouth then spreads, Hey, you gotta get involved with these types of deals. So there’s still a lot, there’s a lot.

Charles:
Yeah. It’s, it’s just opening. There’s so many people that don’t know about these type of investments. And it’s great that you’re allowing you’re able to provide this to friends, families, and current and previous colleagues. So, but how can our listeners learn more about you and your business? Timothy?

Tim:
Yeah, you can check out our new podcast. It’s called the passive income brothers podcast on all the major podcast platforms. And you can head over to Cityside cap.com. And my email is just Tim Cityside cap.com.

Charles:
Okay, great. I will put those links into the show notes. Thank you so much for coming on today and looking forward to connecting with you in the near future.

Tim:
Awesome. Likewise, thanks for having me on

Charles:
Talk to you soon. Bye-Bye bye now.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.

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About Timothy Lyons

Tim is a 16-year veteran of the New York City Fire Department (FDNY) and currently serves as a lieutenant in the borough of Queens.

Until recently, he also worked part-time as an emergency room RN at a level 1 trauma center. He brings years of real-world management and leadership experience to his real estate investment career.

Tim’s initial goal with real estate was to create passive income and in turn, be able to spend more time with his wife and three little girls. After partnering on a multifamily property, he saw first-hand the power of real estate investing as an opportunity to create passive income and build wealth for his family.

He started Cityside Capital with the goal of not only growing his own portfolio but also to help others realize the power that real estate investing can have on creating passive income and building wealth.

Cityside Capital has co-sponsored over $280 million of multifamily assets including nearly 1700 multifamily units.

Tim has also invested as a limited partner in 256 multifamily units in Texas and in a large retail super center in Tennessee.

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