Table of Contents - Financial Freedom Through Multifamily Real Estate with Gino Barbaro
Dave Debeau [00:00:09] Well, hey, they're doing this, Dave Debeau, welcome to another episode of the Property Profits Real Estate podcast, and today is my pleasure to be interviewing a very, very, very astute and experienced real estate entrepreneur. Gino Bavaro, from where are you calling in from today, Gina?
Gino Barbaro [00:00:27] St. Augustine, Florida.
Dave Debeau [00:00:29] Florida. That's one of my favorite states, definitely, especially when it's wintertime here in Canada. That's definitely one of my favorite states. And if you haven't had the pleasure of watching Dino speak or being at one of his events or seeing what he's up to, Gino's been investing in multifamily properties for quite some time. He bought his first thousand units on his own, is at thirteen hundred right now. He's going to be popping up to fifteen hundred pretty quick. And he's a father of six and just a very good all around guy. So Gaono, looking forward to chatting with you and getting some some of your insights about multifamily investing, because that's a very interesting myself.
Gino Barbaro [00:01:08] Dave, thank you for having me on. My goal for the show is to not suck and to bring some value to your audience. Let's make this thing happen.
Dave Debeau [00:01:16] Let's make it happen. So impressive. Impressive bio. Something had to spark this interest in real estate investing. I don't think you've been doing it since age seven. So let me know, how did you first get started in real estate? What kind of sparked it?
Gino Barbaro [00:01:30] Well, I actually started working with my father in the restaurant on age eight, so I've been a lifelong worker inside the restaurant. I bought my own restaurant with my family back in nineteen ninety four. So I've been making payroll, as I like to tell people for twenty five years I've been not an entrepreneur at heart. I was more of a job for me. Right, so twenty eight comes. My father passed away the year before I'd been working with in my whole life. I loved the restaurant business, but when the Great Recession came, took a big toll. I've got four kids at the time. I'm like, how am I going to pay the bills? I need to do something different. So I looked at real estate. I had already bought a couple little properties, failed and a couple did. A couple started getting real estate coaching, went to life coaching school. Everything changed once I started getting educated and I became clear I had the clarity of why real estate. I want to supplement my income from the restaurant initially. But then when I saw the power of refined role, buying into the property, stacking them up, seeing the multiple layers of multiple streams of revenue, like while this can be a venture and doing something for 20 years, it's ingrained in you and you have that fear. Will, if I leave this, how am I going to do this? And for me, it was tough. But the coaching actually helped me out and made me look at my living beliefs and it said, you can do this. I was living in New York, moved out of New York about two years ago to relocate to Florida. And that's why real estate for me, I just wanted to get out from the mundane, what I was doing in the restaurant business.
Dave Debeau [00:02:48] Wow. That's that's a very short, relatively speaking, short amount of time to accomplish what you've accomplished. So you say you're taking a stab at it a little bit before you got serious about it. What kind of led you to to jump into multifamily investing
Gino Barbaro [00:03:03] in the restaurant business was 50 to 60 hours a week. I didn't want another job. Right. I knew fixing and flipping in my market was lucrative, but I didn't want the high tax bracket and I didn't want the turnover. And I knew intuitively, even ten years ago, twelve years ago, the transactions are there. There's no money in transactions. Wealth is created by equity. So transactions become a transaction junky. You get the dopamine effect, you get the trigger. You know, I want to be a farmer. Plant the seed. What are the seed of the multifamily grow? That's what an entrepreneur is taking the risk on the front end and having that asset grow and having that equity, being able to repurpose that equity in the deal. I knew that back in 08. I'm like, if I start getting into this, fixing the flipping, it's not going to be right for me. I didn't want to have one house here, one house there that didn't serve me either because I was already working so many hours. So by default, it was a great niche for me. I just chose my situation.
Dave Debeau [00:03:52] So what was the size of the first multifamily property that you got involved in?
Gino Barbaro [00:03:56] So the first one without Jake, who was back in 2002, was a fourplex in New York. I still own it to this day. It cash is great for me and my brother. Great property owner fixed, probably bought a little too high, but it was self-serving because I was near the restaurant. I used it for self storage. Also easy property to manage. Rents have escalated tremendously over the last ten years. The first property that I bought with Jake was a twenty five unit back in February of twenty thirteen. We call it the little cracked in. It was the best property of rebought, best learning lessons ever and it was something that was manageable. Me, Jake and my brother Mark, we bought a property together. We partnered up something that everyone needs to do, a multi family if and when they want to scale. And we started from the very beginning, honestly, because I had the money Magic did. But Jake, boots on the ground in Knoxville. So let's start this partnership and see how it goes.
Dave Debeau [00:04:45] Nice, nice, nice, nice. So it sounds like you did a lot of stuff right from the from the get go. But, you know, 20/20 hindsight, if you were starting all over again from scratch, but with your knowledge, what would you do differently? If anything?
Gino Barbaro [00:05:00] I would start sooner. I started a little too late. I started when I was desperate. I think that's what happens with people. That's when they become successful because they to the. So, you know, I need to get going. Started sooner. I wish I had started on my own terms would be more empowering to say, you know what, let's start multi family. Now, I can think clearly. I don't have to rush into anything. That's not the way it normally works. I wish I'd done it. I wish I gotten more clarity about why multichannels. So back in twenty two, I was buying it. I wish I had known the reasons why to create that long term wealth, to be able to get out of the restaurant as an option to create other types of income didn't have that clarity. And the other thing was the syndication aspect of it. We're doing our second syndication closing now and I thought on the equity, I want to control myself, just me and my partner Mike. We've been able to hire somebody else for our syndication company. And now that's another company, another source of revenue, hundreds of investors. I wish I had started syndicating sooner and sharing the opportunity, but I was I don't want to be fearful, but I was just unknown and how to work with investors. And I'm taking their money now and I've fiduciary responsibility to return their money. So there's a little bit of a mindset. So those three things I think I wish I focused on a little bit sooner.
Dave Debeau [00:06:08] Yeah, that makes sense now. Definitely makes a lot of sense. So you and your partner, Jake, you've got an education company now as well. So you've been training lots of people over the years, et cetera. So what do you see? Some of the biggest mistakes other real estate investors making
Gino Barbaro [00:06:24] when it comes to that could be a whole entire show, but I'm going to really chunk it down for you. I think the first thing is people think they can do stuff on their own, right? You cannot do anything on your own. You need an environment. You need an environment of people who are like minded. You need to start identifying as a multifamily investor. How do you do that? You need to start going to meet ups. You need to start putting in deals. You need to start getting educated. The lack of education and specific education on multifamily, not just going to read in a couple of articles and listening to podcasts. Those are all wonderful, really going and finding people who are successful and what you want to do. Success leaves clues, pay for your education. That investment in yourself will expand tenfold. Another thing not knowing markets. People have to understand how you into multifamily focus on a specific market because it's market specific. You want lower cap rates. If you're a value investor, you want to add value, you're going to get more money. You're going to generate more income on the back end. You want a cash flow market because you want to get out your job and pay the bills, maybe a higher cap rate market, know your market and choose it. Right. And I think the other thing is not knowing what you don't know. Like I said, I don't know the syndication aspect of it. I didn't know you can get into multifamily by syndicating, by partnering, by raising money, by doing day to day operations, by bird dog. All those things that you don't know are all mistakes because they're holding you back. So take a leap. Go find somebody who's doing it. Seek to serve or pay to pay to play or seek to serve. That's my community director Josh says. And it really hits me all the time because if you don't have the funds, go work for somebody, go put in time and add value to them and learn from them. I wish I had done that sooner. I didn't have any mentors up there, but if I'd done that in New York sooner, I would open my eyes a lot quicker. I would've been able to get into the multifamily quicker and start scaling up.
Dave Debeau [00:08:05] What was what was I saying that you just said there?
Gino Barbaro [00:08:08] Pay to play or seek to serve it to serve.
Dave Debeau [00:08:11] That's yeah. Seek to serve that. I love the look. I mean, I've been talking about that concept for a long time. Either you're paying for somebody to teach you how to do it or you go work for free.
Gino Barbaro [00:08:21] But I need to have skin in the game. Right. Because if you don't have skin in the game, I can tell you all the advice in the world can give you all the tips I can get. You know what cap rates are. I can show you a good deal. But if you don't have money invested, I have mastermind's where people don't show up because they're for free. But when I start charging money for mastermind's, people will take the advice. They'll take the action. The community, I don't know why, but we have skin in the game. That's the same thing with investing. You start investing your hard earned money or someone else's money, you're going to take action. And this is the same thing with the education. When you have something that's earned and you put it in there, man, you're going to you're going to take action on that.
Dave Debeau [00:08:54] So just like take a moment here and explain something, because you talked about, you know, when you got into your first deals, you partnered up with your brother, you partnered up with Jake and I believe in your brother again or a different business partner. And that's how a lot of people get started with whatever kind of real estate investing they're doing now. But you're also talking about syndication. So for folks who aren't familiar with what syndication is, you just give us a big thirty five thousand foot overview of syndicate.
Gino Barbaro [00:09:18] Yeah, sure. So before you partner with anybody, I think you need to have your core beliefs. You need to have what your core beliefs are. And I've made mistakes choosing partners. I've been lucky to have my brother as a partner for years. You need for me. I always want to choose someone with integrity. If if someone's not watching and you're doing the right thing, that's when I know somebody has integrity. You want to live with integrity, with your core beliefs, with your morals and your ethics. So my point is I'm blessed to have really good partners. It was able is able for us to start growing the platform. Actually, I do day to day. And in those day to day in the property management, there's no way that we can do I can run properties into education full time so we're able to branch off with syndication. What it is, is basically you're creating a security. You're raising money from people with the expectation of giving them a return on their money for not doing anything. So basically, you create that. And you're starting to raise money, gets split up into the limited partner side, where those are the partners where you're raising money and the general partner side, which is Jiegu myself and my other two partners. And it's a great way to actually get into these deals that are a lot bigger for us to not take down. We're raising money from investors. Now, it's hard to sort of syndication your first deal because you have so many moving parts where you need to know how to analyze the deal. You need to know how to talk to investors. You need to do all the paperwork for syndication. A lot of moving parts. It can be done. I wouldn't recommend that on your first one, but take a stab at it if you feel comfortable. But you really want to execute on that first deal, have the proof of concept and then go out and show investors what you're doing. So syndication is a great way to get in and start scaling up on other properties. And obviously the general partners don't put any money on the deal. What they do is they actually guarantee the debt. So that's a really big portion. So if this deal goes south, myself as a general partner is on the debt. The limited partners who are raising money from are only limited to that. The investments that they have in the deal
Dave Debeau [00:11:10] that make sense, that makes a lot of sense. What would you say would be like the to make a syndication worthwhile would be like the price point on a building or the size what where it is, because there's a lot of work and expense.
Gino Barbaro [00:11:21] And that's a great I mean, it's a difficult question. I mean, as far as some parameters that are currently right now, most syndications offer preferred rate of return. So the investor gets a preferred rate, which is called a hurdle rate. So on our deals, the first eight percent goes to the limited partners. We don't get anything in general partners. We get charge and acquisition fee. So every time you put a deal together, you can charge an acquisition fee of one to three or four percent of the purchase price as syndicators. Also, you are charging an asset management fee that's usually based on either the amount of equity that's raised or the gross revenues, one one percent, one in eight percent. So you're generating revenue that way. You know, when you're putting a deal together, anything less than a million dollars might not make sense syndicated because you need to spend fifteen thousand dollars with the securities attorney for those documents. A lot of paperwork, a lot of time involved. So depending on the deal itself, I would say something a little bit more than a million dollars is hard to put a rule of thumb there. But think about all the moving parts. If it's something small in that, I would say get a couple of partners, get in an operating agreement, make sure that they're doing something as if they're silent, they're expecting a return with not no, no work involved. That's a syndication. But make sure you get a weekly call them a monthly call. Let them get involved in that process. Partnering is a great way for us to start. We do we do stuff weekly. We're on weekly calls. So as far as our portfolio, we are active in it.
Dave Debeau [00:12:40] So, you know, it sounds like you got a lot of exposure. You do have a lot of experience with real estate investing, probably familiar with Robert Kiyosaki and Rich Dad Poor. And he talks about everybody has their unfair advantage or their super power when it comes to real estate investing. What would you say is yours?
Gino Barbaro [00:12:55] I think I have to. My one fair advantage is having great partners and then having a vision and then being really, really hungry. And they're always thinking about ways to grow the business based on the right deals. And I think the other unfair advantages, I just work hard. I won't take no for an answer. And the restaurant did that. I mean, that's hard work. I mean, working when it's one hundred degrees, working when it's twenty degrees, working on weekends, working with people, yelling at you the taste so that the unfair advantage is just working hard. I'm not any smarter. I just had a little more clarity and I was able to follow through and I had great partners to lean on and to actually get great advice from and add to that partnership the stronger
Dave Debeau [00:13:34] you can work well under pressure, it sounds like. Yes.
Gino Barbaro [00:13:37] When you've got six kids, you just let the other ball roll. Whatever happens, happens. You don't say. There's always somebody screaming. There's always somebody laughing. So.
Dave Debeau [00:13:46] All right. I know. I know you've got an education company. What do you think? Is that the biggest problem that you help solve for your clients and your students?
Gino Barbaro [00:13:56] I think a couple of things. I think one of the biggest problems is convincing them that they can do multi family. Like we mentioned, there's so many different ways of getting into it. Dave, if you want to raise money for a deal, start what they call some syndicating and start raising money for another deal. You want to get into the limited partner side, put some money into somebody else's deal, learn the process there, and then start doing your own deals. I think just like I said, the environment, getting people together who are like minded, who support each other, who can answer questions is an awesome thing to do. You know, the mechanics is not hard. I think it's the psychology that's a little bit harder seeing other people doing it that would give you the motivation, the inspiration to do it. So I think that's what we focus on with our community.
Dave Debeau [00:14:34] Some very good. From all your years of experience, what do you think would be a good, actionable tip that you could give people who are interested in getting into multiple investing?
Gino Barbaro [00:14:46] Well, why are you getting into it? It's the first thing. It's always about you, right? I mean, I can tell you how to get into it. Principal pay down. You've got appreciation, you've got cash flow, you've got cost, segregation, tax benefits. That all sounds great. But why are you getting into it? I got into because I wanted to make a few extra bucks on my side gig and then ultimately turn it into to figure out why you want to get into the. Next thing you start joining communities, start going to meet up, start listening to other people, speaking by educating yourself and start reading books veracious, get that. And let me tell you, it's going to take 12 to 18 months to find your first deal after you've done all that, because it took us 18 months ago, our first deal. But after you've done your first deal, I will guarantee you that second deal is within three to six months because momentum, inspiration, motivation takes place. You're closer now. All of a sudden, brokers look at you differently. You start getting more deal flow. Don't know why that happens, but it just happens that way. So you just really need to get work, be prepared on the front end. Like I said, it's the farmer having to plant the seed and waiting a few months for it to sprout and germinate. The instant gratification is not in multifamily. If you want the wholesale fix and flip, that's a lot easier. But the multifamily is a long game and long game is three to five years. It's not like I think twenty years to do it, but it's going to take you a good eight months to get that first deal and then after that things will start progressing.
Dave Debeau [00:16:03] Awesome. Very good. So, you know, if people are I know you've got a book and if people are interested in finding out more about you maybe getting a hold of your your book or finding some, you know, some and a bit more of an introduction to you and Jake Jeno, what should they do?
Gino Barbaro [00:16:19] Why should they? Very simply, just go to Jake and Gina. Com we've got a great website, got a lot of free resources. Our podcast is called Wheelabrator Profits with a number one multifamily podcast on iTunes. We've been doing it for over four years. We've we've interviewed Robert Kiyosaki, Victor Deger, as you see all the top names. And I love the podcast. We're speaking offline podcast. A great you get to speak to amazing people and learn what they're doing. So continue to listen to those podcasts and my emails. Gino, J.A.G. comments, anyone that wants to send you a message, love to hear from you.
Dave Debeau [00:16:50] Awesome. Very good. You. It's been a lot of fun. Very nice meeting you. Thank you very much for sharing some some great insights and tips. And who knows, maybe we can do this again sometime that day.
Gino Barbaro [00:17:01] Thanks for having me on. I appreciate it. And everyone, have a great day.
Dave Debeau [00:17:04] Thank everybody. Well, thanks very much for checking out the property profits podcast. And we like what we're doing here. Please head on over to iTunes, subscribe read us and leave us to review. Very, very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.