Video Transcripts:
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Because my next presenter is Jerome Myers. He leads the Myer’s development group and he focuses on buying broken apartment buildings. Yeah. We love that as well. He manages 90 units, a 90,000 square feet of work force housing across Virginia, North Carolina. And his goal is to have a thousand units.
Uh, that’s awesome. Um, he also hosts the Dreamcatchers and Myers methods presents multi-family missteps podcast. So, sounds like he’s got a little bit of a focus on missteps. So I love that because that’s what he’s talking about here. And he volunteers on, on stem boards and enjoys traveling internationally.
He has studied and compiled the top mistakes probably from his podcasts. Uh, people make when investing in multi-family and he’s going to share with you not only what they are. But how to avoid or overcome them, please help me welcome Jerome Myers. What’s going on, drum everything. How are you, Michael?
Everything, man. That’s pretty cool. This is great. Yeah. I love the, the five missteps or right. I just love that because if we know what they are, we can maybe try to avoid them. So, um, I’ll let you take it from, from here. And, uh, maybe, you know, I’ll check in on every four months. Okay, great, man. I really appreciate the opportunity to share with you and the community.
And so, I’m just going to dive right into it. I’ve got a ton of content and I want to make sure I get through it. If there’s questions, just go ahead and drop it in the chat and I’ll answer them afterwards if that’s all right with everybody. And so, for the agenda today, I want to talk about why I started speaking, because I feel like that has a really important piece to how people are getting into multifamily deals.
We’ll go through the five mistakes. We’ll start with what I consider the least one and then walk our way up to the one that I think has the biggest impact. And that will be number one, um, offer you got some free resources and if there’s any opportunity for Q and a, um, we’ll do that. Just let you guys know, like I’m not a CPA or attorney, so.
Take it for what it is, but this is an individual lives advice for people who are sitting with me today. And so if you go back to last year before May of 2019, you wouldn’t find me online anywhere. You couldn’t find any online pictures. There’s no real social media presence. And the one website that we have was all about the brand, I was a complete ghost.
And by being invisible, I realized that I was part of a bigger picture. I was operating in my own world. I had just built or finished building a $20 million business for a Fortune 550 company. I left corporate America after getting an opportunity to lay people up two years in a row, um, trying to get into multifamily.
I got turned away from Tim banks and eventually I was able to get into my first deal. And that was a game changer for me because I served as asset manager in that way. And then we started documenting our processes and putting systems together. And that turned into what we call Myer’s methods today. And this spring, we started on our first development deal, which is 120 units of workforce housing in Greensboro, North Carolina.
But nobody really knew that because I was flying under the radar. And what I’ve learned, just taking the survey across the space is that, you know, there isn’t a ton of diversity in multi-family investing. And I thought back to a conversation that I had with a mentor when I was early in my corporate career.
And I told him, Hey man, you’re a shining light to all of the folks that are out there because he was the only minority executive in a company of about 17,000. It’s like, you give me hope that one day I could. And I feel like it’s really important for people to see examples of folks that look like them doing it, just to remove that additional roadblock of, Hey, maybe this won’t work out for me.
So it’s really important for anybody out there. Who’s listening during this show that if you’re having success, that you show it, instead of try to hide it. Because it’s not going to make people ask you for things that you might not want to give them. It’s going to inspire more people. And for me, that’s a much more impactful way of using your success than other people would consider, you know, trying to avoid people, asking them for stuff.
You know, there’s a ton of different approaches in to getting into multi-family. And so now let’s go into the ways that people are doing it and they’re creating problems for themselves. The whole point of this presentation is not to show how smart I am or to poke at people, but to allow people not to make the same mistakes, it doesn’t make sense for myself or Michael or anybody else to make a mistake.
And then you go make the same one. You learn, you go further, faster by learning from the mistakes of others. And so mistake number one is the one that I made and it’s a huge one and that’s only doing self-education, there’s so much content out there that it becomes overwhelming. And so if you’re listening to 40 hours of podcasts, like I used to, or reading 400 books or something like that, something crazy like that, that Spencer said yesterday, you end up in a space where.
You got a whole lot of information going in, but you’re probably not taking much action and all of that information, depending on who you’re getting it from conflicts. And so you start asking questions and you’re like, well, what do I do? And then when you actually get into a deal, it might not actually fit across the frame that you’re working against.
And so I think it’s really important that you find somebody to go on the journey with you so that you have that curated content. And you’ve got somebody to turn to when you get into waters that are deeper than what you’re used to being. So that you don’t drown, selecting the wrong partners. This one was probably the one that was most telling for me.
And I see this more so in deals where I’ve bought than anything else. So you get into a partnership because you met somebody at a conference. You barely know them, but you have a common goal. So you think that’s enough to do a partnership. And what happens is something bad happens while you’re operating the property and you decide that you don’t want to do the deal anymore.
And. All the ugly stuff comes out. And that is when things really, really, really start to degrade. And you end up losing money because you sell the deal at a discount just to get out of the partnership who are these wrong partners, property managers. I remember the first property manager we selected was a residential property manager, and we moved them over to manage a 20 unit and an eight unit that we purchased in one package.
They didn’t have the skills, resources, tools, system. Set up to handle something that big. And it ended up delaying our project by three, maybe four months when we were going through the reposition and phase, the ownership group. I already mentioned that, you know, when you come to these conferences, the goal is to meet people and then you want to go through and deepen that relationship so that you really have a great understanding of who you’re dealing with.
You want to get married after a one-night stand. And that’s what I like in getting into a business partnership with somebody. Just off of a conference, your contractors, if you’re doing a heavy lift, you really want to make sure that the contractor has a proven track record. You guys are able to communicate well, because there are going to be things that come up and you have to make sure that you guys are able to come to some form of agreement or resolution on those conflicts.
The attorneys, you know, some attorneys are better than others. Some wait till the last minute to do all the documents, which create other timeline delays for you and could have a financial impact if you’re up against hard money or some of that other stuff. And so you really want to be careful with that.
And then the CPA, you know, this hit me this year. We didn’t file extension. At the right time. And so the partnerships got hit with some late filing fees on our taxes, and it’s a really simple thing, but you know, that money coming off of the, what would have been the bottom line, it’s really frustrating for the people that are partners in this.
When you’re going through the partners and the people in particular right now that we’ve gotten past the roles, the ethics is huge, right? So you want to make sure that they’ve got the right characteristics, they’re using a communication style that works for you. I remember early on, we had. A partner who didn’t enjoy reading long emails.
And when we were trying to communicate things, without meeting ended up being in a long email and he’s like, I don’t have time to read the email. He didn’t have time to me. So how do you actually communicate with somebody when they take that position? We want to really make sure that you guys are able to communicate in a fruitful approach because you know, if you can’t share the message, then it will create chaos.
Um, skillsets, if everybody does the same thing and nobody does the other thing, you end up with a gap in your skill sets, and that’s probably where the property gets hurt or the project is hurt. And then make sure you have the same goals in investing. If the goal is to get all the money out of the property that you can, and you want to be altruistic and make an impact in the community, those approaches might not work together.
At least not well. And it could leave people feeling alienated and frustrated. Miss step number. Under capitalizing. And this one is really one that shows up a lot when people are getting into their first step, they’re just trying to get across the finish line. They just want to get to close. And when they do that, they set them up for failure on the backend.
Right? So after you get into the deal, you know, some people want to cashflow the rehab. And when you try to cashflow the rehabs, what happens if you don’t have cashflow where you can’t do the rehab, and if you don’t do the rehab, then you have a vacancy problem. And then it just kind of spirals out of control.
So you want to raise that money up front, having no liquidity after close. And this happens when people try to buy deals in cash, the banks is going to require some liquidity afterwards. So you won’t be able to get debt. In that situation, but when people buy in cash or they do some creative financing and then something comes up with the property and they don’t have any cash to take care of it, the same scenario when your cashflow and out of rehabs closing without taking fees.
This is for all of the folks that are doing acquisition fees. If you’re in this thing full time, And you’re not making any money any other way. If you don’t take a fee at the close, you’re going to have a really hard time focusing on operating the property. Cause you’re not going to be sure how you’re going to eat.
Cause your savings going to run out at some point, not doing a breakeven analysis. Uh, it was interesting to hear Joe talk about it earlier. How has the over utilized metric and some of the other things you want to know where you have to be short term so that you can. Budget properly. If you struggle with occupancy because you’re doing a rehab or something else like that.
You knowing where you exactly you’re going to be so that you can service your debt. And the other stuff will allow you to be successful in sleep at night. Instead of staying up, trying to figure out how you’re going to pay that mortgage or some other expense related to the property investors backing out at the last minute, I remember I had somebody commit to funding, half of a deal, and a couple of weeks before closing, they said they weren’t going to do anything.
And so the scramble there to finish that. If you’re not careful, you will have, you will end up under capitalized and unable to execute the business plan that you’re going. And I think the other thing that people do when they’re just trying to get a deal closes, they cut their splits. And what that looks like is, Hey, we came in, we’re going to do 70, 30 or 75, 25, and then we cut it to something a whole lot less.
And what that does, is it disincentivizes? The operators to continue to pay attention to the property because they’re looking for something that’s going to deliver more cash to their pocket. Number two, not creating systems. So there are some things that you’re going to do manually. Each month and potentially each week, if you’re doing those tasks over and over again, you want to figure out a way to systematize them so that you can spend less time on those things.
You know, if it’s some type of reporting, if it’s some type of analysis, the ability to hit a button allows you to get all that time back in. Redeploy it against something that’s going to be more valuable. Other things that I think people should systematize against is market analysis. So if you’re trying to figure out where you’re going to go, if you can just plug in the labor of bureau data and whatever else you look at, you can get that taken care of in a relatively short.
Deal flow, you know, setting up alerts when new things come on to the commercial MLS, uh, Kevin people who are in your system that are sending you deals like all of those things. If you have to do it manually, you’re going to be losing valuable time and it’s going to kill your efficiency distributions to the partners.
It was really good to hear that. Hanford talk about the way that they’re able to send out wires monthly and how they’re able to get the reporting in like the first 10 days of the next month. And it’s just like, this is a really well-oiled machine and it happens without a whole lot of touch points. Um, one of the things that I think is most important is vetting partners and potential investors.
You know, you want to create a system for walking people through that process. And once you figured that out, It will have less false positives, right? You think somebody is somebody you want to do business with and you end up in a space where it’s like, oh man, I really didn’t know this person. If you’ve got a system in place that kind of vets out to people or filters out the people who, you know, don’t have common values as you are looking for a very similar outcome issue.
You make your life a whole lot easier. The reporting we we’ve touched on a little bit, and then the thought leadership content, you know, it’s very manual to post every day on the different social media platforms. Or if you have a podcast editing, a podcast can be a huge time suck. And so the goal is really to figure out systems and processes so that you can automate those things and get back to really focusing on the books.
And so the big one is messed up. Number one. So once you get into a deal, there’s a whole lot of other stuff you, you start doing, right. You start focusing on everything but operating. And it was good to talk to Bruce about this a little bit, Bruce Frazier, because he was like, I just want to focus on the deal.
I don’t want to do build a platform. I don’t want to do this. I don’t want to do that. Anything that. But way for me doing a deal is a distraction and he’s right in a, in a lot of different ways. And I’m not saying that you shouldn’t do any of those things. What I’m saying is you have to keep the key thing, the key thing, and the key thing is operations.
We’re in a time now, specifically, where if you don’t operate your deal, well, you’re not going to do well on your returns. And that for me is like critical and core four. Anybody who’s getting into this space because a fellow business plan will end up costing you and your investors, the risk capital that’s in the deal.
And so things that people start focusing on and lose sight of their property and operating their business plan is looking for a new market to enter because maybe they’re not getting much deal flow in the market. They’re in trying to analyze the next deal and work on the next contract and negotiate that while their property is.
Actually performing as well as it should be. Where’s that next deal? What partners or investors should I be talking to so that I’m ready to go do the next deal with social media posts. Should I make, and how much content should I be? Behind that, what broker can I get in contact with? Um, which mastermind should I join?
Which podcasts interviews should I do? Which conferences should I go to the next thought leadership content to produce? You know, maybe you’ve got a podcast and now you want to start a YouTube channel or maybe it’s time for you to write a book. Like all of these things are pulling you away from the main thing, which is the operations.
And my favorite is when people go to conferences, they gotta take selfies with people to build credibility because. They’re being seen with this person. And so, because I’m with this person, I’m really somebody that’s doing something in this space and that isn’t so much the case. I’m running a little early on this one, but you know, we’ve got some free resources.
So we got the multi-family Ms. Sales podcast and the whole thought behind this is it’s great to hear success stories, but we learn more from our failures. And so we bring operators onto the podcast and we get them to tell their worst stories. They tell us about the good, the bad, the ugly. They tell us how they fix the problem so that if you encounter that same person, You get the opportunity to benefit from their learnings.
Um, the dream catchers podcast, many people are here because they liked Michael’s message of financial freedom. And so this podcast tell us the story of people. Who’ve exited the matrix, which I associate with corporate America. And then we’ve got free four step guide and, um, a podcast related to syndication and joint ventures for anybody who likes to jump over to Myers methods.com and grab that from us.
And so, you know, my party message to the group is your, your dream should be real. You can have anything that you want, you just have to be willing to pay the price and you have to be willing to commit to using enough effort so that you’re able to exact that result. So thanks again and well, that’s good.
Well, we’ll do, I’ll just, uh, you know, we, a few minutes left, so I’ll just pepper you with some, some questions. And also if you guys have questions watching, right. Uh, go to Jerome session right now and go in the chat and let us know if you have any questions for him as well. So we talked a lot about, about, uh, mistakes that, uh, that you’ve, you know, you’ve heard about people making, which of those, like what’s Kevin, like one of your bigger mistakes.
Yeah. For, for me it’s partnership. Right? If you, and I’ve spent probably the last six months focusing on that, if you don’t pick the right people to do a deal with. It will crush you because you’re, you’re binding yourself to other people, right? If somebody called Michael and said, Hey, Michael, I want you to sign this car loan with me.
And it’s like, no, I’m not going to do that. But we do it for apartment deals all the time. And so the point of it is you’re, you’re tying your financial future to other people. You want to make sure that you really know them and you understand their values and what their goals are, so that you rate success.
And I didn’t do that in my first year. I was just happy to be there. And because of that, um, we had some struggles in the beginning and we eventually worked through them, but we had a really complex project and we had a lot of money on the line. And things weren’t going smooth in the beginning. And because we didn’t have a strong relationship at the start with it created issues, but here’s the thing is you were just glad to be there.
Right? So in the beginning, like if I look back on my first deal, I would never ever do that deal again. But without that deal, I wouldn’t be where I am today. Right. So, so, so yes, you have to be careful. You have to be cautious, but at the end of the day, sometimes you just got to get a deal done. Right. I agree with you, but here’s the flip side of that, right?
What if that deal goes in the dumps and you can’t get another one. Yeah, that’d be bad if you’re your first deal or any deal, can’t be so bad where you lose your shirt and you’re out of the game. There’s no, there’s no question about that. And for me, the thing that I worry about most is having people in the deal who won’t come to the table.
When it’s time to get things done that are critical. And so you’ve got to make sure everybody’s got the same vested interest. That’s the only thing I’m worried. Yeah. It’s so tough. And we’ve had partnerships as well, and it is so difficult to get someone to pull the weight and do what they’re supposed to.
You know, they have equity it’s it’s there permanently while the deal is still alive and there. Not doing Jack, they’re just not. And you’re like, ah, I gotta do this other guy’s job because he’s not doing it because if I don’t do it something bad will happen. And it’s irritating because you can’t fire someone.
It’s so irritating. You can buy them out. But yeah, you can buy him out. Sure. More money in the deal. That’s not performing. Right. The questions that you you get into. And for me, you know, you’ve got to make that decision and everybody’s gotta be completely committed to them. That’s right. I mean, in the beginning we used to tie things like asset management to equity.
We no longer do that because we realized, oh my gosh, what is this guy? Or gal doesn’t know what they’re doing. They don’t want to do it. Whatever. And now they have equity for something that they didn’t do for five years. Like it’s just separating, separating and stuff. And you know, and Kevin, to the point now where, you know, you’re, you’re actually paying people to do certain things versus giving them equity.
Now, in the beginning, you don’t have that luxury because you don’t have asset managements coming in that will cover $50,000 salary. I get that and things definitely change. This is why you would never go back and do what you did two or three years ago, you know, You got to do them at one point, you know, and then you kind of.
That you said something, uh, similar, uh, you said something interesting when you started off with you, you kind of beat yourself up a little bit for not being, you know, visible when you first got started. And it’s interesting. Here’s my, here’s my, my observation. If you look at the people who are in this business, okay.
They’re like 80% white male. I got to say it. And we have women on this panel. You know, we have, uh, people of color in his panel and we’re like, why aren’t there? Why is there not more diversity in this, in this industry? Uh, what did, what are your thoughts? I, I go back to the dinner table at my house. Right.
I’m the son of a soldier and stay at home. We didn’t have anybody that had access to real wealth. And so, you know, my origin story is in college where me and my buddy are sitting on the stoop and we’re doing the calculation of how much the apartment owner is making, but we never seen him and we never talked to him.
So how do you create the path? The great thing about what you guys have done. Like your whole ma your mentorship program and other stuff is you give people a path to actually get a deal done and you guarantee it, right. There’s a lot of other educators that don’t do the same thing. There is no guarantee, and they’re not going to continue to work with you after the 12 months is up.
Right. And so. I don’t think many people really understand that they can own it because they haven’t seen anybody do it. And I think that’s a big part of it for me. Yeah. I agree. I think it’s a lack of role models, right. Uh, you know, and I was having, I was having a discussion with a very experienced, uh, female syndicator last year at deal America live and we have, we are bantering back and forth and I kind of challenged her and she was super successful.
I’m not gonna mention names. You know, drag it with you. But I said, you know, you’re a super successful syndicator, but you have no platform. You’re not actually being a role model to other to other women. Yeah, you’re right. And, and, and, and you’re right. So you’re quietly being successful. Good for you. What are you doing to inspire the people?
And if you look at, and I told you, you look at, uh, you know, some people sometimes get upset, they don’t get invited to speak at a conference. Well, okay. But the conference organizers want to sell tickets, obviously. And if you don’t have a platform, you can’t sell tickets there for, you might not, you might, might not speak, you know?
And, and, and it’s one of those things. You actually have the ability you’re in a position to inspire other people. And if you’re super successful good for you, but who else is benefiting from your success? If you don’t talk about it, right? I mean, what do you, right. And so why did you now start building a platform because you really actually have started building a platform because of that very point, I realized that.
I had the opportunity to be the guy that I looked up to when I was in corporate America. And there were so many people around me who, when the question was asked, do you know anybody who owns an apartment? I was the only person that could raise my hand. Right. And then the people who were connected to me in a close-knit circle, they could raise their hand too, because those were the people I decided to apartment with after the first deal.
But nobody actually had an example of that. And I think it’s a great way to build. Financial independence, financial freedom. And I want to share that with more people. And I don’t want anybody to believe that they can’t do it because of the color of their skin, their hair or their sacks, because those are not any of the reasons why I totally agree with you.
I haven’t had as many discussions with female entrepreneurs. There’s nothing inherently. Any of those things. I think it really comes down to lack of role models. I mean, right. I mean, that’s exactly. So, so what is your battle cry, man? What do we have? What do we have to do? We’ve got to be, we’ve got to share our microphones with diverse voices, and we’ve got to make sure that we don’t, I don’t make the same missteps to put a bad taste in people’s mouth.
Right. If somebody puts their money in the deal, it’s the first time investing in something outside of the stock market and they lose their money. They’re going to say that’s bad forever. And so we’ve got to be great operators. So when people put their money in R D. That people feel safe and that we’re able to make a huge impact and create wealth and financial freedom for people of all races, creeds, and colors.
Yeah, that’s awesome. And I told her, I told the ladies, it’s the same thing. He says, you guys, two things, you have to do something. And then I have to do something. You guys have to build your platform. And I have to, uh, allow you to leverage my platform to, uh, to get your message out more and be better role models.
So that’s where we’re going to do room. Um, so, so, so what’s up with a red pill, man. You’ve been wearing that shirt, the entire conference. Uh, I’ve got a whole closet full, right? Um, this Steve jobs of it, right. Just. Yeah, you just wear over and over again. It’s about exiting the matrix. It’s about deciding that my new role I’m going to live my reality and I’m live my truth.
And it doesn’t matter what conventional wisdom says. I think I can create and manifest the things that I believe in most deeply. Can you say a little more about that? Um, I can say a lot about it. I think the big thing. Yeah. So the whole idea. Yeah. And I love your battle cry on financial freedom, right? The whole idea of going to school, getting a good job and working for 40 years doesn’t make sense, right?
There’s no reason for us to go to a job that we don’t care about or that doesn’t invigorate us. So we don’t have passion about when. There’s so many other things that we have gifts and interests in that we can go off and do. If we’re not worried about how much money we’re going to make. And so my goal is to help people exit those jobs and go do the things that they’re most passionate about so that they can impact the world.
But in a real way, instead of figuring out how to buy a bigger house, a bigger car, or some of the other, um, things that we spend money on that don’t actually. Make the world any better or really our experience. We’re just trying to fill those holes in our souls with things. And in the end, you end up empty and really, really sad.
I’ve been there. And I’m sure a lot of other people who’ve accumulated wealth over the years have been there too. You get to the top of the ladder, you realize, Hey, this isn’t really it. I really want to be significant. I really want to make an impact. And you know, part of that for me, is inspiring others to chase their dreams and make them.
That’s right. Exactly. So what, what would you, how would you, how would you articulate your mission? Then? The mission is fraying a hundred people from jobs that they’re not passionate about so that they can go off and make the world a better place. That is my goal. And the way that we’re doing that is through apartment owners.
That’s great. Cause my goal is a thousands of you do your job and only have to take care of 900. So this is a fly by is Michael is good. That’s all. Durham is a real pleasure to have you here, man. I’m I appreciate, uh, your perspective and your, and your passion for this. We love it. So thank you so much for, for being here.
You’ll make a life grateful for the opportunity to talk to you. Awesome. I’ll talk to you soon.
