Discover the Impact: Purpose Driven Investing for a Better Tomorrow

Stephen S. (00:04.013)
Welcome to the show where we interview the nation’s leading real estate entrepreneurs. Super excited for today. If you are joining us for the first time, the second, third or 100th time, you’re about to get a ton of value. I’m here in the studio with Steven Libman and we are going to talk about purpose driven investing today. Steven has been a real estate entrepreneur on the investing side for more than 15 years.

And we are going to talk about core values and what they are doing and how they are playing in the space of multifamily. Just remember at Investor Fuel, we help real estate investors, service providers and real estate entrepreneurs, 2 to 5X their businesses to allow them to build the businesses they’ve always wanted to allow them to live the lives they’ve always dreamed of. That being said, Steven, welcome to the show.

Steven Libman (00:51.086)
Hey brother, thank you so much for having me, I appreciate it.

Stephen S. (00:53.425)
I’m super grateful that you’re here. I’m really looking forward to this conversation. So before we get started, just for my sake and for our listeners, can you give us just a little bit of a background of what got you into this space and how you’ve gotten to where you’re at today?

Steven Libman (01:09.72)
Yeah, so I think it’s always interesting because I always started at beginning of the career, but I guess what’s probably most makes most sense is to talk about, at least for a minute, my mindset around growing up around money and real estate and what it looked like to be financially free and successful. So, you know, I was actually left by my biological father when I was born. My parents together were divorced.

nearly seven times between the two of them by the time I was 14. And although I had somewhat of a financial stable life for a period of time, stability wasn’t the earmark of what I think most of us think about when we come to think about financial security growing up. And I only bring that up because I think a lot of people think that you have to have a head start before you get to a place of success.

meaning your parents were in real estate or you had hedge fund parents or, but that’s just not my story. So, you know, I think it’s important to bring it up because two things, one, the man on top of the mountain didn’t land there and two, your past isn’t a precursor to your future if you get around the right people and you learn the right things. So, went to Boston University for college and graduated with a degree in, nobody will guess this, sociology.

And after my liberal arts degree that cost me a quarter of a million dollars, I got into the sales world, working in Manhattan, selling everything from payroll and tax filing services to ATMs. I became a real estate agent and then a broker, working through the downturn in 2007, eight, nine, and actually selling bank owned properties to investors and watching them go in and assess a property, flip a property, and then sell it for a profit. And I thought, man, this is

Stephen S. (02:35.779)
Really.

Steven Libman (03:04.161)
a really good, interesting way to earn a living. You’re working for yourself. You don’t answer to anybody. But I didn’t really know anything about it. So after about four or five years in the real estate industry, I was working with a lot of investors that were buying these great bank owned properties because I was able to find them and learn how to assess them for construction costs and things like that and bring them, you know, kind of very short to market deals that were bank owned.

And I remember this one gentleman, we just had a relationship where I brought him three or four deals that year. So he was going to make, I don’t know, somewhere in vicinity of five to six hundred grand in profit off of his flips. And I remember going to the closing table on a Wells Fargo deal in Brick, New Jersey, and somebody had stolen his pool ladder out of the pool in the backyard. Now it’s a bank owned property and this stuff happens all the time, right? Luckily they didn’t steal the copper in the house. And he said, Hey, I’m not closing.

unless I get that pool ladder back. And I said, well, I’m not going to call Wells Fargo and see if they’re going to send us a pool ladder for closing. And he said, well, it costs about 400 bucks. I want you to take it out of your commission or I’m not going to close. Now at this point, I don’t know, I’m probably 26 or 27 years old, married with my first house and needed that commission and decided to give him $400 out of my

I don’t know, couldn’t have been more than $3,000 commission to get this pool letter issue resolved. And that is probably what sparked my thought process of saying, even as an independent contractor, as a realtor, I still work for somebody else. Somebody else still has power over what I do. And I’ve always considered myself as hardworking, but also unemployable, meaning I don’t take direction real well. So,

when I found out that I was still working for somebody else, decided to start really looking into how do I start my own company? And around the same time, I met my business partner, Travis, who was running big underground machines, digging pipe and trench and putting underground utilities in for his family who was developers. And we started talking and learned that he wanted to get into some house flipping, I wanted to get into some house flipping.

Steven Libman (05:30.572)
We went out to Costa Rica on a trip and decided to come home and burn the boats. We both quit our six figure year job and decided we’re just going to do it. We’re going to go for it. We didn’t have two nickels to rub together to start that business, but that’s why we decided to start in the wholesaling side. So we would wholesale a property, then we’d do it again and do it again and do it again and save some money until we could flip a property. ended up doing about a thousand flips and wholesales in the New Jersey area.

over the next six or seven years. Just got crushed in taxes. If anybody is flipping houses out there, you know that there is some tax liability. It’s taxed ordinary income, not long-term capital gains. So you’re paying 35, 7, 40 percent, depending on the state that you’re in. One of our mentors said, hey, you you guys should get into the multifamily space or the commercial space. There’s really good tax incentives into that side of the business.

So I didn’t believe him, of course, so we read the tax code and found out that he was right. There was significant tax incentives written into the tax code for commercial real estate owners. And that year we built about 350,000 square feet of self-storage down in Florida, paid zero tax and made the most amount of money we’ve ever made and realized this seems like a better side of the business. And we decided to pivot away from wholesaling and flipping and go full-time commercial real estate.

Stephen S. (06:53.869)
And what a great backstory. Thank you so much for that. So Stephen, tell me this because you mentioned when you got started, both were leaving, you and Travis were leaving six figure paying jobs, getting into a completely new venture, taking that leap and that risk. And you chose wholesaling because wholesaling does have a lower barrier to entry than other forms of real estate. But like for somebody that’s getting started that thinks

hey, maybe it’s too good to be true, or there still is going to be some form of cost. What’s really the biggest cost when somebody that’s just desperate and needs to do something that has the potential upside like wholesaling? What’s what’s something they should be keeping in mind, like when they get started in that?

Steven Libman (07:36.43)
I mean, our first dozen deals didn’t cost us anything. I mean, we were doing wholesale deals off of the internet, right? We were just unoffendable when it came to a buyer or a seller telling us no, right? So we just made a bunch of offers regardless, right? We were searching for estates, we were looking for handyman specials, we were looking for dilapidated houses. But I mean, at some points we were making 100 offers a day, right? Because we had access to seven or eight MLS systems and we were just making offers.

calling every realtor that we could and saying, hey, go do a video walkthrough with me so I can figure out what my repair cost would be. And we’re cash buyers. It might be offensive to the seller. That’s not our intention. But this is the number we can pay. If it’s interesting to you, let’s do it. If it’s not, that’s OK. You can call me back if it ever becomes interesting. So I think the biggest cost is probably your pride to recognize that.

man, this is going to be painful because a lot of people are going to tell me no, a lot of people are going to call me a scavenger, a lot of people are going to be calling me, you know, different names or whatever. But, you know, once you start to build the reputation of, wow, these are buyers that are interested in actually buying property and actually going through the transaction, can actually help me get out of my house. It takes some time, effort and energy to do that, but…

It’s worth it. So, you know, in the beginning, we just did the guerrilla marketing stuff, right? We did bandit signs. We did, you know, kind of low hanging fruit. But the first at least dozen deals were gotten right off of the MLS because we didn’t even have a dollar for marketing at that point.

Stephen S. (09:16.303)
Now you still had access to the MLS, not just anybody can access the MLS though, correct? Was that because you were Realtor?

Steven Libman (09:20.876)
Yeah, I was still a real estate broker and I kept my license in referral mode specifically to have access to the MLS.

Stephen S. (09:27.419)
So, and you were ultimately, like, you were just leveraging what you already had.

Steven Libman (09:34.198)
Yeah, exactly. And I mean, you know, if I didn’t have that, I probably would just find a realtor that understood my business model and would send me a hot sheet every day. We could, it’s pretty easy now with, with what you can do and setting filters and parameters to get new properties sent to you on a daily basis to where you can literally put keywords into a filter and they can send you those types of properties that you’d be looking at on a hot sheet.

and then you go through them and you call your realtor back and say, hey, you sent me this property. I’d like to go see it or analyze it or whatever. it’s, it certainly was helpful when running comps, looking at tax records, but there’s, there’s other guerrilla ways to do that without having a license for sure.

Stephen S. (10:16.387)
sure. now let’s kind of transition a little bit off of that topic. That was more for my own personal curiosity than anything because that’s like the biggest thing I see in real estate groups and associations I go to is people that are just getting started that end up never taking that action step because they just don’t know what they don’t know. Right. So one of the things that that we kind of intro the show with was you know

purpose-driven investing, which is what you all focus on. tell me where that comes from and what that means to you and your business.

Steven Libman (10:51.426)
Yeah, frankly, it didn’t mean anything when we were wholesaling and flipping. We were just trying to make a dollar, right? We were trying to get back to the six-figure income that we initially were making when we quit. And that wasn’t purpose-driven at all, right? That was, let’s put a paycheck on the table and let’s make sure that we can work for ourselves. And, you know, it’s not to say that we, so we’re Christian-owned and operated company, which means that we tithe, we give back, we try to give to nonprofits and things like that.

but that was not where the business started. The evolution of the business was really focused on the fact that you have these investments and you have these investable assets, but especially in the multifamily space, you own a building that is filled with people. And I think we, as Christians, a lot of time think that we can write a check and maybe dig a well in Africa, which we’ve done.

over time, it’s kind of pivoted to, you know, we read a study at one point that said over 100 million people live in multifamily housing in the United States, right, about a third of the country, whether it’s high rises or trailers. And studies show that 95 to 98 % of those people are unchurched, meaning that they might not be faith driven, but they couldn’t identify what church to go to locally because of the transient nature of renters. And

That’s when we realized through some mentors of ours that, you know, there’s a mission field in our backyard and we happen to own it. And we can be purpose-driven about the messaging and about loving on people and about how we treat our tenants and about how we treat our investors and give people this kind of double-pronged approach of making temporal and eternal returns on their investment. And so, you know, the Lord is really through some prayer

encouraged us step by step. know, at first when we moved into the multifamily space, it was we wanted to give one percent of our net profit past our tithe. For non-Christians out there, a tithe is 10 percent of your net profits that goes to your church, your local church. So we wanted to give one percent over that tithe to different nonprofits. And we’ve supported over 40 different nonprofits over the years, impacted over 250,000 lives individually around the world.

Steven Libman (13:13.678)
through that giving. That giving went from 1 % to 2 % to 3 % to 4 % and continues to hopefully grow as we become more more profitable. And then more recently, you know, we’ve shifted our focus to how do we create these programs and intentionality and create an impact in the communities that we own, right? We own somewhere between 4,000 and 5,000 units at this point. That’s 4,000 5,000 families that we get to impact on a daily basis because we own the mission field. They live in our complex.

So what are we doing to intentionally impact their lives in a positive way?

Stephen S. (13:46.065)
So, you talk about impacting people in a positive way and doing those things, what are some of those tangible things that you’re doing like with the giving specifically? Like is there anything time specific that you guys do to give back as well? Or tell me a little bit more about how you play your faith out within your business.

Steven Libman (14:10.99)
Yeah, so, you know, we at every complex, we work with a company called Apartment Life. Apartment Life is a nonprofit that’s been around since 1985. They’ve managed over 40,000 different apartment complexes. And essentially, we give a free apartment to someone that lives on site that does biweekly events and serves the tenants. I mean, we’ve done movies under the stars where we do a Moana night where we have Moana and Maui come dressed up and they take pictures with all the kids. We do

you know, hand out popcorn and candy and things like that. We will go around and hand out donuts and coffee in the morning, you know, so every two weeks at every one of our complexes, we’re doing one of these events where it just serves the tenants and there’s no reason other than we want to thank them for being a tenant. And that creates this sense of community and it drives this sense of, I mean, it gives us better Google reviews, our lease attrition drops by almost 40 % when you implement these programs. So there’s a direct

there’s a direct rate of return that gets affected by doing that. But there’s also this amazing story that we get to share with our investors because they’re a part of something bigger than just the rate of return. And so there’s those things. We’re working with some local churches that’ll come in and we’ll fund free tutors over the weekends for the summer because kids that live in multifamily housing versus single-family housing fall further behind than their single-family counterparts.

So if we can give them some free tutoring, they won’t fall as far behind. We take our investors on investor serve days, right? Where they come out, we’re gonna have some food trucks come out, and we’re gonna buy a bunch of food and serve the tenants that are there and just have a day out by the pool. And everybody’s invited, and now we’re having not just the local church and our apartment life people, but now our investors that are coming down to actually be the hands and feet, you know, and actually serve those tenants in a tangible way.

and create those relationships and things like that. So yeah, there’s a lot of different programs, there’s a lot of different dials, and the more you get into it, that’s why it’s not this framework and structure where it’s just done. You go into each community and you find that different people have different needs in different communities, and how do we serve those people tangibly? We have one complex where people can’t get to church because a certain number of these folks don’t have cars. They live in a city, they have access to buses, but the bus isn’t going to drive them.

Steven Libman (16:37.282)
to church. Well, the church has bought a van, and now they’re running a ministry that goes and picks people up on Sundays and brings them to church if they want to come. Right? So there’s just these different things that you can do and different levers you can pull depending on the needs of the community.

Stephen S. (16:52.401)
Wow. Now, what was that evolution like? Like when you got into more multifamily properties doing that, when was that like aha for you guys where you were like, hey, there’s a bigger play here.

Steven Libman (17:06.636)
Yeah, I mean, probably in the last three years, we’ve really started to think through, okay, we’re giving a lot of money away, which is great. It feels good. And we’re seeing impact around the world. And, you know, but for me, it was, you know, myself, my partner, my CEO, you know, we’ve had a lot of conversations about, well, what are we doing in our backyard? You know, and then it became, we well, we heard about apartment life through another company that was using them. And we went and

interviewed them and then we got involved with a group called Redemptive Real Estate where there’s other faith-driven multifamily owners around the country that are doing different things and we’re networking with those folks and learning about some different things that they’re doing and we’re starting to combine some of the things that one group is doing and another group is doing and you know like everything else the more mentors that you have around you that are further ahead than you you can

really glean a lot and accelerate your learning curve. So, you know, it’s been a quick evolution in last couple of years. We’ve been giving for, I don’t know, seven, eight years. But now in the last three years, especially in the last 18 months, it’s become extremely intentional where we even have somebody on our team that’s just focused on the ministry aspect of the business, right? And they’re doing a fantastic job, Celia on our team as she does some investor relations, but mostly

she deals with the nonprofit side of the business. And yeah, we’re excited to see where the Lord takes it. I mean, we’re just, we feel like we’re just scratching the surface. We know that we’ll probably, you know, get to a billion dollars under management over the next 24 to 36 months, which is thousands of families that we get to serve in new and different ways. And, you know, we’re always excited to see what the next thing that we can learn is so that we can implement it.

Stephen S. (19:02.289)
How did you, when you decided to start this and start aligning things with your core values, what was that set of core values? How did you develop that in the beginning?

Steven Libman (19:14.316)
Yeah, so great question. I think if you haven’t defined your core values, there’s a couple things that you need to do. One, you should have core values for your business. Two, you should have core values for your family. Oftentimes those things should intersect. But a good way, a good exercise to do this, which is really practical and easy, is just sit down and think of three people that you really admire. And write three to five traits.

down of each of those people and you’ll start to see some overlap. Right? If you respect your mom because she was brave. If you, you know, respect an entrepreneur because there was bravery there. Or if you know people that don’t lie because they’re filled with integrity. You know, you’ll start to see kind of this crossover of multiple people and some of those values that stand out to you. And what I think is interesting about that is those things stand out to you not because

you recognize it in them and you want it or you covet it or you desire it. But I think it points back to what’s in you that the Lord wants to grow. So if you really honor integrity, that’s probably a core value of yours and you probably have some. Maybe you need to grow it and expand on it, but it’s probably a core value, right? A good way to also think about this is if somebody violates that core value, how does it make you feel? Right?

You know, so we always say you get hired, fired, promoted, and demoted on the core values of our business. And that’s kind of the different ways that, now if you make a mistake, you’ll never get fired, right? But if you violate the core value of integrity, you would. So these are kind of one-strike rules where, you know, integrity, accountability, honesty, respect, those are the types of things that we pick out. So that’s a good exercise to go through.

you know, as kind of an extra credit on that homework if you decide to do it, is write a letter to those folks. So if they’re alive and you’ve said, man, I really respect this person because of the integrity they show and the tenacity they shown or whatever, let them know, right? Write them a letter and say, hey, I was doing this core value exercise and you popped up as one of the people that I value because of this. Just wanted to let you know that.

Stephen S. (21:39.021)
What are some examples of how your core values were challenged in a real estate deal? And do you have any stories where you’ve had to say no to doing business or something wasn’t going the right way? Or can you give us something there?

Steven Libman (21:57.388)
Yeah, yeah. And it happens a lot, unfortunately, in business where, you know, so for one example, we have kind of these parameters of people that we’ll work with in terms of just track record, forget about core values. But this is how it kind of relates is there was a multifamily operator that we already had funded a deal. We did great on the deal, by the way, and we already exited that property.

And they said, hey, we have this other property. It’s going to be a senior housing development. It’s already built, but we’re going to take it over. We have a third party property management company that’s the best in senior housing that we’ve ever seen. you know, nationally, national accolades, all this stuff. And we were a couple of weeks from closing and it kind of came up that they fired that property management company. And they just didn’t tell us. Now they had no senior housing.

management experience. And if you know anything about senior housing, it’s different than multi because it has different insurances, there’s nursing licenses that go along with it, there’s a lot of other technical things that it’s not just a leap you should take, right? You shouldn’t just jump into taking care of the elderly without any background. And so they did this and it came up in a meeting where they had fired this experienced partner, which was the only reason we were able to fund the deal. And we were like, Whoa, whoa, what do mean?

I know you guys don’t have any experience doing this and you know, we’re pretty concerned that you’re not going to be able to manage it appropriately for our investors and we have a fiduciary responsibility to them. And we ended up having to walk away from that deal and it wasn’t easy and they asked us point blank. They’re like, well, you know, we’ll bring people in that do have the experience, right? We’ll hire

senior specific people before we close to come in and help us run this asset and that will satisfy what you need. I said that might be true. Right? You’ve been in business for 35 years. I’m actually pretty confident in your ability to problem solve for this. The problem is, is that you made this unilateral decision and it violates our core value of respect. So now we have to walk away.

Steven Libman (24:12.61)
And that was the last deal that we ever did with those folks, unfortunately. But, you know, in the beginning of all of our relationships, we lay out to people what our core values are. And we let them know that we hire, fire, promote, and demote based on our core values. So that’s just one example, and there’s many more, of, you know, where your core values can guide your decisions. You know, I think there’s… My buddy Sharano, he says this, he says that there’s an inverse relationship between clarity and stress.

Stephen S. (24:42.289)
Hmm.

Steven Libman (24:42.382)
Meaning, the lower the clarity, the higher the stress. What this does is it gives you a very clear framework of how you make decisions. So you have lot of boundaries, ergo clarity, so it reduces the amount of stress on how you make those decisions.

Stephen S. (25:04.657)
Wow. Now if you had to go back to the beginning, like and start over from scratch with everything that you know today. So you were able to take all of your lessons, your failures, your, your wins, and you were able to go back to the beginning, start from scratch with that experience. What would you do different and what would you do the same?

Steven Libman (25:27.502)
Well, the first thing I would do is, so we were doing, when we were doing wholesales and flips in the beginning, it was probably year three, two or three. And we were maxing out around 15, 16 deals a year between me my partner. And we started listening to some podcasts and we started listening to some people that said they were doing a hundred deals a year. And we were like, they’re full of it.

But we ended up talking to the guy who had the podcast. He also had a mastermind. We joined the mastermind and the next year we did like 72 deals. Right? And then we doubled that again. And so I think if I had to go back again is to not place myself on an island and get around people that were like-minded, that were looking to do similar things or that had already done similar things. Because what’s interesting about this is if I could tell you how much I paid in mistakes in the first three years of my business.

versus what it cost me to join a mastermind, I’d pay it ten times over. Right? So I think there’s a couple reasons that you want to join a mastermind. One is a mastermind, find a mentor, whatever you want to call it, right? Is just find people that are doing what you want to do that are further ahead than you are. Which doesn’t mean, by the way, that they’re smarter. They might be. But it does mean that they started earlier. And one thing I know about distance and speed is that speed very rarely makes up for distance.

So if you can pay to link your train to somebody else’s distance by learning what they’ve learned, then you can go a lot further a lot faster. So I would say, everybody always asks, well, would you start a fund or would you start doing multifamily before you did single family?

And I would love to do that, right? If I had to start all over again, would I just jump right into multifamily and raising hundreds of millions of dollars? Well, yeah. But could I have raised hundreds of millions of dollars without the credibility of flipping a thousand houses first? Probably not, right? So I think there’s strategic partnerships that could probably cut the path a little faster. But the journey of learning that it took to learning how to flip a house, learning how to wholesale a house,

Steven Libman (27:41.774)
to raising capital and partnering with an experienced operator to building 400,000 square feet of self storage and then now managing nearly 5,000 units. They’re all very different skill sets. So I would say from an entrepreneurial standpoint, you have to build the muscle. If you don’t know it, if you don’t have an MBA in finance, you have to build the muscle and you have to figure it out. The other thing would be to…

to hire the right people. Hire for more than you think you can afford, because you’re going to pay for it if you don’t. So hire the best talent that you can. It’ll actually make you money, not cost you money. I think a lot of entrepreneurs think that hiring somebody is going to cost them money, and it usually does. And here’s why. Because when you start a company and you’re an entrepreneur, you become the town dog catcher. Any stray dog that’s running around that wants to work for you, you’re like, my goodness, would you work for me? 100%. Let’s go. Why would you want to work for me?

Right? Because we kind of undervalue ourselves as entrepreneurs. Like, who would want to work for me? But when you have the vision, you have the mission, and you know that you can get high quality talent, know, hire people smarter than you. My CEO says this all the time. Steve Jobs didn’t say it. He goes, I don’t hire smart people to tell them what to do. I hire smart people so they can tell me what to do.

You know, so anyway, hire for as much as you can afford or if not more because they will make you money, not cost you money. Don’t be the town dog catcher. then yeah, I think relationships is everything, right? The right partnerships, the right relationships. So be slow to get married, date first. Get married to those partners later because even the people that seem to align with your core values, unfortunately,

When you get a lot of money involved, they might not.

Stephen S. (29:37.888)
And money, just to follow up on that note, money does not change who you are, it exposes who you are.

Steven Libman (29:45.736)
Yes, that is true.

Stephen S. (29:49.329)
Thanks so much again for being here, Stephen. And if anyone wants to learn more about you, what you’re working on, where should they go?

Steven Libman (29:57.058)
Yeah, go to investingwithpurpose.org. You can learn about the nonprofits we’ve partnered with. You can listen to the podcast also by the same name, Investing With Purpose. Check out the book, Investing With Purpose. You know, try to keep it simple and, you know, help people align their core values with their investment thesis.

Stephen S. (30:15.567)
Awesome. Everyone, I hope you enjoyed today’s show. We’ll see you on the next episode.