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Show Summary
In this conversation, George Roberts discusses the multifaceted nature of investing, emphasizing the importance of diverse strategies, market analysis, and risk management. He highlights the need for emotional intelligence in making investment decisions and contrasts long-term and short-term investment approaches.
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Investor Fuel Show Transcript:
George Roberts (00:00)
So just go out there, look. Don’t be in a rush. There’s a lot of survivorship bias.A lot of people who are successful will say, hey, just go out there and do a deal, because that worked for them. But relax. There a lot of people who took that advice and they failed. So take your time, learn to underwrite and look for that margin of safety. And I find that with the mom and pop deals under 100 units. And I want to see that there’s some seriously under market rent. Show me that rent roll that has people living there five, six, seven years. And also show me some really good comps. And that’s how you get me interested.
and wanted to go and sponsor your deal. So make sure that your first deal isn’t your last because a bad deal will hurt you a lot more than a good deal will help you.
Dylan Silver (02:17)
Hey folks, welcome back to the show. Today’s guest, George Roberts out of Michigan is the founder of Roberts Capital Enterprises, a real estate investment company with a focus on multifamily apartments and growing metros. George, welcome to the show.George Roberts (02:34)
Thank you, Dylan. It’s great to be here.Dylan Silver (02:36)
I always like to start off at the top of this show by asking guests how they got into real estate.George Roberts (02:42)
So it was my dad, we were in the depths of the Great Recession and he said, you gotta move up in terms of your family home. So here, I could probably scroll around a little bit, but yes, this is my dream home. I got my piano and everything, got a Romeo and Juliet balcony upstairs. And at the same time, the question is, what do you do with your own home when you see that it really isn’t ⁓ even what you paid for it? So we ended up becoming landlords and he had always been an entrepreneur.So was a very natural progression. And from there, as an investor in very diverse asset classes, it just seemed to me real estate is the way to go. Why not get back into real estate, but this time let’s do it at scale. And so I became a multifamily investor.
Dylan Silver (03:28)
When you got into the multifamily space, was that a big jump for you? Did you have some mentors or experience or folks who could guide you or was this, hey, we’re going we’re going to figure it out on the fly?George Roberts (03:41)
Yeah, so, ⁓ well, a great quote for you is, when you drive at night, you can only see as far as your headlights, but you can make the entire journey that way. So I didn’t know what it was going to take to get into it, but I found a great local group of guys that were looking at properties literally every week. They introduced me to their underwriting methods, and it only took about six months working with them. So we’d all had some real estate experience.You know, some of us had mentorship. I didn’t. I was thinking very heavily about it. But when I got into that mastermind, I realized, hey, you know what? We’ve all got experience. We can guide each other and we can step up. And for us, it wasn’t too big of an issue the first time because we use seller financing and our down payment was only $250,000. So three partners, including myself.
that’s not too expensive. I mean, a lot of people will put more than that into a single family home if they’re not if they’re not financing it.
Dylan Silver (04:43)
Yeah, you know when I think about seller financing, I come from the distressed single-family background. There’s a lot of that. In the multi-family space, I’m thinking you know small apartment complexes to larger apartment complexes. How common is seller financing?George Roberts (05:46)
Well, it’s one of those things that you only find it if you’re looking. If you don’t ask, you probably won’t find it. And actually, for my next book, I’m gonna talk a lot about how to get that seller financing. A lot of people, they’re afraid to do anything to damage that broker relationship, because if that’s where you’re getting your deals from, that can be very damaging. And no broker wants to hear that, because it sounds like you’re not serious tire kicker, whatever you wanna call it, to many brokers.But it’s all I find in how you approach it. Now, if you’re going direct to the seller and there’s no problem at all, you can just, usually they’ll say no because they haven’t thought about it. But you say, hey, would you be willing to discuss it with your CPA? What the tax concept would be of selling it right now outright versus seller financing. And the CPAs, they usually go to back for the lower tax bill that comes with getting paid in two chunks. So, you know, I I think, you know, again,
Dylan Silver (06:30)
youGeorge Roberts (06:42)
That’s how I’d approach it if it’s direct from seller. And then if it’s with a broker, I’d say, you know, walk the property and say, okay, you know, we like it, but, you know, as you see, this is not going to qualify for an agency loan. It’s going be very hard to get favorable financing terms. You know, I notice in your pro forma, you know, you have a 4 % interest rate. Well, I don’t think we’re going to get that. And so, you know, looking at the numbers, you know, the only way I see we can pay your price is if…Dylan Silver (06:54)
Yeah.George Roberts (07:11)
you can get them to consider seller financing. And of course, I work with some relatively distressed properties from time to time, and that sort of a script seems to work well. So I think it’s all in how you approach it. If you approach it the right way and you’re not afraid to hear no, right? I mean, how many times have you heard no in your life? And you didn’t die any of those times. So just ask the question.Dylan Silver (07:32)
Thank you.When we we talk about multifamily deals, think a lot of people maybe have a sense of, how do I jump from what I’m doing into the multifamily space? You mentioned the the concept of being able to see only as far as the headlights will go. I want to ask you about that first deal. You mentioned you had been looking six months. Do you remember that first deal, how you came across it and what the process was to to get it under contract?
George Roberts (08:03)
Yeah, so was one of my partner’s, fun story, he had a son who worked in that area. So he’s looking for something that would get him out there. And it was a deal that had two two deals had fallen through, it was 2020. And the seller just really wanted to get rid of this thing. Tenants, I get the idea, we’re not very happy. And you know he didn’t even go in the building with us. He died, again.Pure inference, but I’m getting the idea that they didn’t like him much. One complained about a rat in the kitchen. Another one said, no, there ain’t no crime around here, but actually this guy threw a brick through my window about a month ago. It’s like, thank you. That’s all the information we needed. So you get the idea that there were some problems and the seller, after having, you know, some decent deal fatigue, two deals falling through, we gave them a low ball offer. And the broker said, you know, hey, I think that ⁓
you know, it’s gotta have an eight in front of it. So we said, okay, 800,000. And he said, I was thinking more like 850. He said, well, that’s our offer. Just carry it to the seller and see what they say. So, ⁓ you know, again, if you’re not afraid to hear no, you can get a great deal. So yeah, there were a lot of problems. We fixed it up. ⁓ The same partner who found the deal also ran the construction. And he was great at doing things like putting up cameras.
Dylan Silver (09:13)
ThankGeorge Roberts (09:24)
improving the exterior, letting people know in general that there’s a new sheriff in town. And so there’s no more crime that happens there to our residents, or I should say by our residents either, because you know usually those bad places, it’s a little bit of both. They’re not just victims.Dylan Silver (09:36)
youWhen when you talk about that deal and then the partner who handled the the rehab as well, how important is it to partner with someone who who can do that versus hiring it out on your first deal or looking for something that may be more turnkey?
George Roberts (10:33)
Yeah, so I think that’s where you all have to look in terms of where’s your value at. So if you can handle the heavy lift, then by all means do it. But you don’t have to you don’t have to do that. So if it doesn’t fit into your wheelhouse, I would say don’t don’t worry about it at all. There are so many other things you can do. You can do things like an operational reposition. Sometimes you just have mom and pop don’t know how to run the thing and you can run it better. You can put in the professional property management and who knows, maybe even save money.They may pay for themselves once you start raising the rent. I mean, I was mom and pop at one point. I was busy as a bioscientist. I published in three different fields. I didn’t have time to field calls. If if they’re paying, I don’t raise the rent. And that’s how I manage things. So I’m not putting anybody down. I’ve been there myself. But when you do it as a business, you just have to do things differently. yeah, there’s no reason why.
You have to make your money doing the heavy lifts. The thing I like the most about investing is that there are 100 strategies and they all work if you apply them properly. And if you do the proper analysis to know which strategy is likely to work at this time. No strategy works all the time
Dylan Silver (11:44)
Certainly. I mean, when we think about the last five years, we were talking before the show about the family space, know, how deep people bought, you know, around 2020. And now here we are five years later, and it’s a totally different scenario. There may be even some distress in a lot of the funds that purchase some of these multifamily properties. When you’re looking for for deals right now,George Roberts (11:50)
Yes.Dylan Silver (12:10)
what’s your general process for for looking for the deals and then also too, I’m imagining when you’re seeing these deals on market because it isn’t necessarily the the best time to sell right now. A lot of it is under covering what’s the level of distress of the self.George Roberts (12:26)
Yeah, absolutely a lot in there. So I’m one of those buyers who got it in 2020 and we had enormous tailwinds for a couple of years in multifamily. But for your single family listeners, there’s been a huge difference in trajectory since then. Multifamily took a huge hit and took a long time to recover. Single family took a medium sized hit and then just kept on trucking. So depending on which market you’re in, whether you’re in multifamily or single family, there have been many different trajectories.And then now coming out of the pandemic and coming out of that, those great tailwinds that we had in many markets, we’ve had a lot of overbuilding. So what’s happened in Orlando, which is where I bought that first property over the last five years, it’s just incredible. I mean, we’ve seen everything from everybody’s moving to Orlando. we have no building activity to rates are going up. What the heck?
to now the overbuilding, but I think, you know, in other six to 12 months, Orlando might be underpriced. So I’m very happy to hold on. And that’s the privilege and the prerogative of somebody who buys right and finances right. When you do that, you can take your time and you can get your best price. But you also mentioned maybe not being the best time to sell. I mean, I’m going through that. I have a couple of deals that were expected to exit around
Dylan Silver (13:33)
Yep.George Roberts (13:44)
the end of 2025, early 2026. One deal just fell through. The other one, I think we’ve been, we’re under contract for the third time. So I will tell you that I don’t think it’s the best time to sell, but it’s also not the worst time to sell. I mean, we’ve been through the worst. So if you’re hitting your numbers like we are, I mean, I’m happy to have exits. So that’s just how it goes.Dylan Silver (14:11)
I want to ask you, pivoting a bit here, George, I see the book and I also read a little bit of it. You were kind enough to send us a copy. And so it’s interesting, Passionate Living for Passive Investing. That’s the name of it, right?George Roberts (14:16)
Yes.Yes.
Yes. So so my wife helped me with that. I wanted to call it passive investing for passionate living, but she said reverse it because you’ve got an interesting life story. So that’s really what prompted me to write the book. I think that a lot of people are just not really living their best life, even, I know it’s hard to believe, even entrepreneurs like you and I, Dylan. And why is it? It’s this hard-driving spirit that gets us into entrepreneurship, but then maybe we don’t really
experience or fully benefit from the fruits of that entrepreneurship. So, you know, make sure that you’re really enjoying your life. I mean, I’ve had some of the best family times that you could possibly imagine just hiking in the park for free. $5,000 sailboat dance lessons with my wife. I mean, we’re also talking about how you’re broadcasting from the Dominican Republic. My wife loves the idea of going to the D.R. because she loves Bachata and so do I.
Dylan Silver (15:41)
youyou
George Roberts (16:02)
and we also both love Argentine Tango.Dylan Silver (16:03)
youGeorge Roberts (16:04)
And you know, we go to lessons like literally every night and it’s just a few dollars a lesson if you get one of those unlimited cards and you go every night. I mean, it’s a steal. So just do it. Don’t wait to live your best life. So that’s what it’s all about. It’s about learning to get into the investment game, but then also making sure that you grow, right? If you have that growth mindset, you’ll scale your business and you’ll scale at your lifestyle.Dylan Silver (16:10)
Yeah.I want to ask you maybe a niche question about dance. I was a Texas licensed realtor and a Texas licensed realtor and lived in Texas for about five or six years. So I got big into country dancing, a little bit of Latin dancing. I live out here now, so a little bit of Latin dancing, but I never considered myself a dancer growing up or in my early adult life and was kind of strong armed into it by a buddy who was a Bachata instructor. I told him,
I’m not a dancer, I can’t do this. Low and behold, I just kept going and I loved it and the community around it. Did you grow up dancing or was it something that you started doing later on?
George Roberts (17:10)
Oh, was very much later on. I mean, like for the last 15 years, I’d watched these YouTube videos. I realized that’s not the way to do it. You have a buddy who’s a dance instructor. That’s the way to do it. But it wasn’t really until just over two years ago that I started going to the lessons and I just went every night. so so even if you’re like me and you consider you have two left feet, just try it because if you’ve never had quality instruction, you don’t know how you’re going to respond. So just go out and do it. And Bachata is so much fun.I love it because I feel like it’s got a pretty decent learning curve. I feel like you can go to maybe a half dozen Bachata classes and you can go out and enjoy the social. So so do it.
Dylan Silver (17:43)
Yeah.Yeah, I’m right
there with you. I I think in some ways there’s actually some similarity between like what we would call like Texas two step and Bachata and some of the turns and so forth because you can, like you said, just get out there a handful of times and maybe the first couple you’re you’re can’t step over anything but then you get out there enough times and now you’re able to dance with strangers. You’re like, this is great.
George Roberts (18:04)
Yes.Yeah.
Yeah, keep with it. Keep with
it. I love bichata. It’s so fun.
Dylan Silver (18:16)
I want to ask you a really a granular question about when folks are looking for multifamily properties, they’re trying to figure out, what Metro do I look in? Do I look in my backyard? Hey, how do I know exactly, you know, if this is the right deal for me? There’s a lot that that goes in here, especially multifamily. There’s maybe some more, there’s more award, but there’s also more risk. It’s just these are just bigger deals. What would be your generalguidance without giving away all the gold for folks who may be looking at hey how do I find that that first deal for me?
George Roberts (18:50)
Right, well first of all, get over your limiting beliefs. Like you said, it’s the same idea but just larger. So just think of it, we’re dealing with more zeros. But you have to be just as careful. Every bit as careful and it’ll come out. Now for me, I’m really looking for margin of safety. I always am. In these times particularly. And particularly when there are some decent deals out there. There are a lot of people who are under stress.So just go out there, look. Don’t be in a rush. There’s a lot of survivorship bias.
A lot of people who are successful will say, hey, just go out there and do a deal, because that worked for them. But relax. There a lot of people who took that advice and they failed. So take your time, learn to underwrite and look for that margin of safety. And I find that with the mom and pop deals under 100 units. And I want to see that there’s some seriously under market rent. Show me that rent roll that has people living there five, six, seven years. And also show me some really good comps. And that’s how you get me interested.
and wanted to go and sponsor your deal. So make sure that your first deal isn’t your last because a bad deal will hurt you a lot more than a good deal will help you.
Just get out there, underwrite very carefully, think about what can go wrong and make sure those comps are just literally crystal clear.
Dylan Silver (19:57)
Yeah.I want to ask you one more question. We are coming up on time here. What do you think about for folks who are trying to identify, you know, who do I partner with? To me, that seems like maybe the most important thing, maybe even more important than the deal itself. How much importance does that carry for you when you’re looking at your first deal? Who do you partner with?
George Roberts (20:27)
Yeah, it is important. We all did background checks on each other even before we had a deal just to say, hey, we’re gonna be in this underwriting group together and we’re committed to finding. So definitely be willing to invest a little bit to make sure the person you’re working with is the person you think you’re with. and it’s, I think with everything in life, there’s either a dating or a cooking analogy. So with this one, let’s go with dating. You don’t have to marry the person on the first date. So go out and meet people.find out who you can add value to and as when you get to the point where you’re maybe underwriting with this person, you spent a lot of time together, maybe it’s time to go and get that background check and just keep at it. And I’ve done deals with various groups throughout my career and I’m still doing deals with the people that I did my first with. So you know I guess maybe in that case,
You don’t have to get married ever when it’s an investing. So just keep out there doing deals and whatever makes sense.
Dylan Silver (21:31)
We are coming up on time here, George. Where can folks go to learn more about your syndication, to learn more about the book? How can folks reach out to you?George Roberts (21:41)
sure absolutely so I know you’re put up my website www.robertscapitalenterprises.com in case you’re driving just wait until you safely stop you’ll find that in the show notes but yes we want to learn more about my investing philosophy passionate living through passive investing and I hope to follow it up with another book multifamily goldmine using economies of steel to live your best life so so get out there read my book and if that makes sense to you if you like my investing philosophyPerhaps you’d like to invest passively in my deals or if you’re a newer investor on the active side, show me your deals and I’d be happy to take a look at your underwriting and let’s see if it looks like we can make it.
Dylan Silver (22:21)
George, thank you so much for coming on the show today.George Roberts (22:24)
It was a great pleasure, Dylan. I had a fabulous time. Thank you.
