RES 231 | Limiting Beliefs In Real Estate

 

What is holding you back from investing in real estate and achieving a six to seven-figure success in a short period? There are so much limiting beliefs that have been prevalent in the real estate arena that results to investors soaking all of it in and shying away from going all in on one thing. Antoine Martel, the co-owner of MartelTurnkey Company, trumps all of those limiting beliefs and shows you how to do it like a pro. At a young age of 23, he has been crushing it in real estate. He built a rental property portfolio with over $5M in assets, is well-versed in underwriting and analyzing commercial development deals, and owned a Turnkey company that sells 100 homes a year. Antoine recounts how he got started in real estate and shares the best and quickest way to educate yourself on real estate and start raising capital with zero experience.

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Trumping Limiting Beliefs In Real Estate with Antoine Martel

Our guest is Antoine Martel. Thanks for being on the show, Antoine.

Thanks for having me, Whitney.

I’m excited to have Antoine on the show. He has a turnkey company that sells 100 homes a year and a few markets in the Midwest. He bought a twenty-unit apartment building. He’s now looking to syndicate larger buildings. One big reason why I’m excited to have him on the show is he’s 23 years old and he is crushing it in real estate. He’s also been very successful in raising capital. I want him to help us to eliminate all these limiting beliefs of age and the lack of experience and all those things. Antoine, thanks again for being on the show. Give the readers a little more about who you are and what your focus is at the moment.

Thanks for the introduction. It’s pretty much what I do. I started in the business in the residential side of things. I started the company while I was in college. I wanted to grow a rental property portfolio for my family. I started doing that for the first year. We started selling properties out of our portfolio to friends and family who were looking to get started in real estate. They want to buy properties in the Midwest and they only had $15,000 or $20,000 to get into real estate and didn’t know how. I started selling properties out of our portfolio, giving them financing, property management and the whole nine yards. That’s how the turnkey company started. In 2018, we did 60 projects and in 2019 we’re on track to do over 100 projects. That’s what my experience has been with real estate. In 2018, we started to see personally that multifamily was also a great option to another facet of real estate, but also another one that we thought we could handle and one that we can understand. We started looking for apartment buildings and personally, as a family, we bought a twenty-unit apartment building in Memphis, Tennessee in December.

Where are you located?

I’m in Los Angeles and then the rest of my family is in San Francisco, Bay Area.

You’re buying the turnkey properties all over the country or are there some specific places?

Specific markets that we’re in and that we’ve found are the best markets for cashflow, and also the legal side of things, evictions, tenant and landlord friendly states. Those places that we’re investing in are Memphis, Cleveland, Birmingham and St. Louis.

The twenty units you’ve found in Memphis you said as well?

In Memphis, yeah, because we knew the market and we knew the neighborhoods. We have boots on the ground, contractors ready to go and people ask me too like, “Where are you looking for multifamily?” The same markets that I already have my boots on the ground. As soon as I get a deal coming through, I know where the deal is. I can have my team go through property management. They can tell me what they can rent the units out for, so I have the leverage.

Not only did you start this while you were in college and you’ve grown it very fast, but you’re also doing it out of state. That’s another one of those limiting beliefs. We’ve got to do some local stuff and get good at this before we go to another market, especially that far away. It’s not like you’re within driving distance.

Not even close. That was one of the things too when I first learned about real estate, flipping houses and all that stuff. Everybody wants to buy the house next door, but the reality is we only had $40,000 or $50,000 in the bank. How are we going to buy next door? We can’t unless we go raise money and put all of our eggs in one basket and hope that project is a success. We have no real estate experience. For me, it made sense to buy a property all cash out of state, renovate it and then do a cash-out refinance. If everything loses or crumbles to the ground, then I’m just out $40,000 or $50,000. I’m going to make money back eventually. Buying a house here in LA and making a 4% return was not interesting to me. If that project goes south, then my parents’ house is on the line. You’re signing your life away on that deal. For me, it made sense. I also talked to a ton of people who are already doing it, which got me way more comfortable with investing out of state. I learned how they were doing it and how they were setting up the teams. Once you go out there and find people on the ground, like property management companies who have been doing it for 30 years, it helps to calm those nerves and make that first investment.

How did you find these people that were already doing it? How did you gain your confidence to be able to go and scale this fast and do these many deals that fast?

Follow-up is the key to make clients say yes. Click To Tweet

First of all, we were finding the markets. We started in Memphis, Tennessee. The numbers make sense for residential. There were a couple of neighborhoods that made even more sense for cashflow and close to jobs like right next to FedEx headquarters and stuff like that. Good blue-collar workforce and the jobs were there like a Fortune 500 company, which is good too. First is finding the market, then finding those teams on the ground. I knew that I was going to need a long-term partner and what I mean by that is a property management company who’s going to take care of those properties from the time I buy it to 30 years down the line when the mortgage is paid off. I wanted to find somebody on the ground who had a property management company and that was my first line of attack.

I went on and googled, “Property management company Memphis,” and called every single company that came up. 70% of them are not going to answer. The other 30%, half of those people are not going to give you the right answers, they’re too big and they don’t have the time for you. The more medium-sized property management companies are the ones that I started targeting. They manage anywhere from 200 to 800 doors and they were looking to grow their company. I shared with them what I was trying to do even though I had never done anything in real estate before. It was, “I want to buy properties in Memphis. I want to renovate them. I want you to manage them. I want to do a cash-out refinance and keep doing it over and over.” I sold them on the dream. “I want to end up buying one house a month and keep using you for property management, but you have to help me get the property from unlivable to livable so that you can make money.” It was a no-brainer for those smaller companies because they want to grow their company.

What about even before this? Did you have a mentor or somebody that you had talked to some people that were already doing it? Who did you lean on when you were buying that first house or two that’s so far away?

Podcasts and networking on BiggerPockets. I would have coffee with anybody who wanted to talk about real estate in California and LA. I would take a bunch of people to coffee. There wasn’t any mentor that I had specifically for the turnkey side. It was just me, my dad and my brother batting ideas off of each other for a couple of years before we made that first investment. We were like, “Let’s do that now or never. We need to get our money invested and get our money working.”

You’re committed and you’re getting started. I want you to elaborate on how you started raising capital with no experience. You haven’t had many years’ of experience in the business and done all these deals and all this track record to show. It’s what everybody says. How did you start raising capital and what were those conversations like? What kind of response? I would like for us to get into that.

What made it easier for me to raise money was getting that first deal completed. The first deal was funded by my father. My dad had $50,000 saved up and we bought the house for $40,000. We renovated it for $10,000 then it was worth $60,000 after, cash-out refinance and pulled the money out. With that deal, I made a one-page case study, before and after photos, before and after numbers, what we expected will happen. It was a short little case study, three pages I think including the photos. I would go and network with people in LA. I kept going to network with people through BiggerPockets, take them to coffee, lunch or whatever the case may be, and learn about what they were doing or what they were trying to do.

I would bring out the case study. They don’t need to know that it’s deal number one but, “Here’s the deal that I recently did out of state. I’m looking to do more. Here’s the deal that I have under contract or here’s another deal that’s down the street that I’m looking to do as well. Do you want to partner up on it? I’ll pay you back your money when I do a refinance in a few months or whatever the case is.” After doing dozens and dozens of those, I started to build a list of people in LA who wanted to invest in real estate. They didn’t have the time but they had the cash in the bank account. All I was looking for was $40,000 to $50,000 investment. Through networking and sharing what I was doing and what was working for me, people started to come on board, even if they were completely against out of state investing. It just took time and it was a numbers game.

You don’t have a track record and you’re so young and all these things. How did you battle some of those things that people throw at you? I heard it so much myself like, “We can’t start with a large apartment property. You’ve got to start with single-family.” How did you talk through some of that?

Almost every investor that I met with would ask at the end of the conversation, “How old are you?” I would tell them, “I’m nineteen years old or I’m twenty years old.” People were more amazed because of how much knowledge I had and how much homework I put in before sitting down at that table. If you sit down at that networking event, at that coffee table, exchanging business cards or whatever the case may be, and you don’t know what you’re talking about. You don’t know how to answer their questions, or to rebut what they’re saying against investing out of state, if you don’t know all the pain points, then it doesn’t matter if you’re twenty years old or if you’re 50 or 60 years old. If you don’t know how to answer those questions and how to come back at their rebuttals of why they don’t want to invest with you, then you’re not going to have success either way. I put a lot of preparation into studying about real estate investing, out of state investing and my markets. It comes down to practice and I was networking almost every single day, whether it was one coffee meeting or something like that. After you do 100 of those meetings, you get to know why people do not want to invest and what their questions are. You are able to tweak over time what the best way is to answer those questions.

You make enough mistakes and then you get better. You improve and improve and you figure out what works and the common questions or the reasons why somebody may not want to invest. If you hadn’t had those first few conversations, you would never have gotten to that 100th conversation or your confidence in your ability to answer those questions now.

You have to go with the mindset of the first twenty network coffees you’re going to have are going to be terrible. It’s fine. My whole thing too was I’m not going to sell on anybody like, “Invest with me.” All I did in those coffee meetings was to tell people what I’m up to. “What have you been doing in real estate, Whitney?” You tell me your whole story and then you ask me what I’ve been doing. I was sharing with them, “I just completed a project in Memphis. I bought this single-family home, renovated it, rented it out, cash-out refinance and I’ve got all my money out.” The questions start pouring in and you’re not selling them on anything. You’re explaining to them your whole process and how the deal went. You could even walk away from that coffee meeting and email them a few days later, “Great meeting up with you. I have another deal I’m looking to do right next door. Do you have any interest in working together?” That can be the start of building that investment relationship together. Going and sharing that information freely without the sale or the pitch got people even more interested because now we are friends. We are sharing information about investing instead of me being a salesman.

That’s so valuable and I’m glad you brought that up. The more salesy you are, it felt like you’re pushing them away. They can see right through that. You talked about meeting with someone almost every day and I like that drive and just pushing, “Who can I meet with? Who can I tell my story to?” Even if they don’t invest, you’re getting better. You’re improving the way you’re answering these questions and talking about what you’re doing. How did you meet enough people to be able to schedule these calls every day? How did you find these people?

I will do a couple of band of BiggerPockets accounts. I was scaling out of their messaging platform. I would go and I would type in my ZIP code. I would type in people who are interested in flipping houses or rental properties. You can do this all through BiggerPockets, that networking tab and then you search through there. Get a Pro account, it’s $30 even if you do it for a month, just do it. I would message as many people as I possibly could, “My name is Antoine Martel. I’m a real estate investor but I invest out of state. I wanted to see if you want to reach out. I wanted to see if you want to get together for a coffee sometime. I’d love to chat about real estate.” Nothing salesy, “This is what I’m doing. Do you want to get together?” They have a messaging limit of ten every hour, then every single hour I would go back until you’re maxed out.

RES 231 | Limiting Beliefs In Real Estate

Limiting Beliefs In Real Estate: It doesn’t matter if you’re 20 or 60 years old. If you don’t know how to answer questions from investors and how to come back at their rebuttals, you’re not going to have success either way.

Are you focusing on people that are local to you at that time?

Just local because it was very early on and my mentality too was even if somebody wants to flip houses in LA, 80% of those people in BiggerPockets have never invested in real estate. They have this fantasy of flipping houses. Everybody does, of flipping houses in LA, but many of them have probably never even invested in real estate before. If I come to them with, “You can get in real estate for $50,000 and invest with me and make a 20% return,” then people are like, “How did you do that?” The questions start pouring in and then you add that value and knowledge to them. Now you’re a resource for them. You’re the out of state investing guy for them. For me, it was anybody with a pulse who is interested in real estate is somebody that I was meeting up with.

What’s maybe a habit that you developed or one way that you educated yourself quickly?

I would say through listening to podcasts is probably the best and quickest way. Books are good, it just took way too long and there was a lot of fluff in it. Listening to quick little 30-minute podcasts and you get the key points. I would say going through a deal and putting in the time. It took me a couple of years to make my first investment ever. That’s a couple of years of knowledge that I had in my brain. I had the experience of doing that one deal was all the information I needed to go to those meetings and talk about it.

You have this growing business and this turnkey business. You’re growing it really fast. Why multifamily now?

We have always heard that multifamily is the way to go from all the big syndicators and stuff like that. We decided, “Let’s take a look at this space. Let’s see what the pros and cons are.” If you have the right property management company, the pro is going to be the scale. Instead of having one tenant under one roof, you have twenty tenants under one roof. Your operating expenses go down a tiny bit. You’re able to scale and you also can get better financing if the deal is big enough. We started researching and doing our homework on those things and then I started reaching out to brokers and I was like, “If I find a good multifamily project that can beat the returns of the residential side or at least match it, then that’s definitely something to pursue and to look more into.” We thought too it’s managing one project now under one roof, at one property address instead of twenty projects in twenty different neighborhoods in twenty different addresses. The scaling up of both the renovation, the tenants and collecting rents made sense to us. That’s when I started reaching out to brokers, networking with brokers and trying to get some deals. I started analyzing deal after deal until I got good at it. A few months later, I found a deal that finally worked and put it under contract.

Do you have a tool that you created? What are you using to analyze these multifamily deals now?

My dad is a numbers guy. He created his own tool. Back when I was in college, I was working for a commercial real estate developer here in LA for a six-month period. He had some tool that I used and then I had my dad edit it and make it more for multifamily. For the readers, there are plenty of tools online that you can pay $50 for a calculator and it will be worth it.

What was it about this twenty-unit that you said, “This is one we need to pursue?” How did you find it?

I built a list of brokers in all my markets. Every two weeks for a few months straight, I was emailing these people or calling them, “My name is Antoine Martel. I’m a real estate investor looking to buy apartment buildings in these neighborhoods for this price range, this amount of units and value add.” Every couple of weeks I would email them and keep showing them my criteria, “If you have anything that comes up, let me know. I’d love to buy it.” A few months later, I emailed somebody on a Thursday and they said, “I just got a deal like this. It fits perfectly for your criteria.”

What were your criteria?

Over twenty units, less than $3 million, 7% to 8% cap rate, B or C-class neighborhood and value add.

 They called you back and said, “I just found a property that fits your criteria,” go ahead.

Things are going to get done incorrectly and that's fine; those people that you hire or bring on are going to eventually learn. Click To Tweet

Friday morning, they sent me an email. It’s three sentences and five photos of the exterior. It was like, “Here’s a property. It’s twenty units, all one-bedroom, one-bath units, renting out for $550 per month on average. The property will be sold with the new roof and here are the operating expenses, whatever it was. You need to make an offer before they give you any financials.” I was like, “I have to submit an LOI.” I submitted my LOI and I said, “The contract doesn’t begin until I receive all the financials and due diligence doesn’t begin until I get all these financials. You better have them or else I’m not putting any earnest money. I’m going to walk away.” I did that and it turns out that they were keeping records and they did have financial. We put it under contract and a couple of weeks later, we got all the financials. We sent that to the lender and then moved forward.

You had no financials but went ahead and put in an LOI anyway. Even that would have turned away most people.

I learned that from the residential space too. As long as you set up your contract in the right way, even if I have absolutely nothing and I just know the unit count and the price they’re looking for like $50,000 per unit and the market rent was $750, there are a lot of variables that you’re working with. The unit price compared to the rent in that neighborhood made sense to me. With the residential space too, I’m placing three offers every single day. You get in the habit where placing offers is not scary anymore. For me, placing the offer even if I did get it under contract and then I realized I was way over what I should be buying it at, I knew I had 30 days to come up with something to back out. I knew I could get my earnest money. I knew that if they send me the financials, I don’t even need to send the earnest money. I can wait to see the financials, do a one-hour run with the numbers and see what it looks like and then I can back out and say, “You’re way off from what you told me.” With time, you get comfortable placing those offers. The more offers you place, the better chance you have of getting a deal.

I like your drive and you’re even talking about you didn’t just find a couple of brokers, you made a list of brokers in all these markets, and then you’re contacting them every couple of weeks.

Follow-up is the key. Even with the turnkey space, we have our warm leads on seven-day loops. Every week, we’re following up with those leads. Even though they may not have replied to the last five emails, we continue emailing them until they say yes or no.

Those sellers give you no financials and expect you to make an offer. You follow through and it turns out you get the deal.

All those buyers that passed on a deal passed on an 8% cap in Memphis, Tennessee in an up and coming B-class neighborhood.

Somebody that’s not next door bought it many states away. Congratulations. What’s been the most difficult thing or maybe something that surprised you about this multifamily deal you didn’t expect?

When we bought the property, we were expecting to increase the rents from $550 to $725. It turns out that we spent a little bit more on the renovation. We put stainless steel. We put granite countertops, the whole nine yards. The place looks like I would move in there. We put it on the market and we were looking at the comps in the area after we had taken the professional photos. It looks really good. Instead of $725, we put it up for $850. The first weekend, we had both of the units that we renovated, rented out on one-year leases. At the end of the day, we brought the rents from $550 to $850, a 60% increase in the rents. That was one of the good surprises.

One of the bad surprises that we had was the special contractors are the ones that I don’t use a lot on the residential side. My GC is terrific. He did the whole exterior renovation, did all the units, etc. Finding somebody to build a staircase was the hardest thing in the world because the staircase they had going up into the second storey was completely falling apart and falling down. That’s the hardest thing and we’re still trying to replace the staircase, all the handrails and all that stuff. It’s way more challenging than I thought to find those special contractors to do the special jobs on the property.

Did you raise capital for this twenty-unit deal?

No, this was done with our own capital, the capital from the turnkey business. The reason why I did it that way was the same mentality as starting the turnkey company. I do the first deal myself. I have made a case study. I created a case study and then push the case study out to people for free. People can look at it but then, with the information and value that I’m adding to other people, they are going to trust me and know my business model and know that I had a successful deal. When I go and ask for the syndication next time, I’m going to already have a rapport with all of these people. That’s what the philosophy was. I’m looking at doing some bigger buildings and looking to syndicate those with some of the investors that have the case study.

You’re going to have a great case study on that apartment building. That’s for sure. What’s after this? What are you looking for next? Are you going to keep the single-family turnkey going while also trying to pursue larger apartment buildings? Are you going to stay around twenty units? What’s your plan?

RES 231 | Limiting Beliefs In Real Estate

Limiting Beliefs In Real Estate: The more offers you place, the better chance you have of getting a deal.

My goal was to do 100 single-family homes for the turnkey company and then do 100 units of apartment buildings in syndication or doing it ourselves. We’ve been looking all year for multifamily. As you know, it’s very hard to find any good deals. We’re still looking a few years out. I would like to keep the turnkey company. It’s a great way for people to get started and get their feet wet in real estate investing for $20,000 or less, and to have control and learn how real estate investing works. They don’t have to invest in turnkey forever, but they can eventually scale up and it could be their foot in the door to the real estate investing world. Personally, I’m also looking to get into bigger apartment buildings. I’d like to scale up in the next few years to do 500-unit or 300-unit apartment buildings and syndicate them and pull investors together to do that as well.

What’s been the most important thing to grow your business as fast as you have? What’s something that you’ve had to implement or what’s something maybe that you’re even implementing now to go from 62 to 100?

It was spending the money on upgrading your systems and creating systems for things like follow-up and sending out contracts, then also hiring the right people and delegating. Not being scared of delegating or things being done incorrectly. Things are going to get done incorrectly and that’s fine, but those people that you hire or bring on are going to learn eventually. We hired at the beginning of the year our sales manager for MartelTurnkey. She’s selling all the properties. All the clients and leads get passed off to her. She’s managing that. I hired my brother full-time and he’s managing all the acquisition side for the business. I have all these other people who are now working to make MartelTurnkey run on its own. It takes money and it’s very scary to hire that first, second or third employee to spend that much money every single month. I think that’s helped us scale and that’s going to help us continue to scale into the future. To do 500 homes a year with MartelTurnkey, it’s going to take a team to do so.

You’ve got to scale your systems and your internal, no doubt. What’s the one thing that’s contributed to your success?

I would say my parents’ belief in me and taking the risk on me as a 21, 22-year-old college graduate and letting me use their money. Trusting and believing the whole process that I had come up with of doing that burst strategy out of state and backing me along the way. Right out of college, they covered my rental expense for a couple of months. I told them, “I’m going to try to figure this out. If I don’t, I’ll move home but I need money to feed myself for the first few months.” They give me a six-month timeframe for me to figure it out. They always backed me since I was a ten-year-old starting company. Their backing of me since I was a little kid has probably been the biggest contributing factor. If I didn’t have that and didn’t have somebody who would believe in me, I’d probably have a job right now.

That’s a testimony to other parents and to me as well, these little ones and that’s awesome. How do you like to give back?

Giving back is something that I’m trying to implement. We haven’t done so much of it the last couple of years. I do like to volunteer and sometimes I will go to Los Angeles like we had that big fire in Los Angeles. There’s an organization that I’d go with and we replant trees and clean up all the stuff from the fire, etc.

I’m thrilled to have you on the show. You’ve provided lots of great content, very valuable and I appreciate the value you’ve added to the readers and to me. Tell them how they can get in touch with you.

If you want to get in touch with me, I’m on Instagram a lot. My Instagram is @MartelAntoine. You can also head over to my website. All my contact info and my email are there. You can even schedule a phone call with me on my website. The website is MartelTurnkey.com.

Antoine, thank you so much for being on the show. I appreciate you and your time. I hope the readers will also go to Life Bridge Capital and connect with me. Go to the Facebook group, The Real Estate Syndication Show. We can all learn from experts like Antoine and grow our businesses together. I hope you’re sharing the show and learning every day. We will talk to each of you soon.

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 About Antoine Martel

RES 231 | Limiting Beliefs In Real EstateAntoine is 23 years old and has a turnkey company that sells 100 homes a year in a few markets in the midwest. He even bought a 20 unit apartment building last year, now looking to syndicate larger buildings.

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