WS1298: Parallels Between Athletics and Real Estate | Brandon Magierowski

EPISODE 1298

[INTRODUCTION]

0:00:00.0 

Brandon Magierowski (BM): It’s not for everybody. It’s super competitive and super challenging. You’ve got to keep the end in mind and it’s very hard when you’re underwriting 100 deals to get one or 150 deals to get one, it could be very deflating. But, if you stick with it and you find the right people, it can be very, very rewarding.

[INTERVIEW]

0:00:20.6 

Sam Rust (SR): This is your daily Real Estate Syndication Show. I’m your host, Sam Rust. Joining us today is Brandon Magierowski, who is an active syndicator and loan broker, currently owns multiple multifamily properties in Louisiana, Texas, and Florida. We’ve got a Gold Coast fan on our hands and is a graduate of Multifamily University. Brandon, welcome to the show, thanks for joining us today.

0:00:41.6 

BM: Thank you, Sam. Thanks for having me.

0:00:43.1 

SR: So, I know you’ve been in the northwest corner of Louisiana for a while, and you told me at the top that ball took you there, so expand on that. Talking about your background looks like you’re a coach, I have a lot of background in baseball, what drove you there, and then what, draw a line from that background to where you are today in commercial real estate.

0:01:01.7 

BM: Yeah, sure. So, I guess my tagline is, I’m actually living what they call the American Dream, I came from Canada back in 2004, came down to play baseball on a scholarship, I had no intention of staying, I was coming down to play ball, my plan was after I graduate, I was gonna go back home. Ended up meeting who is now my wife, and we have a family.

SR: Usually a girl involved. 

BM: Usually a girl involved. And she made me legal, I got my permanent residency card because I was married and I started a baseball business. So, I was coaching college baseball, the program I played in, and I end up coaching. I graduated with a Master’s degree, and I knew coaching wasn’t for me, I wanted to be an entrepreneur. I always felt like I had that kind of drive and passion to do my own thing, I just didn’t know what ended up meeting a guy that was running some baseball tournaments, did not think it would grow to what it is today eight years ago, but we went from running three events in one state, and we do over 100 events across the 11 states in the southeast within the baseball business. And that baseball business really allowed me to network with other individuals in the sports world, and one of them was actually one of our partners. He’s active duty Navy, and he is my real estate partner today. Back in 2016, he was bragging to me about these deals, these real estate deals he had in Panama City, Florida, he was doing what he called STR.

0:02:14.8 

BM: I had no idea what that meant. He was like, yeah, STR. They’re cash flowing, and I had no idea what these terms meant, all I knew was people talk about real estate and how great it is and how the wealthiest people in the world always do real estate. But I was in a position where I was a middle-class family, man, running my own business, and we were just growing a little bit, year after year, I didn’t have a lot of cash on hand to go invest in deals nor did I know how to invest in deals. So, I asked Ramsey, my partner, I said, how do I do this? I want to buy something, I wanna get my feet wet in real estate. He threw two books at me, one being Rich Dad, Poor Dad, and the other one being A Real Estate, just a real estate book on how to invest in real estate. I read both of them, and three months later, we bought our first properties together here in Trade Port, and six months after that we bought another property in Trade Port. The first one being a triplex, 3 units second one being a 6-unit.

0:03:00.3 

BM: And that was my introduction into real estate. And from there, the light bulb kinda went off, we wanna go bigger, multifamily, then he’s active duty Navy, I’m running a business, we both have families, we both have a small portfolio, and it’s like, how do we do this? We have no idea where to get started. Someone told us to read the Joe Fairless Apartment Syndication book. It was phenomenal, but still, You still had to do it. Everyone can read it, but you know this and you have to go do it. And when we said we need a little kick start, so we went to the Neal Bawa Multifamily University boot camp up in San Diego, we dropped about three grand piece, we invested money into it, and we went to that boot camp and in three days, we learned from A to Z on how to syndicate apartments, how to raise capital, but again, we still have to go do it. Came back and we picked up another partner who’s active duty Navy, he lives in Panama City. His name is Joey B. And we hit the ground running, we said we’re gonna start telling people what we’re up to, how we’re gonna go after these large apartment complexes. And last year, after about eight months of being together as a team, we finally landed our first deal, it was a 119-unit deal in Lubbock, Texas in partnership with VFR capital investments out of Dallas.

0:04:06.8 

BM: And we were brought on that deal 10 days before it closed, we had to raise, our required more to raise $250,000 as a team, and we ended up raising $500,000 in eight days and got that deal across the finish line with VFR and with Elevate Capital with Georgia Group. And that was our first deal, and that was kind of the feather in the cap, they always say the first one’s the hardest, but Sam, that’s kind of my path. I came here as a baseball guy, I wanna do real estate, read a couple of books, found the right partner, made some mistakes early, went to a boot camp, got our first deal last year in June and followed by another syndication last fall over at San Antonio.

0:04:40.3 

SR: Oh, it’s fantastic. In there, a big part of your story is finding the right partner, and that’s something that gets talked about a lot, like everybody says it’s really important, you find the right partner. But it’s kind of hard to define what that actually looks like. What does it mean to find that person, How do you go about it? How did you guys meet, how did you determine that you were the right fit for each other?

0:04:58.9 

BM: Tee was a partner in the baseball business that we are operating together, so we actually work together inside of these baseball events, and kind of really hit it off on a personal level. But he ended up being my mentor. So my goal was to find somebody that was doing it already and say, okay, how can I add value to that person, improve his portfolio, he can teach me the ropes. So we bought the properties and three-port together, but I took on all asset management and management of those properties, and he didn’t have to do anything and we still split it 50-50, so that was my value to him to say, listen, we’re gonna split the cost of these properties, the down payment, but I’m gonna manage everything. You don’t have to do anything. And that was my deal to him for the first deals. So, my recommendation comes out there alone with looking for somebody, obviously start networking, start telling people what you’re up to, but just look inside your personal network of who is already doing this and ask them, how are you doing this, how can I add value to you? And you’ll end up finding the right people, but along the way, you’re gonna find people that you think they’re right, and they’re not, That’s just the nature of business. That’s the nature of real estate, is there’s a lot of over-promisers and under-deliverers out there, but sometimes you just gotta learn the hard lessons with those people.

0:06:09.0 

SR: You touched on this a little bit, but we get calls at Life Bridge all the time from people who wanna break into the business, they’re well-intentioned, they’re like, hey, how can I add value this and that, Syndication is not challenging to understand the broad strokes of what’s happening, and if your first question is how can I add value, you probably haven’t done enough homework. I’m just not sitting around dreaming up roles for people to parachute into. There’s obvious ways that you can drive value like you did for your prospective partners like, hey, I’ve got these deals, I wanna learn, you’ve got the knowledge I need, I’ll put my time, sweat, blood, tears into this, you just pass on the knowledge and then, hey, a partnership was born out of that. I think that that’s something that gets crossed over is, yeah, find those people who are doing deals who are actually making waves in the action, but figure out a way to proactively provide value, not just sit back and, oh, hi, how can I help?

0:07:00.3 

BM: Well, yeah, a great question to ask those teams is where do you need help? Inside your group, which role are you guys missing? And it could be underwriting, it could be capital raising, it could be asset management, and see if you can fill that role, but you gotta be good in syndications, sorry, in smaller deals, you can be good at a lot of different things. When it comes to syndicating and joining a GP group, the roles are usually established inside those fruits, you have your underwriter, you have your capital raising team, you have your asset manager, you get your acquisitions manager. If you’re early in this game and want to syndicate, figure out which one of those roles you want to be and be the best at it. If you’re gonna underwrite, go be the underwriter. And that’s a mistake we made early as a team, as a syndications team, is we were all trying to do everything at the same time. We’re all trying to capital raise, we’re all trying to underwrite. But slowly we’ve figured out honestly, what, we didn’t like to do it. It’s like, we’re doing all these things. It’s like, man, I hate underwriting. We need an underwriter. Nobody wants to say to spread you on this team, man, I love capital raising, hey, I hate capital raising, and we mold it at that way. Looking back, what we could have done early on is really sat down and say, hey, what does everybody really love to do and what is everybody really good at, and let’s get in that lane, and then let’s figure out which lane we don’t have filled and go out and find that person.

0:08:15.0 

SR: A division of labor is important, and if you don’t have early defined roles, responsibilities and KPIs, it’s gonna be pretty hard to move the ball forward. I think back even to my first syndication, and just begin with the end in mind, and then take one bite every day, just move forward one step, whether that’s in the underwriting or whatever you’re trying to master, but as you said several times in relaying your story, you have to take action, you do have to take action, all the books in the world and Joe Fairless book is a phenomenal book. For those who haven’t read it, really soup to nuts of the whole syndication process, it’s not gonna go out and close the deal for you, you have to take the steps, you have to take the knowledge, the head knowledge, and actually apply it out in the real world.

0:08:54.4 

BM: And that goes for when you’re paying for mentorships and a lot of gurus out there that are teaching everybody, I wanna know what the percentage is of actual people that take what they’ve learned and actually go apply and close deals. And if you’re a person that, you can still learn it and still be involved in real estate you know this Sam, then just go and be a passive investor. If you don’t have the bandwidth to be an operator, there’s still a lot of money to be made as a passive investor where you just give your money to a deal, take your feet up and let the operators do the work. Obviously, as a GP and an operator, there’s gonna be a more meat-on-the-bone for you because you’re in the weeds on those deals, but it’s not for everybody, and it’s super competitive and it’s super challenging and you’ve gotta keep like you said, you gotta keep the end in mind, and it’s very hard when you’re underwriting a 100 deals to get one or 150 deals to get one, it can be very deflating, but if you stick with it and you find the right people, can be very, very rewarding.

0:09:46.6 SR: You mentioned finding the right mentoring program or coach. Neal Bawa is known in the industry for his data-driven approach in some of his unique ways of looking at numbers, how would you advise people to go out and find a mentor?

0:10:00.9 

BM: Well, someone told me this in one of my podcasts, someone said, you don’t find a mentor that’s not just promoting a lifestyle, they’re promoting action steps. If you’re looking for that mentor, the best way to find it is to talk to other people about who they have used as mentors and what their experience was, there’s a lot of noise on the internet, and there’s a lot of people selling guru programs and mentorships and courses, but you gotta find out who’s actually been inside those courses, what they learned, what they’ve applied, and the biggest thing is you’ve gotta pay for mentorship. Paying for mentorship, number one, pay for what you get, if you pay for something, usually they’re providing very superb service, it’s been thought out, and number two, when you pay for it, you’re going to apply it yourself, It’s like a gym membership. You pay for the gym membership, you’re gonna go to the gym for the most part, if you set up a free gym at home and there’s no money in the line, it’s easy to just look at it. It’s just one of those things we’ve paid for a mentor, we hired a mentor, his name’s Tim Kelly, had an active duty passive income, very successful syndicator, capital raiser, educator, and we paid for him for six months, and it ended up leading us to that first deal. After we finally got off our wallets and paid for somebody to really teach us the ropes, we closed our first deal.

0:11:14.2 

SR: And I know you’re on the debt side of deals as well. You’re in the loan origination business. You’re wearing a lot of hats these days. Debt markets have been highly volatile. What advice would you have for syndicators who are getting started or trying to figure out how to finance a loan in these interesting conditions?

0:11:31.0 

BM: Yeah, my advice would be, and this would be like, I guess it would be like you could say that I’m selling, but don’t be afraid to use a broker for your loans. I’m a loan broker, almost a loan advisor because we’re also syndicators, so the lenders that we’re providing for our clients are the same lenders we’re using for our syndications. We have a large database of those lenders that do bridge debt, agency debt, CMBS pod, SPA, and private equity. There’s usually a 1% fee tied to a broker, so 1% of the loan amounts could be paid to the broker, but if you are new to this game, you don’t have a network of lenders to get soft quotes and to get term sheets and to shop it out, then I would highly recommend going with an experience for a brokerage team and going, hey guys, I got this deal, I need a loan. ‘Cause what they’re gonna do, they’re not just gonna take it to one lender, they’re gonna take it to five or six and be competitive with it to get you the absolute best term sheet, and guess what they’re doing that you can work on setting up the operation of your property, not trying to call lenders and trying to sell your property to them.

0:12:31.8 

SR: Along those veins, in what way have you recently improved your business? It could be your ball coaching or event business, it could be the syndication side. It could be your loan origination side, but what’s one way you’ve improved your business that our audience might be able to take and implement in theirs?

0:12:46.1 

BM: The number one way to improve your business, and what you’re doing, in my opinion, is to tell people what you do. Too many people hide, they sit behind social media, they sit behind their desks, they sit behind their phones and just operate. If you want to attract people to you, and attract people clients or other operators of other GP groups or people to invest in your deals, you’ve gotta tell them what you’re up to and why you’re doing it. When we finally, as a group, even in the baseball business and in the syndication business, and in the brokerage business finally told people what we’re doing and why we’re doing them, put ourselves out there to show people that we’re just real human beings that put our pants on the same way you do, that were very relatable. But we’re also doing this, and when you have a deal or you have an event you wanna play in as a baseball team, you need a loan for your deal, I want people to think about Brandon Magierowski or Joey Beckham, or Robert Newborn or Westley Yates whoever’s on our team, right? And the only way for them to know those names, get your name out there, whether that’s going to conferences where that’s on social media, whether that’s you setting up phone calls, whether it’s getting on podcasts, but if you’re gonna hide, they won’t know who you are.

0:13:49.6 

SR: And I think part of that just comes from confidence of knowing what you want, don’t posture yourself as an expert when you’re not, but also be forward with people and let people know, hey, this is what I’m seeking to do, here’s some things I’ve learned along the way. People are generally in your network, they wanna, they’re curious, they wanna know what you’re doing, and especially when it’s off the beaten path. Syndication, as much as a lot of us eat and breathe in this space, it’s still very, very new. It’s pretty fresh. Most people haven’t heard of it. You’ll be surprised at how many opportunities you’d find just by being open about what you’re pursuing.

0:14:22.2 

BM: Open and honest, like you said, and just tell the truth if you haven’t done a deal, you haven’t done a deal, but this is why you’re doing it, and this is what you’re up to, and this is what you’re looking for deals. Or maybe you’ve done deals, and what have you learned from those deals, what mistakes have you made? Just be open and honest with people. I think that’s kind of what’s missing in some of the social media stuff people hiding behind this glamorous social media life of everything’s perfect, every deal is perfect, all the money in the world going into my pocket. And we all know that’s not the truth. So, I think what I would encourage other syndicators to do is talk more about some of the mistakes you made, because that’s gonna relate to a lot of people early on that are trying to get into syndications, that is to tell them it’s not all roses. This is very challenging, and these are the challenges that we’ve had and it’s how we overcame them, and that’s just gonna be more relatable to people.

0:15:10.2 

SR: You’ve seen a lot of Offering Memorandums from a lot of different brokers all across the Gulf Coast, Brandon. What’s a common area that, maybe, a broker stretches the truth or leaves a little bit of a deck that you point out for folks who are also underwriting deals that you see?

0:15:25.0

BM: Usually what I’m seeing (inaudible) is some of the comps, they leave out specific comps that are more realistic in the area. But an OM is an advertisement. The broker’s trying to sell the deal for the most money he can. He wants to top dollar for the deal, so he’s gonna make this deal look like the greatest deal in the world. So, take the OM for what it’s worth, but you really gotta dive deep in your own writer underwriting, do your own comps, do your own rent comps, do your own sales comps, get the CoStar report, do the market reports, get the tax cost insurance quotes, get a soft term on lending, soft terms on lending for the deal before you submit your LOI.

0:16:00.3 

SR: I think that’s really important. I love running my initial phase of underwriting, just assuming that everything the broker told me is accurate, and if the deal doesn’t pencil on my underwriting, which I can do that in three minutes like, well, this isn’t a deal, but then you have to do a 180. I’m gonna assume that nothing the broker told me is true and we’re gonna go verify that, but I find that the two-pronged approach is helpful to winnow the field, so to speak. 

0:16:23.1 

BM: Right. How quickly are you being able to analyze the deal? What’s the first thing you do, Sam? Are you looking at the underwriting, look at the market.

0:16:30.2 SR: So we’re pretty entrenched in a couple of markets here in Colorado and then in Idaho, so when we’re evaluating deals, I don’t have to do a lot of market research, I have a really good idea of the comp set, we own close to 1500 units, so I know the sub-markets pretty well, so I can look at a deck and see what’s the right role look like, how much room is there to grow, and then what kind of CAPEX items outside of a normal unit renovation, what else are we looking. Those are the two things that I go to look at first, and we’ve done a lot of macro work and continue, you know, it’s an ongoing evolution of knowing your market and those sub-markets, but the advantage of doing this for a little while and owning some units in different markets as you get to know them from the inside out, and that knowledge is always more helpful. I can quickly look at one of our nearby properties and we own by most of the properties in Colorado Springs now and get a rough idea of is there value here that we can add, or is this a pig that’s been polished?

0:17:26.0 

BM: What you said is super important, is you know the market like the back of your hand. You’re expert in that one market and the surrounding sub-markets, and I think a mistake even that we made early on was we want it to be everywhere, we wanted to buy everywhere, whatever deal hit our plate we’re like, oh, we’ll go buy in that table, we’ll buy in that city, but we didn’t have anybody in that city that would know it. They didn’t know everything and we didn’t. So, we really dialed it in. We really dialed in a few markets and those markets only because there’s people inside of those cities that we know and that we trust, and they probably know the market better than we do.

0:17:59.2 

SR: 100% agree. Well, Brandon, as we get ready to jump off here, where can folks reach out to you if they’ve got more questions about what you do on the loan side or as part of your syndication group they’re really focused?

0:18:10.5 

BM: Yeah, so on the lending side, you can email [email protected], [email protected], and then with our Real Focus Capital Group, it’d be [email protected]. Pretty active on LinkedIn, Facebook, if you wanna reach out to me there, happy to connect and whether you’re a newbie or experienced indicator about the chat with you about opportunities, ’cause really, I think you know that Sam, it’s a team game, especially early on, you wanna find experienced groups and team up like we did, and we’re always looking to work with good people.

0:18:38.2 

SR: Fantastic. Well, Brandon, thanks for joining us today. Thank you to our audience for joining us. This has been another episode of the Real Estate Syndication Show. I’m your host, Sam Rust. Signing off.

0:18:47.0 

Whitney Sewell: Thank you for being a loyal listener of the Real Estate Syndication Show, please subscribe and like the show, share it with your friends so we can help them as well. Don’t forget, go to LifeBridgeCapital.com, where you can sign up and start investing in real estate today. Have a blessed day.