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Show Summary
In this conversation, John Todderud shares his extensive experience in multifamily real estate investing, discussing his journey, the importance of investor relations, and the challenges faced in the current market. He emphasizes the significance of building relationships and understanding emerging markets, while also addressing the hurdles of securing financing and raising capital. John reflects on his educational experiences and the value of networking within the real estate community, ultimately outlining his future goals and the importance of personal connections in achieving success.
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Investor Fuel Show Transcript:
John Todderud (00:00)
I would tell you Quentin, anybody who’s been in real estate for 15 years, if they say, no, it’s just been clean, smooth sailing the whole way, they’re pulling a fast one on you. So of course, yes, I’ve had a lot of challenges from a variety of different perspectives. I’ve had a fire, just had a fire recently with one of, we brought down a few units. Nobody was injured and it didn’t burn the whole building down.and they’re manageable.
Q Edmonds (02:00)
Hello everyone. Welcome to the real estate pros podcast. I am your host Q Edmonds. I’m excited to be here today. I have another fantastic guest here. I love how he wants to develop and understand with investors about their connections, but they want how he can serve them. Once they he’s very strong at building relationships, has a background in software. Listen, he’s a consultant. He’s comfortable with the numbers. He has tools and resources that he use.to make sure that he can serve his client in the right way. And so I am super excited for us to learn more about Mr. Todderud. Mr. John, how you doing today? ⁓
John Todderud (02:42)
Thanks for inviting me Quentin. I’m delighted to be here and thrilled to be talking with you and excited to be able to share a few things with you and I’m ready for your tough questions. ⁓Q Edmonds (02:55)
Ask me what I promise they they won’t be tough questions. At least I don’t think they’re gonna be tough. I promise you I’m not trying to make it tough But I am excited about people getting to know you a little bit better. And so what I want to do, Mr. John I want to Dive right into it. I want you to tell people what your main focus is these days I would love for you to tell people maybe a quick origin story of kind of how you got into real estate like how that came aboutAnd then also tell them where you at in the world, what markets you’re operating in. So, know, main focus, ⁓ origin story, and where you are. Mr. John, you have the floor, Okay.
John Todderud (03:34)
Great, I’ll try to be brief. My main focus has been in multifamily. It always has been in real estate. I’ve not done single family homes. I’ve owned single family homes, but not made them as investments. When I decided to get into this 15 years ago, it was starting off as small multifamilies. That’s still what I do. ⁓I look at different markets around the US. I try to find opportunities in the right markets, emerging markets that have certain qualities, not just huge cities, but really ⁓ medium to maybe smaller tertiary markets, ⁓ the main metropolitan areas around it, and look for growing sub-markets in those. And so, interesting, if you look at any city in the US and you look at some statistics about it, you look at jobs growth and population growth, typically you’re looking at
at what’s going on in the whole city in general. That’s mostly how these statistics are tracked. But you break that city down and you find areas that are doing great, areas that are not doing not so great. And that’s what I try to drill into because I like to find out where the paths of progress are and where things are growing. And so my business is out looking for properties, looking for partners.
to work together to buy the properties and I look for ⁓ people who might have an interest in participating as an investment, looking for these opportunities to grow their wealth, to find cash flow. I’m super focused on cash flow and appreciation as well as the tax benefits.
The markets that I’ve focused on have been primarily in the Midwest. And really I started with, I mean, I started in the Southeast, I should say.
bought properties there and had them for a little bit, but then it became super competitive and it still is today. Good area. I love the Southeast, but I don’t focus on it so much. I would look at opportunities there, but I don’t focus on it. I look also mainly in the Midwest, the Southern tier. I’ve had this thought drilled into me about, the migration of the U.S. is from North to South.
And so I’m looking at the southern tier of states, not necessarily Texas and Florida, although they’re great areas. They’re also super competitive. The states that I like are Kansas and Missouri, Oklahoma, Arkansas, Kentucky, and most recently this year I entered Ohio. And so Ohio is not really a southern state. ⁓ Gets pretty bitter cold in Ohio. And also I’ve talked to a number of people this fall who
who have seen significant success in other Northern States, including Wisconsin and Illinois. And so, I I talked to them about properties that they’re buying and the returns they’re seeing, and they’ve been seeing this over a pretty extended period, and I’m impressed. So I’ve not ruled those areas out either. They are my primary markets, not so much coastal areas, not so much the Southeast or along the Southern border, but those areas.
in the Midwest. And the reason is because ⁓ they are a little bit higher cap rates. They’re less competitive. They’re more recession resistant. And they are still growing. See a lot of companies moving headquarters to these major cities and hiring people. You see a lot of impressive statistics coming out of ⁓ most of these major metros. And so how I got started, I…
As you mentioned, I’ve been in the tech industry as software, software engineering and consulting and had my own business for a while. And along the line, I realized I wanted something more. I was still depending on things that were out of my control and I wanted to make some investments in other areas and I landed on real estate. And so real estate, what do you do in real estate? I mean, there’s a lot of different things. You look at…
McDonald’s is a real estate company because of all the the retailers that they have. You can look at a lot of other businesses and they are heavily tied to real estate. Well, I drilled into it and I settled on multifamily. It was just best for me. Something that fit for me, not necessarily the best in the world. A lot of other types of real estate as everybody knows, but multifamily is where I wanted ⁓ to ⁓ build my wealth. And I started about 15 years ago buying small properties near me.
I live in the greater Seattle area and I bought properties not too far from here, a small three-internet or four-internet. I owned them for a few years and I did all the property management, going down there, fixing things and finding tenants and dealing with all the other problems and issues and then grew the income. I got better tenants and after a few years sold these properties, bought properties in other areas that had property managers and then…
along the lines was going to conferences and learning about how people pool other investors’ money together and buy bigger properties. And I thought, that’s really what I need to do. And so I learned that. I learned syndicating. I took a lot of seminars and classes and even coaching and syndicating and found people that also had a similar interest and good partners that I still have today.
and ⁓ began buying properties as a syndicator, bringing investors’ money into deals. That’s still what I do today. And I’m out looking for properties. I ⁓ am trying to ⁓ evolve my business to be a little less directly active in the operational aspects of properties. I mean, that’s an area that I love, but it’s very time consuming. And so ⁓ I’ve… ⁓
been spending more time talking to investors and investor groups on that side of it. I also have had a lot of broker relationships for buying properties that have been sent deals, but now I’m more oriented toward identifying and partnering with ⁓ larger operators, people who buy properties that currently I would not buy myself and have a good ⁓ track record of
delivering strong investor returns. People who I know and trust, who have gotten to know for a while and who’ve had experience with these different markets. So that’s what I’m trying to do is build those relationships too and join them and bring teams of people in to help buy larger properties. That’s where I intend to focus in 2026. my goals are to buy more properties. I love the whole aspect.
It’s a delightful discovery, and I’m sure you’ve seen it too, is that you get into real estate, you talk to people, you meet people at conferences, you meet them over LinkedIn, or whatever your source of contacts are for real estate, and they’re nice people. They are very fun to talk to, they’re open to taking calls, and very enjoyable people. It’s not always the case in different industries that you’re talking with. ⁓
with friendly, engaging, ⁓ generous people who share their time. Real estate is like that. And that’s an area that I ⁓ particularly enjoy about.
Q Edmonds (12:43)
Absolutely. I love it. Thank you for taking me down. No, the really just how you walked your way up to where you are now, how you’re making the decisions that you’re making now. And so I love it. You showed me a clear map of how you got to where you are now. I want to ask you, have you bumped up against any adversity as you was building? Has it been smooth sailing or are there times when you had to pivot fast and make the different decisions? Like is there, have you bumped up against any adversity?John Todderud (13:12)
I would tell you Quentin, anybody who’s been in real estate for 15 years, if they say, no, it’s just been clean, smooth sailing the whole way, they’re pulling a fast one on you. So of course, yes, I’ve had a lot of challenges from a variety of different perspectives. I’ve had a fire, just had a fire recently with one of, we brought down a few units. Nobody was injured and it didn’t burn the whole building down.and they’re manageable.
have insurance and we’ll take care of it. We have, we’ll cover the renters and all those kind of things. I’ve had criminals, I’ve criminal acts taken place in my buildings and ⁓ yeah, it’s extremely disconcerting. And you hear about it you’re thinking what went wrong? Sometimes it was things that somebody did wrong, maybe letting the wrong element into the ⁓ unit or something. Other times it’s out of your control and ⁓
And I’ve had ⁓ a property where I significantly underestimated the ⁓ renovation expenses required, how much capital is gonna be needed to renovate units and take care of it. And ⁓ where the city comes in, there’s like problems that were persistent and a tenant complained and complained a couple of times. And then finally said, ⁓ I’m gonna call the city. And so the city’s involved and you never want that.
We work with the city and have good relationships and all of our properties, but you don’t want them to bring enforcement actions on you. And they did for one of the buildings. It was a leak at a roof, ended up having to get a new roof. And it was the right decision. And I don’t regret it at all. A big expense that I just wasn’t expecting. But once the roof was fixed, tenants were happy, got better tenants in there on the turnovers.
Eventually sold the property for a nice return. It was a decent return even after all of these heavier renovation expenses So it was a lesson learned to not ignore those kinds of things But but yes, nobody wants the unexpected but you have to expect the unexpected and you have to plan for it however, you do that reserves or other kinds of ⁓ planning contingencies But yeah, it’s it’s a nature of the business
Q Edmonds (16:17)
I love it. I love it. Thank you so much for just what I call to get to your vulnerability, right? Sharon, like some of the challenges that you have facing. So I appreciate you sharing. Now, I heard you when you said about your goals, you want to buy more property, but I want you to even expand more on that. Like, how do you want to go about it? Do you have a plan in place? Like, what are your next real goals that you’re really trying to hit as you move forward in 2026?John Todderud (16:44)
Yes, good question. I mean, my plan is not to buy more properties on my own or put together partnership groups. so with that premise, looking forward, what I need to do is understand and get to know more people, groups, teams, partnerships who are out buying properties. And I already do. I know a bunch of them.Hopefully a few of them are listening to the podcast and recognize that yes, I have a relationship with them and I want to grow that relationship. That’s my goal is to meet more of them. And so I’ll be going to conferences. know, people have mixed feelings about conferences. Do you go to a conference just to meet somebody who wants to invest in your deal? Or do you go to a conference to learn how to get started in it? Lots of different reasons for it. My needs have changed over time.
I go to conferences because I meet a lot of other highly qualified people, people who’ve already put the teams together, who’ve already operated in certain markets and they’ve developed certain skills and processes. I’m a big believer in systems and processes. You have to have ⁓ processes in place that don’t depend on one individual and you have to have gone full cycle on properties. That’s a requirement.
It’s great to be buying all these properties and to show how your NOI, your net operating income is increasing. And especially in these days when the cost of taxes and insurance and salaries has gone up significantly in last several years. And if you’re still making income off the property, then hats off to you. You’re doing a good job. You’re doing something right. But I still need the proof in the pudding is selling the property.
is going full cycle and selling the property. And so I look for people with those qualifications and ⁓ who are interested in ⁓ letting me participate in their deals, which is not all of them. A lot of them ⁓ have that piece of it solved. those are my goals going into 2026 is bringing more deals to my investors, deals that are ⁓
larger, more stable, and still produce better returns or good returns for them and everything else that they’re looking for. Cash flow and the depreciation write-offs in year one and those fun things.
Q Edmonds (19:25)
Absolutely, all of the above. hear you loud and clear. So you talk about, what it sounds like to me is that you’re talking about building relationships. And so I want to know if that’s true. I would love to hear your perspective on building relationships. Is building relationships important for you? Has it served you well? Like, what is your perspective on building healthy relationships in business?John Todderud (19:49)
yes, absolutely. It’s critical. It’s imperative that we have, that we take the time to do that. And it’s something that a lot of people in real estate ⁓ miss. mean, they, you know, I meet a lot of people either online or conferences who ⁓ have difficulty getting out of their shell. They’re talking, but they’re the first ones to admit that I am doing all these.these personal conversations is really not their forte. They’d rather be doing something on a computer. And you have to know your strengths and what you can bring to the table. I think everybody in real estate needs to come out of their shell. They need to be able to talk. And so those relationships are critical. And for me going out and talking to people about, I want to build a relationship with you, it starts with a few basic things like,
I need to know the plan, I need to know how they’ve dealt with certain situations, like the questions you’re asking me, and I need to see evidence of ⁓ things like underrating. I can look at underrating, I have these qualifications, I understand the spreadsheets, and I can look at spreadsheets that this is just a little bit of BS fabricated and putting numbers into slots where there should be a formula and all that stuff, and it’s not that hard to detect.
And I think, okay, I’m going to pass on this one. Those are not good indicators, but it’s not the first conversation either. You have to have multiple conversations. You have to be going back because typically the second time you talk to person, you’re getting a different feeling, better or worse than you did the first time, and the third and the fourth and so forth. You have to have these multiple conversations, the same as any of us would with our investors.
I would with a potential partner in teaming with to buy a property. And so yes, the relations are critical to it. They’re more important than the type of property. I mean, I look at the properties and see, yeah, it’s a very pretty property. It’s 10, 15 years old and looks nice and the pictures make it look good. And I can’t imagine there’s a lot of deferred maintenance and…
I basically believe the numbers look at comparable rents in the area. Yeah, the numbers are pretty good. But if that partnership team is not solid and doesn’t prove the track record, then I wouldn’t go forward with it. Likewise, if they are solid, if I work with them over a period of time and they bring me a questionable property, I’m going to give that property the benefit of the doubt because these people know what they’re doing. And so it starts with the team, absolutely.
Q Edmonds (22:38)
I love it. Listen, I’m again, I love the way you think. I’m so glad that you’re walking us through your process, letting us in on how you think and the success that you’re having. And so I know that our listeners are getting a ton of nuggets useful information from you. So I appreciate you. If someone wanted to reach out to you, connect with you, learn more about what you’re doing, Mr. John, how can they get in contact with you, sir?John Todderud (23:03)
The easiest way is my email address. It’s [email protected].Q Edmonds (23:13)
Beautiful, beautiful. Mr. John, sir, thank you so much. Thank you for your time. Thank you for your story. Thank you for your perspective. It was a pleasure having you on today. Again, I know our audience really found great value in this episode. So thank you so much for being here.John Todderud (23:28)
The pleasure is mine Quentin, it’s nice talking with you.Q Edmonds (23:32)
Absolutely, absolutely. So very good. You can’t tell me you didn’t get the nuggets and the value from this conversation with Mr. John. So definitely check him out, but definitely make sure you are subscribed. That way we do not miss out on amazing conversations just like the one we had with Mr. John. So thank you again, Mr. John. And listen, everyone else, we will see you on the next time.
