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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Lee Yoder, founder of Threefold Real Estate Investing. Lee shares his journey from being a physical therapist to becoming a successful real estate investor focusing on multifamily syndication. He discusses the importance of mentorship, building a strong team, and the appeal of multifamily investments. Lee also provides valuable advice for new investors and outlines his future goals for scaling his business.
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Lee Yoder (00:00)
So next year we did a duplex and we got that kind of see the proof of concept. Okay, we got a couple of renters. They’re paying all the expenses. They’re paying off the mortgage and there’s a little bit left over each month. This is investing. This is cool. But I knew I wanted to go bigger. I knew I wanted to scale.Michelle Kesil (01:47)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Lee Yoder, who’s been making serious moves as the founder and visionary behind Threefold Real Estate Investing, focusing on syndication of apartment buildings. So excited to have you on the show today,Lee Yoder (02:11)
Yeah, excited to be here, Michelle. Thanks for having me.Michelle Kesil (02:14)
Of course, I think that our listeners are really going to take something away from how you’re approaching the Midwest market and growing your portfolio, so let’s dive in.Awesome. So yeah, first off, for those who are not familiar with you and your world, can you share what your main focus is?
Lee Yoder (02:37)
Yeah, our main focus is buying, you know, around 100 units and up apartment buildings. I live just north of Cincinnati and really kind of a three and a half hour radius around Cincinnati is where we’re interested in buying these apartment buildings. They’re generally, you know, workforce housing, C-class, however you want to think about that space. And we’re usually trying to improve them and kind of raise rent and control expenses as much as we can and make them worth more becauseWe syndicate these, which means we bring in investors to buy these with us. It’s not just me buying them and it’s not just me and a couple partners. It’s me and 30, 40, 50 investors. And they’re passive. They don’t do any of the work. They just invest their dollars. And me and my team, we go and find the deals and put them together and then operate them for five to 10 years. And so that’s what our focus is.
Michelle Kesil (03:35)
Awesome! How did you get into this world?Lee Yoder (03:39)
yeah, great question. ⁓ Slowly at first and then step by step, just kept, ⁓ what I’d say, of like kept taking the next step. So I was a physical therapist and was enjoying that pretty well, but then got in with a company who brought me in the office. I was a clinical director. Then I was kind of moving toward a director of operations role and this was a startup company. So I was doing a lot of different things and, you know, really kind of had an entrepreneurial feel to it.And I just love that. So I felt like I was really starting to get to know what I felt like God made me to do. And it wasn’t really being a physical therapist. It was more like helping to build something. And so I just knew, man, I want to do more of this. And so when I decided I wasn’t going to stay at that corporate job anymore, I thought, man, I really don’t want to go back to just being a physical therapist. I want to build something. And so I started looking around for what I thought that might be.
My dad’s in construction. I had a good buddy from church that was in real estate full time. So I just kind of sort of look into the real estate space and the more I learned about it, the more I thought that might be for me. So I decided to go back to being a home health physical therapist where I had a lot of flexibility, could kind of make my own schedule and then start a real estate side hustle. And so that was in 2017 that I got started in real estate. We flipped a house that year and that went pretty well, but we said, well, this isn’t really investing. This is just trading time for money in real estate.
So next year we did a duplex and we got that kind of see the proof of concept. Okay, we got a couple of renters. They’re paying all the expenses. They’re paying off the mortgage and there’s a little bit left over each month. This is investing. This is cool. But I knew I wanted to go bigger. I knew I wanted to scale.
So then we got a 16 unit the next year. Right after that, we got an eight unit and a 10 unit. We partnered with the property management company because I just felt like I have no idea what I’m doing with property management. We managed that duplex ourselves, didn’t really like it. So partner with the property management company. They managed those properties for us.
Those did pretty well. We bought those in 2019. By 2020, after the COVID stimulus boom kicked in, by the end of 2020, they were worth a lot more than we bought them for. I was just dying to go full-time into real estate. So I quit my W-2, my job as a physical therapist, at the end of 2020, sold that whole portfolio. So went from 34 units to zero units, but took all the profits and put it in my savings account and said, OK, we can live off this for a few years if we have to. Let me go try to do this full-time.
see what we can do. So we just had one or two partners on each of those early deals. And so rolling into 2021, we said, OK, we’re going to syndicate, meaning we’re going to bring in more investors and buy bigger deals. And so that’s what we started doing in 2021. We started with the 45 unit, raised 550,000 from seven investors. And we just kept doing that, kept doing it. I fell in love with it, loved doing it. Eventually, we built our own property management company so we can manage our own properties. And then we just closed the 415 unit earlier this year.
and raised $8.25 million for that. So we’ve just kind of grown, just keep taking the next step. And we’ll close one in January, 180 units, and we’ll have 930 units at that point. yeah, that’s a long story short, kind of short, of how we’ve progressed.
Michelle Kesil (07:39)
Yeah, amazing. So cool that you were able to grow at that scale. What do you feel were some of like the main keys that have made the difference in allowing your business to be able to grow and scale and run smoothly?Lee Yoder (07:57)
Yeah, I think early on it was finding good partners. mean, I had a mentor early on that helped me get into that first multifamily property. He had done a couple before. So anytime you can find somebody that’s done what you want to do and you feel like they did it in the right way and they did it in the way that you want to do it. If you could, you know, just get a little help from that person. I mean, he didn’t give me a ton, but he gave me a little bit. And I would just kind of send him something. Hey, what do you think about that? And he’s like, yeah, it looks good to me. And so I’d go and take the next step. So I wasn’t really asking him for much, but I just kind of.He was just kind of looking and giving me some confidence. So that was a big boost. And then those first ones, partnering with a property management company. I mean, we bought a 16 unit. just seemed overwhelming to my wife and I. And we thought, there’s no way we can manage this. How are we going to do this? When we take over this property, what are we going to do? Well, when you go partner with a property management company, it’s their team that’s going to do that. And for them, they were managing over 1,000 units at the time. So to manage a 16 unit was no big deal at all to them. Whereas for us, it was such a big deal. So once we were like, well, they’re the ones that are going to do it.
then it just seemed not so overwhelming. So that was a big key. And then ⁓ I continued having partners for different things, but just seeking the advice of people that had done what I wanted to do. That was a huge part of our growth.
Michelle Kesil (09:14)
Yeah, absolutely. Mentorship and having that support is so important.Lee Yoder (09:19)
Yeah.Michelle Kesil (09:21)
So what are you most focusing on now when it comes to solving or scaling to the next thing?Lee Yoder (09:31)
Yeah, right now it’s building out our internal team and maybe what I call like our C-suite team. So like just some kind of upper level folks that are, you know, we’re bringing in to help us. So I think we’ve built a pretty good company. It’s still a very small company. And ⁓ I think we’re now past like startup phase, but not a whole lot. So we still have a lot of like just becoming more professional, becoming more ⁓ skilled at what we do.So we’re just, bringing in some high level people that have more experience and more skills than I do in certain areas to really improve our company. So, you know, we brought in a controller recently that, you know, has an accounting background because nobody at our company right now has an accounting degree and a serious accounting background. So he’s bringing a lot of experience, ⁓ a lot of skills, ⁓ knowledge, expertise that we, that nobody in our company had. So that’s awesome. Now we’re looking to bring in somebody that’s got
a lot of operational experience and skills and just management experience and skills. And, you know, I have some of that, but not a lot. And that’s not where my passion is or my like unique skill set is. So I’m really excited to bring him in to get even better at putting processes and procedures in place, you know, to, you know, if we’re going to scale to the next level, you don’t want to just be pushing ahead and like, okay, we’ll figure it out as we go. mean, you, that’s kind what we’ve been doing for a while.
to some degree. And so I’m excited to bring it in and become just more organized, ⁓ more efficient, more effective, ⁓ things streamlined, better processes, procedures ⁓ across the company. And then I think we’ll be ready to really grow to the next level and then the next level and keep going.
Michelle Kesil (11:52)
Yeah, that’s amazing. So why specifically do you invest in like the multifamily part of Rooster?Lee Yoder (12:03)
Yeah.Yeah. You know, when I was starting out, you know, start out with the flip, you know, but the year before that, even I was listening to a ton of podcasts, reading a ton of books ⁓ or listening to books, you know, while I’m driving and whatnot. And I just felt like the guys and girls that I heard on the podcast that were doing multifamily just made a lot of sense to me. I felt like I identified with what they were, like their strategy.
⁓ But then, you know, at its core, like, multifamily just really makes sense to me. I really buy into the fact that people need a place to live. They don’t necessarily need an extra storage unit. Now, I’m not, I don’t mean not self storage. I think it’s legit. mean, people are doing really well with it, but it just doesn’t make as much sense to me. mean, Airbnb doesn’t make as much sense to me just because you don’t have to vacation. So I just feel like multifamily is really recession resistant.
It can make, can do well in all cycles because people always need a place to live. Now, they don’t have to pay $1,500 for a place to live. They can pay $1,000. So just because people need to have a place to live doesn’t mean you can always raise rent. Also, people can live together. So that can really hurt. So just because people need a place to live doesn’t mean they have to have their own apartment unit. People can live in their parents’ basement. So it’s not like it doesn’t get hurt during recession, but I think it does really well. So I just really believe in housing.
Also, there’s other factors like you’ve got Fannie Mae and Freddie Mac, know, two pseudo government agencies that are always providing financing, providing debt for multifamily, which is really a benefit. You know, and even, you know, in really bad times, mean, government’s going to help people pay for their rent. You know, you’ve Section 8, you’ve got other subsidized programs that are going to help people pay for the rent. there’s just a lot of things about it because I like real estate in general. I mean, I like.
industrial. like self storage. like mobile home parks are very similar multifamily office. I love the idea of owning real estate, but to me, multifamily just seemed the most ⁓ recession resistant.
Michelle Kesil (14:13)
Yeah, definitely that makes a lot of sense. Awesome. So what advice do you have maybe for someone that’s earlier on in their journey and maybe they’re looking to start into investing in multifamily? Is there anything you wish you knew in hindsight?Lee Yoder (14:31)
Yeah, think ⁓ I only have my own experience. there might be better ways to do it. But going back, I think I did it the right way in some ways. And then there’s some things I wish were done differently. But I do think I was listening to a lot. I was really educating myself. I probably would have gone to some of the meetups earlier on to be with people in person. So I was doing a good job of reading books and listening to podcasts and getting that knowledge.But man, if you get
you know, in front of some people that are doing it, and especially people that are doing it in your area. That’s what’s so great about local meetups is you’re, you know, meeting people that are doing it, but they’re doing it in your area. So it’s very relevant information that you’re getting from them and very relevant skills and experience that they have. So I would have done that earlier. So I would encourage people to do that. But at some point, you just got to jump in and get started. So I would just think like, what’s, what’s low risk? I mean, to me, buying a single family home or buying a duplex is kind of lower risk. I mean, if you
are young and you wanna get started, don’t have a family and you don’t mind moving them into a duplex or a quad, I think that’s an awesome way to get started. know, buy a three unit, four unit building, live in one of the units, manage the others. But I just think, you know, if you’re like, man, I wanna buy apartments someday, well, you can’t start there and you can’t start anywhere close to there, honestly. Like you gotta start at the beginning, in my opinion. Like, so just go buy something small, buy a condo, buy a single family home, buy a duplex, buy a quad. Do something small like that and cut your teeth there.
learn from it. you for us, I told my wife, said, well, we can buy this single family home and flip it, even if we can’t sell it and we can’t rent it, we can afford the mortgage on this. So worst case scenario is we’re paying for two mortgages and that’s not so bad. You’re paying off two properties, right? So ⁓ that was our worst case scenario. So I would tell people to think of it that way. Like what’s the worst case scenario? And then like, are you okay with that worst case scenario? If you are, then like jump in.
You know, but sometimes I think people overdo the worst case scenario. think, oh, worst case scenario is like, I’m going to lose my house and my family and I are going to have to move in with the in-laws or something. Well, is that really the worst case? mean, again, in our situation, we could afford both mortgages. So, okay, that’s worst case scenario, not losing our house. You know, so that’s one thing I do. And I’ll just say one other thing really quick. The reason my wife and I were able to make some of the moves we were is because we were really frugal and we saved up a lot of money and we weren’t living off of all of our income.
I took a big pay cut when I went back to home health physical therapy and I did that because I wanted to get into real estate. So a lot of people can’t take a big pay cut because they spend all the money that they make. So that was the first important step that my wife and I And we did that for years. Actually, we probably did that for eight or 10 years where we lived well below our means. So it allowed us to save money, allowed us to buy a house and put 20 % down. So it allowed us to have a lot of equity in our home. It allowed us to take a risk. It allowed me to
leave a job and take a 30 % pay cut. So a lot of the moves we made is because we were in a good position financially. And a lot of people really struggled to do that. I think I would really work hard to do that first and then try to jump in.
Michelle Kesil (18:22)
Yeah, absolutely. Thank you for sharing your personal experience and story on how that worked for you.So what are some goals you have for what’s next in the next phase of where you want to head to?
Lee Yoder (18:38)
Yeah, it’s hard to look too far ahead, ⁓ bringing these new people in to our team, ⁓ I think it’s really going to set us up. we’re almost 1,000 units. I would like to double that in the next couple of years, would be my goal. ⁓ think that, well, I think we’re ready for that. And I think that allows us to just, that scale will allow us to build an even better team and to develop better processes and procedures and to bejust better across the board to build a better property management company. And I think just having more units allows us the resources to do that. ⁓ And then we’re better for all of our properties because we have more property. So that’s really my goal over the next couple of years is to get this really solid ⁓ team in place and then double our portfolio.
Michelle Kesil (19:32)
Yeah, amazing. So you mentioned that there are other investors supporting you that are more passive. Can you expand on what those roles look like?Lee Yoder (19:42)
Yeah, sure. So I’ve got a team ⁓ and we are the asset managers and ⁓ we find the property. ⁓ We put the deal together, meaning like I got to go win that property. I got to be the winning bid. And then I’ve got to find a lender to bring us financing. put, you know, bring attorneys in to write up all the contracts and all that stuff. mean, we do all this work and then there’s ⁓ a group of people and you know, it’s in the hundreds of people thatthat are interested in investing with us. so we send them monthly emails. We kind of keep them up to date. educate them on multi-billion, tell them about what we’re doing. And they get really interested. And they develop a relationship with me. And they get interested in investing with us. And so once we identify a property, ⁓ and then we underwrite it, and we go do inspections, and all the due diligence, we decide we for sure want to buy it. Well, then we present that to these people who have said that they’re interested in investing with us, and have gotten to know us, and know what
kind of deals we do and we know what it might look like. And so we present this opportunity to them. say, hey, here’s, you know, we’ve been telling you this what we do. We’ve been telling you, you know, we’re going to have another one like this. And you’ve said that you’re interested. Well, here it is. This is our next property that we’re going to buy. And this is what we think it’s going to do. And this is what we think the returns are going to look like. you know, do you want to invest in this specific deal? So then if they want to do that, then they, you know, basically just transfer their money over to an account we’ve set up just for this property. And with all that money, then we go buy this property and then
with what’s left over that money, you we’ve made sure there’s gonna be a good amount left over, then we’ll put that in the property and improve it. And that’s what allows that property to be worth even more. And so when it’s worth a lot more, well then all those investors in us, because those investors are part owners of the property through an LLC that we create, we all benefit from the cashflow every year, and then also that property being worth a lot more in five to 10 years.
Michelle Kesil (21:37)
Yeah, so cool how you’re able to bring in people and yeah, support their business and yours and make it on a larger scale. Is there any like criteria for the people that invest with you or just any investors that are, you know, looking to join in?Lee Yoder (21:46)
Mm-hmm. Yeah.Yeah, we take accredited and non-accredited investors. So to be an accredited investor, you have to have a million dollar net worth, not including your personal residence, or you as an individual have to make $200,000 a year, or you and your spouse make $300,000 a year. So we don’t have that requirement. You don’t have to be an accredited investor. You can be an unaccredited investor, which is really anybody. We do have some questions when they’re filling our documents, just do you have some knowledge about investing and
Do you think you have the knowledge necessary to make this decision? You can also bring it to your CPA or your wealth advisor and have them look at it and everything. So there’s really no requirements other than you have to have a pre-existing relationship with me. Because ⁓ the type of syndication that we do, a 506B syndication, you have to have a pre-existing relationship because we don’t advertise our deals to the open public.
we only advertise them to people that have a relationship with us. that’s really it. You got to have just some general investing real estate knowledge, which most people do. Like if you own your home, that probably gives you enough knowledge. I mean, that’s your own decision to kind of decide if you have the knowledge. And then you have to have relationship with me. And if you have those two things, then you can check out our deal and invest with us.
Michelle Kesil (23:10)
Awesome, thank you for sharing all of that.Lee Yoder (23:13)
Yeah. I guess one other ⁓ thing, Michelle, we do have a $50,000 investment minimum. So I should say that. You have to have $50,000 that you feel like you can part with and that you don’t need for the next five to 10 years because these are illiquid investments. So that would be one other thing to think about.Michelle Kesil (23:31)
Yeah, awesome. So before we wrap up here, if someone wants to reach out, connect, learn more, where can people reach out and connect with you?Lee Yoder (23:41)
Yeah, sure. I’m pretty active on LinkedIn, so you can look for Lee Yoder on LinkedIn. But I’d love for people to jump on our website. That’s our company, ThreefoldREI.com. That’s three spelled out, T-H-R-E-E-F-O-L-D, as in fold a piece of paper, REI, as in realestateinvesting.com. So jump on our website. We’ve got some free stuff there, a lot of information. And then you can contact us and connect with us right through the website.Michelle Kesil (24:08)
Awesome. Well, appreciate your time and your perspective. Thank you for being here.Lee Yoder (24:13)
Yeah, thanks for having me. It was a lot of fun.Michelle Kesil (24:16)
Of course. And for the listeners tuning in, you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Lee who are building real businesses. And we’ll see you on our next episode.
