John CazMen has partnered with busy professionals to invest in over $100 million worth of apartments, he consults active multifamily investors and hosts the Target Market Multifamily Insights podcast. Prior to becoming a full-time investor, John worked in corporate America, overseeing marketing campaigns for General Motors, Nike and Coors Light.

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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:
Do you have money sitting in the stock market? And you’re worried about it or worse. You have money sitting at the bank, not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate, but can’t find deals, don’t have the time to get funding in. The last thing that productive people want to do is manage real estate. We find the deals. We fund the deals and we manage the tenants, the termites and the properties. Partner with us at investwithharborside.com. That’s investwithharborside.com. Go to investwithharborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time. Go to investwithharborside.com. That’s investwithharborside.com.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have John CazMen. John has partnered with busy professionals to invest in over $100 million worth of apartments, he consults active multifamily investors and hosts the Target Market Multifamily Insights podcast. Prior to becoming a full-time investor, John worked in corporate America, overseeing marketing campaigns for General Motors, Nike and Coors Light. So thanks very much for being on the show, John,

John:
Hey Charles, thank you for having me today. I’m excited to be here and talk to your audience.

Charles:
Yeah, great. I wanna dig into kind of your transition into full-time investor cause that’s I think what everybody’s goal really is that’s listening. So tell us about your background both personally and professionally prior to getting involved in real estate investing.

John:
Yeah, absolutely. So I started off in marketing and advertising. I spent 15 years in corporate America, leading campaigns for major brands like Nike cores, light mountain do and general motors. And in short for me you know, I enjoyed what I did loved, what my job loves, you know, developing strategies and campaigns. And the time I was at GM earlier in my career was 2007 to 2011. And if you recall, that was a time where we had, you know, the financial crisis, but the first signs of that were actually the automotive industry, right? So I was a part of the big three that, you know, had those financial issues. And we were pretty much getting ready to go through a structured bankruptcy. So I walked through all of that and watched my senior leadership on, you know, the, the big financial news channels every day.

John:
And just the stress, the anxiety that, you know, I felt my colleagues felt it made me feel powerless and I was still early in my career. So I didn’t have a whole lot to worry about, but it made me really think about the pathway a lot. And I ultimately decided I needed to invest my money on the little money I did have. I needed to find a way to invest it. So I wasn’t solely relying on this w two job. And that really led me to real estate took a few years to, to get going. I moved to Chicago in 2011, got married to my wife and she and I bought our first property together. We bought a duplex, lived in one unit, rented out the other and continued to invest in multi-family. And ultimately we ran into a challenge where, you know, we would buy properties and self-manage, but we kept running out of our own money. Right. Cause we could only buy a property when we saved up enough money to buy a property. So that really led us to this world of partnerships, working with other people and ultimately into apartment syndication. Yeah.

Charles:
Interesting. So tell me about you house hack your way into your first property, just like I did. So explain what you did there and what year this was and you were in Chicago as a duplex and kinda how, how that whole, how that turned out for you and long.

John:
Yes. 10 years ago, 10 years ago, we, we started that 2012. We bought a two unit lived in the top floor. We did some renovations to the unit. We lived in renovated the exterior of the property. And if you recall that time, right, 2011, 2012, that was when we were starting to emerge from that financial crisis. So the banks were opening up, you know, property values were slowly starting to turn around and people were starting to, you know, get back into real estate. But up to that point, you know, it was kind of, you know, either still going down or just starting to tailor off, but in 2012 was written, the uptick really started to, to happen. So we got in at the right time. Right. And we were looking, I was, you know, actively looking for properties, studying the market torn properties. And I distinctly remember having a list.

John:
I had a list of 10 properties and my wife and I would go, we tore these properties. We kind of go through our list. We’d talk what we liked the properties. And we were taking our sweet time. I mean, this was like December, January, and we just kept, kept looking. And in February, it’s like the second week in February after one weekend that Monday, that top 10 list became a top seven list. Three of those properties went the contract and we’re like, oh, okay. We need to, okay, go add three more to the list. But we added three more to the list. And that next Monday, that top 10 list became a top six list. Two of the new ones were off and two of the other ones were off. So then we’re like, okay, the market’s starting to heat up. We gotta be more proactive.

John:
And I remember there was a property we loved in a neighborhood in Chicago called Wicker park and we loved it. It came out like late Thursday evening. I called the broker right away, said, Hey, I wanna tour this. We set up an appointment for Saturday. I tried to get the first appointment Saturday morning. We got a, the second appointment basically. And we got there and somebody, when we got there, somebody was walking outta the property with papers in her hand. Yeah. And I’m like, I hope those papers are in a contract. And it was, and at that moment it was like, okay, we gotta move and get more, you know more aggressive here on the property. So I actually went through that top 10 list, went through all those properties that were still there, found one we liked discussed, you know, what was the issue before toward it, again, putting you off, got that under contract, we sold that shortly after we moved to Cincinnati.

John:
So we owned that for eight years and then sold that about a year and a half ago and did extremely well with that property. So very excited for that. And I tell everyone if you’re looking for an easy way to get started in multifamily a two to four unit that you can live in residential financing in the United States, you can use FHA financing that really allows you to only bring 3.5% of the down payment. Or if you are a veteran, if you served in the military, you can get a VA loan where it’s even less than that. You might even be able to do 0%. So yeah, there’s some phenomenal financing available if you’re willing to house hack as they call it, but living in one unit and renting out the others.

Charles:
Yeah. It’s also much easier to manage. You’re like, well, I’m scared about managing it. Well, it’s much easier to manage it when you go downstairs or next door to take care of our problem. You know what I mean? And if I was working at home at the time when I house hacked and it was like, all right, well, I just open up the door for the contractor, handyman. They go in here and do that and stuff like that, which I think a lot more people now are doing that than, than 10 years ago. But that’s awesome. So tell us about how your business has, how your business has like grown and what your current investment strategy and criteria is and like how, what you’re kind of focusing on now in your business.

John:
Yeah. So that first property is almost cheating, right? Because like you said, I lived in a property. I mean, I was renting before that. So I mean, I’m paying, you know, my rent and the numbers weren’t quite as critical, obviously wanted to make money, but it wasn’t like, it was a pure investment where if I didn’t get a certain return, I was gonna be disappointed at a, at a list somewhere anyway. Right. So that was the first deal. The next deal to me was really the first real investment because I wasn’t living at that property and I needed the rental income to cover all the bills, call, cover the debt service and be worth my time. As far as the, the residual income I was gonna make off of it. Right. Mm-hmm <affirmative>. So we bought that three unit property that did really well for us.

John:
And then we started to expand into commercial. At this point, I believed in the power of real estate, we were able to refinance that first property and pull out a large line of credit. We used that to buy an eight unit building and we started to flip some projects as well. And ultimately what became crystal clear was we proven out the concept, you know, all the things we had read, you know, have been verified based on our own experiences. And we were ready to really grow. And the big thing for me was understanding why I was doing this. If I could rewind that clock back, I started this conversation talking about my time in Detroit, working in the automotive industry. Well that anxiety of losing your job and not knowing how you’re gonna pay the bills, that always kind of stuck with me. And when I switched from the automotive space into the advertising space on the, on the agency side, it was a similar kind of thing because if I lost a client or a big book of business, there was gonna be around a layoffs.

John:
And I had a, I Le led some pretty major accounts for an advertising agency. And we ended up being in a situation where, you know, had nothing to do with anything we were doing. But the senior leadership, the parent company, they ended up going bankrupt folding. And once again, I was at a company that was going through a bankruptcy. And at that moment I realized, dude, you have been building real, this real estate portfolio. You started to kind of create some passive income. You’re building up equity, but it’s still not enough for you to live off of. If you don’t have this W2 job, you’ve gotta find a different way. And that’s really what, what forced me to open up to partner with other people. And those partnerships allowed me to then go out and look for real estate where it wasn’t tied to how much money I had in my bank account.

John:
And I think that’s really important for any investor, because we all have some sort of limitation. You know, if you are overseas, maybe you can’t, you know, tour the properties or manage them yourself, or get out there, especially in a competitive environment. Maybe you have some capital, but you don’t have the experience to invest. And banks really want you to have experience or banks want you to be a us citizen, right? Or maybe you have the opposite, you have the experience and the knowledge, but you don’t have the capital. You need to go out there and find these deals. So I think part of what you have to do is be willing to work with other people, to find the partnerships where you bring what you bring to the table, and you can align yourself with someone who can supplement that and together you can go out and kind of build a portfolio that addresses the needs and concerns that you have.

Charles:
And that’s awesome. Yeah. The thing is about proof of concept. That’s so important. And it sounds like you’re in a second property. My second property is, well, I got that. And I was like, cause the first one was kinda like a mess. And the second one was like, all right, now this is actually working. I’m actually making money. I did this correctly compared to the first one. And so you just kind of you learn from your mistakes and then you kind of you grow from there. So that’s awesome. But you brought partnerships. Yeah, go on. Sorry. I was just

John:
Gonna say the, the thing that’s interesting is like, I was the opposite because the first fews I did were perfect almost, you know, I mean, they were exactly how you draw, draw ’em up. Right? I mean the first deal couldn’t have gone any better. <Laugh> the second deal was exactly what I expected. So what actually happened for me was I was I’m self-aware enough to know that <laugh> I wasn’t flawless. And I just, I, I didn’t feel like I was actually learning if that makes sense. Right. You kind of do need to fail a little bit, so you can truly, yeah. Step back, revise your systems, processes and align. And there were things I was doing well, but I didn’t know what they were or why they, it was working. And I really needed that next deal, that third deal, which didn’t go as according to play.

John:
So I could finally say, ah, okay, here’s where this, we messed up here. Here’s why it didn’t happen on those first two deals or here’s what we need to adjust going forward. So to your point, you can’t be afraid to make a mistake. It’s a part of the learning curve. What you do want to do is, is make sure you mitigate the risk or the exposure you have if you are to make a mistake. So it’s not your life saving. So I think it’s really important to go out there, take some calculated risk, some structured risk, and continue to refine your strategies and processes.

Charles:
How do you mitigate those risks around? How would you suggest that to someone

John:
You really wanna understand what those things are? You know, the very first question I would ask when any deal or even a potential partnership is how could I lose money or what can go wrong here? Mm-Hmm <affirmative>, you know, what is my expectation? What’s my business plan. What’s my outcome that I’m projecting and what would cause this plan to drill, you know, what would need to happen for me to have to spend more money renovating this property or to lose money or to not be able to rent at the the dollar amount that I expect. And when you start thinking through and troubleshooting, what could go wrong? Now you can start to ask yourself, okay, well, how do I get in front of that? If the renovation budget is higher than you anticipated, okay, well maybe we should have some money in reserves.

John:
Maybe I should inflate my renovation budget by 15% or 20%. So I have extra money set aside when that contractor comes back and says, actually it’s gonna be more than what I thought you’re prepared for that. So if you can start to sit down and ask yourself, well, what could go wrong? What happens if I don’t get a good contractor? How do I get a good contractor? How do I keep that contractor? You know incentivize to stay on the schedule, to stay on the budget, all those kind of things start to come up. When you really think about the project and how you manage it and mitigate that risk, if you just hope it goes well, hope is an awful strategy. You know, it just doesn’t work. So you really do need to take the time to think through and troubleshoot those issues. Talk to other people, listen to podcasts like this, read books, understand what are those things that can go wrong and then put together a plan so you can mitigate that risk.

Charles:
Nice, nice. One thing I wanted to know, like how old were these properties, like when do you think they were built the, your first handful of investments there in the Midwest? Well,

John:
I was in Chicago for eight years when I started investing. So all of my properties were in Chicago and Chicago has a very old housing stock. Yeah. So, I mean, the first property we bought was built in the, I mean, probably the early 19 hundreds, I mean maybe 1920 or something like that. Yeah. All the properties, I think were much older brick homes brick, brick, apartment buildings. The second property we bought was just recently renovated. And at that time my wife was pregnant with our first child. We didn’t want to go into a heavy renovation project. So I was actually looking for something that was renovated, but still had some upside potential. And we were looking for something where the rents were not in line with the market and we could push rents. And I mean, honestly, we got a little lucky because the agent we were working with found a property and she didn’t find out, honestly, it was her other client.

John:
Her other client was getting ready to list this property. And she said, John I’ve got another client who’s getting ready to list this property. I think it’s exactly what you’re looking for. I can be the dual agent, but I actually wanna step out of the process and let y’all just talk. And she introduced me to ’em. We had a conversation, it was on a Sunday night. I looked at the property, looked at the numbers. It was exactly what we were looking for. And we had poured dozens of properties up to that point. And it was what stood out to me was the unit sizes were bigger than the other units that I’ve seen in that neighborhood. And when you really understand your market, the market local market knowledge is key. So when Chicago, as you, as many people may imagine similar to New York and other big metropolitan cities that are highly highly dense, you know, high density, well, you don’t have a lot of space.

John:
The, the standard Chicago lot is 25 feet wide by 125 feet long. So 25 feet wide, you’re not gonna have these huge apartment units at 25 feet wide for the entire building or for the lot. That’s not the building. That’s the lot. So this property was actually an oversized lot and the building was a little bit wider. So the lo I wanna say the building was about 30 feet wide. So the units were much bigger than the typical apartment building. But the units were renting for less than what I was finding in the market. And these are recently renovated. So I knew we could push rents by like a hundred, 150 bucks. The clauses were big. So I found that opportunity. And that’s the key when you’re investing is you’ve gotta find something that maybe other people don’t see. And because this wasn’t listed yet, I knew I had to move fast. Otherwise this got to the open market, somebody would probably beat me with a higher offer. And again, because I was in with the agent, she was able to reduce her commission a little bit, since this was gonna be easy transaction for her, she was gonna get both sides of it and it made it work. It made it easy deal. Mm-Hmm

Charles:
That’s awesome. One thing I wanted to point out that I love is that you knew the unit sizes and you knew the market so well. And that’s something that I think a lot of people make the mistake on not knowing. And when I started buying in Connecticut years back I would know this size two bedroom, or this size three bedroom, this three bedroom. I will keep tenants in here for five plus years. It’ll be very rare if I have someone that’s not in here for five years. And I have some tenants that are in there for 10 plus years. And it’s like, okay, that’s minimal turnover. They’re taking their minimal, you know, the rent increases every year, stuff like this, but that’s where you start making money with limited turnover, but you knew that going in, you knew it would be easy to rent. You knew that you were gonna keep tents in there most likely longer. I would imagine if it was such a price property, and that’s where you start making money. So it’s, it’s really important to know everything about the market. And you knew when to pull that trigger on something, you knew exactly when to do it going forward after you really, really learned and understood the market that you were working in. So that’s, that’s fantastic. That’s great.

John:
Yeah. And it goes back to what we said about mitigating risk, right? I mean, it’s like, you can guess all day long, but if you have the, the market knowledge and whether that is, you know data points, you can pull out or you’re out there touring properties all the time, you’re looking at apartment listings, you’re reading, what’s available. You’re looking at the square footage. You, you really understand what the market is doing. And you can find that opportunity when you’re actively involved in the market. Now, the flip side of that is it’s really hard to scale when you’re constantly scouring for, you know, a one unit or a two unit property. And you’re that into the weeds of the details. It’s great starting out because you need that base, right? You need that base to be able to feel confident in the decisions you’re making, but we invest in, you know, basically six figure properties.

John:
Now a hundred plus units is what we’re looking at. I wanna understand the area, I wanna understand the market data, but I’m doing it more at a macro level, as opposed to literally walking into, you know apartment 37 F and looking at that and saying, okay, well, because this one faces that side of the street or this side of the parking lot. It should rent for $2. More than that. Like at, at a certain point, you can’t really grow the business if you’re not looking at the overall business and the overall market, but starting out if you’ve got, you know, one unit or two unit, you’ve gotta protect that investment. I think being super deep in the knowledge is there, but when you scale up to a larger property, now you’re managing that larger property. Not necessarily that individual unit, you’re looking at that property saying, how can we keep rents at this level?

John:
How do we reduce our turnover? How do we make this an inviting place to live so that we can run the business? We’re trying to run and very similar to, again, any kind of business, right? You know, if you’re running any kind of business, you’re going to take a look at the sales. You’re gonna look at the income. You’re gonna look at where are you doing the best business, which products, or which services are, are most attractive. What’s your competitive advantage in the marketplace? And how do you grow those things? Now, if you’ve got one unit, that’s gonna be a pretty finite discussion and conversation, but when you’ve got a 200 unit property, you, you have to look at the entire 200 unit property, not just each individual unit mm-hmm.

Charles:
Yeah. So it’s great advice. Yeah. The rent comps are the, one of the first things I always will look at when looking at a property because I talk to people and they’re like, well, how do I know? Like, don’t waste your time underwriting. See if there’s, you know, you can just get movement in these rents, 20, 25% higher, make sure it’s apples to apples. They’re nearby. They’re not like two miles away. I get people send me rent comps two and a half miles away, which rather be in a different country. I mean, it just doesn’t matter. It has to be something real estate is so local. And so street by street neighborhood by neighborhood and Google maps is good, but you look at something on Google maps. You’re like, wow, it’s such a difference this right. Between these two things. Yeah. Cause there’s a train track and a highway and you know, a river, I mean, this, it completely changes what you’re working on. But so John, you talked about earlier about utilizing partnerships to scale. So how have you done that and how has it allowed you to become a full-time investor?

John:
Absolutely. I mean, I think partnerships are absolutely key. You know, again, we go back to what we were just talking about. Well, that was me doing a lot of the work and I trusted me. I trusted my work. I trusted my research. I trust the work, but that’s extremely limiting in how much we can grow and scale and how much money we can actually make. But by using partnerships that opens up the doors, because now I can leverage someone else’s knowledge and expertise and their time and their resources, and that allows us to grow in scale. So the very first deal we did as partners was 192 unit complex, where we partnered with the group in Texas. So they were local, they knew the market, they had a lot of experience and we were able to come in and partner with them, not something that I would’ve ever had the ability to do by myself.

John:
Or even as a lead at that stage, cuz I just wouldn’t have trusted what we could do on a building that large, but they had done some deals like that. And you know, it made it easy for us to come in, partner with them, learn, grow scale, and be in a position to continue to do larger type of deals. So from a partnership standpoint, you know, one of the things for us is always understanding who you’re working with, building relationships, getting to know them, what’s their experience, how do they operate? How do they think, do they understand their market? Are they prioritizing investors and the people that they’re in business with what’s their character how do they communicate? You know, are they gonna be easily, easily reachable or they gonna disappear at the moment, something bad happens. You wanna make sure you really understand the types of people you’re working with and whether or not it’s gonna be suitable for a great partnership.

Charles:
So have you had any partnerships fail? And if so, what happened with those?

John:
Yeah, absolutely. We’ve definitely had partnerships that have failed. Most of those partnerships, you know, we we’ve talked about the, you know, the, the lessons learned well, part of it is, you know, stepping back and just trusting someone based on their experience. Experience is really important, but experience doesn’t make a great partnership. If that’s the case, you’d have, you know, you just get the best players on a team, in any sport putting together and boom, you got a championship. Well doesn’t work that way. Personalities are important. How you handle conflict is important. Understanding roles and responsibilities. You know, if you get five people that do the same five things really well, but no one can do other aspects, well that’s not gonna work, right? So it’s gotta be a team. You have to have team with a team with complimentary skills. And that really helps, you know, we, we did a, a flip project and at the time I had no real desire to be a flipper.

John:
I was only focused on multifamily, but I needed to make more money. Right. So I decided to partner with this guy who was a developer, I would be kind of the money. He would, you know, flip the project and that was gonna be the partnership we’re gonna split the proceeds 50, 50, well, early on, there were red flags that I ignored and one of the big red flags. And I tell everyone, this is, you always wanna make sure that anyone you’re looking to partner with, that they understand and address any concerns you have or questions you have with a level of empathy and respect. If they’re dismissive to a concern, you have run away. Because if you tell me, don’t worry about that. I’m absolutely gonna worry about it because you should be, you should be able to explain to me why that issue, whatever it is, it could be anything simple.

John:
Like, oh, you know what happens? What happens at the roof collapses? Don’t tell me, don’t worry about that. Tell me, Hey John, you know, one, we don’t anticipate that happening. Based on the construction, we had a roof inspection, you know, our roofer went up there, everything looks good. Two, we have insurance that is set aside to take care of that. You should be able to break it down and explain to me why that concern is not as important to you, right? Or how you’re already addressing that concern. But when you tell me, don’t worry about it. That tells me that you only wanna talk about it and you’re very dismissive and there might be other things that are more relevant that you’re not gonna be as willing to discuss with me. Right. So I would say, just make sure that one, they respect you to talk about how decisions are made, you know, be clear on how much input do you have. Do you have the ability to make decisions to impact something? Is it a 50 50 thing? Or if it is what happens if you disagree, how will, how will the decision be made at that point? You flipping a coin or what are you doing? Right. So you have to get into the weeds a little bit on some of these things, if you wanna have a solid partnership.

Charles:
Yeah. The other thing too is I always, I always get worried when people are like, oh, we’re gonna partner where someone, someone does the work and then I bring the money. That’s all it is. I, you always speak to someone that’s bringing the money. Cuz they’re the one obviously that has at risk. And like they don’t have any skin in the game. So if they don’t show up, then it’s like, you know, I was like, so what are you gonna do? So can you sell the property? You need their signature. I’m like, maybe it’s something where you just lend them money in a mortgage and you do it that way. You know, where you can like say, Hey, it’s not getting done, blah, blah, blah. You know what I mean? And I’m selling the property or whatever, but it’s crazy. It’s crazy how people have these set up. And then you have people that just don’t show up. Cause I have contractors that are supposed to be paid and they would never show up. And you’re like, well, if this person isn’t getting paid, they’re just getting paid on the back end, you know, 90 days on the road, I’m really gonna have an issue with this person showing up if they don’t show up at this, you know, right now to do the work. So so many red flags. So that’s, it’s great. Thank you for your input. So

John:
I think this real quick on that points, Charles, I I think understanding the, the risk exposure is really key. That that’s something that I, I do think is really important is making sure that there is some sort of risk or exposure that is mutually shared, whether that is reputation, whether that is money financial, but they need to have some sort of skin in the game. Yeah. Because on the deal, I just mentioned to you, the problem was there was reputational risk, but he had no, no money in the game. The property is fully in my name. The, the way they deal was structured, he only really made money when we sold. So guess what, when we ran into issues and it was clear that we weren’t gonna make much of a profit, he had no incentive to even finish the project. You know, I still need to get my money back and not take a bigger loss. He was like, ah, never, nevermind I’m out. So you definitely wanna make sure that you are structuring these partnerships in a way where there’s mutual risk on both sides. And you know, again, money is, is, is a big piece of it. And at a minimum is one where everyone is going to be incentivized to do what’s best for the project at all times.

Charles:
Yeah. It’s very difficult to structure. I haven’t really seen a great structure for that before. And it’s seemed like, well, maybe you hire them almost as like, like a contractor per se. And then you’re like, okay, then I’m gonna give you something on the back end, but you’re giving me a discount upfront on it. I don’t know. I mean, it’s just a very difficult thing cuz you’re dealing with people that usually aren’t money and business people and obviously they don’t have the money or they would be doing it themself. And that’s, you know, that’s something too that you have to look into, but so John, with what you’re doing now, you, you seem to be a very analytical person. You have a lot of experience. So what is your superpower? And like how important is this knowing your superpower when I’m forming partnerships?

John:
Well, I, I think the biggest thing on, you know, figuring out what you’re good at is don’t overthink it. You know? I mean there there’s things that you enjoy and things you probably don’t enjoy. There are things that you’re naturally good at and things that maybe you’re not as naturally good at. So I don’t try to overemphasize it cause I, you know, I think people can bog themselves down saying, oh, I’m, I’m not actually that great at anything. Right. But you are probably pretty good at something, right? Whether you have an accounting background, maybe you’ve got a, a background in project management. Maybe you have a background in marketing like me. So there’s something that you’ve done. Well, you’ve either been compensated or you liked enough to make a career out of it. Or there are things that people tell you, Hey, you’re really good at this.

John:
So you gotta take some of that feedback in and figure it out and do some self assessment. There’s a lot of different, you know assessment tools out there. If you wanna go that far disc assessment or personality assessment. But for me, what I would say is I’m, I’m, I’ve built a career on the account management side and managing teams and managing people. So that’s something that I have a lot of experience in. I know marketing extremely well spent 15 years in corporate America doing marketing for brands. So I understand the value of marketing strategies, putting together an integrated strategy, recognizing that things need to work together. So for me in the business that we have with syndication, you know, just to, to break it down, I think many of your listeners are familiar, but we partner with other investors to pull resources together, to go out and buy large apartment buildings.

John:
So for me with the skillset that I have on managing teams and, and managing people, as well as marketing and advertising I work with people on one, I work to find deals. So on the acquisition side, I work with folks to identify opportunities, talking to brokers, building those relationships, putting teams together for these deals, what are the different roles we need? We need attorneys, we need brokers, we need lenders, we need investors, we need key principles. So putting those people together and then raising capital, you know, working with investors in our network and expanding our network, getting in front of new audiences so that we can tell people what we do and how we help them. So if they feel like it’s a fit for them, they can come on and learn more about us. So those are the things that I focus on in the business.

John:
And you have other folks who maybe are more technical, maybe have a construction background or worked in property management. And those individuals may focus more on actual day to day operations, making sure that they understand what’s in the lease contracts. You know, how do we manage expiring leases? You know, what renovations need to be done? How do we keep this on timeline? How do we keep this on budget? And ultimately the financial side of it to say, okay, if we want to hit a certain return metric what do we need to do to structure this deal, to structure the financing in a way that best suits us so that we can be successful. So you try to, you know, figure out what you’re really good at and then if you can supplement the other task or the other roles with other people that makes it a little bit easier to, to create a business that can be successful.

Charles:
Oh, that’s great. Great information. So I wanna talk a little bit about, you were talking about passive investors and that’s something that you work with and you raise money with them, you partner with them and you host a podcast. So how have you really let’s say developed and cultivated your audience and your you’re really your investor avatar because if we’re raising money, if there’s people on here that wanna raise money, whether it’s doing one off deals like we were talking about before, like flipping or whatever it might be, or going in and, you know, buying properties with within joint ventures or in syndications. So how are you finding the right people to target your message of when you’re speaking to it speaking to people and who you’re looking for, that your message is really gonna resonate with.

John:
That’s a great question. For me, it goes back to the marketing background. So with any product or service I’ve ever I’ve ever worked on for a campaign, it always starts with the customer, you know, who are we talking to? What are the challenges they face and how can we help them with this product or service mm-hmm <affirmative> right. So in that case, if you don’t understand why someone would want to invest in real estate or, or why someone would want to invest with you, yeah. It’s gonna be hard. Cause you’re just gonna talk to random people. You’re gonna call your mom or your cousin or your friend from softball, or, you know, a buddy that you were in the military with and you might share, Hey man, I’m, I’m investing in real estate. Would you want to invest with me? Or do you have some interest in this?

John:
And you have no idea what the answer is gonna be. Right. because you’re not really setting it up to address the issues and challenges they have. I think about it this way. If I were opening up a bakery, I wouldn’t call everybody. I know and say, Hey, I need you to buy a sheet cake for me. Right. Or do you know anybody who wants to buy a sheet cake? Like, I’m going to tell you, Hey, I’m launching a bakery. Here are the people that we serve here are the people who, you know, typically are looking to buy cakes from us. If you know anybody who’s having a wedding, a graduation, a birthday party or another gathering or celebration, I’d love an introduction to see if maybe we could cater with our cakes, right? But I’ve given you clear direction of who we help.

John:
And I can call my mom, my dad, my brother and my sister and my uncles, my cousins, my friends. And I can tell them specifically who we help and I can ask them for help identifying who those individuals may be. Notice that I’m not asking my brother to buy a cake from me, ask him, telling my brother, Hey, do you know anybody who’s getting married or is having a graduation party or having a big birthday? If so, would you mind doing an introduction? I’d love to see if maybe I could present some options to them. That’s the way that we approach it is really understanding how to take your existing network. Let them know what you do, how you help people and expand, but then asking them, Hey, would you mind introducing me to one or two people who maybe in your network that are looking for these kind of things.

John:
So when you talk about building out your avatar, you have to take the time to get clear on that. And also understand that if you have zero experience going after a, a, you know, a high net worth multi, you know, multi-millionaire investor is that you don’t know at all is probably not gonna work for you. Why would that person wanna invest with you again? If I got a product or service, I might have an ideal customer in mind, but if my product or service isn’t ideal for that person, why would they call me? Right. If let’s say I’m launching new shoes, right? I got a new shoe line. Great. You know, the best person I can get is LeBron James. Right? <laugh> great. Why would LeBron wanna wear my brand new shoes? <Laugh> that, you know, have no track record. No one’s ever seen, you know, no one’s tested about he’s probably not gonna do that.

John:
Right? I’m not gonna go to NBA athletes and say, Hey, where are my new shoes? Right. If I don’t have an in mm-hmm <affirmative> so you have to figure out where are you uniquely positioned to help people. And that’s why friends and family is a great place to start because they at least know you. I know you, I know John, I’ve seen what John has done in the corporate world. I know he is highly respected. I’ve seen John on multiple podcasts. You know what, let me start with John. That makes sense. Right? And then over time you can expand as you build up your credibility and your confidence in the space, but you wanna start where you kind of have that. And going back to the cake thing, if, you know, if I opened up a bakery, but no one’s actually ever tried my food and no one knows whether or not I’m, I’m a, I’m a great baker. I, I can’t just try to cater the biggest weddings in a city. Right. I can’t go to biggest venues and say, Hey, here I go. I’ve gotta build up that momentum. Right. So it’s some kind of concept when you’re figuring out who your customer is or who your, your avatar is and who are you uniquely positioned to serve.

Charles:
Yeah. And also with those larger investors, like those larger people that you’d be in your so-called cake business, dealing with they’re gonna have different requirements than one of your family member or our friends. And they’re gonna have a, if someone came to me with a deal, I have a whole list. Whether they want me passively or actively, I have a checklist I’d work through. And it would probably, no one would probably call me back. That was a new person. You know what I mean? But a seasoned person would say yes, and they’d send you back and they’d answer, you know what I mean? It’s a whole different approach and it’s a whole different thing than you’d get from when you’re on that relationship. Versus when you’re strictly in a business, just a business relationship, not only a personal one as well. So so John, let’s talk about some common mistakes. You see real estate investors make, since you’re a coach, you talked to a lot of people, you had a podcast for four plus years and you’ve been investing for 10 plus years.

John:
Yeah, man, listen. The market right now is very competitive. And one of the biggest mistakes that I see people make is relying solely on spreadsheets. You know, you, you get your spreadsheet, you get your data, you get the rent roll, you take the T 12, you put those numbers into some spreadsheet and either the deal pencils out or dozen, some pencil out well, 98% of the time, the deals are not going to pencil out when you take those numbers and figure out what a, a broker or an agent’s asking for for this property. So the biggest thing that you can do, and I tell all of my, my clients, this and anyone else will listen, is you have to understand your business plan. The business plan is going to be key. How can you stand out and be unique? How do you create value?

John:
Especially if you can create value that maybe others are missing, that’s gonna be a great way for you to grow. And scale is you’ve gotta look at those numbers, but then you’ve gotta torture test. ’em A little bit why this number? You know, what if we change this number, but it’s not just change a number. That’s what if we change the business plan? So we could achieve this number? You know, how can you actually improve rents? Can you improve rents without doing renovations? What if you do a higher end renovation, can you take the rents up even higher than what you’re projecting? You’ve gotta really understand the business plan and look at a couple of different scenarios and what the underwriting looks like. Reflecting those different business plan options before you can say yay or NA on a deal, you know, but if you only go in and take the T 12 numbers, slap mental a spreadsheet and expect to get a certain return metric, and that’s the way you’re making decisions, you’re not gonna get very many deals.

Charles:
Interesting. So what are some of the main factors that have contributed to your success throughout your journey?

John:
One is just continuing to surround myself with great people. I think education is key. Networking is key. You talked about the podcast. I mean, I’m fortunate to talk to many other successful investors every week. I host the Chicago multifamily club. So even though I moved to Cincinnati, I’ve, I’ve been hosting this meet up for about four or five years now. And I get to surround myself with other investors in the markets that I’m familiar with doing it. I attend conferences. I have a, a mentor myself and I tell everyone, listen, if you’re looking to get a mentor, your mentor should have a mentor, right? Mm-Hmm <affirmative> because that shows, they believe in mentorship. If someone is, you know, looking to do mentorship, but they don’t have a mentor, are they trying to stay stagnant in where they’re at? Or are they simply looking to, you know, find a way to, to add some revenue streams to their bottom line?

John:
And there’s nothing wrong with making money on that. I’m just saying you want to make sure that this is someone who’s also looking to scale and grow what they’re doing, and they’re gonna move up to a higher plateau when they can hopefully pull you up along that way. And I’ve been very fortunate to, to have a mentor. When I met him, he had a $7 million portfolio today. He has almost a $2 billion portfolio, and this is all in the last five years. So you wanna surround yourself with people that are operating at a high level, because I mean, simply by being around these people and it sounds crazy, but when you surround yourself with people operating like that, it forces you to one acknowledge that it’s real and as possible. And two, it’s gonna make you look inside to say, okay, if that person is doing that, yeah. How can I do that? Even if you’re not as motivated to do it yourself, it’s gonna force you to know that it’s at least possible. I saw this guy do it. I just watched him and he’s telling me how he’s doing. He’s doing it. So it’s not a mystery. It’s not just a book or some random.

John:
Podcast that you never met. You don’t know you’re having conversations. You’re asking, how are you changing your business? And they’re giving you advice and, and feedback on what you need to do in your business to grow. And I guess that’s probably the biggest thing. It’s the business. It’s not a hobby. I’m not just hoping to get a deal every, you know once or twice a year. I’m full time. I’m a full time investor. There’s no turning back. This is what we’re doing. You know, this is where we’re at. And because it’s a business, we have to treat it like a business. We have to operate as a business. We need systems, processes, operations, human resources, marketing sales. That’s a very important aspect of this. If you really want to grow and scale, you have to be committed to that process. And I think it’s, it’s really important for us and our investors that we dedicate that level of commitment because that’s the only way you can grow.

Charles:
Yeah. The other thing too is when you said about the process and also trusting the process too. So if your mentor’s done this, I mean, real estate, just like other investing strategies, it’s a, it’s a long term process and real estate’s made when, you know, you put money in and you make a little bit of money on the cash on cash, but really it’s really on when you’re refin, you have an equity event where you’re refinancing it or you’re selling it, whatever it might be. And at that point then you like really realize, wow, this is a really good investment I made for three, four or five, six years ago, whatever it was. And it just took time to mature the market for us to season it, to do it. And it’s just, that’s another thing too. And if you were following someone that’s done that and was successful in that you have to trust that as well. It’s not, it’s a get, it’s a get rich over time. It’s not a get rich quick if done correctly. So, but so John, how can our listeners learn more about you and your business?

John:
Yeah. Listen, if you wanna learn a little bit more about investing, whether you wanna be on the active side or the passive side, we’ve put together a sample deal package. And I think it’s really helpful for investors to start wrapping their head around both terminology, deal structures you know equity splits and prefer terms and all that kind of stuff. So if you wanna dig deep and start to really familiarize yourself with that, whether you’re active or passive and what kind of information you should be looking for in a potential deal, check out our sample deal package. You can go to Kasman capital.com/sample deal. And that will also put you on our email list. So you get our, our newsletters. And if you wanna learn more, talk to me from there, you can feel free to reach out, and we always send out kind of a link to our, our calendar. So if you wanna hop on a call with us you can sign up from there.

Charles:
Awesome. Well, thank you so much for coming on today. John, looking forward to connecting with you here in the near future and have a great rest of your week,

John:
Charles, thank you again for coming or for having me on, I should say. See, and appreciate it. Thank you for the chance. Talk to you soon.

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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Links and Contact Information Mentioned In The Episode:

• Casmon Capital Group

About John CazMen

John Casmon is a real estate entrepreneur, who has partnered with busy professionals to invest in over $100 million worth of apartments. John also consults active multifamily investors to help them start or grow their business. He hosts the Target Market: Multifamily Insights podcast and is the co-creator of the Midwest Real Estate Networking Summit.

Prior to becoming a full-time investor, John worked in corporate America, overseeing marketing campaigns for General Motors, Nike and Coors Light.

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