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Episode cover_John Casmon_business relationships

Create a Real Estate Empire from Scratch with John Casmon, Casmon Capital Group

May 29, 2024

Strategic business relationships are often the backbone of thriving ventures, allowing individuals to combine strengths, resources, and expertise for mutual benefit. John Casmon, a real estate investment expert, has mastered the art of leveraging partnerships and other people’s money to build a thriving investment portfolio. And in today’s episode, he walks us through the steps of identifying the right partners, negotiating terms that benefit all parties involved, and managing these relationships over the long term to ensure sustained success. 

About John Casmon

John Casmon is the founder of Casmon Capital and a trusted consultant for active multifamily investors looking to launch or expand their operations. John hosts the popular Multifamily Insights podcast and co-created the Midwest Real Estate Networking Summit, connecting industry leaders and investors.

Before embracing real estate full-time, John led impactful marketing campaigns for major brands like General Motors, Nike, and Coors Light. His corporate background fuels his strategic approach to real estate, combining rigorous analysis with creative marketing techniques. John doesn’t just see himself as an investor; he’s a facilitator of wealth-building, helping others achieve financial independence through savvy real estate investments. 

How strategic business relationships turn connections into capital

Strategic business relationships (SBRs) transform connections into various forms of capital by pooling resources, sharing expertise, and expanding networks of different professionals and entrepreneurs. Here’s how they add value:

  1. Market Access: Partnerships can open up new markets, allowing companies to sell products or services to more customers.
  2. Resource Sharing: By sharing resources like technology or staff, companies can cut costs and become more efficient, leading to savings and improved offerings.
  3. Increased Credibility: Aligning with reputable companies boosts your business’s reputation, making customers more likely to trust and buy from you.
  4. Risk Sharing: Partners share the risks of new ventures, making it easier and less daunting to explore ambitious projects that could lead to big payoffs.
  5. Enhanced Innovation: Working with partners brings different perspectives and strengths together, sparking innovation that can lead to new products and revenue streams.
  6. Expanded Networks: Each partner brings their own contacts, significantly widening the scope for new business opportunities and further capital growth.

To create more strategic business relationships, entrepreneurs can actively network within and outside their industry to identify potential partners who share similar goals and values. They should also clearly define what they can offer and what they seek from the partnership, ensuring mutual benefits that drive both parties toward shared success.

Key Insights:

  • Leverage Other People’s Money (OPM). Choose funding strategies that complement your financial capabilities. Using OPM allows you to undertake larger projects and increase your investment capacity without exhausting your personal resources, helping to accelerate growth while managing risk.
  • Implement risk management practices. Developing a clear understanding of potential risks and preparing strategies to mitigate them helps protect your assets and ensures steady growth without unexpected setbacks.
  • Create systems and processes. Implementing systems in investment analysis, property management, and client relations ensures consistency and quality, enhancing your business’s reputation and operational efficiency.
  • Build a robust network. Connect with individuals and groups who can provide advice, share opportunities, and partner on projects, enhancing your business’s reach and capabilities.
  • Align investments with your goals. Choose investment opportunities that support your long-term financial and business objectives, ensuring each decision moves you closer to your desired outcomes.

John’s best advice for entrepreneurs:

“I had to overcome that fear of losing money. And the way I did that was by aligning myself with people who can help me.”

Connect with John Casmon:

Follow Beyond 8 Figures:

Transcript

All right, so there, I did it. My team will not yell at me anymore. Today, I want to welcome John Casmon. John, thank you so much for coming on the show.

John Casmon:
Absolutely. Thank you for having me, A.J.

A.J. Lawrence:
John, you have such a cool background. We were just chatting, you came out of advertising, you created your own networking group, your own investment group, Casmon Capital Group, and you are like an OG in podcasting with the Multifamily Insights podcast where you do two a week. You’ve been doing it forever in a day. Really doing some really cool stuff. So I’m really excited to have you here.

When we were chatting before, you had said a bit about going down this direction to be an entrepreneur was a bit about creating your own environment. You talked about you have your kids and all this, but what happened from advertising, I started my own because of all the craziness of big advertising firms, more than a few times, into then real estate investing and creating this podcast? Could you kind of share this journey for us a little bit?

John Casmon:
Yeah, absolutely. So let me give you a little background. Again, my name is John Casmon. I am based in Cincinnati, Ohio. Really a midwest kid. I live in Cincinnati, but I’m from Cleveland, so I’d say that proudly, right? I’m born and raised midwesterner. And early in my career, once I graduated college, I was really interested in advertising and marketing. One of the first real big jobs I got was at an agency.

My client at that time was General Motors. The client I had actually got promoted, and when he got promoted, my name came up to replace him. So they actually called me over, wanted me to interview. I got the job. So early in my career, I’m working at GM. Now, this was back in 2007. 2008 happened, my company- yeah, you see where this is going.

2008 happens.

A.J. Lawrence:
I remember that period.

John Casmon:
Yeah, it was a little bit of rough period, right? So the automotive industry was at the forefront of the economic collapse, my company in particular leading the news waves there when it came to it, and it really forced me to think about my future. Real estate was something that was always interesting to me. It seemed simple enough that you could try to figure it out and it sparked my interest. So that was really the start. But it took some time to get some traction. I moved to Chicago in 2011 and to be clear, I did well. I didn’t get let go. I actually thrived during that time period.

So it worked out well for me. I was recognized by many publications. But ultimately, I wanted to move to Chicago and I wanted to start investing a little bit on the side. My plan was, hey, I need to create some passive income so that if a situation like that came up again, I wouldn’t be vulnerable. So I started investing and I was just a guy with a duplex. So I had a two unit building, I lived in one unit, I rented out the other unit and I slowly started to build equity. Bought a three unit building, did the same thing. My wife and I would save our money and buy a property.

So eventually bought an eight unit building, and right around that same time, the agency I was working at this time also ended up having some financial issues and went into bankruptcy. So here I was investing in real estate because I wanted to have some flexibility and some security away from my job, and I realized the strategy I was using was working but it wasn’t really working as well as I thought it was going to. Because here I am with this job situation and I still didn’t have enough passive income or secondary income to take care of all my expenses. So it made me just step back and think of the strategy and what else I could be doing or should be doing. I used to get on websites, I listened to podcasts, I tried to read as much as I could about different strategies. And one thing that came up often was OPM, right? Other people’s money.

And I realized the biggest issue I had was I was saving my own money to buy these properties, and I wouldn’t even look at properties. So I needed to learn how to use other people’s money. But I didn’t think it was for me. I was afraid of losing somebody else’s money. I didn’t really know how to structure the deals. I just had a lot of issues with how to go and navigate that. Lo and behold, I met a person who became my mentor, a guy named Joe Fairless, who built a huge portfolio.

Today, Joe charges a lot of money to work with them. But at that time, I was fortunate to learn from him and learn how to scale and put together these deals. And through those relationships, I met these guys, and together we ended up buying 192 units. And that really took me down the path of apartment syndication, which is what we do today. So up to now, we’ve invested over $125 million worth of apartments, and we help everyday professionals partner alongside of us to get all the perks of investing in real estate without the headaches of being a property manager, an owner, or a landlord.

A.J. Lawrence:
Very nice. You go down this pathway, you started working with this mentor, you were looking at larger and going in the group. Was that group that you moved to, was it intentionally set to go after 125, or was like, hey, let’s just see what we can do? How did that kind of move from what I always call that lovely space of, let’s go put on a play to like, oh, we have an actual business here. Let’s go do something fun to like let’s make it something real. What happened in that space?

John Casmon:
Well, I think the key thing here is that when I met Joe, the largest deal I’d done was an eight unit deal, which is commercial real estate. And to me, that was a big deal. Again, we put all of our money down into this, and I had to work with a third party property management company. So my vision was like, okay, well, if I can raise half the money next time, then I can probably double the size. I can do a 16 unit or maybe a 20 unit or even a 12 unit. That was what I went into this thinking, and I was thinking of a JV, maybe one partner that I could work with. So that was my mindset.

And I started to see what other people were doing, and I had never even heard of syndication so I was just thinking, okay, well, I’ll just get a partner, right? I’ll JV, have people who may want to do business with me. We can do that. So when I learned more about syndication, I ended up meeting this group and these two guys. I met them at a conference, Joe’s conference. And when I met them, we just kind of connected. We learned about each other. We went to dinner and I stayed in touch with them. So about six or seven months later, when I launched my podcast, I actually had them on the show back at episode two, right? Literally when I launched, they were episode two.

So the first guy, and we were just chatting, just like you and I were chatting in the kind of the green room and catching up. What are you working on? What’s going on? And they were working on a pretty large deal, and they said, yeah, this is gonna be pretty big deal for us. And I’m like, wow, that’s great, man. I’m like, well, listen, if you need some help, we’ve known each other for some time now, I’d be interested in working together. He called me a week later and said, hey man, you still interested in being involved in this and helping out? And I said, yeah, let’s talk. So we kind of talked more about roles and responsibilities and what we could do on the deal. And I wasn’t the lead, but I got a chance to partner with them and be involved in that 192 unit deal. So for me, no, it was not what I was expecting at all.

I was expecting a 16 unit, but I ended up doing 192 units. And then from there, we started to do more deals on our own, an 81 unit deal that we’re the lead on, 104 unit deal. We’ve got other deals with other partners, so we’ve been able to scale and grow our portfolio from there.

A.J. Lawrence:
Now, as that transition that I always call it that growth and complexity occurred, what did you have to change in order to kind of go from your own aspiring to 12, 16, 20 to now hundreds and a fund and investor? What was sort of the biggest impact of the complexity that you found?

John Casmon:
Well, I think there are a few major changes I had to go through. The first was my network, okay. Without being surrounded by people who were playing the game at that level, I’m not sure I would have had the confidence to believe I could do it. When you have a mentor, coach, or somebody that’s directly in the space playing the game at that level, showing you how to do it, but then you have peers who are a little bit more approachable or a little closer to where you’re at or have more recently made that jump, and you’re getting the same feedback and you’re now in these circles. Well, now, this is the norm. This goes back to that rule of you’re the average of the five people you spend the most time around, right? Well, when you change those five people and you see that three or four of them are doing these 100+ unit deals, it inspires you to want to play the game at a different level. So I think that was the first one, is just change the network. With that comes mindset, right. Is being able to educate yourself to build the confidence.

And confidence can’t be faked, right? You can go out there and have some blind hubris and just assume you can go out there and do these big deals. But I had to put in the work. So it came from studying and literally, I’ve been investing in real estate for maybe seven years. Up to that point, I had to kind of unlearn everything I thought I knew about real estate investing to learn how to invest in real estate at this level. What does it mean to underwrite a deal when it’s 100+ units when you’ve got a third party property management company? What does it mean to look at a market and understand which metrics to pay attention to when looking at the market to forecast into the future? Up until that point, I was only looking at kind of the current economic state of the property. What’s the current cash flow? Okay, great.

Here’s how much we could pay for it. Now, I’m projecting out three, five, seven years into the future based on economic trends and demographics and all these different things. So it really took a more deliberate, and I would say intentional approach to understanding what we were doing. And because background in corporate America, working at General Motors, working at advertising agencies, I understood how to take this data, look at it, do market research, understand the marketing aspects of what was going to happen, how do we achieve these rents and all those kind of things. But it definitely took a minute to get comfortable and build that confidence. And it’s okay to not feel extremely confident out of the gate. You’re trying to learn a new skill. So developing that really the biggest thing. And then I would say that the third thing that really had to happen for me to change, to play at that level, was I had to create systems and processes.

I had to create a proven system process. That means I didn’t just guess and throw some stuff against the wall, but I could lean against those folks who had done this before. I could understand their proven systems. I can make tweaks and adjustments to it based on my experiences. But with that proven system, that allowed me to understand how everything works, to build that confidence, to go out there, and do these deals.

A.J. Lawrence:
In this process, you talked about working with this coach who- I always love it cause I also, early on in my last company, I got this coach who then grew to become like now he’s on the Tim Ferriss show. He had done some really big stuff outside of it, but like early in his coaching career. And then I’m like, oh, yeah. I got lucky because I couldn’t even get into his conference. But, yeah, you have this coach, what else helped you kind of grow? Because you did have the background in advertising, yes. Especially, GM is a great one.

I always had GE for whatever reason. I used to laugh where for the first like 20 years of my career, I knew either I would always get hired by an agency that had different GE client or they would soon get it because it was just like I ended up agency after agency, even my own agencies, we always ended up with a GE unit of some form. I was like, okay, it’s just kind of a magnet. But you get to understand that thought process of you need to provide very deep, what I always call the dotted i’s and the crossed t’s compared to the entrepreneurial thing of the crossed i’s and the dotted t’s, where it’s just like we got to figure it out.

So it’s like that kind of mix. You had that ability to like, all right, we need to figure out how this works whatever way it works, and then we have to do it so detail oriented for the client that you learn it. So you had that background. You had a mentor who was helping you look at the mindset. You had the basics, you had put in the chopping of the wood, the carrying of the water with your own properties. But what else helped you coming up into this detailed space? I’ve had conversations, I’ve worked with- I’m not going to say it’s the same thing as private equity, but anytime you start talking about bigger money, the expectations, and how you have to present yourself and the amount of due diligence and work you have to do per dollar increases, even if the impact is so much higher. So what else helped you in that kind of transition?

John Casmon:
That’s a great question. So when we talk about systems and processes, one of the things for me was I thought I had a great network to raise capital. And again, I was somewhat concerned that I would lose money. That’s the fear of everyone, right? You don’t want to take people’s money and mess it up, right? So that was the reason I actually went and found that mentor. It wasn’t so much that, hey, let me do this. It was, I was afraid I was gonna lose somebody else’s money. And once I realized that you know what? I need to go down this path because the alternative for me is continuing to watch the employers that I’m at go bankrupt or have my career just dangling in the winds. I need to take control. So I had to overcome that fear of losing money.

And the way I did that was, well, let me go align myself with people who can help me. So that was the big thing. But through that was systems and processes because I realized that a lot of people that I knew did not have a lot of money to invest. I mean, this was in my early 30’s so a lot of these people were just getting their careers going. They were starting to hit the stride, get ready to get married, maybe have kids, maybe buy a house. So I didn’t have a whole lot of money just sitting around to invest. So I had to expand my network, and that was a thing that I really had to focus in on within my network. One of the things that helped me tremendously was attending networking events.

And this goes back to, you know, even when I was still in my General Motors in Detroit because that was how I started to learn and get around people. I didn’t grow up around people in this space, okay? I didn’t know people who invested in real estate. I read about it in books. I can listen to podcasts on it, I can read blog posts about it, but I didn’t meet real investors. And to me, until I started to come across people who were actually doing this, it didn’t seem real. And it wasn’t until I started attending these events where I can meet such and such who invested in 120 units, or this person who had ten houses, or that person who was doing this, right? Now, I can see them and ask questions and I’m getting feedback and I’m starting to understand, oh, this is real.

There are people doing this and there are people doing this in every single city, every single market. So now I’m building my confidence. And now, as I’m going back into these events, I’m watching these people grow. There’s one person in particular, a friend of mine named Brie. When I met Brie, she had one three unit. She lived in house hacking just like me. She had a three unit. She lived in one unit, rented out the other two.

Maybe six months later, she had nine units. I’m like, oh, that’s amazing. She went from three to nine units, right? She drew out two other buildings. About a year later, a little less than a year later, she went from nine to 90 again. I don’t ask her where she’s at in her portfolio every time I see her, but she went from nine to 90, and I’m like, wait a minute. How did you do this? So I was shocked and I invited her to go to breakfast because I just wanted to learn how she did it. And the entire time, I was under the impression that she just had her grandfather pass away or something like that and gave big inheritance. And she was the one who told me she actually had these investors from California who had been following her and wanted to get to know her and invest. She ended up partnering with them.

So that was really that, oh, you can go out there and attract capital for your deals. You can build a personal brand that allows you to go bigger and do business. And that was a big shift that I needed because I was in my own little of who I knew, who I had connections with. And I really realized that I need to expand my network. I need to connect with new people, people who want to do business with me, people who want the opportunities that we can provide, as opposed to just relying on maybe my friends and family.

A.J. Lawrence:
That is kind of that fun as you grow. I want to kind of dive into how you built it, because early on, I did do a bunch of the toastmasters and kind of the other, you know, what I always call those baby networking. And those were very nice people. But there’s only so many insurance people you can talk to in a meeting. When you do that as you grow your business and you start looking at how you want to expand your network into an area where you can actually provide more value, it’s not a transactional thing, but also just into an area where you can grow with similar people. You had the podcast, can you maybe talk about what you did to expand this network? Did you join groups? Because I know a lot of people in real estate talk about like Gobundance was one group. I hear a bunch. What type of things did you do to ingrow your network?

John Casmon:
Yeah, so I did a few things and some worked better than others. But I did launch my own meetup. That was one of the first things I did was launching my own meetup.

A.J. Lawrence:
Oh, nice.

John Casmon:
We also launched a podcast of course, Multifamily Insights, where we’ve been doing that for seven or so years, or over 600 episodes on that.

A.J. Lawrence:
I know you have a million episodes. I was like, oh, God, I have a while to go here.

John Casmon:
So we did that and we also created our own conference, the Midwest Real Estate Networking Summit. And that was a conference I did with the aforementioned Brie. And that really was born out of a desire to see people grow and scale in an environment where they could just learn. I realized that for me, attending these kind of conferences was huge because one, people who attend conferences, they’re serious about growing their portfolio. You spent money, you’ve taken time off from work. If you’ve got a job, you’ve traveled, you’re committed to learning what you need to learn or connecting with the folks you need to connect with to scale your portfolio. So that was big for me. I mentioned my first partners, guys I met at a conference, right?

Like the people who are attending these things, they’re serious. So that was great for me. The challenge was in order for me to attend a great conference, I typically had to get on a plane and go out to Utah or Colorado or Texas or somewhere else. And I was like, I’m in Chicago. Like, this is the third biggest city in the country. We don’t have any of these kind of events here. So my partner and I decided to create one. So that was huge for me as well, to create kind of an opportunity to connect with other folks and get in front of some individuals.

So I definitely think that that helps. It’s a big way to scale and grow. What I would suggest for your listeners is understand the key is personal branding. And we talk about personal branding. This is not about advertising or podcasting or hosting your own meetup necessarily. What we’re really talking about is getting people to know who you are at your core. What are your values, what are your principles and how do you help others. It’s just taking a megaphone to who you are.

That is a personal brand, right? It’s what people say about you when you’re not in the room. Now, when we create these platforms, all we’re really doing is trying to control or massage the message a little bit to highlight the things we want people to know about. So we want to highlight what we’ve done in real estate. We want them to know what our corporate background is, what our wins are. It doesn’t mean that they’re immediately going to do business with you because of that, right? Your reputation is really what we’re focusing on and it’s going to come down to what other people say about you. You know, do you show up? Are you present? Are you excited to deliver? These are the things that people want to know.

And at the end of the day, that’s going to be your personal brand. It’s not the meetup or the podcast, whatever else you do. Those things are great to let people know that you exist. But at your core, who are you? That’s what people really need to know and that is the personal brand you need to focus on.

A.J. Lawrence:
Very cool. I would love to keep diving into how you grew this, but let’s take a step back because I think one of the things I know from myself and then in talking with other entrepreneurs who are in the audience, real estate investing, it’s like you start looking into it and it’s noisy. Like there’s a retweet

John Casmon:
Yep.

A.J. Lawrence:
Yes, I can. I’m cool. But like, the real estate Twitter world is incredibly dense. The amount of content, big pockets, you had mentioned biggerpockets. I can’t remember. If you’re coming from the outside, what I find a lot is a lot of us especially in the mid-journey entrepreneur, we’re really good at doing what we do. And maybe we’ve learned a few skills around the way to actually keep the business from blowing up, though, as I always joke, my last business, I learned the hard way that you got to do all the stuff to keep the business running after it blew up. And then I rebuilt it.

So it was like, okay, the things you learn along the way. Going into it, I’ve always felt like, and the people I know who do well in real estate, they’ve spent years, like just your story right here. Yes, you were able to do a little bit straight off on your own because, hey, you know what the world? Maybe this is a good diversification. But to really make it worthwhile takes a lot of knowledge. How can, because this is now what you do with Multifamily and with your apital group, Casmon Capital Group. God, I was just about to massacre everything there in one sentence. Let’s talk about how someone making half a million a year or whatever, let’s just put there, not saying an entrepreneur is going to make that, more or less different, but just you have a good amount of capital that you could deploy. How do you look at this if you don’t have the time? You’re busy running your own business.

And look, a well run personal business is a great growth vehicle, but you want to diversify. You want to look at the tax advantages and just the capital appreciation of real estate is really attractive. But it is complex standing from the outside. I mean, hell, I barely can stand owning a house, let alone investing into something. Maybe walk us through what we should be thinking, how it works with you, how someone should appreciate investing in real estate through the different tiers or specifically around what you do.

John Casmon:
So I think the first thing is what you said, right? Most people are aware of some benefits of investing in real estate, right? So certainly cash flow and appreciation. But there’s some phenomenal tax benefits, not to mention the leverage that you can use. There’s some great benefits that come with investing real estate. Where things start to fall apart is figuring out what strategy is right for you. So the first thing I would ask all your listeners is, what are your goals with investing? Is your goal to make enough cash flow to live off of that? Is your goal to put your current capital to work so that you could build more equity over the long haul? Is your goal to transition and leave your W2 job and do this full time? All these things matter, you know? Or is your goal just to reduce your tax liability? The ultimate decision you have to make is, do you want to be active or do you want to be passive? If you’re active, you’re the one doing the work. You are finding the property management companies, the contractors, you’re finding the deals, you’re handling it, you’re running it. What most people think is they want to invest in real estate and they’re going to be passive by hiring a property management company.

And what ends up happening a lot of times is they realize that it’s not quite as lucrative as it looked on paper. The property management company may take anywhere from six to ten or even 12% of the revenue. If you have one thing that happens, furnace, roof leak, anything like that, it could wipe out profits for not just a year, it could be two, three years worth of profits. So a lot of you realize you really don’t want to be an owner from that standpoint. On the flip side, some people may say, all right, well, hey, I’m just going to self-manage, right? I’m going to manage this thing myself. And what ends up happening there is that they wind up with a second job. And it actually is the opposite of what you thought.

You thought you were getting passive income. You’re gonna get this real estate. Someone’s paying you just check every month for rent. And you wind up taking the weekends to do showings and painting units and all this other stuff if you want to be hands on yourself. And I found that myself, that’s what happened to me. I’m a full time job and I got a quote to paint my unit. I thought it was too high. Ridiculous. They were like 750.

I’m like, absolutely not. I’m going to do this myself. And I took that Saturday and I went to the unit. And between patching the holes, sanding the wall down, washing the wall, first coat of primer, second coat of primer, first coat of paint, second coat of paint, at some point, my wife called me. And at this point, my oldest son was maybe three months old. And she calls me and I’m sitting, and it’s like June, I’m sitting in the unit and there’s nothing going on in the unit, right? It’s just an empty unit and I’m literally watching paint dry while I’m talking to her, while she’s got my newborn son, my three month old son at the park. And I’m like, I’m spending my Saturday painting this unit while my family is at the park. And the whole reason I’m doing this is to have that financial flexibility to spend more time with the family. And here I am, spending my Saturday in this unit, right?

So I realized, at no point did I sign up for a part time job, right? That wasn’t in the cards. This was supposed to be passive income equity building, but that’s essentially what had happened. So I think you have to be really clear on what you want because it very easily can become a part time job if you pick the wrong strategy. So I was going to say that the next.

A.J. Lawrence:
So let’s talk-

John Casmon:
Yeah, go ahead.

A.J. Lawrence:
No, no.

John Casmon:
The next piece is passive, right? If you truly want to be passive, you need to find that you can work with. So what we do is we still invest in multifamily properties but we buy large enough properties where we can bring on other investors. And if you think of it, the technical term is called syndication, but think of it like this. Instead of you going out and buying a two unit property and me buying a two unit and five other people buying two units and having to manage them all themselves, we all get together. One group is going to take the lead, we’re going to find it, we’re going to manage it. We’re going to put in all the professionals, we’re going to hire contractors, hire property managers, we’re going to oversee that.

Everyone else is just going to invest. So their work is selecting the right groups to invest with, reviewing the deals as these opportunities come up, and making a decision on whether or not they want to invest. We still have all the work and responsibility but because we’re buying these larger properties, there’s more money going around so we can run it like a professional business. And keep in mind, with my background, this actually works way easier because we’re now talking about cash flows of millions of dollars as opposed to tens of thousands of dollars or $100. So I can pay a full time property manager to work on site, I can pay a full time maintenance tech to be on site to handle repairs and issues that come up. We never have 0% occupancy. Our occupancy typically, on the low end is around 90% or so, but typically it’s going to be between 90 and 95%.

Some properties it could be a little bit lower depending on the stage of renovation. But the point is, it’s more predictable. When you’ve got a two unit, your property is either 100 full, 50% full, or 0% full or zero. That’s it. Those are the three options. So when you’ve got a hundred units, you’re typically going to be, again, someone that 85 to 95, typically 90% to 95% range. So you can predict your cash flow and it’s a little easier to manage that and project out what you’re going to need operationally.

You’re going to have a similar amount of repairs that come up based on that so you’re not going to have as many surprises. So for us, it’s an easier way to manage, it’s more professional for our investors, it’s more predictable from that standpoint, and it’s how we work with our investors today.

A.J. Lawrence:
Someone’s looking to invest, is there typical terms? Like I’m very active in that, I’ve funded searchers and I’m also looking to acquire. And there’s typical, there’s some variation, not the two in 20 that you see in VC and in some of the private equity space, but variation that is pretty typical of the investment and then theres just some fudging depending upon the opportunity and the person you’re backing. In real estate like a syndication, so lets say, okay, I know you’re going to be the general partner. I’m impressed with what youve done. Would it be a safe assumption to say, oh, there’s a general financial structure of how that works, or does it change? Do you have to go into the details? Where should I start looking at whether it’s a good investment or not to invest in your syndicate? And maybe also generally, where should someone think about from public REIT? REIT, I always say it wrong, versus going to a syndicate. Like is it 50k, is it 25k? 100k? Where should someone start looking if you have this money to invest from something safe and like traditional to a more advanced structure?

John Casmon:
So, yeah, you said a word there that I don’t include in my vocabulary when it comes to investing. So I don’t think anything is safe. So I’ll just throw that there. So there’s different degrees.

A.J. Lawrence:
Yeah, no, no, I don’t mean safe.

John Casmon:
I know what you meant.

A.J. Lawrence:
You’re right.

John Casmon:
I know what you meant.

A.J. Lawrence:
I don’t mean it that way.

John Casmon:
But I want to be clear for the listeners.

Every investment has a level of risk. And the reason I bring it up is I do think it’s important to be very mindful of how you evaluate risk. That’s ultimately what you’re getting at, right? Is like, how do I evaluate deals? How do I assess the amount of risk in this opportunity versus that opportunity? So one, I would say you want to start with understanding your own goals. Just because a deal is a “great deal” doesn’t mean it’s a great deal deal for you. I think too often we get caught up in numbers and metrics and what someone else is looking to do. What are you trying to accomplish for you, your family, your investing goals? Make sure you are clear on that before you start investing. Very often you’ll see someone invest and they realize this actually does not help me get to where I’m trying to go. And now they’re trying to refigure out like, okay, let me reconfigure my whole investment portfolio or how much money I’m deploying here or doing that. So one, just get clear on what you’re trying to do. And you don’t have to have every dollar allocated in that clarity.

But if you’re trying to reduce your tax liability, you want to just diversify from the stock market, just figure out what it is ultimately you’re trying to do. When you mentioned, REITs certainly have a purpose and value. I think REITs are more like a stock than actually investing in real estate. You don’t get a lot of the benefits of owning real estate that you do in a syndication. So in a syndication you are a part owner of the product of the company so you get the same benefits of owning the real estate, again, without the headaches of having to be a landlord yourself. So that’s one of the perks that people really like about investing in syndications. When it comes to deals, there are a few things that I’m looking at. One, I’m going to look at stabilized cash flow.

I think that’s a really important metric because it lets you understand how the property will perform. Sometimes, you’re going to buy a property, and what we like to do in our deals is we buy a property that’s cash flowing but has more potential. Just like again, any investor, right? We want to go in and create a business plan so we can increase the value. Whether that’s through renovations, operations, whatever it is. So that’s what we’re going to bring to the table. And then we want to look at that stabilized cash flow number. And that’s one of the metrics I tell our investors to pay attention to because that’s going to tell you kind of the strength of the asset and the opportunity.

We also want to look at the downside. Okay, we’re looking at the market, we’re looking at the competition and rent for other properties in the area. We’re looking at new developments, new construction, other constraints that may hinder our ability to explain. So we’re paying attention to those kind of things. And then the last thing is the numbers, the projected IRRs. And the reason I say that is novice investors quickly scroll to how much am I going to make? And these are projections. And some people are going to be bullish in their projections, some are going to be more conservative in their projections.

What I’m trying to pitch into when I’m investing passively is who is the operator? What’s their track record? How much experience do they have? And then when I’m looking at the deal specifically, I want to understand and assess certain levels of risk. I don’t like high crime areas for myself. I don’t like those challenging properties to operate because I think there’s just a lot that can go wrong, particularly when the economy has, if you’re renting to folks who live in paycheck to paycheck or rely on government assistance or things like that, it’s very tight for them. I mean, a $20 increase means something to them versus if you go more into our working force, where they have a little bit more cash, they’re renting to save to buy a house, or they’re renting because they’re more transitional, they can afford that a little bit more. On the higher end, on the luxury end, I think you have a different set of circumstances, right? Because these people can leave at any moment, buy a house or move and get a new job in New York, or there’s a condo development or brand new luxury apartments that you’re competing with. A lot of different aspects there. We really like the B class, we call it B class, but it’s basically workforce housing. So think about your teachers, your police officers, your firefighters, like your working professionals who have a good paying job. They want good quality housing.

A.J. Lawrence:
Right above low income housing.

John Casmon:
Absolutely. So that’s kind of where we play. As an investor, I think it’s important for you to develop your own investing thesis. What do you like? What do you not like? And go from there. So we’re not going to make as much cash flow as if you were to play on the lower quality of apartments. We may not have as much demand on the upside of rent or even on the back end as those luxury apartments. But we focus on a blend of the two consistency. We want a good cash flow, stabilized cash flow.

We want demand where there’s people who want to live there, investors who want to own this property. We like a nice blend of the two, and that’s how we invest.

A.J. Lawrence:
Very cool. All right. Well, first, let’s talk about where people can find out about how to invest with you or learn more about what you’re doing as your syndicates and stuff. Where should they go if they’re interested in learning more?

John Casmon:
Yeah, so I think the easiest thing is we actually have a sample deal and the follow up to that is seven questions to ask when evaluating a deal or an opportunity. So if you want to check that out, you can go to casmoncapital.com/sampledeal. And I think the key here is just starting to wrap your head around this. You know, for many of your listeners, busy entrepreneurs, they don’t want to take on a new job of trying to learn real estate or learn a whole other asset class. But if you can add this to your portfolio, reduce some of your tax liability, diversify some of the things you’re doing today, it could be a really nice addition to what you’re already doing. But you got to wrap your head around it. So this sample deal, along with the seven questions to ask, I think does a really good job of helping you to wrap your head around investing conceptually. And from there, if you have more questions, I’m happy to hop on a call, get you added to our list and go from there.

A.J. Lawrence:
Cool. We’ll put that in the show notes and in the email about it and make it easy enough to find. And now tell us about how our listeners can listen to your podcast.

John Casmon:
Yeah, Multifamily Insights is available anywhere you listen to podcasts. The show really gets on everything it takes to be a successful multifamily investor. Whether you want to be active or whether you want to be passive, questions to ask, things to look for an operator, things on a deal, all those things we talk about with other operators, investors, and industry professionals. So if you want to learn more about the current state of the market or really just wrap your head around multifamily, it’s a great opportunity to do that. Again, you can check out Multifamily Insights on Apple Podcasts, Spotify, or anywhere else you listen to podcasts.

A.J. Lawrence:
The great little places. I make fun a lot of like the clickfunnel world with all these offers like, we’ll show you how to do it, we’ll do it with you, or we’ll do it for you. But in a sense, this is what you have. And I don’t mean to equate you with that world, but it’s like, look, if you’re curious and you’re listening to this podcast and you’re curious about real estate investing, I have been going through his podcast and the guests. I mean, I don’t even know where to start. So I want to tell you, I won’t do that. You can go talk to John and John will give you the curation of how to explore this. But the amount of information of just understanding and the amount of times I actually had an AI summarized a bunch of your podcasts just to give me some good, you know.

I was like, wow, this is so cool. But if you’re really just more like, look, I’m interested in investing and this is not an area I wouldnt mind being a better investor, but not in the real estate world. And I jokingly say that because I have a brother whos in the space and there are times where the conversation is so esoteric and I’m like, its like me talking about HTML back in the day. It can get kind of like, okay, okay, yes, we know you have a hobby. But you can also go to John’s investment group and check this out and kind of explore this from a more pure investor point of view. You have the two paths to kind of take yourself on. So go check out the Casmon Capital Group and we’ll have the link down below and his seven questions. And then obviously listen to a few of the podcasts and start your journey into better understanding this.

John, thank you so much for coming on today. I really appreciate it.

John Casmon:
Absolutely. A.J., thank you very much. Definitely enjoyed our conversation today and look forward to staying connected with you.

A.J. Lawrence:
I do too. You’ve given me a better understanding of some of the ways to look at real estate. But also just as what I always love about businesses, hearing someone talk with passion about their space and what they’re doing always clicks ideas around what I do and what I’m looking at. I think that’s the best part about talking with people in business no matter what, is if you find people are passionate, they’re going to be looking at problems or opportunities or things, that just slightly, that you’re having in your own world. And you just gave me a bunch of things that I’m going to start exploring and looking at myself. So this was a lot of fun. Thank you.

John Casmon:
Absolutely. Thank you.

A.J. Lawrence:
Hey everyone, thank you again for listening. Please, like I asked earlier, sign up for the newsletter, go to the site, or better yet, if you enjoy today’s episode or you know someone who’s interested in investing in real estate, share this episode with them and ask them to subscribe both to John’s podcast and to our podcast. And they get two great podcasts to listen to, but nonetheless, thank you so much and I can’t wait to talk to you again soon. Bye-bye.

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