Andrew Freed is a real estate agent and investor based in Worcester, Massachusetts, and his firm oversees a portfolio of over 550 units.
Andrew worked as a corporate project manager for over 10 years on the W2 track, then shifted his focus to real estate investing, and in 3 years went from 0 rental units to over 300 while working a W2, often using creative financing strategies and syndications.
Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Andrew Freed. He is a real estate agent and investor based in Worcester, Massachusetts, and his firm oversees a portfolio of over 550 units. Andrew worked as a corporate project manager for over 10 years on the W2 track, then shifted his focus to real estate investing, and in 3 years went from 0 rental units to over 300 while working a W2, often using creative financing strategies and syndications. Andrew, thank you so much for being on the show today.
Andrew:
I am honored to be here. Thank you for having me.
Charles:
Yeah. So you have an interesting background. Prior to getting involved with real estate, you were on the W2 track. So let’s talk about what you were doing before you kind of got that real estate investing bug.
Andrew:
Well, I really lucked out because I got the perfect role to set me up as an asset manager for real estate, which is essentially what I do right now. And what I did was I was a grant manager at a research organization called the Broad Institute of MIT at Harvard. And over there I managed their portfolio of research labs each I had to manage their budgets, I had to manage their projects, I had to manage the income and the expenses, and it really set me upright to be an asset manager for managing a plethora of, of different properties all at once. Right. but going back to, you know, going back to like my original track, like I got, sorry, do you want me to go into like the whole W2 thing or I’m just Yeah.
Charles:
Go into what are you Yeah, we’ll go into everything that you want to do and we can cut this out. It’s not a problem, but just go into your W2. This is perfect because this is what, everybody has a unique background, so it just gets them to what they’re doing now. So
Andrew:
I just don’t wanna like talk for five minutes and not let you jump in.
Charles:
No, no, no. This is all about you. I’m supposed to, you know what I mean? So we’re about find ’em out about what you got going on. I appreciate that. Thank you, <laugh>.
Andrew:
So, yeah, I mean, more or less I was enamored by the W2 track, right? Get a good job, get a good education, get a nice six figure job get a, get a job at a swanky organization, the Broad Institute of MIT and Harvard. And I did all of that, right? It took me 10 years to do that all through my twenties. I did that. I got my bachelor’s, I got my masters, I got the con in Boston, like I did it all right. But at the end of the day, I felt empty. I felt like I had so much more potential to give and put on the table. And like ultimately what scared me most was the fact that like, yeah, maybe I have six months maybe or 12 months of reserves, but I still had to crawl back to that job every single day.
Andrew:
Right? I relied on that job for my livelihood and at that point I really decided I needed to make a change. And that’s when I found this beautiful book. I, our Rich Dad Poor Dad. I, I ate the purple pill, it opened my eyes to the power of real estate and at that point, that’s when I decided I’m gonna leverage my W2 and house hack 10 multis in 10 years and ride off to the sunset with 30 units. That was my original goal going into it, and that’s, that’s what I was aiming to, you know, my first couple years.
Charles:
That’s awesome. Yeah, that’s great. When you, when you ate the purple pill, as you say what was, other than just having to crawl back to the your job and stuff like that, was there anything else that was like a wake up call that really changed your mindset? Were there other people that you saw maybe 10, 20, 30 years ahead of you? Yeah,
Andrew:
You’re absolutely right. So, you know, one of the big turning points for my real estate endeavor, it took me, I think a year to get up to seven units. And then in three years I had a couple, a couple hundred units. I found a mentor, I found somebody named John bace. The guy owned hundreds of rental units in my area, and I found a way to provide him value. I ended up starting a meetup under his brand, becoming an investor focused agent under his brokerage, the number one agent, right? And because of all that, he really felt the need to take me under his wing. So I started doing deals on myself. I would call him for advice. He would give me advice, you know, I would rather than land, rather than you know, I would avoid landmine after landmine just by talking directly with my mentor. And then over time, I took on bigger, bigger deals. He ended up partnering on my first syndication. It was a success. And then at that point, I kind of leveraged that to start building my own private equity and syndication real estate firm.
Charles:
Yeah. That’s awesome. So you went from owning that condo in Boston, as you talked about, and really leveraging that to do 10 year, 10 properties in two years, which is great. I mean, what a, what a resourceful way of getting involved with rental properties. Let me
Andrew:
Restate that. My original goal was to get 10 multi-families house act once per year, 10 times with 30 units, and right off to the sunset. I had no intention of owning hundreds of rental units. It’s kind of worked out that way.
Charles:
Interesting, interesting. What would you say would be some of the strategies that you’ve utilized investment strategies, maybe created financing, something else that you’ve utilized in your journey to this 550 units that you have today?
Andrew:
So many amazing strategies that people don’t realize are out there, right? The low down payment loan, FHA loan or 5% down conventional loan on a multi-family property, a fantastic way. And to get into a lot of units with very, very little money, right? So, you know, I did that three or four times and I got in upwards of 12 units with only a hundred thousand dollars just by leveraging, moving into a u moving into a primary residence for a year and then turning into a rental and keep doing that a couple times. That’s a fantastic way to get a lot of units with very, very little money. Another fantastic strategy line of credit, right? You can get a home line of credit on your primary residence and if it’s your primary residence, there’s some line of credit’s going up to a hundred percent, right? So you can really leverage the equity in your primary residence to buy more properties or house hack more properties. Those are two very easy strategies. I mean, I could keep going and going if you want more tests. No,
Charles:
That’s perfect. That’s great. Yeah, there’s, there’s so many different when you’re dealing with the, I guess four and under unit properties, it, there’s so many different financing tools and products and services that are available to those investors. And also the properties that you’re buying are highly liquid, you know what I mean? You can easily sell these compared to a larger apartment complex that’s gonna take you six, 12 months to sell.
Andrew:
Yep. That’s a good point. Very good point. So
Charles:
Let’s talk about what you guys are doing today. What is your company’s current investment strategy and kind of really your overall current investment philosophy?
Andrew:
So we recently started a syndication fund and our entire philosophy is we buy value add property at 20 to 30% discount on a price per unit basis. We allocate money to enhance the revenue while decreasing the expenses in many different ways, separating the utilities, putting the utilities back in the tenant, creating square footage adding bedrooms. Those are some easy ways we increase the NOI while decreasing expenses. At that point, you know, once our business plan is complete, we suck up money via refinance once we’ve forced appreciated the property and use that money to buy more and more and more property. So it’s very much just VA buying value add property. And we specifically target, you know, probably areas of a cap rate of like six point a half to 10%. So it’s a nice balance of kind of cash flow and appreciation. We typically like to find, you know, properties with our cash flow far exceeds the cost of the interest rate.
Charles:
Yeah. One thing when I was buying single a small multifamily is three units, four units in Connecticut. It was one thing that we’d find was that you’d have electricity that’d be sub-metered, but you never had the water, right. That’d be sub-meter. Is that what you’re doing? You’re going in in submetering these properties for water?
Andrew:
Fantastic question. So we actually buy, a lot of the structures we buy are between five and 20 unit properties, right? And they were all constructed between 1880 and 1920. That’s where workforce housing was created. These are all old mill towns, right? Back then they didn’t separate water, right? So if we were going in there and separate water, we would have to redo all of the plumbing. So it’d be very costly for probably not that much of a benefit. However, we do always separate heat and electric. We buy a lot of these multis, but sometimes it’s being combined. I mean, there’s a lot of really good programs out there. There’s heat pump rebates where you can get, you know, heat pumps, you know, 50 cents in the dollar you know get heat pumps 50 cents in the dollar. And they’re a fantastic way to separate heat while, you know, saving costs. Yeah,
Charles:
That’s what we always made sure that always the heat was separated and then the hot water as well. You know, we would always have to pay for water, but that was just kinda one of the things I think of the Northeast with how that works. It’s, it’s interesting with these properties, my first ones being like from 1904 or 1900, something like this. And there’s no insulation in these properties because it was so inexpensive to heat them. So they would heat everything. And if you dig down a couple feet in the backyard, you probably hit coal. And it was like, so there’s no insulation in these properties. Water, like all these natural resources were not expensive, so they weren’t really planning with it. And, you know, fast forward 50, 70, a hundred years we start worrying about this stuff and we start putting stuff like installation, you know what I mean? And when water was put into these properties, they weren’t obviously put in, in 1880. When they’re put in, they’re put in different parts of the property, which might be a little more susceptible to freezing. So these all, it becomes a little bit more management intensive of these properties. Huh.
Andrew:
You know, I think a good analogy is like you take a 1950 structured car and then you try to put modern electronics in that car, <laugh> like it sometimes it just doesn’t fit right. It wasn’t meant for that originally. Right. But yeah, I mean, you gotta make it work.
Charles:
Yeah. Yeah. So if we’re talking about you know, properties with cap rates of 10%, these are mainly C class assets, is that correct? Yeah,
Andrew:
I would definitely say BC class assets is where we typically like to, to purchase it.
Charles:
Are you guys self-managing these or are you using a third party property manager? So
Andrew:
I think the magic in managing, you know, these smaller type assets, like, so we play in this nice little sweet, sweet round between like 55 and 50 units where it’s too small for private equity to plan because it’s so management and tested because you can’t have on onsite property management, right? So to find anine effective scattered site property manager is very, very challenging. So we actually had to bring it in house which is honestly our, our competitive advantage in my opinion. But we are, yeah, we’re vertically integrated. We have onsite property managers, we have technicians we have painters. So yeah, we’re, we’re, we have about an organization of like 25 people or so.
Charles:
Yeah. The private equity model, it doesn’t work in the sense of two ways. First of all, they’d have to buy so many of these properties to kind of get, move the needle on their fund or whatever it is on their capital. And then the second thing is, like you said, there’s not some onsite, so they just don’t buy like a hundred unit and have the onsite and make the call once a week and with them and see how everything’s going when you’re work withing like a scattered plot kind of investment strategy on the smaller scale. It’s like you said, it’s more management intensive, but that’s also if it can be done right, if you have your own managers, I feel it’s much easier to self-manage these with your own team than bringing in third party management. Definitely with c class properties, I find.
Andrew:
Yeah, I mean, and you care more ultimately if you’re, you’re managing, you gotta manage it for more from like an asset manager perspective rather than from a property management perspective. ’cause Ultimately, you know, if you’re hiring a property manager, your incentives aren’t aligned most of the time. They wanna make the most money for you and you wanna make, you wanna create the most profitable, you know, business in the form of your properties, right? Sometimes your incentives aren’t aligned, but when you know you own the company, you can ensure your incentives are aligned.
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. And 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@investwithharborside.com. That’s invest with harborside.com. Go to invest with harborside.com.
Charles:
If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time, go to invest with harborside.com. That’s invest with harborside.com. So let’s talk about when you’re buying a property, because with these properties as we said, there are more management intensive after you have tenants in there. But also there can be these properties range in all different types of qualities when you’re buying them with, you know, it could be old, a lot of old systems, a lot of things that were patched up. The weird stuff I found in decades of doing this with older properties, it was something that you never got, it never ceased to amaze you. Can you tell us a little bit about when you’re buying a property, are you going in on, are we just getting this prepped to kind of fixing the main things, deferred maintenance and renovating a couple things and then putting it out? Or are we doing like full renovations? Obviously it’s all on a per case basis, but like what is your goal on that finished product being before it gets rented out?
Andrew:
Yeah, I mean, we buy more or less value add properties and we’re not going in there and we’re not gutting everything, right? But we’re ensuring the electrical is in good standing. The plumbing’s in good standing, each of the properties is at least in a 90 percentile of how, how it looks cosmetically, right? Like LVP floors, granite countertops, decent cabinets, LED lighting, like it’s rental grade, right? But at the same time, you’d be surprised how many units are our rental grid out there and, and don’t look decently, right? And that, and, and, you know, ensure the roof has a good 10 to 15 years left in it. We’re not gonna, we’re not gonna replace a roof if it has 10 years left in it, right? But we’re gonna budget money to ensure it can last in the five years front, right? So we try to put, we try to build a construction plan upfront so we don’t have to worry about CapEx for the next 10 to 15 years, is kind of the goal.
Charles:
Yeah, no, that makes perfect sense because like I said, these are, I mean, all properties you have, there’s gonna be certain mechanicals that have to be changed every 10, 15 years for sure, no matter how new or old the property is. But there can be other things that are maybe not present or that you’re aware of for most people that might not be as educated as you are in the purchasing process that they might not pick up on. So that was a lot, that’s a lot of great information of having that funds kind of put aside that reserve. So when you purchase and
Andrew:
You know, I would say one of the big things that’s missed that these older properties always, you got a budget of money for the foundation, right? And just because you’re putting money in the foundation doesn’t mean it’s a bad foundation, it just means you’re reinforcing it. I mean, spend there hundreds of years, right? But a lot of times you gotta budget money towards lolly columns. Sometimes you gotta budget money towards, you know, ringing up some joists. Sometimes you gotta budget money towards repointing the foundation. You know, you gotta like, you gotta think ahead because ultimately that’s holding up everything else you’re putting into the property. So just keep that in mind, especially with these older properties.
Charles:
Yeah. So we’ve talked about the properties here. Let’s talk about kind of the tenant, the tenants that you work with. And I mean, one thing we find especially as being a, a previous investor in the Northeast it can be, it’s very tenant friendly. How is your, what are you doing on the front end to help make the whole rental process better down the down the road? Is it do you do a lot of upfront screening? I mean, how does that process work to really weed out potential bad tenants and make it a lot more of a consistent, less volatile rental environment? So
Andrew:
A lot of our tenant management issues really derive from inherited tenants, right? Because ultimately if you have a strong leasing prop process upfront, you know, when you’re very stringent about who you put in your unit, you know, you can avoid a lot of these headaches, right? And what do I mean by that? I mean, somebody with decent credit score, we’re talking six 50 to seven of their credit score. We’re talking somebody with no evictions, we’re talking somebody who makes three times the rental income. We’re talking to somebody who maybe has six months of reserves in their bank account. You can always ask for their bank statements, right? You know, so these are things you gotta wanna do in advance to ensure you’re getting a tenant, a strong tenant upfront and you avoid these tenant management issues. Right. But ultimately, you know, I think when it comes to the Massachusetts, yeah, I mean it is definitely a tenant friendly state.
Andrew:
It’s sometimes challenging to operate in, but if you don’t how to operate in the state, then you could be very successful. Right. And you know what I mean by that? So I mean like, you know, understanding when and how to use cash for keys, right? Understanding that, you know, ultimately it’s, it’s about ROI over principle. Like I, I really don’t care if the tenant, you know, if the tenant gets two months free rent outta me, if they leave the apartment in two months, when an eviction normally takes me three to six months to happen, that’s a win for me, right? And a lot of people will be like, oh, but I don’t wanna give ’em two months. They don’t deserve that. But like, but it’s gonna cost you more money in the long, in the long run by taking their quote unquote principle approach. Right? So those are just some examples of how you can operate in this market effectively, where others operate inefficiently. Yeah.
Charles:
If you’ve ever spoken to landlords that let’s say weren’t successful as previous property owners landlords, and you can see if they’re very strict when you’re working with c class properties, it’s a, I found it’s a lot more give and take and negotiation with working with people. ’cause You’re working with people, you’re renting the people that are you know, your clients, they are paycheck to paycheck. I mean, they hit tough times and it’s kind of like you’re working with them and you can still make money doing it and you have to know when to you know, move it to the next level. But you find some people that weren’t successful and it’s like, it just doesn’t work. You have to be flexible with working with people. And the same thing about the principals thing is if you’re hardheaded about it, you’re not gonna make money in it. You’re gonna, your principal and your cash flow and your whole investment’s gonna go out the window. Unless just like you said, just get ’em outta there and I can move on and clean slate for the next tenant. I
Andrew:
Mean, I mean, that’s just business in general. Like, nobody wants to hurt work with a hard, right? Like people wanna work with easy people that are easy to work with, right. And that’s just business. And that’s, and that’s honestly how I think people should manage their properties. So
Charles:
Investing in five to 50 unit properties, obviously when you’re getting into that higher number, you are most likely, you know, you’re having financing upfront. How are you usually financing or you know, you’re having a longer term financing maybe with local banks or credit unions. How are you doing financing your smaller purchases that are say 5, 10, 15 units?
Andrew:
So the magical thing about Massachusetts is it’s, it actually has some, it has some of the most credit unions out of any state. I think it has over 300 banks in Massachusetts, right? So because of that, there’s a plethora of portfolio lenders and we fund a lot of our smaller properties from these portfolio of these small credit unions and banks with 3, 4, 5, 6 branches in different markets. Right? And a lot of times we go to these banks and they’re funding the property at 75% and a hundred percent of the construction at like six point a half percent interest rate. So there are lenders out there that would fund pro projects like this then. And we get really good lending on these, on these value add deals.
Charles:
That’s great. Yeah. It’s one thing I found when looking for financing up north. If you went with local small banks and credit unions, they’ll kind of bend over backwards for your business. It’s kind of funny though because if you contact one that I found like maybe like an hour away from the property, they’re like, well what are you doing contacting us? Aren’t there ones near where you are? And, but when you speak to ones, they’ll have the amount of unique plans. I had one that did it on a mo on a mixed use property. They did a 25 year fully amateur rising loan, you know what I mean, on a commercial property. And these are, this is usually where it’s something five, seven tops, 10 years, you know what I mean? But you have these people that it’s in their neighborhood, it’s in the area where they wanna service and they’re kind of bend over backwards for that business and to really show that community what they’re doing. Yeah.
Andrew:
I mean ultimately, and the main thing about a portfolio lender is they’re lending their own money, right? So they can lend it however rules they want. It can go outside any guidelines because it’s their own freaking money, right? So that’s what’s really powerful about these portfolio lenders. And to your point, like I think one of a pro tip to get access to some of these portfolio lenders possibly outside your market is getting a warm intro from a lender, from somebody in their network who already has loans with them, right? Really easy way to get in their network and have them start giving you loans. And once they give you one loan, the floodgates open. Yeah,
Charles:
No, that’s a lot of, a lot of great information. So over all the years of working and doing, being a real estate investor, what would you say when you look at other real estate investors being part of that meetup and everything, what do you say some of the common mistakes you see other real estate investors make?
Andrew:
What I think some of the most common mistakes other real estate investors make is after they have a proven track record and they wanna start to scale and potentially use other people’s money, it’s more about making your investors’ money than making you money in your first couple deals. You really need to establish a strong, strong track record. And I’ll just give you a quick example. My first syndication a 69 unit in New Bedford, Massachusetts. I think we had seven GPS on it. And I mean, I had like a seven, 8% equity in that I didn’t have a lot right? It, it was didn’t make me a lot of money, but I knew if that syndication was successful, that would lead into a lot more deals for me in the future. And that’s exactly what it did. Right? So that’d be my, my advice is, you know, think about, you know, when you first start scaling, think about providing your investors value first and it will really provide fruit in the long run for your business.
Charles:
Nice, nice. What would be advice, ’cause how you started with a W2, what would be your advice for someone in, with a job right now who wants to start investing in real estate, possibly active, possibly passive? My
Andrew:
Advice to you would be you have a freaking asset, right? And the asset is the fact that you have a W2 and you’re lendable and you can get access to these FHK loans and these 5% down conventional loans, those are super powerful loans to get you in property with very, very little money, right? So what I would say is, you know, think of your job not as, not as a prism, but as a tool to acquire these multi-family assets with these low o low down payment owner occupied loans and start accumulating three, four or five six. And once you have those under your belt, you’ll have options. Right? Very easy way, very low risk way to get started, in my opinion. Yeah.
Charles:
Yeah. I think and then doing those deals yourself and being active on them, you learn so much about being a real estate investor with limited risk, like you said. I mean, there’s only a handful of tenants. It’s not, you’re not gonna get overwhelmed, really. It’s not like buying a 20 unit property, not knowing what you’re doing. You’re buying two, three units at a time and you kind of learn how everything works. You don’t have massive, you know what I mean, tenant turnover at the same time you have one here, you kinda learn what’s going on. You know, I, that’s why I found that it was an easy way of really dipping my toe in and learning the real estate business from the inside without having, you know, because you have to do it sometime. You can only have so many mentors and podcasts, you know what I mean?
Andrew:
And, and you know, and what I say is one of the biggest arguments I hear from people is like, oh, I don’t have the money. You know, I’m like, you absolutely have the money. Right? Most people’s net worth rely lie in two things, right? Their, their primary residence, their property, or their 401k, you can literally borrow your 401k to buy primary residence properties, right? So the money’s right there. Stop making excuses, start making it happen. Yeah.
Charles:
Andrew, kind of as we wrap up here, you’ve been very successful in your previous career and now in your current career of being a real estate investor. What would you say some of the main factors contributing to your success over the years?
Andrew:
I would definitely say, you know, you can’t, you can’t give up no matter what the true, the true, the truly successful people understand that failure is a path to success, right? And the true measure of success is how, how much you iterate along the process to become the best version of yourself. Nice.
Charles:
Yeah. Makes perfect sense. Andrew, how can our listeners learn more about you and your business?
Andrew:
They can find me at Investor Freed on Instagram. They can look on my website, freedom management.net. We always have good opportunities out there. And you can find me at Andrew Freed on Facebook and LinkedIn.
Charles:
Perfect. Okay. We’ll put those, show those links into the show notes. And thank you so much for coming on today. It was it was great having you. Thanks
Andrew:
For having me. I really appreciate it.
Andrew Freed, started as a project manager on the W2 track, experienced a paradigm shift inspired by Rich Dad Poor Dad, prompting him to pursue financial freedom through real estate. Leveraging his Boston condo with a HELOC, he strategically acquired 10 properties over 2 years, including multifamily units and syndications, and employing creative financing methods. As of present, Andrew oversees a portfolio comprising over 400+ units with an additional 50 units under contract. Andrew emerged as a prominent figure in real estate, specializing in multifamily investments, house-hacking, and syndication. Acknowledged as a distinguished figure in real estate investing, Andrew became the top contributor on BiggerPockets and featured on podcasts such as BiggerPockets Rookie Podcast, BiggerPockets Real Estate Podcast, and One Rental at a Time. Committed to community engagement, he regularly presents at real estate meetups, fostering connections and sharing expertise. Andrew’s ultimate goal is to travel the world and empower others to attain financial freedom through real estate investment.
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