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Show Summary
In this conversation, Andrew Freed shares his journey from a corporate job to becoming a successful real estate investor in Worcester, Massachusetts. He discusses the multifamily market in Worcester, his strategies for investing, and the importance of mentorship. Andrew also addresses the current state of the real estate market, particularly in New England, and offers advice for new investors looking to get started in real estate.
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Investor Fuel Show Transcript:
Andrew Freed / InvestorFreed (00:00)
what really brought people down was they didn’t they did not buy opportunities that provided forced appreciation and they did not provide by opportunities that.you know, the cap rate exceeded the interest rate, right? Like I did all of that. Like I bought, you know, five to 20 unit properties at a 20 to 30 % discount with value to create. So there’s equity built in, right? And simultaneously I’m buying at an eight, nine, 10 cap rate while I’m borrowing at a five or six, right? So there’s just so much dealt in there for I could mess up all day and the deal still makes sense, right?
Dylan Silver (02:05)
Hey folks, welcome back to the show. Today’s guest, Andrew Freed went from corporate to real estate. And after reading Rich Dad Poor Dad, he used the HELOC to get into investing. He currently manages 500 plus rentals and owns 550 plus units through a combination of house hacking, syndication, and accessing liquidity through lines of credit. He’s also a realtor specializing in multifamily in Worcester, Massachusetts. He’s helped buyers house hack and start their own investing journey. You can find him at freedommanagement.net. Andrew, thanks for taking the time today.Andrew Freed / InvestorFreed (02:35)
I am excited to be here. Thank you for having me.Dylan Silver (02:38)
Now for those who are not familiar and are tuning in, where is Worcester, Massachusetts for those who are totally unfamiliar and then also what’s the market like out there in Worcester?Andrew Freed / InvestorFreed (02:48)
Great question. So Worcester is actually the second largest city in New England, second to Boston, and it’s 45 minutes west of Boston. What’s fantastic about Worcester, and the reason why I love it, is first of all, it’s a mecca when it comes to multifamily investing. 30 to 40 % of the housing stock are small multis, ranging between two and 20 unit properties. So fantastic for multifamily investing. Additionally, it’s like at the epicenter.of New England in general. Logistically, it’s very easy to get to. It’s right, you know, 45 minutes an hour from Nashua, from Manchester, from Hartford, ⁓ Providence, Boston, Lowell, Massachusetts. The list goes on and on and on, right? And it’s more or less a direct artery to New York City. So there’s so many reasons why I love Worcester in general. And the difference between Worcester and Boston is Worcester probably operates between a six and a half and eight cap rate.
Boston probably operates between a three to five baby, right? So it’s definitely more of a cashflow heavy play.
Dylan Silver (03:51)
Now, getting into multifamily investing, was this something where you had mentors in the space? Was this something where, you know, family or friends was coming from that space? Or was this a leap of faith for you?Andrew Freed / InvestorFreed (03:59)
Mm-hmm.So I was, like many of your audience, I was just a typical W-2 worker, got sold the American dream, got sold, get a good education, get your bachelor’s, get your master’s, get a nice six figure Sally, Sally, a prestigious organization, get a condo in the city. Like I did it all. And by the end of my twenties, I felt completely empty. And I felt like I had so much more potential to put on the table, right? Then I found this beautiful book, Rich Dad Poor Dad.
And it kind of opened my eyes to the way I viewed money. Previously, I was very averse to debt and reading Rich Dad Poor Dad, I understand how to utilize debt to build assets, right? And that’s kind of what led my journey into real estate investing that happened during COVID.
Dylan Silver (04:43)
And so walk me through those first couple of deals. Was that first deal, single family deal? I know a lot of people may start small, but I’ve also talked to people who their first deal is 20 doors.Andrew Freed / InvestorFreed (05:41)
Totally. So I highly recommend this for anybody who starts wants to get into real estate investing and many big players got started this way. For instance, Grant Cardone, Brandon Turner, house hacking, right? So my first play in a real estate investing is I mean, I bought a condo. I had it for five or six years. I lived in Boston and my condo appreciated over time. had about $200,000 of equity in that condo. So what did I do? I got a line of credit, a HELOC for about $200,000, borrowing, I don’t know, three or 4%.And I utilize that money to start house hacking properties, owner occupying three to four unit properties with an FHA loan three and half percent down or five percent down conventional loan.
Dylan Silver (06:22)
Now, when you were in the process of house hacking, was this something where you were doing this very gradually and like, hey, I’m gonna add, you know, one a year or did this scale up rapidly in the first year and you were thinking this is gonna be, know, my new full-time passion and career really?Andrew Freed / InvestorFreed (06:39)
Totally. So, you know, while doing my real estate journey, my entire vision was building it simultaneously doing my W-2. So my initial vision going into this was I wanted to house hack 10 multis in 10 years, know, 10, families have 30 units right off into the wind. That was more or less my thesis going into real estate investing. As I got into it, as I got more experience, it definitely changed over time. ⁓ But for my first, I think, two and a half years, I went from zerothe 24 doors and then from year two to five, it went from 24 to 500. So they were definitely different dynamics I took at different journeys of my real estate endeavor.
Dylan Silver (07:18)
So 25 to 500, let’s go through that, because of course that’s exponential growth. Was there a mindset shift? Did you say, you know, this is something that I’m really passionate about? Was it just opportunity that you saw? Did you, you know, work with syndicators who showed you a way forward through raising capital?Andrew Freed / InvestorFreed (07:22)
Okay.Totally.
Yep. Those are all valid and good questions, right? And where it all really started for me was it started with finding a mentor, right? I found somebody in my market who owned hundreds and hundreds and hundreds of rental units. I found a way to provide them value in the form of becoming an agent on their agent team. Even though I had a strong W-2, I became an agent and got commissions just so could provide them value. I started a meetup under their brand.
Right. did so many things to provide them value. And then when I started getting deals on this contract, I started having questions and I called this person. They suddenly picked up my call because I was obviously making them a ton of money. Right. So I that’s how I started. I found a mentor with hundreds of hundreds of hundreds of rental units. And then at that point, I started building a brand, started going on YouTube, started going on podcasts, ended getting on a bigger pockets podcast. And right when that happened, somebody brought me a 69 unit syndication portfolio that I syndicated.
And that kind of started my journey into raising capital and taking down larger deals.
Dylan Silver (08:37)
Now, I’ve seen this from afar, you know, outside looking in, from about…2014, so this would have been before you were in, but 2014 to 2020, it almost felt like you couldn’t buy a multifamily deal wrong in most of the country. And then 2020 to today, really, and we’re maybe seeing a shifting of the tide right now, it’s been trickier for syndicators. I’ve also heard that, you know, investing in the Massachusetts and New England markets has been different, maybe hasn’t been affected so much. But I think generally across the board, it’s not
Andrew Freed / InvestorFreed (08:51)
Mm. Yeah. Mm-hmm.Yep.
Yep, totally.
Dylan Silver (09:13)
the easiest five years for syndicators in general. Have you felt any of those pressures or have you seen that affecting other syndicators up there as well?Andrew Freed / InvestorFreed (09:57)
I have definitely seen it affect syndicators, but I would definitely say I’ve seen it in markets that are oversaturated, right? The Sun Belt, right? Like every syndicator over the Sun wants to invest the Sun Belt. And as a result, it’s completely oversaturated, right? As opposed to New England, there’s probably four or five syndicators, maybe 10 syndicators in entire market. And I know every single one, right? Like people don’t syndicate in my market because they just simply don’t know how to operate. And I think there’s a…huge false belief that New England is a bad market to invest in. Like, please keep thinking that and let me keep buying all the real estate I possibly can, right? And I’ll just tell you a couple of reasons on why New England in general is a fantastic market to syndicate. First of all, it’s completely, it’s completely ⁓ insulated, right? Like in New England, know, the population growth is definitely steady. You know, we have so many strong institutions that will be here forever. You know, MIT, Harvard, we have a very strong healthcare.
very strong biotech, but not only that, we have extremely high rents, right? So it’s expensive, don’t get me wrong, but the rents are high because the cost of living is so high. So, you know, there’s a multitude of reasons why I love New England in general to invest in.
Dylan Silver (11:11)
Yeah, I mean, you mentioned a bunch of things that I think are very relevant to investors who are investing in those, you know, sun-belt states. There’s this idea that,Andrew Freed / InvestorFreed (11:17)
Mm-hmm. Yup.Dylan Silver (11:20)
It’s not going to be favorable to investors, that it’s difficult to be a landlord, and so on and so forth. But at the same point in time, you can, and I don’t know this personally, but I think I can say this having spoken with lot of investors, you can bank more heavily on appreciation. You can bank more heavily on low vacancies, that you’re not going to have to …give away so much to attract tenants. mean, that’s happening right now in so many markets in the country, which is unbelievable. Because if you go just back a couple short years, it was like every market that you were in, if you were a renter, you needed to do first, last, finders fee, broker’s fee, know, some other security deposit. And now in some markets, including the one that I’m active in in Texas, people are getting like a free month of rent, a $500 gift card, right?
Andrew Freed / InvestorFreed (11:45)
Totally.Yeah, yeah. Totally.
Yeah.
Yeah,
you bring up a great point. And I think a big thing about that is how easy is it to build, right? In Texas, you can build a skyscraper with very few permits, right? New England, you need a mountain of permits. It’s extremely hard to build properties, but as a result, the existing housing stock is in high demand, right? And there’s a housing shortage, right? And combined with that, New England actually has some of the strongest Section 8 programs in the nation. 30 to 40 % of my…
my rentals alone are our section eight and they pay extremely well. So, you know, I think New England has a lot going for it. But just going back to your original point, you know,
Dylan Silver (12:39)
Yeah.I mean, hey, if the properties are going to appreciate like that and if they cash flow so heavily, it does in effect give you a little bit of cushion in a way where people might not see that. I do want to pivot a bit here, though, Andrew, and ask you about the single family space. And we have a lot of flippers who listen to the show. It hasn’t been the easiest couple of years for flippers, but we may start to see that coming back. I also know that there’s a lot of people who are very ⁓ much looking at the burst strategy right now. ⁓
Andrew Freed / InvestorFreed (13:08)
Mm-hmm.Dylan Silver (13:09)
Are these strategies, ⁓ fix and flip and burr, are these viable strategies right now in markets in Massachusetts or in Worcester?Andrew Freed / InvestorFreed (13:20)
So I mean, full disclosure, think I have five active flips going on personally. So I’ve experienced this firsthand, right? And I’m only talking about my market, right? New England specifically, there are two markets, right? There’s multi-family, and then there’s condos and singles, right? The condos and singles are trading extremely slow right now. If you’re in New England right now, if you’re in Massachusetts, I would not recommend you flip because it’s just the holding cost will kill you, and buyers are extremely picky.plethora of options. But if you’re considering flipping a multi a two to four unit property, I absolutely recommend that for a multitude of reasons. First of all, they would sell right. But second, well, you an exit strategy, right? You could always refinance it, toss a renter in there and keep a rental. Right. So that would be my advice for people in my market regarding whether they want to flip or not. Yeah.
Dylan Silver (14:52)
Now, when we talk specifically about ⁓ getting started in multifamily investing, I think a lot of people might say, I’d rather get started in, I shouldn’t say most people, but there’s a lot of people that would say, well, let me do a flip. Let me work with smaller number of doors. Or they might say, let me cut my teeth in a smaller unit size until I build up. But I’ve also heard the approach where you should partner with someone. If you’re gonna be managing five rental properties,Andrew Freed / InvestorFreed (15:02)
Sure.Yeah.
Sure.
Dylan Silver (15:22)
properties,it’s the same amount of work as managing 20. And I’ve heard 20 is the same amount as 50. And so I think a lot of people might get maybe some mixed messaging as far as where is the right place for them to start? Do they partner? Do they do it by themselves? Do they partner for capital? Do they partner for experience? What’s your perspective for folks who may be just getting started on how many doors they should acquire? What segment of real estate they should be looking at? And then do they take on partners?
Andrew Freed / InvestorFreed (15:26)
Mm-hmm.That’s a lot of questions in one. I will definitely do my best. So I think your first part of your question is, should they take on partners? I personally think, before getting started at any investing, you definitely have to put your money where your mouth is, and get a couple ⁓ pilot studies under your belt, couple of investments under your belt, before you even consider taking other people’s money, would be number one. That’s by far number one.
Number two is you really have to do an analysis of how much time you have available versus what kind of return you want. Right. Because if you’re working a full time W2 and you think flipping is realistic, like that’s a full time job that’s going to take hours and hours and hours of time. Yeah. Maybe it provides you a 20 to 30 percent annualized return, but it’s a full time freaking job. Right. Meanwhile, if you’re working a W2 and you don’t have a lot of time, multifamily investing might offer a low return.
but it offers you the time to actually be successful in that investment, right? Or maybe you have a lot of time, right? Maybe you want to focus on short-term rentals because that does require a lot of time, but it has a higher return. So I think you have to understand your situation. At the end of the day, just like any attorney, I think my answer is it depends. What is your specific scenario? And I can definitely lead you down the right path. But ultimately, I think it all comes down to just the low-hanging fruit.
It’s simply just, you know, house hack a property. could even be a single family with a bunch of bedrooms, right? It’s very low cost. She’s talking three and a half, 5 % down, super low risk. You’re literally on the property acting as a property manager. And it’s literally real estate investing in training wheels. You’re literally like on site learning how to be a PM, you know, day in and day out. You’re literally living there, right? It’s unavoidable. So that would be my advice to get started. And obviously just going back to your, one of your questions as well, you know,
Dylan Silver (17:40)
Yeah.Andrew Freed / InvestorFreed (17:47)
Is it one door verse 20 verse 30? You’re absolutely right. Like once you get big enough, you know, the work to come close a three unit versus a 20 unit is not that much different. Right. But I absolutely recommend if you’re investing in real estate, you should take an acclimation approach. You got to take something easy and then slightly harder, slightly harder, slightly harder. Don’t go to the 50 unit first. Take a three unit, then take on a five unit, then take on a 10 unit and slowly build your way up ⁓ in difficulty.Dylan Silver (18:15)
Yeah, I mean, when we talk about ⁓ which segments to get started in, I’ve also heard people tell me, you you got to go to something which you’re going to be comfortable with, that’s going to be good for you and your schedule, and that you’re also going to be passionate about. Someone told me, you know, if you’re doing short term rentals, do you enjoy being a host? Do you enjoy messaging people? Because that’s going to be part of it. And if that’s going to bug you to receive a late night message about, you know, some concierge service that you have at the B &B, that could be an issue. SoAndrew Freed / InvestorFreed (18:33)
Yes. Yep. Sure.Yep.
Dylan Silver (18:45)
It is time dependent. It’s what you’re passionate about and so forth We are coming up on time here though Andrew any new projects that you’re working on and then as well What’s the best way for folks to get in contact with you or your team?Andrew Freed / InvestorFreed (18:58)
So I’m actually doing a syndication fund, the Path of Freedom Fund, and I’m purchasing about $10 to $15 million of value-add real estate in the New England market. I think we have like 60 or 70 doors already owned under that fund. So just building that fund, it’s going to be a fun endeavor. It’s kind what I’m working on right now. If people want to learn more about me, they can find me at Investor Freed on Instagram or Andrew Freed on LinkedIn or Facebook. And definitely check out my podcast, the Freedom Real Estate podcast as well.Yeah, appreciate you having me here.
Dylan Silver (19:29)
Andrew, thanks so much for coming on. Thanks for your time.Andrew Freed / InvestorFreed (19:32)
Thank you.
