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WS223: Brian Robbins on Learning The Art Of Passive Investing

RES 223 | Passive Investing

 
When a full-time job is not enough, people tend to hunt for means to invest and earn passive income. Brian Robbins, the author of Done!: The Professional’s Guide to Double-Digit Returns, Multi-Generational Wealth, and our Worry-Free Retirement, unravels the steps to becoming a passive investor and being an expert on it. Also the CEO of Cornerstone Complete Care Incorporated, he recounts his journey from being in the healthcare industry to transitioning to real estate. Find out from Brian how investors should build relationships with syndicators and vice versa, and learn about self-storage investing and why it is better than multi-family at some point.

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Brian Robbins on Learning The Art Of Passive Investing

Our guest is Brian Robbins. Thanks for being on the show, Brian.

Thanks for having me, Whitney. I appreciate it.

I’m excited to have Brian on the show. He’s a good friend of mine. I’ve known him and his family for quite a few years. Brian is the author of Done!: The Professional’s Guide to Double-Digit Returns, Multi-Generational Wealth, and a Worry-Free Retirement. He’s the Founder of Wellings Capital. It’s an income-focused multi-family real estate investment firm centered on providing stable, yield-producing investments to their clients. Their asset management partner has over $150 million in performing multi-family assets under management. He’s the CEO of Cornerstone Complete Care Incorporated, a multidiscipline physical medicine clinic. Brian, give the audience more about who you are and what your focus is.

I’m a practicing chiropractic physician. I’m also involved with multi-family real estate. We got involved a few years back. I have syndicated a few deals and have written a book on how to get involved with this great asset class. I’ve got ten children. I stay pretty busy.

I know your family. They’re amazing people. It’s an amazing story there as well, which we had time to know more about that story. Brian, you wrote this book called Done!. Tell us a little about that book and let’s dive into a few things.

[bctt tweet=”There’s always a demand for housing as long as people like to have roofs over their heads. ” via=”no”]

As a physician, things have changed in the last years quite drastically. I got involved in helping people. The focus of what I’ve done with my life has been to bring cutting edge physical medicine to patients. We have a multidiscipline practice. Our hands have been more and more tied by government intervention. They’ve changed things quite a bit. It’s gotten to the point where I spend more hours in a day about documenting, answering questions and writing forms for insurance companies. I got tired of it. I didn’t get into healthcare to be a glorified government healthcare worker. I got into it to have the freedom and help people. I can’t do that anymore.

That’s what got me interested in writing a book on laying out a step-by-step plan for professionals to take their occupation and use it to generate passive income for themselves. Hopefully lay out a roadmap where they can provide that stepping point or launching point for themselves to get out of medicine if they choose to, whether it’s a veterinarian, a dentist or chiropractor. Providing for themselves, it doesn’t mean they’ll have to if they choose not to. They may enjoy what they’re doing. They can do it without the stress and pressures of having to depend on insurance companies and fighting with the clerks and small offices located someplace else that are telling you how to treat your patients.

It changes things a lot when you can work because you want to instead of because you have to. Could you tell us a few of those steps if somebody wants to be a passive investor, but they have that busy practice? It’s like you’re thinking, “How in the world could I ever own any real estate?” Could you lay out some of those steps for us?

You have to sit down and decide what you want. Lifestyle investing is a term we didn’t come up with. It is a term that describes figuring out what you want to do and invest to help you accomplish that. Multi-family real estate and apartment complexes, especially in the commercial realm, they have a great way to make a great income. When you take that and you combine that with a full-time job, sometimes that’s hard. You don’t want to be up at 2:00 AM plumbing toilets or tenants calling you. Real estate syndication provides a passive opportunity for investors to get involved with real estate and not have to worry about trash, tenants and toilets at 3:00 AM. That’s probably the biggest step in understanding real estate syndication and pooling resources with other like-minded investors and taking down larger assets so that you can capture the value of the commercial multi-family investments.

Busy professionals are thinking about what they want. What are some common things that they are going to need to consider when they’re trying to figure this out to get started?

RES 223 | Passive Investing
Passive Investing: If you’re going to go with multi-family, then you’ve got to figure out where you want to invest and talk to a syndicator. If you want to invest with a syndicator, you want to do it yourself.

 

Take single-family rentals versus 100-unit apartment complex. You don’t have time to manage either one, quite frankly. You don’t want to be up late trying to deal with problems from a tenant. When you have a 100-unit apartment complex, it produces enough income that it underwrites the salary of a professional property manager. A professional property manager can be hired to come in and take all that hassle away. They’ll have a leasing agent and people that take care of all the mechanical aspects of the property. The only thing you have to do is manage the manager. That can be done during normal office hours. That can be done in leisure time. That’s if you’re a syndicator. If you’re not a syndicator, it’s even more passive because all you do is you invest your money and you sit back. On a quarterly basis, you’re going to take a look at what your investment produced. You’re going to look at reports from your syndicator. This is taking advantage of the wealth building opportunity that multi-family apartments have, but you’re not getting all the downside associated with it so you can continue your lifestyle.

You can continue running your practice then take that money and put it into a hard asset. I’ll tell you a quick little side story. What got me interested in this a number of years back was I was working with patients during the day. I walked in and there was a guy sitting on my exam table. He had tears coming down his face. He was obviously in a great deal of distress. I thought he had back pain or neck pain. I thought he’s in a lot of trouble there, but that wasn’t it at all. In fact, he said, “What am I going to do Dr. Robbins?”

I said, “I don’t know. Tell me what’s wrong?” This was a couple of days after the big stock market crash. He said, “I put all my retirement funds in the stock market.” I was like, “I’m trained well how to take care of back and neck pain, but this is not my specialty.” We talked about it a little bit. It turned out he had taken his company stock, transferred it over, put it in there and it dropped by 40% or 50% overnight in a couple of days. I didn’t want to be in his position. I didn’t want to be sitting on some doctor’s exam table somewhere talking about how I had worked my entire life and half of it disappeared overnight because that was invested in the stock market.

That’s what got me most attracted to this asset class where you can own a physical building. You can go visit your property anytime you want. If you’re an investor, whether it’s syndication or you own your own place, you can go and knock on the doors. You’ve got something. If the stock market crashes, people still need a place to live. The industry likes the term evergreen investment. There’s always a demand for housing as long as people like to have roofs over their heads. I told that story in my book, but that’s what got me interested in this field the most.

Our audience, you’ve convinced them. They know that they want to invest in large apartment communities, multi-family. What is the next step that we should be thinking about as a busy professional to help generate that passive wealth?

[bctt tweet=”The investor who likes risk wants to see appreciation and growth down the road.” via=”no”]

There are different asset classes, but multi-family seems to be the one that I like, that and self-storage. If you’re going to go with multi-family, you’ve got to figure out where you want to invest. You’ve got to sit down and talk to a syndicator. If you want to invest with a syndicator, you want to do it yourself. You want to go for a larger asset. You want to go for a smaller asset. You’ve got to walk through all those steps. Finding somebody who can trust, if you’re going to invest with a syndicator, that’s incredibly important.

You want to see somebody’s track record. You want to be comfortable with them as a person because you’re going to be working with them for a while. They’re going to be managing your investments. You want to make sure that they have a great communication system. They have a decent team around them. They understand the asset category. They understand how to find value add assets that they can improve and create wealth for themselves and for you as an investor. That’s critically important, finding the syndicator if you’re going to go that route.

If I’m that busy professional, “I want to do this, I want to own that real estate. I love this model,” how do I know that that’s somebody I want to work with or what should I be asking?

It’s a lot of questions. The first one, I would look at is track record. I would talk with them, “What have you done so far? What are you looking at currently? Give me your criteria for choosing a submarket to invest in?” First of all, if you look at the United States, you’re going to look at where jobs are going. You’re going to look at where growth is happening. You’re going to want to be right in the epicenter of those things that are happening. Buffalo used to be a market where everybody would joke about how the last person out turn the lights off because so many people were leaving.

I understand this undergoing renewal now. Many years ago, you probably didn’t want to be there. See if the syndicator understands those concepts if he does his research when it comes to looking at properties and looking where they’re located. I would also then quiz them, “Tell me your process. Send me some information. Let’s look at what you do to vet the market, breaking it down to the submarket and even to the neighborhood. Once you find a piece of property that you’re interested in, what’s the process you go through there? What is your due diligence? Do you have checklists? Do you have guides? Do you have help? How do you vet the physical plant of a property that you’re going to look at?”

RES 223 | Passive Investing
Passive Investing: Multi-family is a great deal because if you can find an asset, especially an off-market asset, then you have a chance to turn a great profit.

 

I would walk through them on those steps. I think if you’re going to get a pretty good understanding of their capabilities just from asking those questions. The next thing is I would ask, “Tell me about your game plan? Are you a buy and hold investor? Do you buy these as a syndicator? Do you buy these and hold onto them for twenty years or do you flip them in three years, five years, seven years? Tell me what your time horizons are.” You will want to see if your personal goals are going to match up with that syndicator. If you want to hold onto this for twenty years and he wants to sell in three, you might be the right guy, but maybe this particular asset may not be the right one to jump in with them on.

You want to make sure that you’re both working together and not working in different directions. Those three areas are probably the most important. I would even ask, “Do you look at value-add properties? Do you look at Class A, Class B, Class C? Are you looking for cashflow or are you looking for appreciation?” The investor who likes risk, they want to see appreciation, they want to see growth down the road. Whereas somebody who may be a little further along in their investing close to retirement, they might want a stable cashflow asset. Those two things when you’re looking at planning are pretty important as well. Those are all questions I would be asking.

That’s definitely some stuff you need to know if you’re investing with someone as a passive investor. Let’s turn the tables a little bit, Brian. Let’s be on the syndicator side working with that busy professional. How do I prepare myself the best to be able to be ready for those questions? How to keep nurturing that relationship?

You don’t want to work with everybody. I’ve found that out as a syndicator. The person who wants to get into this asset class or investment has to have the understanding that number one, this is not a liquid investment. You’re not going to turn around and if you need to get out, you’re not going to be able to sell it. If you need that liquidity, go to the stock market, because you can do that in the stock market. That’s not the case here. Like any piece of property, it takes time to turn a piece of property around. When you’re investing with 63 investors, not everybody wants to sell at the same time.

It’s going to be a group decision made by your syndicator. As long as you’re okay with that five or seven or ten-year time horizon and then that’s great, but if I’m talking to a potential investor and he says, “No, I want to be out in a year,” that’s not going to work with the direction we’re going. The next question, we look at it as to see from an equally yoked standpoint, “Are you a person who is thinking about this more like gambling? Do you want to roll the dice and we’ll see how it comes out? Are you looking more for that stable long-term return?” We wouldn’t want to work with somebody who has more of that gambler’s mindset. If somebody needs to score a big hit and that’s the only way they can be happy, that’s probably not what we’re going to suggest for them to get into this area anyway, because we know what the returns are typically.

[bctt tweet=”With investors’ expectations, live by the philosophy: underpromise and over-perform.” via=”no”]

We can create returns, but they’re not going to be hitting a home run. We like to get singles and doubles, occasionally a triple. It’s consistency. That’s the person that we look for when we’re going to work with an investor. The last thing is you don’t want somebody who’s going to call you and check on their investment every single day. It’s no problem. They can call anytime they want. It’s this interview on both sides of the equation. If you’re interviewing an investor to see if you’re going to work well, it takes them six months to make a decision on what they invest with you. They call you every single day. I’m going to tell you that’s how they’re going to be once they invest.

You have to decide. If you want that much of a handholding, that’s what you’re going to get. You always want to provide as much information as possible, but everybody needs to be on the same page, both the investors and the syndicators. The expectations are realistic. In my medical business, our philosophy is to under promise and over perform. We want to do that with an investor. Understanding their expectations will tell us whether we can deliver on those expectations, so it’s important to find that out.

Brian, what’s been the hardest part of the syndication journey for you so far?

The hardest part is maybe some of the background legal work. I’m not an attorney by trade. I didn’t stay at the Holiday Inn. No, I can’t pose as an attorney. It’s working through all the legal ease and all of that and making sure we’re 100%, we don’t like anything gray. We want to be completely black and white. It’s not right up my area of expertise, that part for me has always been the part where I have to lean heavily on our attorneys and those people to do the legal work. The easy part is the asset evaluation. That’s the part that comes naturally since I’ve done a fair amount of them in the past. The legal ease is probably the hard part for me.

If you could go back and talk to yourself when you were starting the syndication business or journey, what would be something you would make sure that you knew or that you could tell yourself?

First of all, I’d tell myself to start at a much younger age. We jumped in a few years back. It was right in the middle of this overheated cycle with multi-family being overpriced. If I caught it a few years earlier, it would’ve been a completely different outcome. In general, I know the power of investing in real estate. If I can go back and tell my 22-year-old self, I might not have gone to medical school. Who knows?

What is your buying criteria now? What are you looking for?

We’ve actually shifted some of our efforts towards self-storage because multi-family is so overpriced for the most part. Everybody and their brother knows about multi-family. It is a great deal and knows that if they can find an asset, especially in the off-market asset, then they have a chance to turn a great profit. There is a lot of money chasing multi-family deals, everything from 1031 exchange money to foreign money. We spent the last few years looking at deals. We’re not going to overpay with our investor’s money. We are going to find a deal that works. We only invested in finding a handful of deals. The multi-family space only knocked down one that made a lot of sense. When you say buying criteria, the criteria has to be that it makes financial sense. We look at different deals and we’re looking more at self-storage, but each asset class has its cycle timing. We’re not giving up on multi-family by any means. Self-storage has a little less froth on the market. There are not as many huge players and self-storage as it seems like there is in multi-family.

What’s the number one thing that’s contributed to your success?

The ability to get in and get our hands dirty, and not be afraid to dig deep in an asset both from the financial side and looking at their numbers to the physical evaluation, the due diligence side and getting in crawl spaces. It’s being able to see potential in a value-add property that some people might not see. Between getting our hands dirty and being able to see that value-add component to it and seeing what a rundown asset can look like after it’s been rehabbed. I think those are the two things that are probably our strengths.

I’d like to ask every guest, how do you like to give back? I know that’s a big part possibly of your why as well. Tell the audience how they can get in touch with you and learn more about your business, but also tell them about how you give back, Brian.

To get in touch with me, Brian@WealthGenCapital.com. That’s the easiest place to get in contact with me, but to give back plays a big part for us. We have ten kids, but eight of those were adopted. We adopted a large sibling group of Russian orphans. We’ve adopted seven kids at once. It’s drawn our hearts in that direction. We made a good living before we got involved with real estate. We got in real estate to hopefully help us fund the startup. One of our life goals is to start up a couple of orphanages. There are so many kids around the world that are displaced. They don’t have a place to go. There’s not a safe place to learn, to be nurtured and to be raised. That’s our purpose with being in the real estate space. It’s to be able to generate income to do that. We hope to be able to get our first one going and we’re certainly into planning.

That’s close to our heart as well. It’s an amazing adoption story from the Robbins’ family. I hope as an audience, you get to know that. Brian, thank you again so much for being on the show, for your expertise and experience sharing that with the audience. I also hope the audience go to Life Bridge Capital and connect with me. I’d love to help you any way I can and have that conversation with you. Go to the Facebook group, The Real Estate Syndication Show so we can all learn from experts like Brian and grow our businesses together. I hope you are sharing the show. I would greatly appreciate it.

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About Brian Robbins

RES 223 | Passive InvestingBefore entering the commercial real estate investment arena, Dr. Robbins owned a number of companies including multiple medical practices, a coffee shop, a 1,500 member gym, and a number of real estate investments. These real estate investments included a small apartment complex, a 32,000 square foot retail shopping center which houses his medical practice, and a number of single-family properties. Dr. Brian Robbins is the author of Done! The Professional’s Guide to Double-Digit Returns, Multi-Generational Wealth, and a Worry-Free Retirement (2017). Brian has been a featured guest on various real estate focused podcasts and is a regular author for Bigger Pockets.

Dr. Robbins and two partners started Wellings Capital in 2014 with a focus on class B value-add multifamily investments. After spending the better part of 3 years looking for assets that weren’t overpriced, in December of 2017 Wellings was finally able to purchase a 125-door townhome community in Lexington, Ky.  

Recognizing the multifamily space was just way too overheated Wellings turned their attention to self-storage. Wellings participated in the purchase of two self-storage assets in Bradenton Florida in 2018.

Deciding to go a different direction Dr. Robbins sold his shares in Wellings and started WealthGen Capital in early 2019.  WealthGen is a boutique real estate investment firm that focuses on serving the needs of doctors, dentists, veterinarians, chiropractors, attorneys and other professionals.   

The Millionaire Land Barons Club, a division of WealthGen Capital, helps like-minded professionals pool their resources to acquire growth-oriented commercial real estate and Dr. Robbins personally invests alongside his clients in each project.

He is now fully committed to helping this group of high performers reach their financial goals using WealthGen Capital’s wealth generation platform.

Dr. Robbins and his wife Anita live on a farm in Central Virginia where they have raised 10 children including 8 that were adopted. They are passionate about adoption and hope to one day use commercial real estate to help them underwrite the cost of starting an orphanage.

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