MB 138: Syndication vs. Creative Financing for Multifamily Capital – With Jake Stenziano & Gino Barbaro
Financial Freedom with Real Estate Investing
English - November 28, 2018 01:35 - 35 minutes - 33.2 MB - ★★★★★ - 464 ratingsInvesting Business Education business entrepreneur health entrepreneurship finance marketing lifestyle investing entrepreneurs interview Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
While syndication is the most popular way to raise money to fund a multifamily deal, it is not the only option. A resourceful real estate investor can leverage a number of other creative possibilities. Jake Stenziano and Gino Barbaro have built an impressive portfolio without syndicating a single deal, but now they are adding the strategy to their repertoire. What drove them to add ‘investor relations’ to their skill set? In what situation might a different approach, like owner financing, be appropriate? What are the pros and cons of syndication?
Jake and Gino are the co-founders of Jake & Gino, LLC, an educational platform that leverages their expertise in multifamily real estate to help others attain financial freedom by way of apartment building investing. A few short years ago, Jake and Gino were a pizza guy and a drug rep; today, they own 900-plus multifamily units. They share their creative approach on the Wheelbarrow Profits Podcast, and they are the co-authors of the Amazon bestseller, Wheelbarrow Profits: How to Create Passive Income, Build Wealth, and Take Control of Your Destiny Through Multifamily Real Estate Investing.
Today, Jake and Gino join me to explain how they were able to build a portfolio without syndication, discussing the benefits of using community bankers and partnering with high-net-worth individuals. They share the case study of a 281-unit owner-financing deal and describe how good broker relationships can reveal creative financing opportunities. Jake and Gino also address the differences between community bank and agency debt and the value in understanding the story behind every deal. Listen in for insight around why Jake and Gino are adding syndication to their list of options and learn the advantages—and the drawbacks—of syndicating a multifamily deal!
Key TakeawaysThe advantage of using community bankers
Build in rehab budget Much less cash down (15-20%)How to address the down payment
Partner with high-net-worth individual Do day-to-day operations for equityJake & Gino’s owner-financed 281-unit deal
No money in, walk away with $150K Facilitated by track recordThe right conditions for owner financing
Understand seller’s motivation Every deal has own storyWhy Jake & Gino are syndicating now
Vision to scale requires capital injection Comfortable speaking to investorsThe disadvantages of syndication
Less equity (10% vs. 30%) More work on front-end Meet projections vs. ‘do right thing’ Investors expect liquidity event in year fiveThe difference between community bank and agency debt
‘Ease of doing business’ with community bank Community bank requires personal guarantee Agency debt = nonrecourse, low interest ratesWhat surprised Jake & Gino about syndication
Timeline once LOI signed Can’t accept $ until docs in placeHow Jake & Gino raised money so quickly
Position as experts in space Live events (e.g.: investor dinner, meetup)What’s next for Jake & Gino
Continue to look for big deals Grow education platform (book in 2019)Connect with Jake & Gino
While syndication is the most popular way to raise money to fund a multifamily deal, it is not the only option. A resourceful real estate investor can leverage a number of other creative possibilities. Jake Stenziano and Gino Barbaro have built an impressive portfolio without syndicating a single deal, but now they are adding the strategy to their repertoire. What drove them to add ‘investor relations’ to their skill set? In what situation might a different approach, like owner financing, be appropriate? What are the pros and cons of syndication?
Jake and Gino are the co-founders of Jake & Gino, LLC, an educational platform that leverages their expertise in multifamily real estate to help others attain financial freedom by way of apartment building investing. A few short years ago, Jake and Gino were a pizza guy and a drug rep; today, they own 900-plus multifamily units. They share their creative approach on the Wheelbarrow Profits Podcast, and they are the co-authors of the Amazon bestseller, Wheelbarrow Profits: How to Create Passive Income, Build Wealth, and Take Control of Your Destiny Through Multifamily Real Estate Investing.
Today, Jake and Gino join me to explain how they were able to build a portfolio without syndication, discussing the benefits of using community bankers and partnering with high-net-worth individuals. They share the case study of a 281-unit owner-financing deal and describe how good broker relationships can reveal creative financing opportunities. Jake and Gino also address the differences between community bank and agency debt and the value in understanding the story behind every deal. Listen in for insight around why Jake and Gino are adding syndication to their list of options and learn the advantages—and the drawbacks—of syndicating a multifamily deal!
Key TakeawaysThe advantage of using community bankers
Build in rehab budget Much less cash down (15-20%)How to address the down payment
Partner with high-net-worth individual Do day-to-day operations for equityJake & Gino’s owner-financed 281-unit deal
No money in, walk away with $150K Facilitated by track recordThe right conditions for owner financing
Understand seller’s motivation Every deal has own storyWhy Jake & Gino are syndicating now
Vision to scale requires capital injection Comfortable speaking to investorsThe disadvantages of syndication
Less equity (10% vs. 30%) More work on front-end Meet projections vs. ‘do right thing’ Investors expect liquidity event in year fiveThe difference between community bank and agency debt
‘Ease of doing business’ with community bank Community bank requires personal guarantee Agency debt = nonrecourse, low interest ratesWhat surprised Jake & Gino about syndication
Timeline once LOI signed Can’t accept $ until docs in placeHow Jake & Gino raised money so quickly
Position as experts in space Live events (e.g.: investor dinner, meetup)What’s next for Jake & Gino
Continue to look for big deals Grow education platform (book in 2019)Connect with Jake & Gino
Email [email protected]
ResourcesWheelbarrow Profits: How to Create Passive Income, Build Wealth, and Take Control of Your Destiny Through Multifamily Real Estate Investing by Jake Stenziano and Gino Barbaro
Gino on Apartment Building Investing EP052
Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even Without Experience or Cash by Michael Blank