Insider Secrets Podcast Season 2, Episode 23

 Guest: Gino Barbaro

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Guest Bio:

Gino Barbaro

As an entrepreneur, he has grown his real estate portfolio to over 2,000 multifamily units & $250,000,000 in Assets under management. Gino and his partner, Jake, are teaching others how to do the same through Jake & Gino, the premier multifamily real estate education community. To date, their students have closed 68,000+ units and have $4 Billion in Deal volume! He is the best-selling author of three books, Wheelbarrow Profits, The Honey Bee and Family, Food and the Friars. He currently resides in St. Augustine, Florida with his beautiful wife Julia and their six children.

SHOWNOTES

Key Takeaways

Life comes down to becoming and being persistent.

Focus gave me the clarity to continue to scale the portfolio.

You really need to focus on what you as an investor wants, ultimately what your goals are.

You can always buy real estate. You can always buy it in any part of the market cycle. You can’t always sell real estate.

Market cycles have changed dramatically. The decade of from 2010 to 2020, there was no recession.

Understand where your market is and what part of the cycle and recession is trying to buy as much as you can.

Standout Quotes

“You need to look at job growth and population growth. If you don’t have renters, you don’t have demand.” – Gino Barbaro

“You’re going to be getting a nice dividend every single month. And if that’s what you want, that’s great. But the way I’ve been able to generate wealth, is to have a mixture of both.” – Gino Barbaro

“When you’re speaking to the person on the other side, you’re not trying to get money. You’re offering them an opportunity.” – Gino Barbaro

“Cultivate a solid relationship with the seller and other involved parties. Establish trust and rapport to navigate through any challenges that may arise during the closing process.” – Gino Barbaro

“Maintain open lines of communication with all stakeholders involved in the deal. Clear and transparent communication helps manage expectations and prevents misunderstandings that could potentially derail the closing.” – Gino Barbaro

“I don’t invest in Chicago. Not political, but because you get cashflow, but you don’t get the appreciation.” – Mike Morawski

Timeline

[01:09] Intro to episode guest

[02:56] One word that describes Gino personally and professionally.

[05:11] Gino talks about his background.

[11:21] What are your top three market choices for the coming year?

[16:47] Where do you think we are in the current market cycle?

[28:08] Gino shares three tips for closing a real estate deal in today’s world.

Contact

Email: jakeandgino.com

TRANSCRIPT

Kristen: [00:00:00] Welcome to this edition of Insider Secrets, the weekly podcast that turns real estate investing goals into reality. Each show, we interview guests who are seasoned real estate professionals actively closing and managing real estate deals. Mike is the founder of My Core Intentions and would like to help you make your real estate investing dreams a reality.

Mike coaches you to buy investment real estate, creating short term cash flow and long term wealth. Your host and real estate coach, Mike Morawski, has more than 30 years of real estate investing and property management experience. Here’s your host, Mike.

Mike Morawski: Hey, good morning everybody. I’m glad that you are here. Hey, if you’re new to the show, thanks for being here this morning. I’m sure somebody told you about it. Thank them. Cause you’re going to want to thank them after this morning. Here’s what I want to ask.

If you just do me a favor, like us, love us on social media. If you’re on YouTube, please smash the subscribe button. We love the followers. [00:01:00] It helps our growth. And we are always bringing great content, great podcast guests. Great conversations. And this morning is going to be no different.

I’m excited. Been trying to get this guy on my show for a while. Jake with Jake and Gino. And I am super excited. He’s come calling from Florida this morning, and we are going to talk about a bunch. We’ll talk about raising capital. We’re going to talk about vertically integrating your business and how to get in the multifamily business.

So whether you’re new or whether you’ve been in the business for a while. I know that you’re going to get a lot out of this morning show. So standby. Jake, good morning.

Gino Barbaro: Good morning, Mike. This is Gino. Everyone does that. It’s Jake and Gino and everyone always assumes. And my kids always ask me, Hey dad, why is it Jake and Gino? And I say, guys, it’s Jake and Gino. Cause it sounds so much sexier rolling off the tongue, Jake and Gino, right? Instead of Gino and Jake. So I’m doing great brother. How are you doing this morning?

Mike Morawski: Oh man, I’m [00:02:00] sorry. Hey, there’s a restaurant in Chicago that’s called Jean and George Eddie’s. And I don’t know why, but there’s always this connotation for me between Jake and Gino and Jean and George Eddie’s. And I’m going to tell you, if you get to Chicago, you should go there. It’s iconic. It’s been there a hundred years. Great steakhouse. I’m sure you’re like me and you like steak.

Gino Barbaro: Well, Mike, subconsciously I was the pizza guy. So maybe you’ve got that subconscious connection between me and restaurants and that whole vibe.

Mike Morawski: I know. Are we going to share any pizza recipes this morning?

Gino Barbaro: If you want to, I’m trying to go low carb. So I really don’t want to think about pizza. Cause if I think about pizza, maybe I started drooling on your show. So maybe we should avoid that topic for the next few minutes.

Mike Morawski: Oh my gosh. Hey, Gino, let’s kick this thing off. One question I always ask my guests and I always tell people, I say, Hey, I’m going to write a book one of these days and it’s going to be, what’s the one word. So what one word best describes you personally and professionally?

Gino Barbaro: I would have to say the first word that pops up into my mind is being [00:03:00] persistent. And I think, I have six children, ages 24 to nine, I’ve been making payroll. I like to say since 1994, I’ve owned a restaurant since I was 24 years old, I’m 53.

So I’ve been making payroll more than a lot of people listening to this podcast have been alive and really life comes down to becoming and being persistent. Look at it from my lens, because when people think about success, they think about overnight success and it’s going to take a little bit of time.

And I think to me, truly successful is just continuing to work on your craft and can you continue to get better and continue to grow? And the only way you do that is by trying to be persistent in life.

Mike Morawski: Yeah, absolutely. Hey, do you think you were always like that? You said you being persistent, making payrolls since you were in your twenties, but do you think you’ve always been persistent or is that something that was there an event that happened along the way or did you just fall into that? Grow into that?

Gino Barbaro: I had an epiphany when I was interviewed by a gentleman named Renee Rodriguez. You should all go check him out. He wrote a book called amplify. [00:04:00] It’s amazing for influence, persuasion, leadership. He made me think of a time and a memory when I went back between the ages of nine and 13, and as you’re listening to this, maybe you can do this exercise as well.

And when he brought me back to that time, most of you gonna say, I don’t remember anything, but just think of something that really sticks out. And for myself, it was going to work with my father. He owned the restaurant and I was nine years old. And I told a story about the bread and going into the kitchen and working hard with them.

And I think your values around that age time really shape and really mold themselves. And I sort of wanted to be like my father. I think that’s why I opened the restaurant and he had a lot of persistence. He was an immigrant. When he came to the country, he couldn’t speak English, but he ended up ultimately opening his own restaurant, then actually buy one with us for the family. So I think that value and that hard work and that persistence came from my father.

Mike Morawski: That’s awesome. And I love the fact, I think you and I come from that era where we went to work with our dads, right? My dad used to take me to work and I [00:05:00] have some great memories from that. We’ll talk about that on your show though, because this is about you right now.

Hey, so talk about your background a little bit, where’d you come from? How’d you wind up in the crazy world of multifamily?

Gino Barbaro: As I said, I started out in the restaurant business, my career, I own the restaurant up in New York and I’d been working with my dad since I was eight or nine years old. In 2007, my father passed away. And that’s when I quickly realized, am I living his dream or am I living my dream?

It hit me. And around that time, I picked up a book called The Secrets of Millionaire Mind by T Harv Eker. And that really impacted me. And it made me understand that T Harv says, your fruits are in your roots. The value that you provide. Stop blaming the circumstances on everyone else. Take the blame. If you have something that you haven’t achieved, then myself, all of that time leading up to 38 years of age for myself, I can look back and say all the efforts and everything I had done had led me to that [00:06:00] point and I wasn’t where I wanted to be.

So I understood that responsibility, control, long termism, all those values I lacked. I was fortunate to meet my business partner in 2009, Jake, he was a pharmaceutical rep. He was taking orders out of the restaurant and bringing them to the doctor’s offices and selling pharmaceuticals and selling tortellini carbonara on the side.

So that’s an odd mixture, but Hey, it worked for him until it didn’t work. He moved to Knoxville in 2011 and we started buying apartments in 2013. We took 18 months to find our first deal. But Mike, I had life before Jake and I had life after Jake, and life before Jake was challenging for me in real estate because I was all over the place.

I was all over the map. I was buying properties. I didn’t know what I was buying. I had no criteria. I had no map, no process. And when Jake and I partnered up, I had already gone through those mentorships because after reading that T Harv Eker book, I’m like, I need to learn multifamily. I need to really focus on this as a business.

And I hadn’t done that previous to Jake. So it [00:07:00] was almost fortuitous to meet him when I met him because I was ready to meet him. And people say, Oh, you were lucky. Yeah. If I’d met him without having that mentorship, what I have in that experience and the education, it would have been for naught, but fortunately I met him, we bought our first deal in 2013. And since then we’ve been able to acquire a little over 2200 units in multifamily.

Mike Morawski: Nice. Good for you guys. They always say that when the student’s ready, the teacher appears and you could look at that with your relationship with Jake. You were ready, he showed up and, I think when we put that stuff out in the world like that, not to go down a spiritual path here, but when we put that out into the world like that, we manifest it.

Hey, let’s talk a little bit about, you brought up a good thing, a good conversation about buying strategy. You were buying all over the place. You didn’t know what you were buying. You had no focus. How did you get to that place where you’re focused and what’s your buy box look like today?

Gino Barbaro: In 2005, I met a gentleman that I refer to as Maserati Mike. He pulled into the restaurant, he had a nice gold [00:08:00] Maserati and I invested $172, 000 with Maserati Mike for unfortunately, 18 months later, I lost that 172 grand and once again, I can blame Maserati Mike, but he was not the right partner for me. I didn’t do due diligence.

I didn’t know how to invest in mobile home parks. There were so many mistakes that I had made and I learned through that experience and through my next experience. Hey, focus on one niche. I had done really well with my first multifamily back in 2002. It was a triplex and I loved it. I love that experience.

I knew people needed a place to live and I felt comfortable with residents because I was in quote unquote the hospitality business because I had a restaurant, so I knew how to deal with residents and I liked it. I enjoyed it. I saw the vision in the future. So I decided the first thing Mike, to answer your question, focus on a niche.

Especially if you’re starting out, don’t be into self storage, mobile home parks, RV parks, commercial, [00:09:00] multifamily, pick one. And for me, I love multifamily and I selected that, all in. Give yourself some time to learn the business. I think it’s education times action equals results. I had done action, but no education.

So for myself, I needed to really double down on that. And when you focus on what we call the three step framework. It’s buy right. Finance, right. And manage right. I didn’t have that without Jake. Once me and Jake started investing in deals, that was our three step framework. And in the buy right to speak specifically to that, when we first started back in 2011, it was a lot different than what we’re buying today.

Back then, it was a function of the market cycle. You could buy real old assets back then at really great prices. And you can buy them and you can flip them and continue to buy and scale. Right now, our criteria in this part of the market cycle. And it also depends upon what market you’re in.

We’re looking for assets that are a little bit newer, [00:10:00] 80s and newer. We’re looking for unit mixes. We love two beds and we like three beds as well. We like the townhome style apartment. If they can have garages, even better. We like washer and dryer hookups as amenities in the units. If they don’t have them, it’s okay. We’re looking for median incomes of at least 50, 000.

We like brick. We like hardy plank. This is what our buy right criteria was. The mistakes that I was making with life before Jake. And this is what a lot of our investors do is I’m looking for a deal. Any deal we’ll do. Any market we’ll do. I don’t care as long as it’s a high cap. That’s when you get into trouble because you’re not an expert in any facet.

You’re not an expert in the market itself. So, as a newer investor, focus on what market, become an expert in that market, because it’s important to know the brokers in that market. It’s important to know valuations in that market. It’s important to know property management companies in that market. So when they send you a deal over, you can analyze it [00:11:00] quickly and you can quickly go to yourself.

62 build it’s got clay pulling. It’s got aluminum wiring. I don’t really like it unless the price is really good. Once you’re able to focus on what you want, you can parse everything away and I think to me, ultimately focus gave me the clarity to continue to scale the portfolio with Jake.

Mike Morawski: I love that. And you just spun right into the next thing, which is markets. How do you look at markets today? And what’s your top three market choices for the coming year?

Gino Barbaro: For us, that’s an easy choice. I was in New York when I met Jake and I don’t want to make it political. I just don’t want to invest in a market where it’s very difficult to get residents out. I’m selling time in multifamily. In New York, it’s very hard to evict somebody in multifamily. Now, if you’re your business model, you can say to yourself, Hey, I’m going to put three or four months reserves aside for each one to get a resident out. That’s fine. You can do that.

I just don’t want to invest in a market that’s going to be very challenging as far as getting residents out. We chose [00:12:00] Knoxville because we were fortunate back in 2011, Jake Stenziano and Gino Barbaro in Knoxville, Tennessee. Y’all ain’t doing business down here. It wasn’t an easy place, Mike, but at the same time we were persistent.

We didn’t know how to deal with the brokers, but we learned and we love the Southeast. I’m going to tell you right now, the Southeast, it has its challenges. Insurance is high in a lot of these Southern markets. We’re near the water, but to me, you need to look at job growth and population growth.

And I think affordability of the market that really lends itself to when you’re looking for multifamily, because if you don’t have jobs, then you don’t have renters. And if you don’t have renters, you don’t have demand. And if you don’t have demand, you don’t have rent growth. And if you don’t have rent growth, then you don’t have NOI and your assets not going to appreciate.

So if you’re going to ask me specifically three markets, I may shock you or surprise you with my first one, and this is a big shout out to all the Nebraska people. I love Omaha. I don’t know why other than I’ve been there and I like the [00:13:00] metrics. It’s a very stable, linear kind of market.

Now, people living there are going to say, well, asset prices have gone up so high they’ve gone up everywhere. But what I like about that market is below the radar. Population growth is nice. The people there are nice. It’s a nice place to live. It’s affordable. Rent growth has been really good. Jobs have been very stable there as well.

So I love Omaha, Kansas city, those Midwest markets, another market that’s really good. You had mentioned Oklahoma. There’s certain markets in Oklahoma city, Tulsa. Those are really good markets. Now, if you’re going to come to where I am. I like East Tennessee. That’s where we are. We’re within a three hour radius of Knoxville because we’re vertically integrated. So we like that kind of market.

Side note, not as big of a fan of Kentucky as I used to be. We had a couple of assets in Kentucky turning a little bit more bluish. It’s getting to be a little more challenging not to say you don’t go and look, but that’s just my preference. And I’ve obviously, I love markets in Georgia, Alabama’s got some really cool markets as well.

[00:14:00] And if you’re out in the West, the markets in Arizona. You got Phoenix. Those markets are constantly growing out there. I’ve given you a plethora of different markets. You have some that are linear and Mike, it really comes down to what are you trying to accomplish?

Do you want cashflow instead of capital appreciation, then a market like Tulsa or Omaha may be a little bit better of a fit. But if you’re looking for purely capital appreciation, you’re looking for markets that have lower cap rates, maybe you go to the nationals of the world. Maybe you go to those Huntsville’s of the world that have lower cap rates, but they’ve got more appreciation.

So you really need to focus on what you as an investor wants, ultimately what your goals are, and then try to find the market that suits. Those needs, those goals.

Mike Morawski: Yeah. And I think it’s important to like, when we’re talking to the LP, the limited partner, who’s investing in our deals that we find out what their goals are. Don’t you think we should serve both masters. And I mean, short term cashflow, long term wealth. That’s why I don’t invest in Chicago, right? Not political, but because you [00:15:00] get cashflow, but you don’t get the appreciation. And I liked those markets where you’re getting both and Omaha’s probably just like Tulsa right now, where we’re there before the smart money. Cause as soon as that catches on, it’s all over.

Gino Barbaro: Mhm. I agree with you. And that’s why the most of the markets I’ve mentioned have a balance of both. And if you’re investing purely speculatively in markets that are just going to appreciate, you can make a ton of money doing that is just remember this everybody, you can always buy real estate.

You can always buy it in any part of the market cycle. You can’t always sell real estate. So if you’re caught in a down cycle, when you need to sell, Oh, but you know it’s going to appreciate in three years. Yeah. But if your debt expires in one and you can’t pay the debt on it and it’s killing you because it’s negative cashflow, there’s risk involved in that.

And we’ve seen that happen in a couple of parts of this market cycle over the last couple of years. So be careful of buying purely capital appreciation. I’ve never [00:16:00] done that in my career. I don’t want to do that. On the other hand, you make money in real estate when you sell, not when you buy, when you crystallize the equity or you refi or you sell.

You’re still gonna make money in the cashflow. So if you’re going to tell me, I’m investing in a market that’s got a 20 cap, I’m making cashflow. Great. That’s a good strategy. Don’t understand you’re not going to create massive wealth by doing that. You’re going to be getting a nice dividend every single month.

And if that’s what you want, that’s great. But the way I’ve been able to generate wealth, is like you said, to have a mixture of both, you want to go in there, get the cashflow to pay the bills and to create that cashflow snowball over the next five, six, seven years. But at the same time, you want to be able to crystallize that equity longer term next three or four years, pull that out and replace it or replenish it by buying another asset with that.

Mike Morawski: Yeah, I couldn’t agree with what you just said there more. That’s for sure. We know that there’s market cycles, right? And they could last, if you looked at that trend in that invert horseshoe, we could be anywhere between 8 to 16 [00:17:00] years to fully go through a cycle. Where do you think that we’re at in the current cycle we’re in right now?

Gino Barbaro: Mike, I was reading an article by Jay Scott the other day, famous dude on bigger pockets. He’s a very intelligent investor. He is an investor. And what I like about him, what he mentioned was in the article, traditionally every four years we would have a recession.

It was just normal part of the market cycle, but it appears that our politicians and us, we were to blame as well. We want to avoid the pain. So even when we say we’re in a recession to the average person, it may not even feel like a recession. So market cycles have changed to me dramatically.

I think the decade of from 2010 to 2020, there was no recession. We technically had gotten out of the great recession by 2010. It didn’t even last that long ’cause we pumped so much money in, and we did the same thing in 2020 by pumping so much money in, it just stimulated the economy.

Now we needed to slow it down, but think of the [00:18:00] cycles in real estate as being four is really the first one. If you want to call it recovery. Then there’s expansion, then there’s hyper supply, and then there’s recession. And the weird thing about it is from a national level, it’s very hard to do it from a national level because it’s so market specific and he can be even so neighborhood specific.

I would go to IRR.com. It’s a great resource and it’ll tell you certain markets are in hyper supply. Like take a look at Nashville. You’re taking a look at possibly Charlotte. You’re taking a look at maybe Jacksonville, these markets that are building so much. Phoenix, they have an oversupply of assets and then you may go to other markets that may be in recession right now.

So it’s very interesting. Understand where your market is and what part of the cycle and recession is try to buy as much as you can. You’re trying to buy as much as you can. It’s very difficult to do that because debt is difficult. Raising capital is difficult. Sentiment is difficult.

But it’s the contrarian and as recovery comes, you’re buying in those assets. You’re able [00:19:00] to flip out of them. Refi some, expansion is great. Expansion landed less than a pretty long time in this last part of the market cycle, and now I think a lot of the assets are in hyper supply and I’m hopefully we’re going from that seller’s market, which is basically the expansion hyper supply back in to the buyer’s market where all of a sudden brokers are calling you back.

Sellers are giving in on a price and oh, by the way. We got seller financing was a bye bye for the last seven or eight years. We did a seller finance deal back in 2023. It was seller carry back, but I think that is back on the table as they like to say. And I think that’s one of the indicators that you can say, wow, okay.

Seller financing, creative financing strategies. When you see that kind of stuff, the sellers are losing a little bit of their power and it’s shifting a little bit over to the buyers. If that makes sense.

Mike Morawski: Yeah. A hundred percent. I love creative financing. I’m an out of the box thinker and I love to go down that road. First real estate deal I ever did in my life was seller financing. And the last one I [00:20:00] did last year was a creative financing deal with a seller carry back and then assumption. But that’s a story for another day. That’s for sure.

Gino Barbaro: I can see it lights you up. It’s interesting because that’s where it’s not just real estate. It’s becoming creative and that’s really the business skills that you learn to get a deal done. And for anybody out there, we wrote a book called Creative Cash. If you want to copy PDF copy gino@jakeandgino.com email, send you a PDF copy of the book because that is one tool in the toolbox that you will be able to use.

You won’t be able to use it in every part of the market cycle, but you will be able to use it in my opinion over the next 12 to 24 months, Mike.

Mike Morawski: Gino tell people that how to get that book again.

Gino Barbaro: gino@jakeandgino.com just email me and I’ll send you a PDF copy of the book.

Mike Morawski: Yeah, we’ll put it in the show notes also, so people can go grab that. Hey, you made an interesting comment and I just kind of want to back up around this, raising capital is hard. And here’s what I’m seeing right now. Tell me if you’re seeing the [00:21:00] same, but I think there’s two bookends. We got one where everybody’s saying, oh, there’s going to be a better deal coming down the road tomorrow, which I don’t believe for a minute.

And on the other end, they’re saying, I’m scared. I’m afraid to go into the market. So that tranche in the middle is very thin. So raising capital takes you two, three, four times the amount of work it took two years ago to bring capital in to get a deal funded. What are you seeing? What are you telling your students? How are you dealing with that part of the market today?

Gino Barbaro: I think it’s harder because to me, it was done incorrectly over the last few years. It was a lot easier. It was cheaper money. If you’re going to want to raise capital going forward, this may sound a little counterintuitive. You may think I’m crazy.

I’ve done a lot of work on myself personally, emotionally. And I think the word vulnerability kept popping up and vulnerability leads to truth and it leads to connection. And I think that’s what people ultimately want is they want [00:22:00] connection. And if you want to raise capital. You need to be a little bit vulnerable with your investors and tell them why multifamily.

And let me give you a perfect example. You need an origin story. You can’t jump into raising capital by saying, IRR is 20. This is what I’m going to do three years. Unless it’s a really sophisticated investor, family office. That’s not going to work going forward. They need to trust you. They need to say, I want to work with that person.

So my origin story of why multifamily for me, and I’m focusing on a specific avatar. You don’t have to speak to everybody in the world. If I was raising capital, when I got out of the restaurant, I would use the story of myself being at the restaurant on a Friday night. There’s six inches of snow. I’m in the parking lot.

I’m shoveling that snow. I’m throwing salt down. I’m freezing my ass off literally. And I’m by myself on a Friday night. And the first thought that pops into my head is, you know what? I’m not making money again in my business. Another week goes by. [00:23:00] I’m not making money. My mom owns the building. The restaurant building.

I’m paying her rent. So she’s making money every month from the rent. And oh, by the way, she owns three apartments upstairs. And as I’m shoveling that snow and I’m getting pelted by hail, I look up and one of those windows right there, the light is on. And I say to myself, my mom is at home tucked in bed and she’s getting paid.

She’s getting paid in her sleep while I’m out here shoveling and I’m not making any money. And to me, that’s the story I would use on a podcast or talking to an investor and saying, that’s why I got into multifamily. Because multifamily investors get paid in their sleep and that pain and that vulnerability and that honesty and the truth, that’s the reason why I want it to create income and I want it to create wealth.

And I saw multifamily as that vehicle. So anybody who owns a small business, anybody who’s in the restaurant business, anybody who’s a chef can completely understand they’re working week to week, it’s transactional. My mom is at [00:24:00] home while I’m out there working.

I think that’s what you need to do when you’re raising capital, be honest with who you’re trying to raise capital from, let them know your story, let them know why you’re doing it. You need to have a why. It can’t be just about making money. It has to be something bigger than that.

And I think for me, understanding who you’re speaking to, that’s really, really important. Who can speak your lingo. And then after that everything needs to fall in place. You obviously have to have some type of credibility. If you don’t have credibility, find a sponsor who does, connect with them and partner up with them, that comes down to it.

But before you do anything, remember these words, you have to slow down to speed up. That’s what people make the mistake of. They start jumping on and they start getting into their pitch without letting people know who they are and why they’re doing this. So it’s important that you do that. It’s really important that you do that, but it’s also important to let people know that you’re excited that you’re talking to them.

And you had said something very important. As I’m thinking this all through. When you’re speaking to the [00:25:00] person on the other side, you’re not trying to get money. You’re offering them an opportunity. And also you need to get to know them and make sure that it’s a right fit for the both of you. Ian Altman has a great book called Same Side Selling.

His acronym is (FIT) Finding Impact Together. If I can’t deliver a good product to my investor with very similar goals. Very similar values. He mounts his money back in three years, but I need a seven to 10 year horizon. It’s not going to work. So you’re raising money from the wrong person. Make sure you’re raising money from the right person and you listen to them.

They have to get to know you, but you have to get to know them. And does it take time? Absolutely. It’s a relationship based business. It’s not send out an email, get 30 people on your list. Every single person on that list has to be spoken to, you have to understand their story and you have to make a connection with them.

Mike Morawski: Yeah. Hundred percent. You couldn’t have said that better. And it is such a relationship business. Just like you and I, we’ve seen each other from a distance on Instagram and social [00:26:00] media. This is a time we get to connect and now we connect and, now it comes to the point where, hey, let’s build a relationship.

And it’s the same thing with our investors, because the deeper that relationship is, the longer it will stay intact. And the more opportunity that comes for both people, when that relationship’s intact. I couldn’t have said that any better.

Gino Barbaro: I’m going to share this with you and the listeners right now, because when we jumped on, I’ll give you the perfect example. I got to know your story in one minute. You were in California in 1983. You wanted to move out there and I felt the pain that you didn’t. 2008, you had a rough go around. This is your second time in the business. You lost a lot in 2008. This is your second go around, right?

Now you’re in multifamily. You got several hundred units. You’re back in California. Just moved back. And I learned your story in a minute and a half. And I completely connect with you because I’m in the same business as you. I’ve had the same struggles with you in real estate, and I’ve actually moved out of state where I lived, where my [00:27:00] identity was. I was in New York or you’re Chicago.

And that’s the power of having these conversations. Great. You’re on zoom, but when you’re sitting down and talk to somebody face to face and you’re real and you’re vulnerable and you’re being honest and truthful, that’s how you make the connection. And then obviously you have to show your ethos, which is your credibility. But you’ve been doing it for so long, that shouldn’t be a problem, but the connection one on one is real.

Mike Morawski: For sure. And I teach people that, Hey, come up with an 11 second elevator pitch because wherever you meet somebody and you care about them and you ask questions, they’re ultimately going to say, Hey, tell me about you. What do you do? And give it to him in 11 seconds, let them know who you are. I think boy that’s great conversation. And I hope people listening to this morning, will go back, rewind this and listen to this again, because this was really good.

Hey, I have a question for you. So listen, we’re walking down the road. We find a deal. We put a deal under contract. Now we get to closing. We’re in an environment where sellers are a little emotionally involved. Buyers are [00:28:00] emotionally involved. Closing becomes tenuous sometimes, through the process. I mean, we closed 300 deals last year. It was like pulling teeth. Worst seller I’ve seen in 30 years. Give me three tips for closing a real estate deal in today’s world.

Gino Barbaro: The first thing is when you get a message or an email or a text, I want you to stop. And I don’t want you to respond to that for maybe a half an hour to an hour. Because it happened to me last Friday. I got an email, 5 o’clock, they want to extend something. I’m saying you’re waiting till 5 o’clock on Friday to get an extension. And for me, it’s normal. You get really annoyed, you get really pissed off. You really have to calm down and take a step back. And this is why the power of partnership is amazing.

Cause I’ve got a partner. I can work it out with a partner. If I’m looking at it by myself, it can be very challenging. Cause I look at life from my paradigm, from the way I look at things. My partner has his set. You put those two together, you may get some really great [00:29:00] creative ideas.

I think the second thing is what is your ultimate goal? Are you ultimately trying to close the deal? Are you just trying, what’s the word, if it’s a fair price and you’re just trying to take advantage over the longterm, it’s not going to work out in our business because I’m going to know that Mike is a terrible buyer. The brokers are going to know that and they’re not going to show Mike the next deal.

Man, Mike got a great price on this one, but guess what? Mike ain’t getting a look at the next four or five deals. That’s the reality. So understand what your goals are. Are you just in it for one and done? Are you in it because your ego is really big and you want to beat everybody? Or are you in it because you want to create value for your team?

You want to have a really great, what’s the word you want to have a great feel and you want to have a broker call you up and email and you go, Jake, man, I close this one deal. This is awesome. I can’t wait to do the next one. If that’s the goal and that should be the goal, then sometimes be empathetic and pull back and understand what your goals are.

That’s what it really comes down to. And I’m trying to think of a third one for us [00:30:00] because as we’re closing this deal, if you’ve got to give money, we’ve got that retrade word. Two years ago, that retrade word was a cardinal sin. It was a mortal sin. You don’t do retrades two years ago, but now guess what? They have some validity to it.

And you have to look at it and say, can I get a better price somewhere else? Can I go somewhere else? Or is there some validity to it? And can we negotiate this? We negotiated the price. They were fair. We took some, they took some, we actually got some more hard money down, and then we extended the contract a little bit.

So there’s always ways to be able to negotiate, but if they ask for something, you always ask for something in return. Because if you don’t ask for something in return, they’re going to keep asking and keep asking, and you’re going to get really pissed. And then blow up. So make sure the nibble, you nibble right back at them.

Mike Morawski: You alluded to it, but you didn’t say it. And on those retrades on the negotiations during that LOI period, I think it’s win win. Because if I can’t structure a deal with you where I walk away and I feel like [00:31:00] you got the best part of it and I got the best part of it, it’s not worth doing a deal.

If I walk away, Gino, and I think, God, Gino beat me on that. I’m not going to be happy. If I walk away and I think. I got Gino, I’m not going to really be happy either. It’s got to be win win.

Gino Barbaro: It sounds cliche ish, doesn’t it? And people are like, Oh, that can’t really happen. But in a great transaction, I think both sides sort of have to win. If you’re asking for a price and you’re asking for terms and I can meet that and I’m a good buyer and you ask for docs, I get docs. We try to make the processes as seamless as possible. I think that’s what we’re all striving to do. And if you can do that, I’m telling you, the brokers really like that.

They have a difficult job, brokers. Their job is to find two people who are on opposite ends of the spectrum, put them together, consummate a deal. There’s a lot of emotion going around and then they have to have that deal closed. If you can make that person happy, both sides, that means the transaction is good. And that means the broker is going to want to work with [00:32:00] both sides as well.

Mike Morawski: Yeah, 100%. And the other thing you alluded to was some broker relationship stuff. I mentioned earlier, I was at NMHC last week or this week, spent three days there, back to back meetings with brokers, pref equity lenders. And it’s interesting these guys today, two years ago, you couldn’t get a return phone call. And today, they welcome the conversation, they welcome the relationship. And you just build into that. And it’s not something that happens overnight and it’s not on the first call, but you gotta be diligent as a buyer, as an investor, especially if you’re leading a group and your group is putting together a team to take down these deals. You have to be building those relationships because you need that broker.

Gino Barbaro: Yes.

Mike Morawski: During the times of tough times, raising capital, tough times, getting funding done, extensions, retrades, everything we talked about this morning. So important. Hey, I appreciate you. I appreciate you being [00:33:00] here this morning. We’re starting to bump up against time a little bit.

What would you tell a new investor this morning coming into the market?

Gino Barbaro: Now is the right time. It’s always the right time. But for me specifically, if I’ve got to look over the past three or four years, I think now’s the right time because like Mike, you had alluded to, it takes a little bit of time to create relationships.

It takes a little bit of time to create some investor base. It takes a little bit of time to create expertise in the market. And as the market continues to reset. And things continue to go down, you’re getting in at the right time because brokers are calling you back. There are investors out there who haven’t invested yet as well.

And you want to be able to start creating those relationships now. Because people always tell me, I’ll wait till the market crashes. It doesn’t work that way because you don’t know when the market crashes. As part of Freddie told us back in 2022, second quarter prices have been down 12 percent from that point.

So I’m assuming we’ve hit a high. [00:34:00] I don’t know if that’s true or not. I know price to continue to slide, but if you’re looking to get into this business, especially get into it for the long term, it’s an amazing business. It’s a great way to build wealth. It’s a great way to get some type of tax benefits.

It’s a great way to build a lifestyle. And to me, when you’re looking at multifamily. You’re looking at it as an investment, but it is also a business. So think of it from that perspective, every single deal you buy is its own little business. It’s own little cash machine. And I think right now is an excellent time to get in and think of this business as long term as well.

Mike Morawski: A hundred percent. Yeah. And, it’s a great way to put six kids through college, right?

Gino Barbaro: Sure is my friend. It’s the only way as far as I’m concerned, you have any pizzas I got to make to put six kids through college and lots of pizzas. A lot less work this way, I think.

Mike Morawski: Yeah, here’s what I like about real estate and being a business like it is. And just kind of last comment here. There’s so many things you can do and [00:35:00] early on in the show, you said, focus on one thing. And, you and I were market rate rent, multifamily investors, some people may say we have our blinders on, what happens is you get really, really good at that and you really understand the numbers and the math doesn’t lie and you understand how to go in that direction.

I’ve seen, maybe you can agree with this or not, but I’ve seen over the last year or so, a lot of people who were in the multifamily space now, all of a sudden they’re doing car washes, self storage, industrial, because you know what, that looked a little shinier than multifamily because multifamily got tough and if you were persistent.

And you stayed in the deal and you stayed in the business, you’re going to do well because the bull run is coming. You might as well get in front of it today.

Gino Barbaro: Yes, that’s a great point, Mike. I guess the last thing I would share is there’s nothing wrong with jumping into another niche. If you’re an expert and you’ve been doing it for years, you just need to understand what [00:36:00] your goals are.

If we want to be the Chick-fil-A of the apartment space as far as customer service goes and we jump into RV parks, it’s a different business. It’s a different niche. It’s a different way to deal with customer service. So for us, it really didn’t align with our values and our goals. And we didn’t need to own 17, 000 units.

We’re currently happy owning 1800 units. Producing a profit per unit of over $200 per unit. You can do the math. I’m living really great. I love the business that we’ve created, the core values. We’ve got 80 plus team members. So ultimately it comes down to what your goals are. If your goals are what we’re trying to accomplish, we want to be the small giants as that book, Bo Birmingham wrote in our space to build a really great enduring organization in the multifamily space, there may be some lean years, but there can be other things you can be doing in those lean years, like operations and like raising capital.

Mike Morawski: 2000 units is a really nice living. Tony Robbins always said, you can live your life or design your life. And it’s a great way to [00:37:00] live your life. Gino, thanks for being here this morning. Tell people how to reach out to you and connect with you.

Gino Barbaro: Mike, it’s been a blast. I always love talking about real estate, multifamily specifically. We can get into personal development mindset. I think that’s another rabbit hole that we can always discuss in another show, but just go to jakeandgino.com. I’ve got the podcasts, I’ve got the books, I’ve got the blogs, we’ve got the articles. It’s a wealth of knowledge. And the last thing I’d say to everybody. There’s two slogans we like to say, if it doesn’t cash flow, let the grass grow. And buy right, and sit tight. And I think you’ll be okay. If you listen to those two mantras.

Mike Morawski: God, I love that. You got any events coming up this year?

Gino Barbaro: October 19th. It’s mid October. We’re going to be having a nice little multifamily event with a lot of our students presenting deals on the buy right, manage right and finance right. And obviously we’ll be teaching on those three pillars as well.

Mike Morawski: Good for you, Gino. Look forward to continuing this relationship and conversation. You never know where it’ll go. Appreciate you being here. Everybody. Thanks for [00:38:00] being here. Reach out to Gino for some information. Find out about his event coming up and get his book. That’s for sure.

Kristen: Thank you Mike, and thank you for joining us for another great episode of Insider Secrets. As always, Insider Secrets is brought to you by My Core Intentions. Wherever you hang out on social media, you will find Mike and My Core Intentions. Please like and follow us to get the most up to date real estate investing trends.

Visit mycoreintentions.com where you can get expert coaching on all things real estate investing and property management. If you’re looking to become an expert, Mike’s coaching will help you scale your real estate investment business. We’re looking forward to having you back again next week for more Insider Secrets.