WS435: Insights into Flourishing Partnerships with Paul Eterno and Lisa Schmidt

[INTRODUCTION]

[00:00:00] 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.

[INTERVIEW]

[0:00:24.3] WS: This is your daily Real Estate Syndication Show. I’m your host, Whitney Sewell. Today our guests are Paul Eterno and Lisa Schmidt. Thanks for being on the show, guys.

[0:00:34.5] PE: Thanks for having us.

[0:00:36.4] WS: Yeah, I’m looking forward to this. I know I’ve met you all at a couple conferences, I think, and we’ve talked numerous times and it’s been encouraging to see your all success and what you’ve been able to accomplish. A little about them, Paul had a successful 37-year career as a human resources executive in corporate America.

After losing a job to private equity, he gave his life to Christ, re-engineered his career to the field of tax liens and deeds through the US Tax Liens Association, who was selected for their first mastermind group, where he met his business partner, Lisa. She focuses a multi-family value-add investments in the Southeast, Southwest and mid-Atlantic states with current holdings in Texas, North Carolina and Georgia and are adding properties in Missouri and North Carolina. Wow, that’s all over the place. That’s awesome.

They joined RE Mentor in July of 2016, which provided their multifamily training. They formed Legacy Property Partners USA in December of 2016 and began pursuing multifamily commercial real estate deals. Paul and Lisa, thank you all again for your time. We’re looking forward to hearing about this partnership and really, a little about how that came about and then even getting into your success since your partner.

Because personally, I’ve seen so many people in the business, it’s like okay, this guy’s really good at this over here, or this lady and this one’s really good at this over here, but then when they’ve found that partner that’s now they’ve got this team, I mean, it’s like they just blast off. It looks like that’s what’s happening with you all. Give us a little more about your all’s background possibly and let’s dive into really this partnership.

[0:02:16.8] PE: All right. You go first, Lisa. Go ahead. Ladies first.

[0:02:19.9] LS: Okay. Okay. Well background-wise, I did not have the corporate background. I was a teacher for 20 years; taught students with special needs. Following that, I was a realtor for five years out in California. Then we moved out of the country. When I came back, that’s when I got into tax deeds and liens and did that, was loving it, but as you had read, we at a mastermind and got to know each other very well. Because over the course of that year, we met four times and for three days at a shot and it was a life mastermind, so we really got to know the people in that group.

Paul and I knew our values, our ethics. Then turns out our real estate goals were aligned and we both wanted to go into multifamily. Identified US – with the help of US TLA, identified RE Mentor as a group that we wanted to have teach us. We went to the first event and said sign us up, because we want the whole shebang. We decided, just make sense to partner. There’s always power in numbers and two minds are better than one.

As you as you mentioned, the synergy that you get from working together and just keeping each other motivated, keeping each other on track has been wonderful. When you’ve got a great partner like Paul, it’s easy to do. That’s how we met. That’s how we got started and that’s just a little bit about me.

[0:03:44.1] PE: Yeah. As far as I’m concerned, as you mentioned, I had a 37-year career in human resources executive management, mostly in Manhattan and Long Island. My last position was senior vice president of human resources for a global telecommunications company. That company was sold to private equity. At the age of 59, I needed to figure out what I was going to do with my life. My wife and her infinite wisdom said to take several months off and think and pray about what you want to do. I did that. I followed her advice and that’s how I got started with the US Tax Lien Association and started purchasing tax deeds. Had some success doing that. Had pretty good success.

I purchased 11 deeds in 15 months and that was the launching pad for getting involved in the commercial, because as a result of that as Lisa mentioned, we made the mastermind, their first mastermind, Lisa and I met. I met her husband, because he was part of the mastermind group as well. We just clicked. We just saw that we had similar core values, same beliefs and same work ethic. It’s been a fantastic partnership.

Lisa and I are very much alike, yet we’re very different in how we approach things. We’re a good check and balance to each other, which I think is key to a successful partnership. She keeps me straight and grounds me, because I can tend to be pie-in-the-sky a little bit. I look at things from 35,000 feet, she looks at it from the nitty-gritty. She’s the detail person.

[0:05:06.9] WS: That’s good. It’s good to have both of those perspectives, so that’s for sure. I found you just being in a partnership too, so much this is mindset. You can be a little discouraged, or you’re really working on something, maybe it’s not working out, or the other person come in and they can say one thing and it’s like, “Oh, well that makes sense.” It’ll move you that much further.

Tell me about your different skill sets that really complement one another, that make this a great partnership, because I know a lot of people that are listening and were thinking about, or they’re looking for that partner to do the same thing. What were you looking for and what are – how do your skillsets complement one another?

[0:05:41.0] PE: Well, I think we’re both people person. First of all, Lisa’s very personable, very approachable, very easy to talk to. I with my career in human resource executive, I’m a very good listener. A lot of times, I felt I was turning my collar around when you’re dealing with employees, but I’ve learned to be a good listener. When you’re dealing with brokers and sellers and other parties within a real estate business, it’s good to be a good listener and listen first before you speak. Specifically when you speak first, get yourself in trouble. We’re both good listeners.

Lisa as I mentioned, is very detail-oriented. I am not. I admittedly am not detail-oriented. She takes the footnotes and records everything, records conversations. Thank God she does that, because I miss a lot of things when it comes to that. I think that’s where we complement each other very well. We don’t miss a detail because of her. She worries for both of us too. She’s the worrywart. I tend not to worry. She worries a lot. She worries for both of us, so that’s good.

[0:06:38.6] LS: I grew up Catholic. What can I say? I’m an Italian. I mean, I get all – Yeah. Also, I would say when we first started off, we knew that we had the same values and we both want, have the same goals and we of course laid those out what our goals were, but we weren’t too sure exactly how the actual jobs of the whole business we’re going to divvy out.

What we did with our first deals was we decided to start off with we both were going to do everything, and so we did. We both did all the underwriting. If Paul found one, he underwrote it. Then if it was something that was good, then he we got on together and we went through everything together. We still do that with the underwriting, but we went through every phase of it together. We both did everything.

Then as we progressed, we thought this would happen. Unfortunately, it did. There just became a natural separation of far as what Paul had more natural expertise in and what I gravitated toward. Paul handles all of our investor relations. He handles our capital raises, his [inaudible 0:07:52.6] had that. I spearhead the asset management maybe a little bit more of the acquisition side, although we both participate in acquisitions and we both participate in the equity raisers, because that is definitely a team sport. We both have our parts that we head up. I must say Paul, I’m sure because of he’s the HR and just because of his personality, he’s excellent at the investor relations.

[0:08:18.2] PE: Well, I have the advantage living in New York. I’m surrounded by money, by capital. We have a lot of potential resources here in the New York metro area and I’m trying to tap into those. That we’ve had some pretty good success and we have another – We go to a lot of meetups, going to a lot of meetups, going to a lot of conferences in Manhattan, getting involved with high-net worth individuals. It’s been a great experience and great exposure as well. There’s a lot more to be had here.

I think over time, we’re going to build – we’re building relationships and were going to build even more. I think the success that we’ve had has also helped us, because a lot of our investors who got involved in our first deal, when we sold that deal and got the returns that we got, the vast majority of those investors rolled over their funds into another deal with us. That’s the secret to success is making sure that you exceed the expectations of your investors. To the grace of God, we were able to do that. Working along.

[0:09:16.8] WS: That’s a great feeling when you can exit a deal and provide even more returns than what you projected, or faster than you projected. Investors usually don’t mind that too much.

[0:09:26.3] PE: No.

[0:09:27.7] WS: That’s awesome. Obviously, and they’re looking to invest again. Do it again and again and again. Tell me about the training that you all received. I know you all joined RE Mentor. Had you all partnered before that, or was that during the same process, or when did that – by the timeline there?

[0:09:45.4] PE: Well, I think we went to the boot camp in 2016.

[0:09:50.5] LS: Mm-hmm.

[0:09:51.1] PE: In June or July of 2016 and that’s what we signed up for their training program. Then we went on a series of boot camps with them, learning how to – we’ve actually visited properties to learn what you need to look for when you see the physical property, looking at roofs, looking to see if there are satellite dishes on the roofs, which is a no-no and looking at the siding issues and windows, things like that. Just looking at the physical structure to see what can be improved to raise the value of the property.

We also took a boot camp on underwriting, how to read a T12, how to read a rent roll, what things to look for. Are there spikes in the rent in the T12? How do you go about explaining away those spikes, or getting to the root cause of those spikes and just looking at trends between income, amongst the income lines and the expense lines, learning about asset management, doing due diligence, just the entire due diligence checklist process. They had a boot camp for each one of those. We attended each of those boot camps.

Sitting with syndicators; we actually had an opportunity to sit with probably 15 syndicators in a conference room and then rotate throughout the room and interview syndicators and have them interview us. Sponsors, so that we could see if we had any synergies with any of those sponsors. That’s how we found two or three of our sponsors was in that boot camp. We’ve had successful partnerships with those sponsors, so it’s worked that well.

[0:11:26.2] LS: We should be doing a commercial for RE Mentor, because all these classes were with RE Mentor.

[0:11:30.9] PE: Yeah, it’s true.

[0:11:31.9] WS: Yeah. I’ve met lots of people who have had lots of success through that program.

[0:11:35.9] LS: We feel that that’s one of the strengths that we bring to the table that a lot of other investors don’t have is that we have that family of RE Mentor. For instance, if we go after a property that maybe we don’t have the expertise in, we can branch out, because we can pull in a co-sponsor that has that expertise. Or if we run into something that we haven’t experienced before, we have different people that we know very well and we have the backing of that group that we can go to and I think that’s been very, very helpful for us. I mean, they’re a wonderful family to learn through.

[0:12:13.2] PE: Yeah. I think anyone’s success is predicated on the people that you associate yourself with. We have been blessed to be trained by some of the best in the business. Well, we were with the United States Tax Lien Association. We were mentored by the two founders, the two founders of the US TLA, Tony Martinez and Saen Higgins and their mentor who happens to be a 40, 45-year career commercial guy. He was a world of knowledge for us. We were trained by the best.

When we got to RE Mentor, they have just a bullpen of experts that have been doing this for years and years. We’ve been able to rely on them for guidance and support. They’ve just accelerated our progress and our success tremendously in three years.

[0:13:03.8] WS: For the listeners who are thinking about partnering with somebody, give me maybe your top two things that are okay, you definitely need to think about this before you partner, and maybe a thing or two about after you partner, here’s a couple things that you got to keep this in mind.

[0:13:21.2] LS: I’m going to leave this off. I’m going to go back to my dad had a business, a family business. It was a restaurant and he was partnered with my uncle. As I got older, I was getting ready. This was way before I was in real estate, but I was looking to open up a business and joining with another gal. My dad said to me, “Lisa, you better think long and hard before you go into business with and get a partner,” he said. “It is – consider it a marriage,” he said. “You better make sure your partner was the right person.”

Number one, that was what I believed that that mastermind group that we were in that was so detailed into – We were sharing our hopes, dreams, fears. We knew the 12 people in this mastermind group very well. That I think was very instrumental in allowing Paul and us to be so comfortable knowing each other that we were sure that we aligned. That going in, know the person that you’re going into partnership. Just don’t willy-nilly say, “Oh, that would be fun. Let’s do a partnership.”

Because if you’re going to be talking to that person every day, or at least I think should be and many times a day and working with them non-stop. If you’re not aligned, you can handle some issues, but if your ethics and morals and goals are not aligned, just like in a marriage, it’s just going to be problems.

[0:14:49.7] PE: Yeah. You need to be brutally honest with your partner. If there’s something that concerns you, you need to be able to speak openly and honestly and work through that. Lisa and I have had done that several times during the course of this partnership.

[0:15:04.3] LS: For instance, before the show today I made sure Paul powdered his head. I mean, you got to do that.

[0:15:12.1] PE: Whitney. Can you see the abuse I take from her?

[0:15:15.6] WS: That’s funny. One thing you had mentioned earlier Paul, is that in the mastermind you’d even met Lisa’s husband. I just know when I partnered – when my business partner and I partnered, each of us and our spouses got on a Zoom call and for numerous times, for an hour long at least each time. Just really asking – I mean, just really laying it out there and ask any question you want to ask now, like now is the time before we commit to this marriage like you said, right?

[0:15:45.8] PE: Exactly. Yeah.

[0:15:47.3] WS: Yeah. I just thought that’s interesting. You already knew her husband. I mean, I just think it’s so important, because ultimately, you’re partnering with him as well.

[0:15:54.7] PE: Absolutely. Absolutely. Yeah. Yeah, Rick’s a great guy. We had simpatico, because Lisa’s family is a family of military people. Her husband, Rick, is a former XO in the Marines. Her daughter is in the Marines. One of her sons was in the Marines, her other son was in the army. I was not a veteran, but I have a heart for veterans and I am on a board of a 501c3 that supports veterans. We had that synergy as well. We have like-minds in that regard as well.

[0:16:28.9] WS: What about after the partnership? Okay, now we’ve decided, okay, we’re going to do this. What’s helped you all to be successful through this partnership? Is it meeting certain times a month, or a call, or whatever, or certain discussions, or goals you set? What does that been look like for you all to say okay, we’ll help you to be successful through the partnership?

[0:16:48.7] PE: We speak every day. Just virtually every day, we’re on the phone with each other. We’re constantly communicating, talking about what our goals are for the week, the day, the week and the month. Then we do set goals. We have a monthly goal-setting session with each other, see where we are and we set annual goals as well. I think goal-setting is important and you need to have that, because that’s your roadmap to get to where you want to be.

[0:17:15.9] LS: I think also, what has helped is even though at the beginning we were doing everything together, once we felt comfortable with what we were doing, we definitely started segregating and trying to eliminate the duplicity in what we were doing, because otherwise, why I have a team if you’re both doing everything? We tried to eliminate that.

We’re constantly discussing and modifying what we’re doing to make it work better. We’re brutally honest with each other. When one of us feels the other one is going in the wrong direction, we both are really good at telling each other, keep your eye on the ball. Or one of us will say, “Shiny ball. Shiny ball. There you go. You’re going. Get back over here and get back in the lane.”

[0:18:04.8] PE: That’s me. I’m chasing the shiny ball motion.

[0:18:10.0] WS: Now that’s awesome. Then I appreciate you all sharing that, because partnerships can be such a great thing, that they can also end very quickly, or be a bit bad very quickly as well. It’s great to see that you all done it successfully. I’ve navigated that, which a lot of people struggle with. Just a few questions though before we ran out of time, what’s been the hardest part of the syndication journey for you all?

[0:18:33.4] PE: The hardest part.

[0:18:35.3] LS: Along the way, but gosh, one thing, hardest thing. Gosh, I don’t know that –

[0:18:41.3] WS: Finding deals, raising capital, finding other partners, anything like that?

[0:18:44.8] LS: That’s all been a challenge. The finding partners, not so much, because we’ve got the RE Mentor family that we can pull from. That has [inaudible 0:18:54.4] as much of a challenge. Raising capital, that’s been some challenges. Although, I think we’re overcoming them. We just recently grew our organization. We brought in two young guys that are just – they say the smart person, the smart leader brings in people that are smarter than them.

Well, Paul and I took that to heart and these two young men run circles and sometimes we’re like, “What?” I mean, they’re just – they’re underwriting for us and they are just absolutely brilliant. That took us up another notch in the organization. Now we had our challenges with raising money, but I think that was just a product of being new growing your own network. We’re growing that network and that’s getting easier and easier.

[0:19:47.1] PE: I think a challenge is learning to be patient. This is not a sprint. This business is definitely not a sprint. It’s a marathon. You need to be patient with the process. These deals just take time. I mean, you’re not going to close a deal like this in two or three – in weeks or months. I mean, you have to develop broker relationships and that takes a long time before you start getting off market type deals from brokers. That’s taken literally years, several months to years to do that.

Now we’re starting to see the fruits of our labor in that regard, because now we do have brokers that are sending us deals. We’re starting to see more deal flow, going to conferences and building relationships and touching those people three, four, five times, going to meet ups, touching those people three, four or five times, getting them to invest with you, getting them to learn to know you, to trust you and then eventually, they’ll give you their money. It’s patience. Patience, perseverance, persistence and diligence. Those are the four that come to mind for me.

[0:20:50.6] WS: What’s the number one thing that’s contributed to your success?

[0:20:54.0] PE: My trust in God. I put my faith in God and if I see a challenge in front of us, I just put it at his feet and he guides me. He’s so faithful, he’s answered every prayer.

[0:21:05.6] LS: Yeah, there’s always – that’s at the top of the game. I think the other thing that’s contributed to our success is our attitude toward it. I think it’s a lot of things. I think it’s the training that we have. I think a big thing also is that our investors are the most important thing to us and we really work very hard to be very transparent with them and inclusive of them. For instance, I mean, one of the calls on one of our properties that we do weekly, we’re happy to have. Whenever investors listens in on that call every the cash call every week and we’re happy to have them do that. We want them involved.  We’re very detailed with the monthly reports that they receive. We’re open to talk to any of them. We don’t just take their money and disappear.

It’s a relationship with them as well. They’re our partners and we treat them as such. I think that is another part of it. I think also, we really like what we’re doing. We try to have fun with what we’re doing as well. I mean, that’s always been my philosophy since I was young. If it isn’t fun, I don’t want to do it. We have fun with what we’re doing. Sometimes it’s not. Sometimes we’re pulling out our hairs, or I am. Paul’s pulling on his ear.

[0:22:30.2] WS: Tell me, how do you all like to give back.

[0:22:35.6] PE: Well, I tie with my church. I I give back to my 501c3, it’s called [inaudible 0:22:41.9] Heroes Foundation. I support them. We support veterans on a year – on a annual basis. That’s how I give back.

[0:22:50.0] LS: I have several charities that I support.

[0:22:53.3] WS: Nice. Well Paul and Lisa, thank you all very much. I know this partnership dynamic is something that a lot of listeners are working through and thinking about how they should navigate that and I know you all provided a lot of wisdom in that how you all been successful and I appreciate that. I know they’re grateful. Tell the listeners how they can get in touch with you and learn more about your business.

[0:23:11.9] PE: Well, we can be reached – I can be reached on my cellphone, 631-664-6372.

[0:23:19.2] LS: My cell is 760-443-0747. We also have a website, LegacyPropertyPartnersUSA.com. Then our e-mails are pretty easy. It’s either Lisa or Paul. Mine is [email protected]. Paul’s is the same.

[0:23:46.2] PE: [email protected]. Yeah.

[0:23:50.6] LS: We’re happy to talk to anybody anytime, anywhere.

[0:23:53.5] PE: Yeah. Just if you want to bounce some ideas off of us, we’d be more than happy to just give you some of our experiences and share some of our experiences and give you some of our wisdom. Feel free to do that. We’ll welcome it.

[END OF INTERVIEW]

[0:24:06.4] 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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[OUTRO]

[0:24:47.0] ANNOUNCER: Thank you for listening to The Real Estate Syndication Show, brought to you by Life Bridge Capital. Life Bridge Capital works with investors nationwide to invest in real estate while also donating 50% of its profits to assist parents who are committing to adoption. Life Bridge Capital, making a difference one investor and one child at a time. Connect online at www.LifeBridgeCapital.com for free material and videos to further your success.

[END]