#19 Attract Real Estate Investors | Jacob Blackett Interview

Jacob Blackett Real Estate Investing
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Jacob Blackett, founder and CEO of Holdfolio & co-founder of Syndication Pro, shares his real estate expertise with Ryan and talks about the different approaches to real estate investing including:

  •  single homes
  •  multi-family homes
  • fixing and flipping properties
  •  syndication

Jacob also expands more on how he has used technology to solve some of the problems encountered when attracting property investors. 

Listen to him share more about how the industry has been impacted by COVID and his advice for future real estate investors to succeed in the industry. 

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Key points:

0:50 —  Jacob’s background

4:25 —  What got him started in Real Estate

6:11 —  His very first fix & flip 

7:29 —  Getting funds for the first properties

9:28 — Mentoring perspective 

12:09 — Getting a realtor’s license 

13:30 —  How “Holdfolio” works 

16:30 — Shifting from single to multifamily homes

17:18 — Key things to look for in a new property

21:36 — Syndication Pro Platform 

23:30 — How the platform helps raise capital 

24:56 — Developing the website 

26:57 — Attracting investors through Syndication pro

28:48 — Regulation on syndication platform

30:29 — Benefits to investing in syndication 

32:47 — Target ROI 

34:16 — Debt/investment ratio 

37:30 — Covid challenges in multifamily rentals

39:00 — The future of real estate 

40:32 — Advice for future real estate investors 

42:27 — Connecting with Jacob Blackett 

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Episode Transcript

Ryan Dye (00:00):
From CoLab INC, it’s There to Here. A show about entrepreneurs, innovators and mentors and the impact they seek to make on the world. I’m Ryan Dye, executive director of CoLab, and on today’s show, we talk with Jacob Blackett, founder and CEO of Holdfolio, a residential real estate investment platform and co-founder of SyndicationPro, a real estate technology platform that gives real estate professionals the tools they need in order to raise capital and manage investors online. Based in Columbus, Ohio, Jacob is also the owner of Six10 Management, a property management and construction company, and holds a bachelor of science in finance and entrepreneurship from the University of Nevada, Reno. Jacob, thanks so much for joining us today.

Jacob Blackett (00:41):
Yeah, thank you so much, Ryan.

Ryan Dye (00:43):
You’re a bit of a serial entrepreneur. As the founder and CEO of several companies over the past few years, you have a lot going on, what sparked this entrepreneurial journey?

Jacob Blackett (00:54):
It’s a great question, Ryan. So growing up, my father was actually a small business owner. He owned an automotive shop, and it was just kind of a one man shop, I worked there in the summers, and after school, doing oil changes, and whatever work my dad trusted me to do, made my extra bucks there. And then, actually, when I graduated from high school, and started college, I got a job at a Walmart distribution center working Saturday, Sundays, and Mondays from 2:00 PM to 2:00 AM, 12 hour shifts.

Ryan Dye (01:42):
Oh, wow.

Jacob Blackett (01:42):
Yeah. And so starting off at college, I think one of my things that I really wanted to do early on was just get out of the house, pay my own way, and that’s what I did, and working at Walmart was actually where I really started to realize that having a boss and having a company kind of own your time was something that I didn’t really like. So basically, what happened at Walmart is you would wear a headset, and the headset would track your every movement, it would actually grade you on performance. Like, if you’re 95% or 120%, they would incentivize you for being a good performer. So that was cool. I always got some good incentive pay, but it was all about clocking in and clocking out and everything was just so managed, and you have limited amount of vacation and sick time.
So I just really grew to resent that. I just felt like I was being controlled. And in college, I was actually studying business, finance, accounting, I ran into an entrepreneurship minor, which was glorious. It was amazing. The professors in the entrepreneurship program were owners of venture capital companies and past entrepreneurs, and I remember sitting there, they were typically two nights a week, seminar type setting, and man, those classes were just amazing. So that’s really where I got the entrepreneur bug, I guess of ultimately wanting to just do my own thing and control my… If I’m staying up late, I want to be because of my choice.

Ryan Dye (03:33):
Because of you. Right.

Jacob Blackett (03:34):
Yeah, yeah, not because someone else is making me so.

Ryan Dye (03:37):
Exactly. No, I think that’s a great thing to strive for. So as you’re going through and you’re taking entrepreneurial focused classes, which by the way, is not as common as you would think in academia. I mean, more and more we’re starting to see areas of entrepreneurship focus in business departments and things like that. But it is one of the things that we do at CoLab is trying to help encourage that, and one area is our LaunchU program on college campuses. So I think it’s great when we’re seeing that happening more because there’s just so many opportunities that you can take in that area of development. So what piqued your interest in the real estate side of things? Was that always kind of in there or is just, you go through school and go, hey, I really like this part of business and investing?

Jacob Blackett (04:28):
I was studying finance and accounting, and I was talking to some investment bankers and kind of getting some advisors and I was thinking that I would probably graduate, get my CPA license and then move into some type of private equity or investment banking type realm. And what happened on the real estate side is that late one night, my sophomore year of college, I for whatever reason, turned the TV on. There was an infomercial about fixing and flipping houses.
It was kind of a guru, I’ll teach you how to fix and flip houses, and nobody in my family worked in real estate. I didn’t know anyone, not even a realtor but it made me think, real estate is all around us but I don’t know anything about it. And I actually went to my course offerings with the university, and there was nothing. There was nothing on real estate, and so I actually went to the free one night seminar. I purchased the weekend, 9.95 for a two-day seminar, and I just started getting some books, started finding some online forums and communities and did a couple fix and flips in college and so that’s how real estate entered into my peripheral.

Ryan Dye (05:53):
So you just thought, oh, I’m going to cut my teeth here and find a place and do some work on it and try to make a profit out of that.

Jacob Blackett (06:01):
So, a crazy story, Ryan. So my first to fix and flips, they happened simultaneously, the same time. I was out there looking for my first deal, and I just happened to get two deals together at the same time that seemed to make sense. What happened, unfortunately, because I’m 18, 19 years old, no experience with business, no experience with real estate, I had the education that I learned from the seminar, and I had my realtor telling me, if you did fix these up, you could sell them for 290.
I had a contractor who I walked through the properties with and we scoped out what we would do to renovate and make them nicer. So I had my pieces. But what happened was that the contractor didn’t work out. That created long delays, I had to go find new contractors, which of course, created additional expenses. And so I blew my construction budgets. I didn’t have any working experience with contractors and now the only real way to do that is to have previous experience and get really good referrals and get lucky.
So yeah, I blew the whole construction side of it. It prolonged the project. I had money, loans to buy the properties in the first place. So I had high interest payments every month.

Ryan Dye (07:22):
Well, I was going to ask you, you got loans to then buy these homes. So you didn’t have a lot of capital going in of your own?

Jacob Blackett (07:30):
Right. Actually convinced my grandmother to provide the capital that I needed. She unfortunately had kidney failure and had a settlement due to a drug that she had taken, and so that was my first investor, and yeah. So those two deals, they went sideway. The realtor Who said you could sell these for 290, the actual sales price on those properties were 240, 250, which was, it was all of my margins, and so I lost. I lost 70 grand on those first two deals, and so I…

Ryan Dye (08:08):
But you still were interested in doing real estate?

Jacob Blackett (08:12):
Yeah, I figured out how to take a $100,000 bank account and make it 30,000. But I was actually trying to do the opposite.

Ryan Dye (08:20):
The other way around. Right.

Jacob Blackett (08:23):
Yeah. What happened is that, through this experience, I met people making money in real estate, I met people doing this, doing this the right way and being successful, and so I knew it was possible. I just was naive and didn’t have the right team in place and the right mentors. What came down to was, how do I pay back that 70 grand as quick as possible? And so I was looking at my options of getting a CPA and going up a corporate ladder, or pursuing this real estate side, doing it successfully, and the payback period was five times faster if I could just do the real estate deal successfully. And so when I graduated, I decided to just lean into the real estate. I learned what I did wrong, I took those bumps and bruises or like a tuition and went and did successful deals and was able to pay my grandma back within a year of graduating.

Ryan Dye (09:23):
So you mentioned mentoring, In that experience and process, I mean, you obviously were dealing with some individuals where things didn’t work out or you had a realtor whose margins weren’t where they needed to be in terms of what the advice or things that they’re giving you. Did you have some mentoring though, that did help you kind of look at things in the right direction or avoid certain mistakes as you moved forward?

Jacob Blackett (09:48):
Early on, on those first two deals that would have made or break those deals, right? If I had the right person looking over my shoulder and I knew how to successfully engage a mentor and take advantage of successful people out there doing what you want to be doing. So after those first couple of deals, I had a couple years in college, I did those deals my sophomore year. So my junior and senior year of college, I really buckled down, bought books, got onto community forums. And so when I went out there for round two, I felt like I had a lot more of my bases covered. And when I did my first deal, I didn’t necessarily have a mentor in place. But my first few deals resulted in meeting someone who eventually became a mentor. And early on in my real estate career, I ended up working into their organization, helping them find an app and acquire deals.
They were 10, 15 years ahead of me in the process, and so they were doing everything that I was looking to do, and so I just found a way to work into their organization. Long story short, they were buying all their deals at Sheriff auctions. This was in 2012, so we still had a lot of share sales from the meltdown of 2008, 2009, 2010. And so they were getting all their deals the past few years from those auctions. And so when I met them, I was doing alternative things to find deals. I was putting out signs, sending letters to owners, putting in multiple offers on listed properties, all things they weren’t doing. So I basically just learned what type of deals they’re looking for and said, hey, I can do all of these. You can do the acquisition or the sheriff sales auctions. I’ll do all of these and it made sense for them. And so within a short period of time, I worked my way in and was doing acquisitions for that individual.

Ryan Dye (11:59):
Did you during this time get your realtors license or add that to the mix of your knowledge?

Jacob Blackett (12:06):
Yeah, I did get a realtors license as soon as I graduated college. I actually grew up in Reno, Nevada, I went to the University of Nevada, and I moved to Indianapolis when I graduated college. And so Indianapolis was, of course, a couple 1000 miles away, I had no connection there, aside from the fact that I was moving to be closer to my girlfriend at the time, who’s now my wife, and so it all worked out.

Ryan Dye (12:36):
Well, that’s good.

Jacob Blackett (12:37):
That plan worked out. So yeah, when I moved to Indianapolis, and I knew nothing. So I had just got my realtors license, and that was my starting point in terms of, number one, meeting people, number two, getting access to the MLS listed properties, direct access, and number three, learning, just learning the area and meeting people, so.

Ryan Dye (13:02):
So not too long after this, you founded the company Holdfolio, which is a real estate investment portfolio, how does this approach to real estate investment work?

Jacob Blackett (13:13):
When I first started in real estate, I was purchasing, renovating and selling properties, single family homes to homeowners, and then got into the business of wholesaling properties. So helping other investors find properties that they’re looking to do the same thing. And then also in Indianapolis, there was a market where you could do the same thing where you’re buying property, renovating it, except for you’re moving a tenant into it. So now it’s an income producing property, and there’s investors looking to purchase those as investment properties for rental income.
So all of my experience was buying, renovating, selling. And where portfolio came in, is I wanted to, instead of selling those properties, I wanted to figure out a way to hold them and collect the rental income. And so the model with Holdfolio was that instead of selling the property for a profit, let’s keep it, let’s do all the management, and we’ll just bring an investor or investors on board. So they provide the capital, we do everything else, and we keep 20 or 30% ownership, and let’s see if we can build 1000 property portfolio, and so that’s what we set out to do with Holdfolio.

Ryan Dye (14:38):
So in this approach, is this something that you’re seeing as kind of common out in the real estate market, or is it relatively new? I mean, the concept isn’t overwhelmingly complicated, it’s just a matter of, yes, it may not be as common. So I’m just kind of curious, how common is this approach in developing portfolios?

Jacob Blackett (14:57):
Yeah, I think what we were doing single family homes. So we were buying single family home rentals, we were actually buying 10 of them and putting them in one LLC, and then getting investors involved. I quite honestly, at the time didn’t know anyone doing it. This was in 2013, 2014. I still really haven’t run into anyone quite doing that. So I think it’s pretty unique. But the concept of creating partnerships with investors to own real estate is not unique, right?

Ryan Dye (15:33):
Mm-hmm (affirmative), right.

Jacob Blackett (15:36):
And the term typically is syndication would be the key word term of doing that. Syndicate or creating a syndication, and when I thought up the business model, Holdfolio, I didn’t know that term. I’d never heard of it until one of my early investors who I was talking with said, hey, you’re creating a syndication. Have you found that-

Ryan Dye (15:58):
And you said, I am.

Jacob Blackett (16:00):
… Yeah. Exactly, and I said, what is that? And so he helped me. I got a security as attorney, and so we figured out, got to file form D, there’s certain regulations, exemptions. So that was a learning process for me, but I think it’s becoming more common over the last handful of years for people to create, collaborations and partnerships in real estate and bring investors into deals, and so yeah, I think it’s a great way to scale.

Ryan Dye (16:36):
For sure. So you were doing single family homes as kind of a primary focus, and then have you shifted to more of a multi-family? Are you doing commercial real estate? Or is it primarily multi-family as part of the portfolio?

Jacob Blackett (16:50):
Today, we’re doing almost exclusively multi-family. We haven’t purchased a single family home in well over a couple years. We still own about 80 to 90 single family home rentals that at the peak was north of 150.

Ryan Dye (17:06):

Jacob Blackett (17:07):
So we were kind of been selling those off over the last year or two.

Ryan Dye (17:12):
So when you’re looking to acquire a new property, what are some of the key things you’re looking for to try to ensure a successful return on investment? I mean, there’s so many variables here, and success and failure can sometimes be razor thin. So what are some of those things, where this property must have X or whatever?

Jacob Blackett (17:33):
Yeah, yeah, you’re right, the margin of error can be pretty thin sometimes. And so where we typically start with this is the market, the metro. So we’ll look at the metropolitan area to see from an economic perspective, kind of a macroeconomic perspective, is this area growing? Or is their job growth? Is their population growth? How’s unemployment? And some of these key macroeconomic factors just to make sure we’re in an area, it doesn’t have to be the top growing city, and it doesn’t have to be on the top 10 list.

Ryan Dye (18:14):

Jacob Blackett (18:14):
We just want it to be progressing in the right direction at minimum. With the income producing property or the rental property, you’re typically holding it for an extended, could be a couple years or five years or 10 years, maybe longer. And so we just want to make sure that there’s progress. It’s a good outlook. And so that’s a starting point for us. And then if the metropolitan area looks good, we’ll go ahead and then start looking at areas within that market. On the multi-family side, we’ll look a lot at the deal level.
So we’ll look at any deal that’s in the metropolitan area. Once we have the deal, then we’ll really see okay, where’s that located? And from there, it goes from what’s the street like? What’s the immediate area like? And then what’s the neighborhood look like? What’s the zip code look like? So you kind of start building that, you’re looking at crime, for example, that’s an easy starting point. We use trulia.com, they have some great maps that kind of do some different color shading, so you can make sure that you’re… We like to own properties that are in safe areas. It helps a lot with attracting residents, good residents and having a successful investment. And then when it comes to the asset itself, we prefer at least 100 units on site.
The reason we like at least 100 units is because we found that, at that scale we can afford an on site property manager, at least one maintenance personnel, and so having that on site personnel just helps so much from an operations perspective. If it’s smaller then it kind of gets it can get into a weird scenario, where you’re kind of sharing resources with different properties. Just having someone on site just helps a lot. And then one of our no goes is if there’s not central air.
We typically when we purchase properties, we’re taking a value-add approach. So we’re looking at the property through the lens of how do we make it better. And in the past properties that we’ve purchased without central air, it’s kind of a glass ceiling because no matter how nice you make the site, no matter how nice you make the finishings inside, central air is kind of a prerequisite for a certain type of resident class. They just expect it. And so it kind of puts a glass ceiling in terms of what you can do to turn that property, make it better.

Ryan Dye (21:03):

Jacob Blackett (21:03):
And the cost to install the central A/C on all the units, from our experience, we’ve just never been able to buy it cheap enough to work in those costs. So that’s usually a no go for us.

Ryan Dye (21:17):
For sure. Well, and I think to what you’re saying, the old adage of location, location, location in real estate has been true, is true, will always be true. So you founded SyndicationPro in 2018, as a platform for raising investor capital online. There’s that word syndication. You’re like, all right, I’ve learned this, I’m going to put it in the name of my company. Can you tell us about this company, and the idea behind starting a tech related platform for real estate investing?

Jacob Blackett (21:46):
Yeah, it was born from Holdfolio, quite honestly, that was started back in 2013, 2014. And what I did with Holdfolio, is I wanted to attract my investors through my website, I wanted the relationship to be through my website, I wanted them to be able to check in on their investments through the website, I wanted it to be of service for them, I wanted them to be able to place investments in my deals through the website. And so what happened is that as I built out Holdfolio to do that, and attracted lots of investors and got lots of traction, I had colleagues asking me, I want to do that, I want to make my website so that I can foster my investor relationships, I can have them invest and do all of these things.
And so in 2017, I had a light bulb moment where I thought I could polish up what I’ve built here with Holdfolio, and potentially offer this to my colleagues and friends and the wider market. And so that’s where SyndicationPro was born from. There are some other software companies out there that offer similar service, and I looked at those back in 2017. And what I found is that they were complicated, bulky, very expensive, and I just thought there was room in here to provide a really nicely designed, easy to use kind of elegant and powerful at the same time solution. So that’s where we positioned ourselves in the market.

Ryan Dye (23:27):
So with SyndicationPro, is that something then that other real estate investors that are doing similar to what you’re doing with Holdfolio can utilize this system as part of a capital management tool as it were, or investor portal? Is that a fair assessment?

Jacob Blackett (23:46):
Yeah, you’re exactly right. So our clients are typically real estate firms who have projects and have investors that they manage. And so the software enables them to do a lot of things, but at the end of the day, it’s a service to their investors. It’s a centralized database for their business, for their team, and it’s a lot of time saving. There’s a lot of automation. There’s a CRM built in so they can manage those relationships, and it’s just a really powerful tool for anyone who raises capital for projects.

Ryan Dye (24:29):
For sure. So when you got the idea, I mean, where did you even start to say, I feel like this could be done better. I know what I’m wanting it to be, but that’s not my background. That’s not my expertise? I mean, where do you go from there to get to the next phase to actually start getting a viable product?

Jacob Blackett (24:50):
Yeah, the craziest part is that I started this journey in 2013, 2014 of building out Holdfolio’s website so that it could do these things, right? So I had over four years of working with a web development company, and saying, hey, I want this. Giving it to a web development company, then providing a solution and marking it up. And so I had four years of working with actually a couple different web development companies through that process. And so I had a good taste of if you have a vision of what you want, you can get it done. It’s a process. But when it came time to actually launching SyndicationPro, I knew that I needed a shareholder, I needed a partner who was technically enabled, who was in the space.
And so the web development company that I was using at the time, I had really enjoyed using them. I had been using them for almost three years. The owner of that web development company, Ameet Mehta, I approached him and said, because I wasn’t going to start that company without that shareholder who really knew technology, and was much more enabled than I was. So I pitched him on the idea. We did a, kind of an MVP. We used actually WordPress MVP, and rolled it out to some of my friends and colleagues, and there was a bit of word of mouth growth. And once we realized it was a viable solution, it was differentiated, there was room to grow, then we doubled down on the product and sourced more talent, more team and built a different technology, stack on JavaScript.

Ryan Dye (26:49):
So as you’ve established SyndicationPro, have you had success attracting a large number of investors? Or what have you been seeing since you’ve had this out there?

Jacob Blackett (26:59):
It’s something that actually, I have never experienced before. What we’ve experienced is that if you provide a product or service that people love, and then they talk to their network, they talk to their colleagues, and so almost all of our growth has been through word of mouth, and organic growth, and we’ve been growing a lot. And so it’s been successful. It’s been really fun to have a lot of people switch from other solutions out there that maybe came before us. So we have a lot of people switching to kind of the new best thing. So it’s been a blast, quite honestly from that perspective.

Ryan Dye (27:46):
Yeah, I was going to ask, what’s the competition like in this area? Do you have a lot of different competitors who are doing something similar? I mean, you’d mentioned that there were some that seemed kind of complicated, difficult to use, whatever.

Jacob Blackett (28:03):
Yeah. Yeah, I think that it’s full, there’s quite a few. I mean, there’s quite a few investor portals out there.

Ryan Dye (28:11):

Jacob Blackett (28:12):
Probably at least a dozen, at least, who are targeting the same niche. And so it’s crowded, quite honestly. But I think there’s a lot of room for growth in the industry. And what we found is that if you deliver that differentiated product, that is, making people really happy and talk, then I think that neutral role is going to be well worth it.

Ryan Dye (28:37):
Absolutely. Any investment can involve risk, is this approach to funding heavily regulated?

Jacob Blackett (28:43):
Yeah. When you are raising capital, it’s different, Ryan, if you and I were going to go out and go buy a property, and you were going to find it, and I was going to manage it, and you were going to contribute 50% of money, and we’re both active in the project. It’s a joint venture. There’s no selling of securities or raising money for a return.

Ryan Dye (29:06):

Jacob Blackett (29:07):
Of course, I’m not a lawyer. That’s my understanding. And so that’s really common in terms of these deals. But when it comes to, now, I have a project, I’m specifically garnering investments from individuals who will not be active, they’re investing because they’re looking for a return on their money, that is regulated through the SEC, Securities and Exchange Commission. Typically, our clients are filing an exemption through Reg D. I’ll say a couple popular exemptions. Number one, is 506(b). So if you just Google that, you’ll kind of catch on if you’re a listener and trying to find out some more information. That’s a very popular. 506(c) is also popular, but those are exemptions.
You get a securities attorney on your team, you tell your securities attorney what you’re looking to do, they’ll guide you in terms of your cans and can’t dos. So it is regulated. There’s definitely certain things you need to follow, and the software helps our firms. It’s built in a way that helps them do that.

Ryan Dye (30:20):
What do you see as one of the biggest benefits for people looking to add real estate as part of that long term investment goal?

Jacob Blackett (30:28):
Yeah, what I have experienced is, the benefit to investing in a syndication is that the ideal syndication is a true partnership where, for example, we’ll use Holdfolio as an example, Holdfolio is going and buying a 100 unit apartment, in order to get it done, we’ve got a bank coming in to make it happen. We’re signing on the bank that we’ve got a certain amount of cash ourselves, but to make it happen, we need say, a million dollars. So we’re going to put up 100 grand of our own money, maybe 200,000 of our own money, but we just haven’t figured out the way to print the other 800,000, right?

Ryan Dye (30:28):

Jacob Blackett (31:08):
Just haven’t figured out a way to print money. So we’re getting that 100,000 from investors. So this dynamic of a syndication is really nice, because we have fully incentivized Holdfolio, we have our hard earned dollars in the deal. We’re managing it, we’re taking responsibility. And so from the investor’s perspective, you’re in a sense investing with than with that operator, that person, Holdfolio, the sponsor is what you typically call them, or the general partner, they’re taking care of the deal. They’re on the hook, if anything goes wrong. From an investor’s perspective, you can certainly lose money, you can lose all of your money, but there’s no liability.
So if something did go really wrong, and there was some type of liability, some suit, as an owner of real estate, you have to worry about that. So from an investor’s perspective, if I’m buying rental properties, and something happens, and I get sued, depending on how you’re doing that, you could be liable. And so with a syndication, you’re able to kind of sidestep some of those. As long as the sponsor is good, and they’re doing their job, it can be a really great scenario where you get to own real estate, you get the tax benefits of owning real estate, and you have a partner that you can rely on who is doing all the day to day heavy lifting. And so it can be a really amazing venture.

Ryan Dye (32:36):
Sure. What would you say is kind of a target ROI if you’re putting together a project and bringing in different investors? I mean, what would you like to see each property produce within a certain range? What’s kind of your goal?

Jacob Blackett (32:50):
Yeah, it’s a good question. And of course, when looking at the ROI, its risk adjusted. So you’re thinking, how risky is the investment, and that’s going to correlate with how much ROI typically. So what we like to work towards is having our investors earn eight to 10% cash on cash. So every year, year over year, just based on the rental income, I’m earning eight to 10% on my money. And then when that property does get sold, then I’m looking at least 15% annualized returns.
So if it gets sold in five years, if I look at my total earnings, the rental income and the profit from the sale, and I annualize it, I’ll have at least 15% annualized. So those are some typical target returns that we seek and were able to achieve.

Ryan Dye (33:45):
So hypothetically, and I probably should have asked this earlier, but let’s say that you’re looking at a property and it’s $10 million dollars, and you’re looking to get a percentage of investors in that scenario that you’re going to buy, you’re going to have some bank debt in buying that. So what’s kind of the ratio you’d like to see when you’re buying, again, picking a random number, $10 million property? What’s the ratio there? And we’ll start with that.

Jacob Blackett (34:13):
Yeah, I personally don’t like to have too much debt involved. It just increases the risk that your debt payments are fixed and non negotiable. And so, a good ratio for me, I’m not on a $10 million dollar investment property would be a loan in the neighborhood of 70% to 75%. So seven million to $7.5 million loan on that property. That leaves 2 1/2 to three million in cash down payment. And then there’s other costs. For example, if you were doing improvements, if you had planned on renovating units and you wanted to upgrade the amenities and maybe replace roof, each property is different, there’s additional. So maybe it could be another million or so of cash.
Maybe the bank provides some of that, maybe the bank provides 500, and you provide 500. But typically, I don’t like the total loan to be much more than 70 to 75% of the total project costs.

Ryan Dye (35:22):
So when you have an investor as part of the pool of capital being put into something like this, I mean, the idea is that within somewhat of a short period of time, they should start seeing some income coming back off of that. Is that a fair assessment? I mean, you’re hoping to have that turnaround happen pretty quick for an investor?

Jacob Blackett (35:42):
Yeah, yeah and it’s deal by deal. So I’ve been involved in deals, for example, where cash flow is immediately. As soon as you close on the property, it’s 98% occupied, and it’s just it’s cash flow. And so you’ll get paid your dividends pretty quick. There’s other investments that I’ve been involved in that, maybe it’s 40 or 50% occupied when you buy it in the first place. We had a project like this. There’s lots of renovations to do. There’s a long [inaudible 00:36:14] lease up. And so it could be three months or six months or nine months-

Ryan Dye (36:19):
Yeah, before you start getting better occupancy, yeah.

Jacob Blackett (36:22):
… Yeah, maybe in a year before there’s actual cash flow. There’s development deals. So maybe you’re investing in a new development, and that depends on how the developer structures the deal. But if you’re building something, it’s not going to be paying cash, right?

Ryan Dye (36:37):

Jacob Blackett (36:38):
So some developers will go ahead and build in, they’ll go ahead and pay out a dividend to you anyways, even though there’s no income coming in, as other developers will just say it’s going to take 12 months, or 18 months, or even 24, it could be 24 months until there’s eventual cash streams, but that investments really in the sale. So it depends.

Ryan Dye (37:03):
I didn’t think to ask this earlier. But if you’re looking at properties that are already built, or maybe need renovation, or whatever it may be, have you done projects, where, hey, we have a plot of land, and we’re going to do a brand new complex? Have you done that as part of the mix? Or is it more already established properties that you then purchase?

Jacob Blackett (37:24):
I’ve looked at it heavily but have not done development myself.

Ryan Dye (37:24):
Yeah, because that’s a whole nother ballgame. So with the financial strain, obviously, on the global economy with COVID, that’s going to affect things like rents, understandably. What challenges are you seeing in the real estate sector, particularly in this area, and in multi-family properties?

Jacob Blackett (37:44):
We’ve seen, luckily, that the multi-family has been doing pretty well. There’s a lot of uncertainty there. There still is uncertainty in my opinion. But we’ve seen our investments perform pretty well. We have one asset that has a lot of service workers, also immigrants as well, as part of the tenant base, potentially some of the tenant base might not be eligible for federal or state benefits. So depending on the tenant days, and the tenant class, we’ve seen some hit more harder than others. But our hope is that we continue to, the last six months have been okay, we’ve been getting through it, some properties have been performing better than ever. And so the hope is that we can continue to get through the rest of this year, get into next year, continue to see some jobs coming back, and hopefully, these cases down-

Ryan Dye (38:50):
For sure.

Jacob Blackett (38:52):
… and just ride it out, and pray, so.

Ryan Dye (38:58):
Yeah, no, I think most of us would be happy to just put 2020 behind us and hopefully, see a better year.

Jacob Blackett (39:04):

Ryan Dye (39:05):
So with platforms like SyndicationPro, where do you see real estate investment heading in the next few years?

Jacob Blackett (39:12):
It’s a good question. I don’t know if I have any really big revelations or hard feelings on trends. Certainly rental market should stay strong. There’s definitely most recently a surge in buying homes. That’ll mean some new increased opportunities to develop homes that can be purchased. So yeah, I think certainly with the pandemic, moving more virtual, as well, I think that’ll continue to help firms who have not quite adopted technology as much.

Ryan Dye (39:49):

Jacob Blackett (39:49):
That’ll help them get over, and get a platform that is more kind of self-served from the investor’s perspective, and doesn’t require meeting face to face and so yeah, I think we’ll continue to embrace technology.

Ryan Dye (40:05):
For sure. So kind of in closing here, what advice might you give to someone who is in that early phase of, maybe I’ve just gotten out of college or whatever, and I’d really like to look at a career in real estate or investment or some form. What are some things that you kind of wish maybe someone had said to you right out of the gate, or just some advice you might share, to think of these things to get you going in the right direction?

Jacob Blackett (40:30):
Yeah. When I reflect back when I was in that situation, I would have leveraged people who are out there doing what you want to do already. For example, on those first couple of fix and flips, I was set on doing fix and flips. I wanted to do it. And so I should have found someone doing fix and flips already, and seeing that maybe I can bring them a deal, right?

Ryan Dye (40:59):

Jacob Blackett (41:00):
Maybe they’ll do the deal with me, maybe I can provide some capital, they can provide some capital, and I can learn from them. We’ll split profits. I’ll make much less. Right, I’ll make much less than doing it myself but it’ll be worth it. A thousand [crosstalk 00:41:14].

Ryan Dye (41:14):
On the job training, yes>

Jacob Blackett (41:15):
Yes, yes. So yeah, I would say, depending on what your goals are, what you’re interested in, what you want to do, go out and find the people that are doing it successfully, and then see where you can place yourself. And in real estate, the deal is the top of the funnel, right? So, like in that example, if you wanted to do fix and flips, go figure out how to find good deals, bring them to a partnership, see if there’s some capital you can provide, maybe you don’t have capital, maybe you’re only bringing the deal, and you’re being involved, and you’re learning. You’re getting your steps and falls, so.

Ryan Dye (41:55):
Exactly. Yeah, I think, just a nice thing to add to that is, we can watch these exciting 30-minute shows on HGTV or whatever, and life doesn’t work like a 30-minute flip on the television show. So just keep that in mind. There can be success, but there’s a lot of hard work involved, too. So in closing, how can listeners connect or learn more about your company?

Jacob Blackett (42:19):
Yeah, the easiest way is to go to my company websites, syndicationpro.com, holdfolio.com. On the about page on both of those is my phone number and my email.

Ryan Dye (42:32):

Jacob Blackett (42:33):
So if you do want to reach out, feel free to drop me an email, and I’d be more than happy to get connected.

Ryan Dye (42:39):
Well, thank you so much for taking the time to talk with us today. We look forward to following the progress of Holdfolio and SyndicationPro. And hopefully, our conversation today can help inspire people in their pursuit of real estate investing and the different things they can do to be a part of this exciting area in business development.

Jacob Blackett (42:57):
Yeah, thank you so much, Ryan. It was a true pleasure. Your questions were amazing.

Ryan Dye (43:01):
Oh, thank you.

Jacob Blackett (43:01):
And I really enjoyed the conversation.

Ryan Dye (43:03):
I want to take a moment to tell our listeners about our exciting new series this fall called CoLab Webinar Wednesdays. Similar to our podcast, this one our free webinar will feature some great personalities across our various areas of focus, such as nonprofit development, technology, film and media, lifestyle, real estate development and general entrepreneurship.
We encourage you to attend these events as it will give you a chance to ask our guests questions on how they got from there to here. We recently recorded a webinar with Josh Donnelly, director of marketing and creative for Donco Marketing. Based in Detroit, Michigan, Josh has several years experience in the marketing industry. This includes director of marketing and creative for digital roots, where Josh implemented marketing and training materials for clients such as Maserati, Chrysler, Ford and GM.
He has also worked as brand manager for FIAT USA, where he managed marketing initiatives for numerous agencies, including print, TV, email, web design, app design, social media and online advertising. You can listen to this webinar on the blog section of the colabinc.org website. October is women and small business month and we will be featuring two great business owners, Lia Griffith of liagriffith.com, a do it yourself site that has been featured in the Oprah Magazine, Real Simple, Good Housekeeping, and on The Today Show. Later in the month we talked with Kennedy Haffner of the healthyhaff.com.
Kennedy is a 23-year old health and wellness blogger who will share some thoughts on developing a business as a blogger and finding balance in their life. The webinars will take place between 12:00 and 1:00 PM, Pacific Time, on Wednesdays throughout the fall. To find out more on how to register visit our website colabinc.org. In the meantime, follow like and subscribe to CoLab INC on all of the various social media platforms and visit our website colabinc.org to see the various ways we help promote the spirit of entrepreneurship. If you have comments on today’s episode or know someone who would be a great guest on our show, send your suggestions to ryan@collabinc.org. A special thanks to our producer, Michael Webberly, editing by Tanya Musgrave and all the CoLab staff. Until next time, be well and God bless.