How Joey Aaronson Built 52 Multifamily Units Using His Own Money|Real Estate Investing Strategy

Joey Aaronson (00:00)
Yes, absolutely. Yep. like you said, in real estate, the one thing we have going forward is we control the appreciation. I don’t have any control over any other market, the stock market, crypto. I don’t control that. I have no problem with it. I think it’s still a great vehicle too, but if I buy a building, I can make it worth what I need it to be worth. I can’t do that with anything else.

Micah Johnson (01:54)
Hello everyone, welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I’m joined by Joey, who’s been making some serious moves in real estate investing now since 2017. Joey, welcome in, man. Glad to have you.

Joey Aaronson (02:05)
Thanks for having me. Appreciate it.

Micah Johnson (02:07)
Absolutely, man. I’m excited for you to be here today. You’ve been on a little journey in real estate and you found some success here. You’ve kept plugging along. You’ve got a really great mindset. Pre-recording quote, just gonna make it happen, man. I love that. I’m excited for you to get your story out there, tell folks what you’re doing. So let’s dig in, man. For those who aren’t familiar with you yet, tell us a little more about yourself and what your main focus is right now.

Joey Aaronson (02:28)
Okay, yeah, I’m Joey. ⁓ I have 52 units right now. I do have a couple partners that help me with this too. We specialize in commercial multifamily real estate and we’re right now to almost a bottleneck where we’re gonna start looking for investors because we’ve got so many deals up in the air going on that it’s, I’d like to get more people involved, so yeah.

Micah Johnson (02:51)
love that man. get into the part of the part of the game where you get to play with other people’s money, right? That’s what they always tell us invest with other people’s money. We’ll take

Joey Aaronson (02:56)
That’s great, yeah?

Yeah, and I’ve always used my own.

like, know what, you know what mean? I’m not gonna lose anybody else’s money. know what, I treat it like it’s my own.

Micah Johnson (03:07)
Well,

and that’s the important thing, man. And it’s where folks, they want to work with someone that has been there. You know what it’s like to sign the same check they’re going to sign. You know what it’s like to go through the process. You’ve been there, you’ve walked it and that’s a big deal, but take us back, man. What has led you to the experience you have today? How’d you get to now doing, you know, value add multifamily?

Joey Aaronson (03:29)
Yeah, so my first deal was actually a lot different from what I do now. 2017, I bought a cabin in Pigeon Forge, Tennessee. I don’t know if you’re familiar with the area. The Smoky Mountains, you a lot of people would go there and visit. So I would go there on vacation a few times a year and I said, man, I gotta own a place here. Well, I a buddy.

Micah Johnson (03:40)
Mm, yeah.

Joey Aaronson (03:50)
that had four or five cabins down there and said it was a great thing to do and you could rent it out and make money. And so I bought my first one down there and it killed it and made tons of money. think we’re making, we’re about 40 grand a year off of a hundred and, yeah, I think our profit was 25 grand. mean, our overhead was almost nothing there. And then ⁓ COVID came and

All the Airbnb cancellations came. So now I’m sitting here for a couple months paying out of pocket for this place, wondering if it’s gonna fill. And I got nervous and I called an agent down there just for fun to see, hey, what’s gonna take you out of this? And they told me, and I’m looking at a $200,000 profit if I sell it right now. Well, know, knowing what I know now, I probably wouldn’t have sold it, but I sold it, took the 200,000 and I started buying.

properties local here for long-term rentals. So I switched the game up. I bought my first, yeah. Yeah.

Micah Johnson (04:47)
Yeah, yeah, you jump to the complete opposite. But what I love

is you took action like that’s the key, man. That’s the key to this game. No one’s barred out of this game if you’re willing to take action, if you’re willing just to do it, right? Because you went, you said, I got it on a place here. Then you talk to somebody who did. They said, do it. You still pulled the trigger. And that that’s the part I love for people to hear is you can hear the best advice, you know, but if you don’t actually do something with it.

It doesn’t become anything. You’re still just telling stories later. You’re not living anything else.

Joey Aaronson (06:06)
Right and I think what I really liked about it was even though I got scared and I didn’t do the best thing I still made money on the deal. That’s the thing people don’t understand with real estate is there’s so many different ways to make money in this you know that like there isn’t a right or wrong but the current thing I probably would have done was I probably would have tapped into that equity on a refinance loan kept the property down there and bought here you know and saved myself that but whatever you you learn.

and there is a goal.

Micah Johnson (06:35)
Now you’re

thinking like an investor, man. Like we all got to go through the things that teach us that and show us that because at any given time, you’re always operating with the best information that you have. That’s where I look at past me and I give that dude a hug. Like you were doing the best you could brother, even when you messed up. I see from this side, the information you were working with. I appreciate what you’re trying to do.

Joey Aaronson (06:38)
Yeah.

Yeah,

yeah, I’m like that was cute you thought you were doing something there, but Yeah ⁓

Micah Johnson (07:02)
Right. I made 200,000.

Yeah. Well, it can be worth 800,000 now. Well, that’s not the part of the conversation we were having. Okay.

Joey Aaronson (07:10)
No, I know I looked at it I bought it for 185 I sold it for I believe was like 350 and Then I looked the other day and it was like worth 550 or something. So well, I got some of it I didn’t get all of it. Whatever, you know If I look at that, here’s the other thing though If I look at that and if I would have just held that and I’ve got five million worth of real estate now so You know what mean? Like that’s

Micah Johnson (07:21)
No!

Right, right.

Joey Aaronson (07:35)
Okay, that 200 grand, I guess I put it to work, so yeah.

Micah Johnson (07:36)
Bingo.

Well, you, you did what people got to do in real estate. Like you said this real estate’s a big umbrella. There’s, there’s a lot of room in it. There’s a lot of ways to make money in it. And it grows with you. Right. Like the, if I would have told that version of you, Hey, Joey, you’re going to own 52 units and you’re to be looking outside the area to buy this stuff. That dude would have been like, no, I’m not. I don’t, I don’t, what do you mean? Right. Like it’s, it’s completely outside the idea, but it’s each one leads us to that next one. So.

Joey Aaronson (08:00)
No way.

Micah Johnson (08:08)
I hear a lot of folks, even my own self, I don’t do what I got in doing. I switched because it’s a big industry, it grows with you and you can find that niche where you can really go deep and then start leaning into what you’re doing now, which is looking for other people’s money. Y’all have gotten so good at multifamily and now that you’re seeing deals, you’re to the place where professionals are the ones that run into the money problem. That’s what I’ve noticed. They also solve it.

Joey Aaronson (08:32)
Mm-hmm.

Micah Johnson (08:33)
But when you get to the place that you got really good deals coming across your desk consistently and not enough money, that’s not a bad problem to have.

Joey Aaronson (08:40)
No, I think the hardest part is finding the deal, period. To find a deal that makes money and makes sense is so much harder than finding the money. We’ll find the money because if you show someone who understands numbers how much money this deal can make, here, take it, take my money. I feel really good about that. We’ve been very fortunate. I don’t think there’s been a deal yet that I haven’t been able to get 100 % of my money back out of.

on the refinance. So that’s pretty good.

Micah Johnson (09:09)
What credit that to?

Joey Aaronson (09:10)
I think a big part is knowing the market, knowing rents here, and then understanding what cap rates these lenders are borrowing at. So ⁓ in here, it’s a little different than everywhere. think down in Florida, they’re borrowing, I don’t know, a five cap, six cap, I don’t know. Here, it’s closer to an eight to a nine cap. So I know when I’m buying a deal, I know what the rents are because I own four buildings on the same street. I know what they can get.

And I just say, okay, the rents are gonna be this. After I get it stabilized and get rents to market, the building’s worth this much. We’re gonna have this much money back. We’re gonna make this much every month. It is that simple. You will have the occasional vacancy for a month here, a month there, but the market’s insane. There’s basically a waiting list on every property we have. So I don’t worry much about that.

Micah Johnson (09:57)
Man, well, that’s the benefit of going

an inch wide and a mile deep,

There’s a lot of ways to do real estate where you’re looking outside your backyard right now, but it doesn’t mean you’re not going as deep as you can there because that’s, a new market’s a new business is really what it feels like. It’s new teams of people, it’s new stuff. There’s so many new things for a new place where once you get nailed down in an area, that market expertise, it becomes worth its weight in gold.

Joey Aaronson (10:35)
Yup. Yup.

Micah Johnson (10:58)
like you’re saying right now, because you get a deal comes across your desk, you’ve done all the homework necessary to know if it’s a deal or not. And when it is, boom, you can strike and do it in a way you’re already successful at it. And that’s one of the big things for the multifamily world is just getting started and getting going, getting those units under your belt, getting deals going. That flow has to happen in order for the credibility you need when people do want to spend money. You got to show you’ve made money before.

Joey Aaronson (11:09)
yeah.

Mm-hmm.

Yes.

Micah Johnson (11:27)
Right. And y’all can lay that

track record out and do it because I mean, a lot of people in that world are learning, you passive real estate gets tossed around a lot. The one of the few passive ways in real estate is private money. You are just as much an investor as we are. You’re just not the operator. You’re not the one on the ground making all the stuff happen, but it is definitely a way to get in there. And it’s one I encourage a lot of people to do.

Joey Aaronson (11:44)
Yep.

Micah Johnson (11:50)
If this ain’t your thing or you already got your thing, but you got cash sitting out there that’s not making what it could plug it into one of these projects for however long it is three years, five years, shorter than that, whichever one it’s, mean, the returns coming out of real estate right now are significantly different and they’re way more reliable than what we see in other areas.

Joey Aaronson (12:01)
Mm-hmm.

Mm-hmm.

Yes, absolutely. Yep. like you said, in real estate, the one thing we have going forward is we control the appreciation. I don’t have any control over any other market, the stock market, crypto. I don’t control that. I have no problem with it. I think it’s still a great vehicle too, but if I buy a building, I can make it worth what I need it to be worth. I can’t do that with anything else.

So, it’s one thing.

Micah Johnson (12:33)
Right. Right. Exactly.

You’re, uh, it feels good to keep it in your own hands. Like you control your own destiny way more. And there’s a reason the American real estate market is the number one wealth generator in the world for many, many generations now because of, that reality is, and when you were talking about this a little bit pre-recording where you said you didn’t come from much, you didn’t come from a thing where it was like, Hey, go do real estate. You discovered it.

and got into it and realized, man, like, this isn’t, what would you encourage somebody, let me go there first, what would you encourage somebody that’s sitting there on that sideline that’s, you know, I want to, but I don’t know, you know, they got those questions. What would you encourage them to do?

Joey Aaronson (13:13)
I would encourage them to talk to someone who’s done it. Just get on a phone call or meet someone who’s done it. Most people are willing to talk to you. I talked to two guys before I ever bought anything and they both were doing very well and I passed both of them up now. It feels cool. But they both told me, hey, this is what I did. This is what I can get for rent.

They broke down everything for me what what I could make per door per month and you know what the risks were what the real risks were because a lot of people are gonna tell you if you have to Evict someone or if you get a leaky toilet, it’s the end of the world It’s not you know if if a tenant calls me it’s a blessing because that means I have that unit filled It’s not empty. You know it’s not you can’t look at look at it that way so Yeah

Micah Johnson (13:57)
All that, man. And it’s such a

cliche thing. Like I get it if you don’t want to deal with tenants and stuff. I get it. I understand. I understand for sure there are people that are like that. But to use it as your excuse, one, real estate’s big. Go sell land. You don’t have to deal with it. So I can counteract you. But to use it as an excuse to not do it, it’s like the old wives’ tale. It’s the one, that one in particular you’re saying is I think the one that keeps people out. Well, I don’t want them calling me in the middle of the night. You know how often that actually freaking happens?

Joey Aaronson (14:08)
Hmm.

Yeah.

Micah Johnson (14:25)
It’s not that often. It’s not that often.

Joey Aaronson (14:27)
52 units

once every few months.

Micah Johnson (14:30)
Right.

It’s not that often. And like yours, I love the way you just frame that. If I am getting a call, it’s a blessing because it means my unit is filled. You want to talk about switching the paradigm. It’s that right there. You could have nobody calling you and no cashflow and nothing going on. That’s what you currently have. Right. Or would you rather a phone call once every three months and a bunch of, and a bunch of cashflow coming in, right? Like really.

Joey Aaronson (14:48)
Yeah, yeah.

Micah Johnson (14:55)
We trade this one for the other because somebody’s uncle told us we shouldn’t do it. It drives me nuts.

Joey Aaronson (15:01)
Well,

a lot of it too, I know this for a fact, a lot of it is the people that went out and bought one rental, one door, one house, and only never scaled, never grew, said, hey, you can’t make any money. You can’t make money on one. It’s gonna be hard, right? You need more than one. So a lot of people think they’re gonna buy one door and they’re gonna be rich. That’s not how it works. You need to scale.

Micah Johnson (16:07)
if you’re

wanting real estate to pay you cashflow quick, you got to operate in economies of scale. Cause it’s a, it’s an incredible get rich slow process where you’re adding when you’re doing a couple units of one a year, you know, by 10 or 15 years, now you’re doing something right. 15 units rolling as in that method. You’re very right. But it goes back to that mentality of what do you actually want it to do? And if your goal is to cashflow quickly,

Joey Aaronson (16:27)
Yes.

Micah Johnson (16:34)
then you nailed it, man, I agree. Talk to people who are doing it. Don’t learn from somebody who’s not actively doing it. That’s rule number one. If they used to, don’t listen. Real estate changes way too fast. Too many things are moving parts in this industry. It’s why ADHD people love it. We just get to like learn all this stuff and bounce around.

Joey Aaronson (16:42)
I’m bad. bad. Uh-huh. mean, yep, very.

⁓

Micah Johnson (16:59)
Guilty, but it is

really the way to do it. And I’m of the same opinion and experience that you have. The people I’ve asked have been perfectly willing to tell me. Now, one of them said, one of my favorite terms, I said, just don’t become an ask-hole. And I said, what’s an ask-hole? It’s like someone who only asks questions and never does anything. And I was like, ooh, very good to know, right? So if you’re going to take up somebody’s time,

Joey Aaronson (17:10)
Mm-hmm. Yeah.

Yeah.

Yeah, always time.

Micah Johnson (17:23)
If you ever want their time again, take action in the middle. When you get back for that next conversation, hey, this is what I’ve done. You want someone to really like work with you and buy in, show them how much action you’re willing to take. Cause that’s that differentiator, man. Like we were just saying a second ago, it’s that difference. And yeah, man, get out there, talk to somebody. If you’re living in a world where people don’t support your dreams, find a new world, man. That’s one thing I love about high level real estate.

Joey Aaronson (17:28)
Mm-hmm.

Micah Johnson (17:50)
If you were to come up to me and say, Hey man, I want to buy a 30 unit. Awesome. What’s the next step? Now where are we going? Right? You want a private Island? Okay. Now what? Like, what do we do? How do we actually do that? Nobody in our world is saying that’s too big or that’s dumb. No, fuck that. What are we doing? Like where are we really getting to? And then dude, gets me jazzed up.

Joey Aaronson (17:55)
Yeah, yeah, what are the numbers? Yeah, yeah, yeah.

Yeah, yeah.

I know, know, same. I’m like, yep, let’s do it. We’ll figure it out. Like, give me the numbers. As long as it makes money, we can make sense of it, right?

Micah Johnson (18:16)
That’s right, man. It really is. You said it earlier. You just got to be smart. It’s good with numbers. Learn what you’re doing. One of the things I asked was what y’all are working on this year. And one of the ways to avoid it doing it is not buying the wrong deals, making sure you’re finding the right deals. So take us through a little bit of that process for a second. So a deal comes across your desk. What are some of the few things you see?

What are you looking for in your first three glances to even notice? Okay, is this worth a look anymore?

Joey Aaronson (18:44)
First thing I looked at is location. ⁓ If I can have it closer to my other units, the better because then I have rent comps right there. So I know what we’re gonna make for rent. Obviously price, but I mean price isn’t as important as location because I bought a building on the street and I bought the building next door identical to it for 50 grand more and it was in worse condition, but I wanted control of that street.

I will pay a little more to have the location because now all the problems that I had on that street are slowly going away as the rents come up. So I’ll look at location. Yeah, I want solid comps. I’d like a building that’s a little newer, something in the 2000s or newer. I’m not stickler on that, but I do want something that’s going to have more modern amenities upgraded.

a little bit. And then like I said, I want something that’s got below market rents so I can kind of come in there and figure out why they’re lower and get them where they’re supposed to be. And then we can make sense of getting our money back in the deal.

Every deal I do, I will tap into the equity within about a year and refinance it. And if I know where the rents are supposed to be, then I know what I can tap into.

Micah Johnson (19:58)
Gotcha.

You’re like burr methoding basically with multifamily in a sense.

Joey Aaronson (20:05)
Yep, yep. And I mean, the last one I did, we paid $575 for, it was only six units, a little one. But we refinanced it and praised for $800,000. They gave us $600,000. So we actually made money on it. Not only both even, but yeah.

Micah Johnson (20:23)
And there’s the next one. And that’s why that method works so well, especially if you’re doing it with your own money is recreate that cashflow. And now you’re not doing that thing you were saying at the beginning, which was selling your stuff. You learn from the cabin. Yep. You learn from the cabin.

Joey Aaronson (20:36)
No, now I’m holding it and I made money. And there’s no taxes.

I avoided capital gains and all of that, you know, because it’s just a loan.

Micah Johnson (20:44)
Right.

Right. Right. That’s powerful, man. That’s powerful. Well, Joey, these kinds of conversations, man, I can have these for quite some time, but for the folks that are listening in that want to find out more about you, hear some, possibly some of the projects you have, maybe even book a call. What’s the best way for them to find you?

Joey Aaronson (21:01)
I’d say social media is, I’m very responsive. So if you find me on Facebook or Instagram and you message me within an hour, as long as it’s not in the middle of the night, I’m gonna respond. So those are the best.

Micah Johnson (21:13)
Excellent.

We’ll make sure your links are down below for those that are listening in. Check our show notes. You’ll get all of Joey’s links there. Joey, man, thanks for being with us today. I appreciate you being on here. Thanks for sharing your story. I think we need more folks out there like you doing it, man. I appreciate that. Thank you. Just congrats. Keep building it. I love talking with folks who are building and successful and keeping going, man. So again, thanks for being here. And thanks everybody out there for being with us today. Absolutely, man. Thanks everybody out there.

Joey Aaronson (21:25)
I appreciate you.

Thank you so much.

Micah Johnson (21:39)
If you got value out of today’s episode, please like this episode, share it with someone else you think you get value out of it. And if you’re not a subscriber yet, you know what to do. Click that button, follow along with us. We’ve got more conversations coming up with operators just like Joey, professionals out there building a real business in the industry. Thanks for being with us today. We’ll see you on the next episode.