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Show Summary
In this conversation, Josh Appelman shares his insights on the importance of operations in real estate, the challenges and opportunities in the market, and the journey of being an operator. He emphasizes the need for continuous learning, building relationships, and leveraging technology to succeed in the industry. Appelman discusses his personal journey from operations to real estate, highlighting the significance of understanding the business side of property management and the importance of making informed investment decisions.
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Investor Fuel Show Transcript:
Josh Appelman (00:00)
I think that you’ve had to go broke multiple times in order to be successful. And it’s not cliche, it’s the truth. Taking loans out to make payroll. You’ve got cash flow, but you don’t have the cash right now. ⁓ Hitting those rock bottoms, the negative net worth, ⁓ all of the things that sharpen the iron. And ⁓ going through the tough times that truly make people, I think, stronger and tougher.Q Edmonds (02:00)
Hello everyone. Welcome to the Real Estate Pros podcast. I am your host, Q Edmonds, and I am excited to be here today. Have another fantastic guest. And listen, from his own mouth, he is operations first. So he is going to make sure that he’s building systems and putting them in place for the properties to be successful. And so I cannot wait for us to see things through his lens, kind of pick his brain about the different things that he do.And so I’m excited to introduce you all to Mr. Josh Appelman. Mr. Josh, how you doing today, sir? man, doing good, doing good. Happy to have you here. And listen, man, I’ll be honest, I kind of want to dive in. I want you to tell the people about what your main focus is these days. If you want to give us a little bit of an origin story of kind of how you got started, man, we love origin stories. We love the hero’s journey. So if you want to do that, that’s cool. And then also tell us what markets you’re operating in, where you are in the world.
Josh Appelman (02:36)
How are you?Q Edmonds (02:59)
So Josh, sir, you got the floor,Josh Appelman (03:01)
Okay,all right. Just quickly, I’m out of Cincinnati, Ohio, so Midwest. Did not start out in real estate or multifamily. My journey goes all the way back to, I’m gonna say 2009-ish. a, because I’ve always been in operations. That’s kind of where things lead to. building my own, building a flooring installation company, scaling that to three states, nine warehouses, 300 plus contractors out every day. 52 full-time employees, which you have to hire 300 to get to 52.
Um, scaled the company, Inc. 500, 5,000 lists, five years in a row, um, sold it in 2019. And, uh, and then the next chapter that’s real estate. So that’s, uh, that’s what got me really before then built, built the, um, my office I operated out of and warehouse, and then, um, didn’t get into real estate really until 2019 and the 20 and purchased my first, uh, multifamily 33 unit property in 2021.
Since then we’ve we’ve scaled multifamily as well as well as just real estate in general ⁓ Operation I’m just operations first really because that is that’s the heart and soul of any successful company if you can Operate your P &L control the control the process the alignment ⁓ Then it’s successful and then it equals success So just measuring measuring everything from top line all the way down to the throughput to the bottom line and what?
what all the line items equate to and how we can control cost in different ways and so on and so forth.
Q Edmonds (04:37)
love it, man. So operations first, you built a flooring business, got to hire 300 to get to 52, like you said. Operations is your thing. And so I kind of want to pick your brain a little bit. Like, when did you know your brain was built for operations? Because let’s be honest, everybody can’t handle operations. Everybody’s not that analytical. Most people hire people to help them with operations. So when did you know this is kind of how your brain works?Josh Appelman (05:51)
No, I’ll tell you, nobody wants to be the operator. Nobody. And PE searches for operators to put capital in with, which being an operations, being an operator is a blessing and a curse because you truly have to own the outcome. And I think that a part of me is that there’s a controlling desire that I want the outcome because I truly don’t want to put the baton in someone else’s hand and control whether things work out or not. I know that what I do and how hard I can press on certain things, things will work out.even if that takes me going out there and making sure that it happens. So having a clear vision of the finish line, what good looks like is, I think is a responsibility and a duty of an operator. But by all means, it’s nothing glorious and it’s nothing to, it’s not a shiny object and it’s a blessing and a curse. But if you are a true operator, then you’re guaranteed success. And if you’re a good operator, you’re guaranteed your own success.
I think that as long as you keep on educating yourself and staying in the weeds to a certain degree, meaning filling out ⁓ different KPIs manually, forcing yourself to see the information, putting it in front of you, then you know which levers to pull next.
Q Edmonds (07:07)
Gotcha. Yeah. Now, man, I love it, man. So, you know, like I said, like you said, you built the business. I have a saying where I say destiny has no wasted moments. Right. Meaning like no matter where you go through life, there are moments in your life to kind of fortify who you are now. So what are some things that you kind of went through through your life to kind of make you kind of who the person you are today? Like did they build resiliency, discipline? Like what are the things that’s been built in you by moments of destiny throughout your life?Josh Appelman (07:36)
I think that you’ve had to go broke multiple times in order to be successful. And it’s not cliche, it’s the truth. Taking loans out to make payroll. You’ve got cash flow, but you don’t have the cash right now. ⁓ Hitting those rock bottoms, the negative net worth, ⁓ all of the things that sharpen the iron. And ⁓ going through the tough times that truly make people, I think, stronger and tougher.We had spoke before and it’s not before the podcast. It’s the lessons that sharpen you. ⁓ You’re constantly learning what’s next and you don’t know what next is. So taking advice from somebody on during those hard times where you don’t know what you don’t know. So it’s paying ignorance tax and
It’s a lot of ignorance tax through the years and you’re paying your dues so that your kids don’t need to pay the dues or the people around you don’t need to pay the dues next. And right now I don’t know what’s next. It could be something tomorrow and it’s just constantly learning, evolving, putting things in place so it doesn’t happen again.
Q Edmonds (08:46)
No, I love it, man. And I appreciate you talking about this. So it sounds like you have faced some adversity as you were building. That’s what it sounds like to me. And if that’s the case, are there any stories that maybe you can share that we can glean from? Maybe a story where you face adversity that we can look at and be like, okay, wow, if he overcame that, then I know I can overcome it too.Josh Appelman (09:09)
It just depends on how deep you’re wanting to go with your own company. mean, how much tolerance do you have for the hard times, for being broke, and how long are you willing to be broke for? And are you watching Netflix or are you learning? Are you spending your time creating different levers of knowledge that could propel you forward?I could tell you things that nobody wants to go through that I put myself through purposely. And I say purposely because I put myself in positions that are uncomfortable. And I will figure them out at the end and things will work out ultimately because I put myself in an operator position. other people, not everybody’s cut out to do those things. it’s not, ⁓ you just have, you have to know what role you can play and every operator needs great people around them.
⁓ Whether it’s asset management, whether it’s out in the field asset managers that are looking at the properties, making sure that the deferred maintenance is taken care of, addressed, walking units. So I say that you don’t have to be an operator to be a part of the operation. So it just depends on your tolerance on ⁓ where you, I guess your level of comfort ⁓ on what you want to create.
Q Edmonds (11:05)
Yeah, yeah. I love it so well said. So let me ask you, what’s the next real goal for you? What are you looking to solve a scale next?Josh Appelman (11:14)
So we’ve, one thing that I, my goal and my North Star was 2000 units by 2027. And I took a step back, this was early last year. So we’re going coming out of 2024. And I like, I’m going to raise capital in this and that. And I’ve raised plenty of capital and I’ve got partners on some of our projects, but 2000 units doesn’t equal success. Cause that’s still 2000 problems. And 2000 units is a, it’s a lot of units, no matter what, no matter if you’re,you’re new or if you’re experienced and you’re in the field every day, 2000 units is still 2000 multifamily residential units ⁓ that you’re responsible for those tenants and families in the units. But it’s the level of ⁓ when you get there. So you’ve got a lot of capital you need to manage, investors you need to manage, partners you need to manage, tenants, the whole thing. So when you do finally get there, what piece do you actually own, if any of it?
And then you’re essentially, could put yourself in a position that you’ve got a ton of responsibility, but you’ve bought yourself a job more than anything. taking a step back and acknowledging that I’ve got a lot of runway left, a lot of time, at least I would, I’d like to think so is pending anything else out there, but build slow. We’re scaling with, ⁓ or we’re looking for true deals that make sense on the purchase.
Because you do make your money on the purchase. If you purchase it at the wrong basis, meaning the purchase price, you’re giving and you’ve got to put years of work effort energy into it and there’s nothing left at the end because you bought it wrong, then you’re just giving time up. But I want to build slow, find great deals that we can put our time into and just get there. I’ve got a target for 2027. It’s not 2000 units, but
⁓ We’ll get there, hopefully wholeheartedly without giving too much equity up.
Q Edmonds (13:11)
I love it, man. got a man. I got a plan in place. I love it. You got the plan. Now you just got to work the strategy of the plan. I feel you, I want to talk to you a little bit about relationships. And so I would love to know your perspective when it comes to relationship building. Has it helped you? Like, do you put a premium on it? But talk to me about relationships. Are they important to you?Josh Appelman (13:33)
I think that you need to be positioned to be in the right place at the right time. You have to know people. You have to be in a great relationship with your bank in this industry. You have to be in a great relationship with the brokers. ⁓ You have to know, and title, you have to have a relationship with a good title agency. ⁓ There are certain key relationships that will help you out. There’s certain key relationships and that really, I think it’s just fluff.There’s rooms that you can get into that will waste your time and take you away from your family. And there’s rooms that you can get into that will help propel your career. So I think it’s being aware of those relationships or masterminds that are more just ⁓ maybe social events. And just know which relationships count.
Q Edmonds (14:26)
Yeah, gotcha. So listen, Josh, is there any topic that I have not brought up that you would like to talk about? Or even is there something maybe educational, motivational, inspirational that you would like to tell people? So either a topic or if you have some kind of motivational word that you want to give, we would love to hear,Josh Appelman (14:46)
Here’s what I’ll say with being an operator and an investor, ⁓ vertically integrated. we look for the properties, we acquire the properties, we day one take over the properties, we install our property management, our people, and then we manage the assets through asset management. We manage the renovations through construction. So we’ve got a lot of different moving components, but those certainly were not built up overnight ⁓ at all.So I think that there are people that want to get into the industry. They want to know how and they want to get to 100 units tomorrow. But I think that little baby steps get you there faster than you realize. If you buy the duplex, live in one duplex, look for another property, maybe another duplex, maybe a quad, start learning the things when you’re small, if you don’t have an operation set up, and then you slowly start to get people
around you, maybe a VA, then you start learning contractors, you start learning vendors. ⁓ Get a building or a property management software system put in place no matter how small you are. Start learning how to track your rent, track your payments. The P &L, start learning how to build your financials ⁓ acumen, your financial acumen to be able to go to the bank and you have an SREO you can present, your P &L you can present. Just all of the building blocks to
to what a real estate investor operator would have. And there’s nobody that can tell you how to do it without you first one willing to do it and then actually taking action to do it, to do the small things that get you into where you’d have your 100 units and then 200 units and 300. The other piece is that if you don’t want all of that responsibility, headache, brain damage,
Look for someone who’s already doing it. Find out what your superpower is that you can add to that organization. And then you can learn firsthand what it looks like because like I said, every operator, every owner, they need great people around them too. And it’s hard to find people ⁓ who are just really good at what they do. It truly is. Like I said, 50, you have to fire tire 300 to get to 58. And it takes time, but if you know you’ve got a certain skill set and
You can add value or add time back to the operator. Get yourself around them and be a part of that play. You don’t have to own the whole thing to be successful. ⁓
Q Edmonds (18:05)
Listen, I don’t want to cut you off. If you got some more, please, by all means, I ain’t want to cut you off.Josh Appelman (18:10)
Well, I just, say that because there’s, there’s always the jargon out there, like start creating your side hustle while you’re working for the other company and this and that. it’s, you go deeper on where you’re at and get closer to the money, and I say closer to the money, start bringing money into the company or start doing the things, start showing up being, be present. You don’t need to find the side hustle. The grass is not greener on the other side. You might already be there. You just haven’t put yourself in a position to be.maximize your success with where you’re already at. the grass is always greener out there, I feel like find what you’re good at and compound and skill up and get there. The other thing is AI. I’m not sure how big you are with AI, but ⁓ if you’re not losing it, if you’re not using it, you will lose to somebody who is going to use it. ⁓ I don’t think it’s going to take over the jobs that
I thought it was before. I know that the more skills you have and using AI, the more valuable you already are. Will it wipe out some industries 100 % for sure? Are we concerned with our rent roll and certain verticals for sure? But if you get out there and you start learning the tools and use the tools, I mean, you can create a ton of value for yourself in companies that are looking to grow.
Q Edmonds (19:38)
Yeah. Well, man, I appreciate you. My dad used to always tell me, you know, on the other side of grass is dirt. If flip over grass, it’s dirt. know if he said grass is going on the other side, but sometimes, like you said, it’s not. Find your superpower, work where you are, and do what you do. And so I appreciate you, man. Listen, if someone wanted to reach out to you, connect with you, learn more about what you’re doing, how can they get in contact with you, Josh?Josh Appelman (20:03)
all over social media. LinkedIn, Facebook, Instagram, just put out ⁓ clips of operator mentality, usually daily on ⁓ real world scenarios. ⁓ look me up, Josh Appelman. I’m out there just posting and just let me know if you need any help.Q Edmonds (20:24)
But listen, man, I want to say thank you so much for your time, because of course we know time is valuable. Thank you so much for your story. I greatly appreciate that. And thank you for your perspective, the way you think and bringing that mindset to this platform. Thank you so much for being here. I appreciate you, Absolutely. So listen, y’all got the nuggets from Mr. Josh. You can’t tell me you didn’t. So definitely check him out. But also make sure you are subscribed here, because I promise we’re going to continue to bring up amazing people just like Mr. Josh.Josh Appelman (20:39)
All right, thank you.Q Edmonds (20:54)
So sir, thank you again. As everyone else, y’all have a great day.
