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Show Summary
In this episode of the Investor Fuel Podcast, host Leo Wehdeking speaks with Charles Dobens, a multifamily investing expert and attorney. They discuss the importance of understanding the multifamily investing business, the common pitfalls in repositioning properties, and the significance of building a strong network. Charles shares his insights on the sales and marketing aspect of real estate, the lessons learned from failures, and the future of integrating AI into the multifamily operating system.
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Investor Fuel Show Transcript:
Charles Dobens (00:00)
property from the other side of town. He was taking leases from his other properties and whiting out the names and unit numbers and sticking them into my units. And so I ended up buying a property that was 50 % occupied. I call them phantom residence. I mean, I learned so much from this deal. One of the things I learned is that my letter of intent says thatI can walk in the, it goes from the letter of intent into the purchase and sale contract. It says that I can go and walk the property and inspect the property at any time the deal is under contract, not just during the inspection period, but any time.
Leo Wehdeking (02:18)
Hey everyone, welcome to the Investor Fuel Podcast. I’m your host, Leo Wehdeking. And today I am joined by someone that I’ve been looking forward to chatting with, Charles Dobens, who’s been making serious moves in the real estate industry. Charles, glad to have you here,Charles Dobens (02:32)
How well? You too, Leo.Good to see ya.
Leo Wehdeking (02:36)
I’m actually pretty good, know, and very excited to have you over here. I think that our listeners are really going to take something away from how you’ve been ⁓ approaching that real estate business. So let’s dive in.Charles Dobens (02:51)
You know, can I just tell you thatyour partner, Mike Hambright, I think he was the first podcast I ever did, or he was my first guest on my podcast, a million years ago. And I’ve seen his picture lately and he’s aged quite a bit. I haven’t changed a bit. I have not changed a
Leo Wehdeking (03:05)
YouNo, trust me Mike hasn’t changed a bit also you’re gonna see him later. Alright, so Charles for for people who may not be familiar with what you do with your world ⁓ Can you tell us what’s your vision or? ⁓ What or your or what is your main focus these days?
Charles Dobens (03:16)
Good. Good.Sure, I’ve got two main focuses. One of them has always been my passion, which is teaching people multifamily investing. I’ve done it for over 20 years now. I absolutely love it. I’ve changed my program over the years. And today, what we have created from our training program is better than anything I’ve ever seen. It takes advantage of the tools of artificial intelligence and it just expedites everyone’s goals.
The other thing is I’m a practicing attorney and I absolutely love helping people as an attorney and managing my firm and making sure that our clients are well taken care of. But I look at my clients on the training side the same way I would as their attorney and I make sure that they’re protected and that they’re not making mistakes that could get them into trouble.
Leo Wehdeking (04:25)
All right, all right. And Charles, can you tell the audience in what markets are you operating in right now?Charles Dobens (04:31)
well,you know, right now I live in New Hampshire, so I’m doing a lot in New England. But at the same time, because I work with my students all over the country, I’m in so many different markets. ⁓ know, people are amazed at how much I know about each market and what the nuances of them are, just because I’m involved in so many of them at the same time.
Leo Wehdeking (04:54)
Alright, alright. Love it. Love it. ⁓ Charles, actually something that caught my attention about you. ⁓ It’sthe way that you’ve been able to teach people, okay, how to invest through your program, all right, that you have. And also one thing that I actually want to bring up, it’s ⁓ about an article that you wrote on October 9th, 2018, if I’m not wrong, where you were, yeah, where you actually talk about the
Charles Dobens (06:11)
2018.Leo Wehdeking (06:19)
Yeah, the multifamily repositioning fallacy. Now, I think that’s something interesting that our listeners may take a lot of value from it. So can you dive in a little bit and tell us about those things?Charles Dobens (06:38)
can’t remember anything that I did back in 2018, Leo. I never wrote that article. So all right, all right, here goes. Let me see if I can ⁓ figure out what I said. And the nice thing about telling the truth all the time is you never have to remember what you said because it’ll just come back to you. Part of the problem I think that that article would be talking aboutpeople not understanding what it takes to reposition a property.
and they think that all they have to do is bring it from a C to a B or a B to an A and that is the solution to their problem. ⁓ I can tell you right now that any property out there can be repositioned from a D to an A with enough money. All it takes is money. You can take a D class property and put in granite countertops and
marble bathrooms and top of the line everything. And when you walk into that property, it is gorgeous. It is an A class property, but it doesn’t mean that you’re going to have a successful repositioning because after you change the property, you have to change the clientele and you have to have created a property in a market where formerly deep residents
are now going to be replaced with A-class residents because that’s the only way that the repositioning is going to work is if you get those higher rents. And the only way you get those higher rents is with a higher clientele. So if that property is located in an area that A-class residents never would set foot in, there goes your repositioning. It fails.
And a lot of new investors, when they go into a market, because they heard, this is an emerging market, we should go check it out, but they don’t know the first thing about that market. They don’t know where the path of progress is in that market. They’re going to listen to a broker who says, ⁓ this is a C-class property in a B area. And the investor has never been in that market. They don’t know what the B area is. So they end up.
jumping on board, attempting to do a repositioning, raising all this money to make it happen. And then when they’re done, they find out they can’t raise the rents because the market doesn’t allow for it. You got to think about the end game. You got to think about your end customer. Your end customer for a B-class property are those two nurses that just graduated from nursing school and they’re looking for their first apartment.
It’s the newlyweds who are ⁓ looking to get a place where they can save their money and then go out and buy a new home over time. And you’ve got to think, is this the type of place that the new husband is going to want to bring his new father-in-law on Sunday evenings for dinner? And if it isn’t, then you’re never going to get a B-class resident in there, and your repositioning is going to fail.
So I think that’s what I was talking about quite a bit, I listen to so many people talk about repositioning, like, oh, all you got to do is this. And that’s the fallacy.
Leo Wehdeking (10:37)
Okay, okay. So that’s actually pretty cool, man. Pretty cool that you know, that article that you wrote. ⁓ It actually helps a lot of people. All right.Charles Dobens (10:45)
with. Yeah, and it soundslike it withstood the test of time Leo. So good.
Leo Wehdeking (10:53)
Yeah, because those things are still happening right now. You know, even though that you wrote it back in 2018, those things still happen today. All right. And Charles, what’s been, you know, the recipe to keep your business running smoothly?Charles Dobens (10:56)
Yeah, yeah.Yep. Exactly.
Okay, two things. First off, you have to understand what business you’re in. And so many people think, I’m gonna buy a multifamily property and I’m in the multifamily business. And the answer is no. You are in the sales and marketing business. And you’ve gotta treat your business that
first thing you do every day when you wake up is market yourself. And that’s the key. The most successful students of mine are the ones that came into this business
with a sales and marketing background. ⁓ You might think that sounds crazy. Listen, after 20 years, I can tell you exactly what it takes. And these guys, when I first met them, my most successful student, owns 8,000 apartment units. I knew on the first phone conversation I had with him that he was gonna be a massive success because he was a salesperson before he came into the business. And so what you always have to do in this business is market yourself.
always have to be looking for customers and you have to understand who your customers are in this business. Your customers in this business are the sellers of the property. Believe it or not, that’s a customer of yours. You’ve got to go out there and find those people every single day. And the other customers are your investors. And so you’ve got to go out there looking for investors every single day. And when you understand that, you’ll be able to find those deals and have the money available when you need it. So,
What we’ve done in our business is that multifamily OS. OS stands for operating system. It takes off on the book EOS, entrepreneurial operating system. And basically what we do in the multifamily OS is we’ve created the systems that you need to run your business. And it involves finding the deals, reaching out to the owners with a push of a button.
building up an investor database with all the other members in the group and working on those and cultivating those leads. And then when it comes time, when one of the members of the group gets a deal and a contract, we put the deal together and we start promoting that deal to all the investor database so that we can get the equity you need to close that deal. So we built the whole entire system so that you don’t have to. And that’s the beauty of it. But it’s so important that you understand what business you’re really in.
So that’s it.
Leo Wehdeking (13:38)
All right, all right. Hey, I actually love that. And yes, you need to know where you’re getting into. ⁓ Now, Charles, I know that every operator I know has a moment where things got real. All right. Maybe a deal that went sideways or a time that they had to pivot real fast. Do you mind sharing one of those moments?Charles Dobens (13:44)
Yep. Yep.my gosh.
I’ve got so many of them. mean, there’s some that, and the thing is, and I truly believe that success is a lousy teacher. ⁓ You learn more from your failures than you do from your successes. If you’re sitting and listening to somebody that tells you that, ⁓ I’ve had nothing but successes in this business, don’t learn from that guy. You won’t learn a thing. ⁓ But I’ve had some doozies ⁓ that have turned into great teaching ⁓ experiences. ⁓
I tell you, I have set up my students to be protected in the, and if they were ever to do an assumption, because many of these new investors, they don’t understand what they’re getting into when they assume an existing mortgage. So I’ve actually drafted my contracts so that my students are protected from that type of a situation. ⁓ Let me give you one story. ⁓ And this one was a great one. And this one really helped me to develop
my due diligence process much better.
So I was buying this property and it was an assumption. And it was probably the second or third deal I ever did. And with an assumption, it took forever. The bank just kept dragging their feet. It took about five months. And I kept a part of the contract, the purchase and sale contract required the seller to ⁓ certify the rent roll
every single month to make sure that, you know, hey, it says you got 95 % occupancy. Well, you need to sign off on it and prove that we have 95 % occupancy. Every single month, I would get that certified rent roll in. Five months later, I’m buying the property. It’s 95 % occupied. The end of the first month, I get 50 % collections. And I said, I called my property manager. said, hey, you gotta go knock on doors.
We gotta get some money in the door. This is crazy. This is supposed to be 95 % occupied. And now you’re telling me it’s 50 %? It goes, Charlie, I can’t knock on any doors. There’s nobody there. I said, what do you mean? I got a certified rent roll last month that says 95%. Charlie, I’m telling you, not one moving truck has moved up to this property. There’s nobody here. I said, go find out what the occupancy really is. Comes back and says it’s 50 % occupied. I said, what?
the hell happened. He Charlie, I’ve never seen a case of fraud like this in my life. And as an attorney, said, listen, you just can’t say fraud. You’ve got to prove fraud because I can prove it. I said, okay, show it to me. He faxes me over, back then we had fax machines. We didn’t scan things. He faxed me over eight leases and the eight leases had white out on
parts of the name of the property and stuff, you could see that they were using the exact same form every time all whited out a particular way. And I said, so what am I looking at? Because Charlie, look at the name of the property. I said, okay, yeah, that’s the name of my property. Yeah, that’s the name of your property on lease number one. Now look at lease number two. And I said, what’s this property? I don’t know what that property is exactly. That is the owner’s…
Leo Wehdeking (17:40)
youCharles Dobens (18:06)
property from the other side of town. He was taking leases from his other properties and whiting out the names and unit numbers and sticking them into my units. And so I ended up buying a property that was 50 % occupied. I call them phantom residence. I mean, I learned so much from this deal. One of the things I learned is that my letter of intent says thatI can walk in the, it goes from the letter of intent into the purchase and sale contract. It says that I can go and walk the property and inspect the property at any time the deal is under contract, not just during the inspection period, but any time.
So that way two days before we close, I can go in and check all the units and see what match up the rent roll to see who’s really living there. So that’s what I learned from that lesson.
That’s one of the horror stories that I had. That property was a disaster from the day we signed the contract. So that’s an example of what you will learn when you work with me. Yeah.
Leo Wehdeking (19:16)
Yeah, and actually,you know, those are those are the kind of stuff that, know, most of the people they don’t like to talk about enough. ⁓ But I think honestly, that’s that’s what separates, you know, people who just dabble ⁓ from the ones who actually stay in the game long term. OK, like yourself. So, Charles, let me ask you this. What are you most focused on solving or scaling next in your business?
Charles Dobens (19:24)
Yeah.Yeah. Exactly.
⁓
well, okay, so we’re putting together the OSAI. We’re creating that system so it can be so incredibly automated for anyone to use. And the most important aspect is getting the deals funded and financed. So part of that AI program will involve an investment club.
that everybody will have access to so that when they get their deal under contract, if you’re in that club, you can raise the money. We’ll have 1,000 investors in the database ready to help you fund your deal. And that’s what we’re building out next. And it’s just putting all the pieces together so that you don’t stand alone. You’re a member of a club, you’re a member of a cohort that helps you get your deals accomplished. I’ve been in this business long enough to know that
One of the biggest problems people have is raising the money. They’re afraid to ask their friends and family for investment money. And so if we can all do it together and we can create that tool, you can’t help but win. You can’t help but succeed.
Leo Wehdeking (20:54)
that’s actually pretty big. Yeah, I know that a lot of businesses are actually implementing AI to automate everything so That’sCharles Dobens (21:02)
⁓ I tell you,Leo, what my system does blows me away. What, you know, I talked to my developers, said, you know what would be really good is if we could do something like this. Two days later, it’s done. And I’m looking at, you know, we’re doing that training coming up in October. I can’t even get into it. There’s just so much to share.
But it’s really, if you join the multifamily OS, this just, I mean, we send you the leads. We send you the properties to look at based upon what your buy box is, based upon what your market is, what type of properties you’re looking for. We go out and find the motivated sellers in your market and we send you the information. And you can just ⁓ click a button and the owner’s email address is there. You can send them an automated email.
⁓ And then it tells you to follow up within a week on the email. It just does everything for you It’s absolutely amazing what my systems can do now that never it would take it would take weeks and so much effort beforehand So that now it’s just it’s it’s unbelievable absolutely unbelievable. Yeah
Leo Wehdeking (22:18)
Alright, yeah,that’s big. That’s actually pretty big. ⁓ Now, Charles, I know that a lot of people listening are either early in their journey or they’re just looking to level up and I think they will benefit from hearing this coming from you. ⁓ Now, when it comes about building relationships and growing up your network, what’s made the biggest difference for you?
Charles Dobens (22:21)
Yep.having a strong network and always adding to it. You know, I started this business off with just my wife at the time and the two of us. And now here I am 20 years later and I own over a thousand apartment units. Usually that’s when I usually show you my book. right here it is right here. I don’t own a thousand apartments in five years, you know, because I’ve done it. ⁓ And you know, I made the…
best of friends. My clients become my friends and that’s the nicest thing I can say about who I work with. I can call a client that I haven’t spoken to in years and they pick up the phone and we start talking like we’re old friends and that’s the type of business that I’ve built and I absolutely love it.
Leo Wehdeking (23:32)
Alright, yeah, actually you can fake that I believe that relationships are everything not only in this space but in all aspects of your life. All right. ⁓ You need to be Yeah, you need to have good relationships with everyone. Okay, because you know, you never know when you’re gonna need them. Right?Charles Dobens (23:41)
Yeah. Yep.Absolutely. Exactly.
Leo Wehdeking (23:53)
Well, all right, Charles, before we wrap up, if someone wanted to reach out to you, connect with you, or maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach out toCharles Dobens (24:06)
Okay, what they can do is multifamilyos.com. Click on the link there, give me your email address, get you on my list. I’m gonna send you the registration for my October webinars ⁓ where we’re gonna, every Saturday we’re gonna teach a new aspect of multifamily investing. And those are live. And I answer questions and I speak to people. So if you come on those calls live, you’ll be speaking directly to me.⁓ And I get some great lessons from or questions from students. Last night we were on a call. I do a Monday Night Live call with all of my students ⁓ and we had some great conversation over what they’re looking at, what they need to be focused on ⁓ and they’re the best. They’re my friends. Every Monday night I look forward to spending my one hour with all of my students. Yeah.
Leo Wehdeking (25:00)
Alright, cool, cool. Well,Charles, listen, I really appreciate your time, your story, and definitely your perspective, alright? We need more people like you in this space doing it the right way. So thanks again for being on the show,
Charles Dobens (25:11)
Ugh.Thanks, Leo.
It’s been fun. I really enjoyed it. I appreciated our conversation before we went live. So, yeah.
Leo Wehdeking (25:23)
Alright, alright. Yeah, that’s good.Now ⁓ for those of you that are just tuning in alright if you got value from this Just make sure you’re subscribed. Alright, ⁓ we got more conversations coming up with operators just like Charles Alright, we’re out there doing real businesses. Alright until then we’ll see you on the next episode
