From House Hacking to 100+ Units: Steven Carroll’s Investing Journey

Steven Carroll (00:00)
Someone who I met through a networking event. And he said, well, I’ve got about 600,000 and I’ve got friends that would listen to I thought like asking for 50K was going to be impossible. And so that opened all the doors. And I was like, okay, I need to do this double down. And I also need to build the relationship. I don’t want capital raising to be, let me call you when I need

Dylan Silver (01:51)
Hey folks, welcome back to the show. Today’s guest is an investor based out of New Jersey, Somerville, New Jersey, involved in over a hundred plus units in multifamily and then also in the mobile home parks and pad space. Please welcome Steven Carroll. Steven, welcome to the show.

Steven Carroll (02:15)
Thanks for having me. I’m excited to share ⁓ and talk a little bit about real estate today. It’s a fun asset class to invest in. It’s been a fun journey for me. So excited to chat with you and to help educate others too.

Dylan Silver (02:30)
I think it’s always nice to talk to an East Coast guy because sometimes I’m out here in Texas and I just kind of forget. I stop talking with my hands. I start pronouncing things correctly. And then I get back to New Jersey and I’m like, there is a New Jersey way to pronounce coffee. And so it’s good to have someone from New Jersey on the show here. Are you a lifelong Somervillean?

Steven Carroll (02:55)
Now I grew up in a small town called Long Valley that no one really knows about in Northern New Jersey. It’s a part of New Jersey where there’s farms and fields and trees and cows. So it was nice growing up there. I spent most of my life in Morristown, New Jersey. But I’ve been Jersey born and raised, so you’re gonna see me talk with my hands and you’re gonna probably hear me talk a little fast. So some people listen to these things with the speed sped up. You might have to slow it down, but I’ll do my best.

Dylan Silver (03:21)
that is actually something that I noticed it’s a real thing I when I came to Texas I came down here on 2019 I was like wow people actually do talk faster in the east like it’s not a that’s not a made-up thing like we’re actually talking faster and sometimes people thought it was like an act that I was putting on and I was like whoa I got a tone it back because this is crazy but then also too the flip side is I really didn’t know and

Steven Carroll (03:45)
Hahaha.

Dylan Silver (03:50)
free to my Texan audience forgive me for this generalization I didn’t really know that there are people who legit dressed up like Woody from Toy Story like that was their like daily garb and I was like no wow cowboys literally still exist like very much so like and you know I live amongst them and I took me took me a while but I got country dancing down on two-step and I got cowboy hat I got you know you know what do you call it bootcut jeans cowboy boots so I’m all

cowboyed up over here but I digress Steven I digress back to real estate ⁓ I always like to start off at the top of the show by really asking folks you know how did they get into the real estate space because everyone’s journey is a little bit different

Steven Carroll (04:33)
Yeah. Well, so my journey started back when I, when I graduated college back in 2008, if anyone old enough here’s 2008, they’re instantly triggered to remember that that’s when their legs fell out of the financial markets. And so I came out of college thinking I’m going to get a job in finance and be successful, whatever that means. And I was competing with 20 year bond traders. So I fell into ⁓ a career in money management, starting in like customer service and working my way up.

And it was actually interesting as I started to work with clients and starting to be more of a financial advisor, I learned that the people who were doing really well were sitting on the other side of the table and they all owned real estate. And one of my favorite stories to tell is how I remember one of our clients who we became close with was talking about a building they owned. And I was like, what do you mean you don’t own a building? Like how do you own a building? Like the companies own buildings, you don’t own buildings. And that’s when I started to learn that that’s something that

that individuals can do. And it’s a great way to both store and grow your wealth at scale. Now that said, I didn’t get started in the industry and start going for bigger deal, though I know a lot of the big multifamily educators will say, go bigger, faster, which I agree with. However, I got my start really, really small. I I started with just a duplex. My wife is a nurse and she has a very physically demanding career.

So, and there’s no pension, right? She’s paid her hourly rate and she’s in cardiac and she’s one of the best nurses around and the world needs more nurses like her, but she does CPR for three to four hours a day and she’s exhausted. So, she wanted to do travel nursing, so needed a place to be able to come home to without paying a full mortgage, bought a duplex. I bought one in the same growing town. ⁓

Dylan Silver (06:44)
Yeah.

Steven Carroll (07:06)
And then eventually, which actually today we’re living in one of our duplexes, just a house hack as they call it. And that’s a great way for us to, we did that on purpose just to save money. We were moving, we bought a house together, but that was how we got started. Just duplexes, very small. And then I started learning and growing and exploring the different asset classes and partnering with different people who were looking at deals, someone who would do the underwriting for bigger deals and scaling up. And so over the last 10 years, I’ve been scaling up.

to include the 116 multifamily units, the mobile home park with 134 pads, and then a boutique motel and a small business in Kansas City too, just to diversify.

Dylan Silver (07:47)
I always hear this now, and I guess it’s kind of like the red car theory. You hear it and you didn’t think about it before, now I see it all the time. Which is duplexes, triplexes, quadplexes, in many cases, especially if you have the right lender and the right kind of ⁓ circle around you, can be easier for young people to qualify for than a traditional single-family home. And the first time I thought about it, I like, that’s not right. And I’m a realtor, so was thinking, you know,

who who is this person that’s going out here and you buying duplexes right off the bat you know of course they’ve got to start with single-family but then I’ve had more and more lenders and then investors tell me no no no it’s actually a way that a lot of people can get in did you know that when you got your duplex that hey this is gonna be a way where I can get in maybe a little bit easier than some other ways

Steven Carroll (08:40)
Yeah, I’m glad you mentioned that. And no, not initially. But then what I started to hear is people who were doing house hacking. I followed BiggerPockets and people were talking about house hacking, living in a duplex, triplex quad, which is not necessarily considered a commercial property yet. So you can still get traditional financing and living in it and renting out the other side. And so that’s why I started to look into it. And what’s great about doing that is whether you buy a single family residence or a

duplex, triplex, quadplex, you can still qualify for that FHA loan, which means you don’t have to put down the 20 to 25%. In this case, when you buy an investment property, that’s not your primary residence, you have to put down 25 % most banks will require. But when you are getting an FHA loan as, hey, this is my primary residence, you only have to put down that 3.5 % to qualify for the FHA loan. it lowers that barrier to entry for people getting in and getting started.

It teaches you the game of real estate and helps you practice being a landlord and managing yourself so you know how it works. And then allows you then in the future, you can move out once that happens and buy a future home. You don’t always have to live in it. Now you have a duplex, triplex quad that’s making you money. And now you own that property. You probably have equity in it.

And then you can do that. You you can move on to your next property. It’s a great way to get started. And I always educate anyone who’s like younger, has roommates, look for that first.

If I was smarter and if I could look back, I’d live with four friends of mine after college. I would have bought a quadplex and charged them for a room or rented it out. And that would have been a way earlier start, but it’s a great way to get started.

Dylan Silver (10:59)
want to pivot a little bit here and ask you about 2008. You mentioned getting into the workforce in 2008. Must have been kind of an interesting time to leave college into the workforce, right?

Steven Carroll (11:13)
Oh, was almost impossible. And that was back when home values were like falling apart too. Now, if only I knew I would have invested in more real estate back then when there’s a lot of foreclosures and was scary. It a scary time. know, companies were going under. I remember I had a job offer from a company called AIG, big insurance company. And also overnight, they’re like bankrupt. It was like, yep, that offer’s gone. So it was a scary, definitely a scary time. What I like about the fact that I went and lived through that is that

Dylan Silver (11:31)
Yeah, yeah, yeah.

Steven Carroll (11:43)
it recession aren’t scary necessarily. You can work through it if you’re smart. And if you like, especially if you have assets to back you up. And so people keep talking about, Hey, we might be heading into a recession. We’re probably years overdue. So well, someone will be right about that at some point. Um, but as, as long as you look at it with the, like, if we do go through a recession, that’s going to be a fine opportunity. Well, I’m back in cash just to make sure that we do have a recession, like that’s the time to build it. But it also taught me.

how many people don’t know how to invest, right? So many people lost all their money, they didn’t even know their money was invested. And even at the end of the day, if I’ve got money invested, I do have money in stocks, but I’ve got a ton in real estate. And at the end of the day, if values go down, there’s still a building with wood and windows and an asset to sell at the very least. So, you know, it just gives me more confidence going into that. But it was a wild time, I’ll tell you.

Dylan Silver (12:33)
I can only imagine leaving school and then seeing that and now you’re like a young guy thinking like I’m gonna start my life and then it’s like not only is no one hiring but also like they’re fighting for survival like their family’s livelihood is being threatened they’ve got in their minds they’ve got way bigger fish to fry than like hiring recent college graduates so they’re it must have been crazy

Steven Carroll (13:00)
Yeah, that was wild. was a good learning lesson though, because my first job, as a quick aside from the real estate side, I got into customer service and then I worked for a retirement planning company back when the joke was your 401k became a 201k. And I mean, I was taking calls from people who were calling in saying, where’s my money? And it got me used to and familiar with having difficult conversations and deescalating conversations.

Dylan Silver (13:24)
Yeah, I’ll bet.

Steven Carroll (13:26)
It makes it easy when I also raise capital for deal that we invest in. And it makes it easy if I’m prepared for, hey, things are tough or we have to have a capital call or, you know, people who say, Hey, you’re, you know, what are you, what are you trying to sell me? I can navigate those conversations because nothing scares me anymore. You know, people will say weird things to you that, know, over the phone, they wouldn’t to your face. So it was a good learning lesson.

Dylan Silver (13:42)
After them.

And I

come from a background as a distressed property wholesaler before I was a realtor. And I still have a lot of there’s a conflict kind of between wholesalers and realtors, which I learned going through real estate school and earlier this year. I didn’t know that prior to I knew there was some maybe some friction, but realtors definitely don’t love wholesalers by and large. But I worked for two years as a wholesaler. And one of the things that I saw was real estate is very much a contact sport. I actually

and borrowing that phrase from an early boss of mine in the real estate space, my first job in the real estate world. But going to distressed properties and walking through some of these homes and seeing kind of people, and it’s sad, but also where the wholesaler has great utility, seeing some of these people who’s, you know, going through very difficult times, either emotionally, financially, or both, probate issues, air, you know, airship issues, death in the family, divorce.

Steven Carroll (14:35)
and

Dylan Silver (14:42)
unfortunately all different types of situations medical and seeing that it’s not just you know a phone call this is this is very real very real and so if this person doesn’t act on this now situations only gonna get get worse but I do want to pivot here Steven and ask you about

scaling in the multifamily space so you’ve got a hundred plus units that you’re involved in ⁓ and you mentioned

raising capital which is something that I think interests a lot of people. can’t tell you how many people, guests I’ve had on this show talk about, you know, needing to raise capital for a business and having done it yourself. What would you say are some of the kind of key or critical pivot points from going from, you know, humble beginnings with a duplex or two to then being involved with deals size of, you know, 100 plus units.

Steven Carroll (16:17)
Yeah, I’m glad we’re bringing this up because a lot of people ask me, how do you raise capital? What’s the best way to do it? And it’s the thing that people are afraid of the most. For one deal we had in Cedar Rapids, Iowa, we raised over $500,000 in a matter of three weeks. I’ve totally raised over $1.2 million for deals that we’ve been investing in. And I’m raising money for one now. But the first thing that I would say thinking about the way that I’ve gone about this is,

If you’re raising capital, first of all, it takes a very specific type of personality and skill set to do that because you have to be confident in both your capabilities. If you’re in a partnership, your partnership’s capabilities and with what the benefit to that individual is. I spend a lot of time when I meet people and I communicate with everyone that I talk to and I talk about real estate investing. I talk about what I do.

and you have to have your 90 second pitch down. Mine’s like a 10 second pitch. I make people double digit returns and give them great tax benefits through passive real estate. You know what swing hammer is? Let us do that. And so, you know, things like that, you have to be able to articulate your value very quickly. So practice those things as the advice I would give to people. A lot of times I’ll be brought into deals as a capital raiser because of my relationships that I have, my background in wealth management. So I can credibly speak to

the benefits of real estate, not just the yes, appreciation, and we’re going to do value add, but ⁓ things like the depreciation and cost segregation studies and what that means for an individual, how you can offset it, what you can’t offset because there’s a lot of misconceptions there. ⁓ So there’s that, but I mean, to boil it down, don’t let me get too far in the weeds. The basic thing is you want to be telling everybody upfront as soon as you can that you’re investing in real estate because

Dylan Silver (17:51)
cost tag.

Steven Carroll (18:10)
Those relationships are what make investing in real estate successful. And you want people to trust you first. Most times the investors I’ve worked with have told me that the reason they’ve invested was 10 % of the deal, 90 % trust in me because they knew, hey, I trust you. And I know that if anything went wrong, you would do whatever you had to do to figure this problem out and make sure our money is protected. And I think that’s the most important thing that people overlook.

Dylan Silver (18:37)
Now without giving away all the gold but maybe getting a little bit granular here and you can maybe don’t give away the full story but just give us a little gold nugget here. When you were starting out raising capital in the real estate space ⁓ do you have any pivot points or critical moments where you realize okay this is really working or this conversation went really well or I need to do more of this and then you have since either replicated or added to that or

⁓ grown from that kind of point, but these kind of aha moments where you say, okay, I’m good at this or I can do this or this has been working.

Steven Carroll (19:16)
Yeah, when I was raising capital for my first deal, I was actually part of a, it was a group event and I, you know, they were basically allowing people to do a quick pitch. And so I went up and I gave my quick pitch on the deal and how we approached it and how we were conservative on our underwriting. And then I opened the floor to say, if anyone wants to have a conversation, I’d love to just chat through the opportunity, no obligation. And then once we were talking after that, that pitch, people were pretty impressed.

And I get a lot of feedback that like, hey, look, that was incredible. I’d to invest with you. Like, what are you looking for? And I thought it was the hard part, right? I thought that asking people for money was the hard part. And then I realized when you approach things the right way and you have a good deal in your hands and you articulate that well and you’re conservative on your approach, it’s a lot easier to raise money than you think. I remember my first investor, he said,

It was a random connection, not a family, not a friend,

someone who I met through a networking event. And he said, well, I’ve got about 600,000 and I’ve got friends that would listen to

if things go well, we’ll bring more people in. And I was like,

Dylan Silver (20:24)
Yep.

Steven Carroll (20:25)
I thought like asking for 50K was going to be impossible. And so that opened all the doors. And I was like, okay, I need to do this double down. And I also need to build the relationship. I don’t want capital raising to be, let me call you when I need

Nobody likes that.

but I wanted to build a relationship. I wanna know about you. I wanna know what you want to accomplish. And then I wanna find a deal that’s gonna align with what you want, give you the option to invest. It’s the best way to do it.

Dylan Silver (20:50)
I’ve heard this now from multiple people and some of the points that you hit on basically tell everyone what you’re doing, you know, have a quick pitch. She mentioned 90 seconds, but you boil it down into 10. And then this idea that, you know, you may think, I got a raise. mentioned 50,000, but someone came with potentially 600. And then I’ve got friends. You’re like, Whoa, you know, I was just trying to go for this, but I get, you know, 10 times that much. And so I’ve noticed that and have had a

some experience, at least putting feelers out there in the capital raising world to where we actually had a syndicating attorney on this podcast. And I asked him after the podcast, I was like, hey, this is what I’ve got going on. I’ve got potentially this many people. And his advice to me was funny enough, he’s like, don’t do syndications right now. He’s like, going to LLC is too much for what you’re doing right now. Get an LLC, maybe get some capital, but you don’t want the SEC.

you know regulations and potential liability for for syndicating but I had nonetheless had a great conversation with him before we wrap here Steven I do want to ask you about the verticals that you’re involved in you got multifamily you’ve got ⁓ I believe it’s the mobile home pads right

Steven Carroll (22:04)
Mm-hmm. Correct.

Dylan Silver (22:06)
Two different spaces, right? But they both have similar principles to a degree. They’re obviously great cash flow. Is there a reason that you chose those two verticals, the multifamily and then the mobile homepads?

Steven Carroll (22:20)
Yeah, for sure. Real quick, before I answer that, just want to go back to capital raising for just a moment. You hit on tell everybody. And one way I tell everybody, I literally had a shirt made up that says passive income through real estate, tax deductions, and ask me how. ⁓ So I love to tell everybody and ask everybody, tell everybody what you’re doing. anyway, going back to your question on the different asset classes. So I love to diversify and I love multifamily.

Dylan Silver (22:33)
You

That was great.

Steven Carroll (22:50)
that’s where I got my start. And because I had a duplex and my wife did, I knew the game. I knew how it worked. But then when I was doing that and going bigger and scaling up, I realized that looking at the asset class as a whole and the levers you can pull to create value, you can increase rent and certainly make sure you’re adding value to, let’s say, bringing market rents up to the current based on doing certain improvements. And then once you get there,

there’s not many opportunities from there to continue to add value. And so I was looking for different asset classes to say, well, where is there more opportunity for value? And a lot of mobile home parks I found are very, they’re utilized, but a lot of them have land that just hasn’t been developed. A lot of them have, they have no systems in place. They’re literally mom and pop owned. And the smaller parks aren’t gobbled up by bigger private equity. So there’s more opportunity. You can sell off homes.

Most mobile home park, they care more about the land that it sits on and you own the trailer, we just own the land. Some will actually buy and sell the trailers. mean, there’s so many different levers to pull. And that’s why I diversified. So I even have a few short term rentals in addition. I get we’re in the motel spaces, boutique motel space as well, just to diversify. And I love finding ⁓ asset classes where you can add value. The more you can give, the more levers you can pull, the more services you can.

the more I think it’s exciting. Multifamily, though, is the best preservation and store of wealth because it always consistently goes up and people always need a place to live. So that’s why I dabbled a little bit in both.

Dylan Silver (24:28)
Lots of different ⁓ expertise and exposure to different strategies. think, ⁓ I mean, just being able to talk about it can be tricky, but to actually have experience in all those different verticals is impressive. So congrats on your success. We are coming up on time here though, Steven. Where can folks go if maybe they’re in the tri-state area and have a deal that they want you to maybe look at or get some feedback on, or if they’d just like to reach out to you?

Steven Carroll (24:56)
Absolutely. I’m on LinkedIn. You can find me under Steven Carroll. I the link is, Steven, or was it LinkedIn slash in slash Steven P Carroll. I’m also on Instagram as the Do Money Better guy. Created a little persona to share some of my wealth management and real estate tips. And you can find me at steven.carroll at yahoo.com. I love listening to your conversations. Please feel free to connect with me. I want to keep this rolling and educate as many people as I can. So thank you for that and please reach out. Happy to help.

Dylan Silver (25:26)
Thank you for coming on the show here today, Steve.

Steven Carroll (25:28)
Great to meet you, Dylan.