WS784: Difficulties Raising Your First $1 Million with Joe Robert

Raising your first million can be tough, but with the right track record and a healthy network of investors, you’ll get to the finish line in good time. This is a lesson that Joe Robert learned during his years in the game and he joins us today to share more about his journey. In this episode, we talk to Joe about the many sides of real estate he is involved in, his approach to raising capital, the tax benefits of being a Puerto Rico resident, and a whole lot more!

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Joe started real estate in 2001 at the age of 19 and has invested in over 100 residential properties and 40 commercial properties since. He is also involved in note investing, having acquired over 2,800 residential mortgages over eight years. Our discussion with Joe begins with a story about how he got into the game, and he highlights the value of his experience in the contracting industry, his first purchase, and the challenges involved. He talks about the lessons he learned in his early 20s about being over-leveraged and then speaks to his approach to raising involving networking, having a good track record, and working with fewer investors who contribute larger sums of capital. After talking about how Joe wants to start his own family office, we move onto the tax benefits of residency in Puerto Rico, and he explains how he is exploiting these in his business. Wrapping up for the day, we talk to Joe about some of his favorite software, habits for self-discipline, and views on where real estate is heading in the next few months. Be sure to tune in to this episode for a ton of value provided by today’s great guest.

Key Points From This Episode:

  • An overview of Joe’s education and how he got into real estate at the age of 19.
  • What real estate Joe was involved in during his 20s and the lessons he learned about debt.
  • Investing in the Philadelphia area around 2010 and hearing about note investing.
  • How Joe did his first raise of one million dollars and the biggest challenges he faced.
  • The value of having previous experience for getting investors to trust you.
  • A system for raising money more easily by partnering with family offices
  • How deals are structured between Joe and his ‘whale’ partners.
  • The other sides of real estate Joe is involved in: Mortgage notes, being an LP, and more.
  • A deep dive into the tax benefits of living in Puerto Rico and how Joe is exploiting these.
  • One of the hardest parts of Joe’s syndication journey; acquiring a Puerto Rico deal.
  • Tips from Joe for how to avoid a downturn by conservatively underwriting deals.
  • Predictions for real estate in the coming years considering quantitative easing.
  • Lessons learned about over-leverage that have taught Joe his self-discipline.
  • Morning habits of Joe’s that keep him disciplined: Slaying dragons early.
  • How software has improved Joe’s business and which apps are his favorite.
  • Joe’s best source for meeting new investors and why he loves in-person meetings.
  • The number-one contributor to Joe’s success and how he likes to give back.

[bctt tweet=”To become a better real estate asset manager, I think it’s better to be knowledgeable about how things work on the construction side. — Joe Robert” username=”whitney_sewell”]

Links Mentioned in Today’s Episode:

Joe Robert



About Joe Robert

Joe grew up in the Philadelphia suburbs and has been a lifelong entrepreneur who started when it wasn’t cool. His start in the contracting industry as a teenager led him to start acquiring real estate at the age of 19, back in 2001. Over the last 19 years, he has invested in over 100 residential properties and 40 commercial properties. In 2011, one of his private investors led him to note investing, where he bought non-performing mortgages from hedge funds and banks. Joe got in at the right time and acquired over 2800 residential mortgages over the course of 8 years. His success in note investing created income and wealth for his investors, partners, and founders. Throughout the last decade, his fascination with minimizing his tax bill led the partners to start a retirement plan back in 2013 for his note company. The plan would ultimately invest in a loan portfolio and return great profits. From there he established multiple retirement accounts over the years and used them to diversify into alternative assets and continues to beat out the returns of Wall Street. In 2014, he decided to make the move to Puerto Rico and participate in certain tax benefits known as Act 22. He spent over 4 years there and was able to sell off his loan investment portfolio at the right time to maximize his gains. As all entrepreneurs, Joe has a desire to constantly learn and seek out trends. While residing in Puerto Rico he met some great people in the blockchain industry. These relationships started his investment into blockchain startups and crypto. He continues to expand his knowledge and investments into the sector.

Full Transcript


[0:00:00.0] ANNOUNCER Welcome to the Real Estate Syndication Show. Whether you are a seasoned investor or building a new real estate business, this is the show for you. Whitney Sewell talks to top experts in the business. Our goal is to help you master real estate syndication.

And now your host, Whitney Sewell.


[0:00:24.4] WS: This is your daily real estate syndication show. I’m your host Whitney Sewell. Today, our guest is Joe Robert, thanks for being on the show Joe.

[0:00:32.1] JR: Dude, I appreciate having me on this beautiful day.

[0:00:34.7] WS: Joe grew up in the Philadelphia suburbs and has been a lifelong entrepreneur who started in real estate in 2001 at the age of 19 and has invested in over 100 residential properties and 40 commercial properties. In 2011, one of his private investors led him to note investing where he bought non-performing mortgages from hedge funds and banks. Joe got in at the right time and acquired over 2,800 residential mortgages over the course of eight years.

In 2014, he decided to make the move to Puerto Rico and participate in certain tax benefits known as act 22. Joe, welcome to the show, just from our conversation, it’s interesting you know, all the things you’ve been able to accomplish in real estate and the syndication business, on the active side, the note business and as an LP. Looking forward to hearing a little more about your story and maybe even talking about moving to Puerto Rico as well.

Get us started a little bit about just who Joe is, getting to where you’re at now in real estate.

[0:01:36.4] JR: Well, I appreciate having me on again and you know, it all basically started I would say back in my teenage years. I started doing landscaping, just to make money in the neighborhood and so forth and you know, in high school, I didn’t really want to participate, I didn’t really want to be in school so I had the opportunity in 11th and 12th grade to be able to get out half days and be able to go to the technical school and so I chose construction. That gave me the ability to be able to not be in high school all day.

From that experience, that led me to take those skills and start contracting work and landscaping. That ultimately gave me experience to start acquiring real estate at 19. My first property that I purchased, I purchased outside of Philadelphia and I lived in that property and I fixed it up at the same time. I was able to take advantage of the tax benefits of living there for two years and exiting tax free which I recommend to everybody. I think it’s a great way to get started.

[0:02:39.1] WS: That was at 19?

[0:02:40.6] JR: Yes, correct.

[0:02:41.1] WS: How did you finance that property at 19?

[0:02:44.9] JR: Good I had money set aside that I earned from doing landscaping, contracting and I had gotten some borrowed money and assistance from my mom.

[0:02:54.2] WS: You hustled and made it happen is what it sounds like.

[0:02:56.1] JR: Correct. I think it’s that contracting experience and doing it yourself that allows you to be a better manager later on, you know what I mean? It’s kind of like the, as I said, the architect and the builder, the architect can draw all things but if they’re not familiar with how to build, sometimes it doesn’t line up.

Become a better real estate asset manager, I think it’s better to be knowledgeable about how things work on the construction side.

[0:03:20.6] WS: For sure. Okay, moving forward, okay, you did that property two years, you’ve sold it, what were you – an entrepreneur still at that time and still doing this house and then moving to your syndication business as well?

[0:03:35.6] JR: Yeah, correct. I would say you know, mostly, this is in my 20s so mostly in my 20s, I was only investing in residential properties. At that point, I kind of led, had my mom lead me and we started investing real estate in the outer banks. I mean, this is kind of before the whole time of the internet all exploding so you know, many people, you know, a lot of my friends were not investing in real estate so you didn’t have that type of network so I was investing real estate there, we did some small land subdivisions, we did some fix and flips.

Ultimately, you know the market changed in the 2000s and we had the big crash and so from that experience, I’ve learned a lot of lessons and that is don’t be over-leveraged and don’t have a lot of assets on your balance sheet that don’t produce cash flow to sufficiently cover the debt. Those lessons I learned in my 20s, I am very glad that that happened because I think we all as human beings learn from our own pain even if we listen to other people so I’m very grateful that I was able to go through that.

That ultimately led me to starting to invest in the Philadelphia area in the early – about 2010, 2011. It was a piece of property that one of my private lenders were lending me on that I heard about the note investing. I attended the meeting and started purchasing notes and then at that point, we decided to do our first official raise, I had to do a syndication at that point for buying or pull mortgage loans and our first raise was a million dollars and I think you know, it was very interesting to say the least.

[0:05:15.9] WS: How did that raise go, what are some details about that, you know, your first raise, had to be a million dollars, how did that go, what was the timeline and who were these investors?

[0:05:26.5] JR: All the investors that came in, they were all investors that we established relationships locally through the real estate meetups. I would say the biggest challenges of doing your first raise is usually if you don’t already have an existing network is actually establishing those connections and building a trust factor for period long enough that they feel comfortable to come in and invest with you.

You know locally, we always attended all the real estate meet, local meetings and then from there we’re able to establish relationships that ultimately led through the other raise that first million dollars but the other challenge we have is, I think it’s much easier to think it’s easy to raise that million dollars from the people and then when you actually go and do it, one of the biggest struggles is, it’s harder than you ever think.

[0:06:20.8] WS: Definitely. Especially in the beginning, what were a few of those challenges that you experienced, how did you overcome them?

[0:06:31.8] JR: I’d say, a few of the challenges that we mostly faced was the ability to actually be able to raise the full million dollars. I mean, that was really, I mean, we didn’t come from a background of high net worth relationships or family with lots of money so you know, it was just a matter of continuously attending the meetings for the period of a  year that took for us to raise that and presenting our story, presenting our case and you know, already have started doing the deals on the side prior to that, we were able to bring in those case studies and kind of present that to the investors so I think that’s always a strong area to come from is either have previous experience or partner with those where you could gain those case studies to present to future investors.

[0:07:14.7] WS: Great points right there. You’ve been establishing these relationships for a year, I just want the listeners to hear that you were hustling going to meetups, meeting these people, building these relationships but then also, it’s something where you’re often in the industry when you’re getting started is having that something to present to them, right? That case study like you talked about. This is what we’re planning to do, this is what it should look like, pretty similar to this, you know?

The one thing that’s guaranteed is that it won’t look exactly like what we have on paper, right? Ever. But this is pretty similar. Some great points there so did you get the million-dollars raised?

[0:07:49.0] JR: Yes, we did end up getting the million dollar raise and also, along the way, we met one in particular but a couple other capital partners that were able to later on bring a bigger piece of the pie to the deal and kind of do some partnership stuff. I think that kind of will go parlay the next thing is that when people are sometimes doing a syndication, I think they think about how many different people they could get or going very broad and kind of what has worked for us over the last 10 years is that sometimes having one or two whales, partners, and maybe you can look at it as family offices or a fund of funds, someone who specifically raises capital and partners with another operator.  I think is another great way to be able to bring the money together and execute on a deal.

It’s a lot less work rounding up a lot of checks versus one check and so beyond that one million dollar raised over the last 10 years, what we have done is strategically work with a couple of people where they were able to bring in the whole check size or three quarters of the check and it also bring operationally experience to the deal.

[0:09:03.5] WS: Speak to that just a little bit there in detail before we move on as far as the difference and just that relationship, you know, there’s many different things there, as far as working with a family office, you know, in a project and some of the ownership there or who has control, things like that versus you know, having a list of 20 investors.

[0:09:22.5] JR: Well, I guess that the 20 investors you have typically you’re going to have total control, right? I mean, you’re going to have total control of that operation. When you’re bringing in more of what we’ll call it a whale or a partner. I guess it depends on your structure but what has worked, what we have done is we are typically the sole manager but there’s like carve outs or something that kind of gives them insights into financials and it allows them to have visibility to everything and then if certain things are not hit or there are certain bad boy carve outs, right? We’ll call it.

That they have the ability to kind of take over that management operation roll.

[0:09:57.2] WS: Yeah, that’s awesome, I appreciate you speaking to that. It’s often questioned, you know, like when can we start working with family offices, should we even, but let’s move on just a little bit. I know your career is taking you a few different places in real estate industry. I know you grew the note buying or mortgage business, right?

You know, why – you grew that but now you moved in the syndication as well as far as multi-family, is that right? Or as an LP, I can’t remember.

[0:10:24.1] JR: Yeah, correct. I’m doing a little bit, a couple of different things currently at the moment. I mean, over the last year, I definitely got into a deal or so under as an LP, the reasons I see that is at the highest level, what I’m seeing across all areas in the world of business is basically companies are kind of becoming a private equity firm, right? They have their main business where they generate a lot of operating income and then they have areas that they can’t reach or they don’t have expertise in.

I think having an operating business but also having armory to participate in other deals gives you reach into other markets or into other operators that have deals that you could specifically select that have a higher return and that you believe that will do well.

[0:11:12.7] WS: Nice, tell me about like where you see yourself five years from now or 10 years from now as far – you had this progression, you know, you talk about how you got started and the million dollar raise and note buying business and now as an LP, you know, where’s Joe at five, 10 years from now?

[0:11:30.6] JR: Five, 10 years from now? The biggest, the main goal I have is kind of have two divisions, the real estate division where we syndicate or operate our own deals and then we also participate as an LP in deals and/or partner with certain operators where we could bring all the capital to the deal and have some kind of control over the deal and then I also have another side that we’ve been doing some venture investing in tech and have that arm where investment startups and so forth.

I mean, currently, I’m looking at example, a drone-based startup for real estate. I think what people are starting to see is that everything is going to come together as one, right? I mean, tech is playing out in real estate and C prop and all that and so it’s going to all become automated over the next 10, 20, 30 years. I think having an investment in both angles allows you to participate in all the markets.

[0:12:25.5] WS: Sounds like you want to become your own family office?

[0:12:27.3] JR: That’s kind of what I’m basically saying, right? I mean, that’s kind of what I’m basically saying, I think that’s – you know, in 10, 15 years, that allows my kids to participate, that would be great.

[0:12:40.9] WS: Yeah, that’s a great plan. Tell me a little bit about – I’ve heard, I met numerous people recently who have moved to Puerto Rico or have in the past, you know, for the tax benefits, could you speak to that a little bit because probably many listeners who are not familiar with that and why people would do that?

[0:13:00.3] JR: Well at the high level there is pretty much no what’s known as act 20 and 22 and 22 is an exemption of a capital gain income and that basically is off of most securities. So it actually brings your capital gain rate down to zero percent. So if you become a resident of Puerto Rico and live there for over a 183 days which is the residency test, the basic residency test, it allows you to participate in getting these tax decrease and the tax decrease allow you to participate in the 0% capital gain tax.

So an example would be if you buy, after you move there if you buy Apple stock and then it doubles you could sell that and there would be a 0% tax rate, right? No AMT, nothing owed to the US government. So depending on what business you’re in, it can be a great benefit. The other is Act 22 – or Act 20, I’m sorry is where you actually can source income down there and pay a 4% corporate tax rate. So you are basically living on Puerto Rico and you’re providing services from Puerto Rico to outside companies.

Or your companies on shore over the US. So an example could be maybe you are managing properties owned in the US and so you set up your property management division down there and so you source management things down there and that would be paid at the 4% tax rate. Now, if you are asking me about real estate State side, the sale of real estate State side is always taxed in the US, you know for any outside parties. So that part would not be considered under any capital gain extension or anything.

But if you are a mortgage and note investor and you are doing that passive activity that would be considered a capital gain. So if you buy and sell notes in Puerto Rico, you could qualify for the zero percent tax rate.

[0:14:54.6] WS: So the investments have to be made while living there?

[0:15:00.0] JR: So there’s two parts. If you move there and already own existing assets, you’re supposed to do basically a price discovery on about the day you move. So it is much easier to acquire those assets or securities after you move there because there is no price discovery but if you already owned existing, you’ll do that when you move there or you pro, some might tell you actually pro rate the income. So an example is if you own an asset for one year before the move.

And then you sell for one year after you pro rate 50% allocate it to the US federal return and 50% to the Puerto Rico.

[0:15:39.6] WS: Okay that makes complete sense. Yeah, I just wanted you to highlight that just a little bit because I’ve heard more and more people talk about moving down there for those benefits and I can see why they potentially want to do that. I am not sure it’s for me or for my family but –

[0:15:56.1] JR: That is I guess it’s the next thing. I mean people always ask me, I go, “Listen, I can’t answer it on a broad base because everyone in life has a different experience.” I have other couples that live there for a handful of years and they move back and I have one buddy that went back to California. You know he is paying like a 50% tax rate and he just wants the quality of life like that, he’s in California. His wife wanted and the accessible to amenities, hospitals and so forth and living out there.

So I would like to say that it doesn’t fit everybody. That is something of interest that they should always go down there and at least hangout for a month or two. I think there is a lot of great benefits and it depends on maybe your marriage or if you are single or whatever.

[0:16:39.7] WS: So Joe, what’s been some challenges or maybe even the hardest part of just this syndication journey for you?

[0:16:45.9] JR: I would say one of the biggest challenges I had was actually acquiring a deal on Puerto Rico maybe about five years ago. Being that we are newer to the market at that point, there is a lot of that. Well, I guess there still is but a lot of bad news being portrayed online and so forth about Zika and the economy blowing up and the bonds and everything. We decided to participate in a commercial REO offering from a bank through one of broker relationships that we had.

And we utilized a local analyst there, which I always recommend. It is a great way to underwrite deals is to outsource to an analyst that is familiar with that local market and has experience and we ended up getting awarded that deal and when we went to talk to our one capital partner that we work with that at that time initially, he was very thrown off and didn’t want to do the deal and so we were kind of a little worried about being able to execute that deal.

You know with persistence and kind of giving up more equity and better terms available, we were able to do that. I think that is one of the biggest challenges that I’ve had. I haven’t had any great problems or anything over the last 10 years.

[0:18:05.7] WS: What about how do you prepare for a potential downturn?

[0:18:09.4] JR: I would say that over the last 24 months, we have participated in a lot less deals. Based on my experience in the 2000s, you know quite a few assets that we had, we actually were selling off in 2017, 2018 and have minimized that deals to a point where our outstanding debt can be managed through a downturn. So I guess basically if you did sensitivity analysis is, you know if you have a certain vacancy or certain lack of cash flow in whatever deals you’re in, can it be covered in a downturn. While that is working well, maybe that leaves deals on the table though.

[0:18:47.6] WS: What do you predict to happen over the next say six to 12 months in the real estate market?

[0:18:52.8] JR: I’m like 50/50 and the only reason I’m 50/50 and the aspect is the Fed is printing whatever they want to do to prop things up and then creating laws or moratoriums that is kind of saving everything. So without knowing how far they will go, it is kind of a hard prediction to make because in the beginning of the year we all thought we are going to see deals galore in about a year because of all of the forbearances, mortgages, commercial and everything.

But with everything being propped up, I think it is a hard position to make a forecast. I would just say what I’m currently doing is minimizing how many deals we get into until we get past that point and if I miss the opportunity, that is okay for me too because I think there is also a part that says the economy is doing well and there is a lot of liquidity in the system that can keep the things going for another few years considering the Fed also announced that they were going to leave the interest rates basically where they’re at for a few years.

Kind of leads me to believe that cap rates will stay compressed and rates for financing is going to be cheap and that is going to drive sales ultimately for cash flow for investors.

[0:20:02.4] WS: Joe, I believe that anyone that’s successful in this business and most businesses has to have a high level of self-discipline. How did you gain such a high level of self-discipline?

[0:20:10.6] JR: By the losses. No but seriously, I would say that you know, for my 2000s experience kind of being in deals that you know, may have overleveraged or didn’t have cash flow. I think that that ultimately has led this success over the next 10 years because it was those lessons that were learned that made me become more disciplined and take on less risk.

[0:20:33.3] WS: Do you have a daily habit that you are disciplined, that helps you disciplined about that helps you achieve success?

[0:20:39.8] JR: What I’ve been doing is basically I got like this yellow sticky here and I put about three or four things on there and I’ve been getting up. I am hitting those three or four things at least for the first few hours and getting those done because sometimes after the first half of the day, I seem to not be as well focused. So I leave more phone calls, outreach and different things for the afternoon and get those three hard things pushed down in the morning because that is my best time of the day.

[0:21:12.4] WS: What’s a way you’ve recently improved your business that we could apply to ours?

[0:21:15.8] JR: I would say probably at the highest level, I mean it is just software, right? I think software can drive people crazy in choosing one but I think when you pick the right software, you actually can make things run more smoothly. So whether that’s a project management software or investor communication, I would say that is probably number one I mean and also you need to be building up your processes.

[0:21:41.8] WS: What’s a software that you’ve used for building out your processes?

[0:21:46.4] JR: You know one of the experiences I’ve had recently in a project management, we were in a Wrike in the last couple of years and we were having a lack of use and so we actually moved to ClickUp, which is about a quarter or a third cheaper and everyone is – it is just a much more usable product and so we are actually right now in the process of finishing out our workflows and so forth in there and I am just having a better usability for my people.

[0:22:15.1] WS: Nice, I’ve heard a couple of people mention ClickUp recently. Did you check out things like Asana or and Trello and those things and is this something that you are like, “Wow this is a lot better than those?”

[0:22:27.9] JR: Right, I didn’t dive deep into all of the other ones. Like I said, I came from Wrike but I also had my one VA. She’s worked in Asana and so forth. I had her do an overview of a few of them. I know Trello is kind of a basic board. ClickUp seems to be hitting all types of avenues and just from going from Wrike and then into the trial of ClickUp, I just had the ability to – I guess the highest level is if you can go into software and find yourself being able to move around and actually do things without going through a big instruction manual is going to be much easier for the users to be able to use, right? And so when I went into there, it just flowed well.

[0:23:01.3] WS: What’s your best source for meeting new investors?

[0:23:03.8] JR: I would say it has been in person meetings over the last 10 years. It’s been in person meetings face to face.

[0:23:10.9] WS: The number one thing that’s contributed to your success?

[0:23:13.9] JR: Network. Network equals net worth, definitely. So back to that, a solid handful of relationships I’ve build over 10 years are people that if I have a deal or something, I could just call on and get one, two, three, four, $5 million from is maybe I am paying a little bit higher cut to them but it makes the deals a lot smoother.

[0:23:35.0] WS: It’s less than not doing the deal, right? How do you like to give back?

[0:23:40.0] JR: Currently, I’ve been I guess working with a select few and kind of coaching them or giving my own advice and providing my lessons I’ve learned for them to hopefully not make the same mistakes.

[0:23:53.8] WS: Nice. Well Joe, we’re grateful for your time today, great show. I mean right off the bat, you’re just providing tons of value to the listeners and myself. I mean don’t be over leveraged, don’t have assets on your balance sheet that aren’t cash flowing, you know there is numerous things that you mentioned there. You know now you’re an LP, just talking through your process and the mortgage bank business but then also even living in Puerto Rico and the benefits of that.

And who that might be for and who not and just some challenges that you’ve experienced raising that million dollars right off the bat and even documenting these processes and whatnot. Joe, tell the listeners how they can get in touch with you and learn more about you?

[0:24:28.3] JR: The best way to get in touch with me is you could search Joe Robert on all social platforms. I am on most of them, I probably pay attention most to Facebook or you could go to and you could subscribe there.

[0:24:40.4] WS: Awesome, that’s a wrap Joe. Thank you so much.

[0:24:42.9] JR: Thank you Whitney for having me on. I appreciate it.


[0:24:45.4] WS: Don’t go yet, thank you for listening to today’s episode. I would love it if you would go to iTunes right now and leave a rating and written review. I want to hear your feedback. It makes a big difference in getting the podcast out there. You can also go to the Real Estate Syndication Show on Facebook so you can connect with me and we can also receive feedback and your questions there that you want me to answer on the show.

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