Jim Lee: How To Acquire 600 Units In 2 Deals

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How can you own 600 units in just 2 deals? This is the power of real estate syndication! In this situation you don't own them 100%, but it's a fractional stake in the properties. However, there is a lot of power in the economies of scale and the way the syndication is set-up and run. Meet Jim Lee, who was born and raised in Taiwan and came to the United States at the age of 11. He graduated with a degree in Economics from UCLA in 2010 and began working as a sales rep with LoopNet & Costar, which exposed him to commercial properties. During the COVID lockdown is when he began to explore ways to scale his real estate investment business more quickly and discovered syndications. He formed Formosa Investing and acquired 600 units in Florida, along with other general partners on the deal. Jim shares why syndications are such a powerful asset to investing in and how you can get started in your journey today.

In this episode with Mike Swenson, we discussed: 

• Importance of having multiple streams of income and how to do it
• What piqued Jim's interest in Multi-Faqmily Syndication?
• How property management issues can lead to value add opportunities on large properties
• How you are in control of appreciation in real estate investing when purchasing large commerical properties
• How the people that surround you affect your cash flow
• Why Multi-Family is one of the best, safest, and most stable assets you can invest in
• How successful people read like crazy and involve themselves in top networking groups to grow their sphere

Timestamps:

0:00 - Intro to Jim's Career
3:19 - How Jim Discovered Syndications During The COVID Lockdown
6:37 - How Jim Found His First Two Deals
8:35 - Value Add Opportunities
10:14 - Criteria For Picking The Right Location
14:13 - Assembling A Real Estate Team
16:15 - The Future
18:50 - Keys To Personal Development and Networking
23:33 - How To Find Jim

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Full transcript here:

 Mike Swenson 

Welcome to The REL Freedom Podcast where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson. Let's get some real freedom together

Mike Swenson 

All right, welcome everybody to another episode of The REL Freedom Podcast where we talk about building time and financial freedom through different opportunities in real estate. And today, I'm so excited. We've got Jim Lee here, and Jim is going to share his story by coming to the United States from Taiwan at age 11. Graduating from UCLA working as inside sales for loop net and costar which, for folks that might not be familiar with that they handle like commercial property listings, and then got into real estate syndication. So right now, you are the founder of Formosa investing, and you have about 600 units of properties.

Mike Swenson 

And we'll talk more details about those properties over the last couple of years. And really looking to gain financial freedom. You saw the opportunity you had a little a little time as a real estate agent, were exposed to syndications and all the positive that it syndications can be and that's where you're at today. So excited to chat with you about your journey. So welcome, Jim, thanks so much for being on the show.

Jim Lee 

Thank you for having me, Mike,

Mike Swenson 

why don't you just go ahead and give us that background? You know, how you got in what you kind of learned along the way and kind of take us to today and where you're at?

Jim Lee 

Yeah, sure. So, like you mentioned, I graduated from UCLA with an economics degree back in 2010. From there, my very, very first corporate job was working out loop net costar as an inside sales. I learned pretty much everything I needed to learn about real estate by talking to you know, age real estate agents, property managers, lenders, investors on a daily basis. And, you know, I learned the importance of having multiple streams of income just talking to investors, you know, picking their brains, and eventually I got into, I bought a two bedroom, one bathroom condo, Ontario, California. And, you know, ever since I got that passive stream of income, I was pretty hooked back on real estate, it's

Mike Swenson 

fun knowing that you've got the income coming in assuming that cash flows, although some people don't always have the an investment that has cash flow, but you've got the depreciation benefits, the tax benefits, your mortgage is getting paid off. And it's like you look at, man, I can, I can do this. And I see all this financial benefit that's coming about.

Jim Lee 

Absolutely. And that pretty much leads on leads to why I got into multifamily syndication, right. Because multifamily, you know, it's scalable. You can use, like you mentioned it's you can use leverage, you know, when you leverage an investment, you reap the benefits of appreciation on the total asset value, while just having a small percentage of your own money in the deal. Now, on top of that, you know, there's a cash flow, you mentioned a man affordability issues that we have right now. And most of all tax advantages.

Mike Swenson 

So talk through your journey of being exposed to syndications. I know, during the COVID, lockdown, you had some time where you're able to do a little bit more research. And for those people that maybe haven't heard about syndications, or they've heard about it, but maybe haven't pursued it more kind of what was it about that? Or what were some of the specifics that you learned that really helped you to get excited about that?

Jim Lee 

Yeah. So I started with syndication, I believe it was, like you mentioned in lockdown. And the reason why is because during long I was a real desert during lockdown, and I couldn't host any open house. And that's the most effective way of finding leads. And so since I was stuck at home, doing absolutely nothing I had to find, I had to figure out a way to make money with real estate because, you know, there's hundreds and 1000s of ways of doing so it's just, you know, I was just trying to explore my option. And so what I did was I just went on YouTube, I started listening to podcasts, and I came across one of my investors, he introduced me to this podcast show called the real estate guy radio show.

Jim Lee 

Run by two fine gentlemen. And they've been doing real estate syndication for 2030 years. And on the show, every every episode, they always pitch about syndication. So that's when I discover about syndication because I didn't know what syndication was, you know, what is it's a never heard of this term before. And they always pitch about how, if you want to do bigger deals, you just you just have to syndicate it. So that piqued my interest to really want to study and learn more about it. Because, again, going back to what I said earlier, when you focus on multifamily is scalable, right, well when you focus on syndication, it's also more scalable because it requires partnerships. I mean, you can do everything on your own, but you're it's gonna take forever. And it's a lot of work, it's just a lot easier when you are able to find potential partner that can help you along the way to build your syndication business.

Mike Swenson 

Yeah, I, you know, I've talked about it in the past with people and what I really enjoy is, it's kind of the the best of both worlds because the people that have the time and the energy to put together the syndication are utilising their expertise, to be able to put the deal together, work out the management workout, the plan, what do we want this to be in the future, and then you have the people that have money, and don't have the time and the energy to become an expert in real estate. And they're just looking for a place to put that money. And so it really is kind of the best of both worlds, you, you get to share your skills and the abilities and what you bring to the table, and you need money.

Mike Swenson 

And people with money want to be able to, you know, invest with people they know, like and trust and, and are going to take good care of it. And it's really just putting that together versus, you know, an investor trying to, you know, research condos in Los Angeles and try to figure out, well, what's the best neighbourhood? What am I going to do? And if I have a condo, and I rent out the one unit, but then you know, the lease is done. Now I've got a vacancy. Here, you're talking about things at a much larger scale, and you have 100 units, and you might have 5% vacancy, we used to have 95 people paying their rent that month. And and so it's yeah, just an economies of scale. That's very beneficial.

Jim Lee 

Absolutely.

Mike Swenson 

Talk about kind of the the two deals that you've done, maybe in terms of researching markets, like what is it about the markets that intrigued you? What was it about the deals that intrigued you the process of kind of putting that together?

Jim Lee 

Yeah. So you know, to kind of piggyback what you just said earlier, it does require you to go out and find potential partnerships. And when you're, when you're scaling, when you're trying to close 100 Plus unit apartment building, there's a lot of things behind the scenes that goes on, you have basically have to have a good property management company set up, you need to find, you know, establish strong relationships with real estate agents, brokers and lenders. So, what I did to syndicate my first deal, I knew that there was a lot of missing pieces of puzzle that I needed to I need to help with, you know, to fill in the spot. So I knew that the type of value I can add is by bringing capital so now I just need someone else with track record of success experience and everything I just told you about.

Jim Lee 

They've established strong relationships and the markets are I'm looking into. So I met my business partner at an event called Investor Summit run by the real estate guy radio show. And him and I we decided to syndicate our first deal in Florida because he had good, really good strong connection with a lead sponsor out there. Orlando and he's been doing it for 2030 years and through so basically, through my business partners network, I was able to find this deal. And the specs we look for is pretty straightforward. We just look for Class C apartment building value, add it typically it's a five year hold. Yeah, so that's, that's what go what, what would it entail what the deal entails for both the property that you're syndicating in Orlando and Jacksonville?

Mike Swenson 

Now when you're looking at you know, talking about value add is it there's vacancies and we need to change property management to fill it is it rents are below market and we're gonna raise it to market is that we're gonna do, you know, a pretty heavy rehab to be able to increase the rents What are you kind of looking at in terms of value add opportunities,

Jim Lee 

anything you anything you listed above? If there's, like the first I'll use my first project as an example in Orlando. It's poorly mismanaged, right? You can clearly tell the rents was not up to date. The building's not, you know, they haven't renovated, put much more much work into it. They haven't add much amenities. There's now even a gym inside the 200 unit complex. There's a pool. So there's like there's a potential Right. Um, so there's this, I think, I think mainly, when we see potential for value add is definitely a management issue. Though seller he lives he also lives in California, but he doesn't have anybody boots on the ground in Florida. And that's a problem. You know, that's and that's, that's where we saw a big potential and we were able to pay, you know, a little bit over the market value for it.

Mike Swenson 

Now, when you're putting together numbers, this is probably where an economics degree comes in handy. Being able to look at numbers and financials and that sort of thing, but st came through, you know, hey, here I am in California, I'm investing in a property out of state, a state that's quite a ways away, feeling comfortable with kind of that market of where it's located within Orlando. And obviously, we know there's demand in Orlando, Atlanta is a great city. But in terms of picking the right property in the right location, talk about kind of doing that research to choose, you know, what, this is the right opportunity here, even though you're you're living in California.

Jim Lee 

Yeah, I mean, it's pretty straightforward. I think the main thing that we tell because most of our investors are from California, and this is something that most people probably don't know is that for everybody who invest in California, they've pretty much made money on appreciation, right? Not not so much on cash flow. So with these investors, they typically like, since they made money here, they just, they want to continue to invest here, they don't want to go anywhere else, you know, so. So it was a bit of a struggle, you know, to convince them. But the criteria that we typically look for is pretty straightforward. It's just, you know, population growth, job growth, landlord friendly, that's very important, because during lockdown, I've seen a lot of my investors get screwed.

Jim Lee 

Because of eviction moratorium, tenants can literally live there for a year and not pay rent. And, you know, you can't do anything about that. And that's what made us made us think about our investor, you know, you always have to look out for the best interest of every investor. At the end of the day, that's what it comes down to. So that's why we pick those markets. It's more it's landlord friendly. It's not, you know, and, you know, during lockdown, Florida was completely open. So that says a lot, you know, there's, that's, that's, and then another thing, Sunbelt, we look for some Bell state, you know, anything that has, that's it's such a sunshine state. That's typically where people like to move to.

Mike Swenson 

So what you're saying is, you know, during during COVID, there wasn't a lot of interest in looking in cold, cold, Minnesota versus warm, warm, sunny Florida.

Jim Lee 

It just depends. I mean, if, if Minnesota has growth potential, I've got a couple of investors who has investment properties out there. So I think any markets is better, better than big cities these days. Like, you know, if you're talking about New York, or California, it's just hard to make to cash flow and market, your what you're playing is the appreciation game. And you know, it's not, I mean, any investment is not guaranteed, but playing for the appreciation alone. It's, you know, during downturn, you just make sure that you have enough cash reserve for that?

Mike Swenson 

Well, I think that speaks to to, you know, investors have different preferences. And you know, that's the thing, you know, having worked with investors, myself, you really realise that they have a certain profile of types of properties, types of returns, situations where they're more excited about something I know it's free. If you're not in real estate investing, it might be hard to grasp that because some people are like, Well, what, what's the numbers and it does come down to the numbers. But it also comes down to interest in a deal. And when I work with somebody buying, you know, a duplex or a four Plex, I could put two buildings that are similar, have similar returns next to somebody and one of them, their eyes light up and one of them, they're just kind of like, Yeah, I'm not really interested in that. And so it comes down to Preferences.

Mike Swenson 

And yes, some people might have want a little bit more cash flow some way might want a little bit more appreciation, some might want a shorter time window, some might like a longer time window. So it's really kind of playing that matchmaker where you're looking to match that investors preferences with the goals of that syndication are of that investment, and you're just trying to find a fit, because they're going to be happy if it fits within their criteria. But if you're finding something that's not a fit for them, they're just less excited about it. And they might pick apart, you know, things that go wrong versus seeing the bigger picture.

Jim Lee 

Exactly. Yeah, I can't, I can't agree more with that.

Mike Swenson 

So when you're putting that together, for those that don't know, on a syndication, you kind of have two sides, you have a GP side and an LP side, the the general partner side are the ones kind of managing it. And then the LP or the limited partners, they're the ones putting the money in. So talk about assembling a team and how that worked out for you guys.

Jim Lee 

Since I just started syndicating. Typically how I find my capital is through family and friends first, and then from there, kind of ask for referrals and so forth. The GP side of it. It's mainly well let's focus on LP first. So besides finding friends and family, I'm just trying to put myself out there, you know, to see you know, being on this podcast with you writing newsletter writing ebooks, going out to events, creating my own community for to network. That's what I'm working on. That's how I find my investors. In terms of general partners, that's just, again, that's all comes down to go put yourself out there and network with people, right? That's how I found my business partner. That's how my business partner found the least sponsors for our deals. You know, just being being being involved in the networking component, but also join mastermind groups, you know, invest in yourself, put some money in it into joining a group with, you know, surround yourself with like minded people, and eventually, you're just gonna have deal flow coming in left and right.

Mike Swenson 

Hey, Mike, here, are you a licenced real estate professional looking to grow your career faster and further with a team of like minded people on an investor focused real estate team, no matter what state you live in? Are you looking to up your game and work with live existing database of current real estate investors all over the United States looking for deals in your state, we're looking for great agents across the United States to join us on our journey to build wealth together and help investors together to learn more fill out our form at elite advantage agent.com. So what types of deals are you looking for, in the future kind of the same criteria of what you what you have now? So we should add? I can't remember if you mentioned that, you know, one is a 400 unit, and one is a 200 ish unit. So these aren't small deals. These are big deals that take a lot of capital. But in terms of, you know, the future, what are your What are you looking to do?

Jim Lee 

Yeah, right now, I like to just focus on multifamily. I want to be able to get really good at one asset class before I branch out. I mean, I don't I'm not opposed to doing everything. I've seen a lot of syndicators nowadays, they do ATM car washes and storage units. But I think, you know, multifamily is probably the best, the safest, in my opinion is the most stable asset you can get yourself in. That's something that I always tell my investor look like it because they always asked me what are the chances of this failing? Well, you know, I would say point 4%. Because back in 2008, subprime mortgage crash, you have like what 4% Single Family residents that go into foreclosure, but only point 4% of multifamily went into foreclosure. So you know, you can't get any more stable than that. So, you know, I think to start off, to build my investor base, that's how I would approach it. But eventually, that definitely, I'll branch out to other asset class,

Mike Swenson 

I see the value of doing something really well, and continuing to hit the nail with a hammer over and over again. But I agree there's other opportunities out there. But if you can get really good at mastering that asset class, you're going to find better deals, you're going to recognise better deals, you might see opportunity where other people don't see opportunity, because you can be creative with that. And yeah, there's there's ATMs and car washes, that you can invest in down the road. And yet, you can start with getting really good at exploring your multifamily real estate. And we know that there's housing shortages, you know, most places where you go, we're not building new homes or new properties fast enough.

Mike Swenson 

And yet at the same time, you know, with with offices, you know, that's my own personal opinion is it's like, that's, that's up in the air, right? Because you've got these large corporations, people working from home, and then people who specialise in office, you know, or industrial space are like, Mike, you're an idiot, like, everything's gonna be fine. But me, I know, multifamily. I don't know, office space, and so stick with what you're doing well, and continue to do it well, before you explore other options.

Jim Lee 

Absolutely. And I don't know what to add to that, you know, I would suggest reading the book one thing, right, it's focus on that one thing and master that one thing that can make you all the fortune you need. Talk a little

Mike Swenson 

bit about investing in yourself and personal development and, and networking, what have been some keys for you in terms of your growth and the relationships you've built? What are, you know, maybe some recommendations you have for people that that want to just grow in business, not necessarily in multifamily syndications?

Jim Lee 

I would say just, you know, read a lot of books. I mean, just look at all the billionaires they read like crazy. But besides that, you know, that I think the most important thing is definitely education, right? Educate yourself in any way. It doesn't have to be reading, it could be listening to podcasts, it could be going on YouTube, finding, you know, people with credibility. You know, resources are free, everywhere you go nowadays, it's like, there's no excuse for you not to educate yourself in the field that you're in. So I think that that's a good start.

Mike Swenson 

So outside of the one thing, is there other books that have landed with you as their, you know, maybe any conferences you've been to or any, you know, learnings from certain people that have been helpful for you?

Jim Lee 

Sure, sure. So, to answer the first question, And currently I'm reading this book, How to be a power connector. Should you rub net, it's basically, you know, how you teaches you how to, you know, focus on adding value within your circle of influence. And eventually what you're going to build a very strong network that you can just be able to reach out to anybody, you know, if you have any problems with anything, right? But you have to build that relationship over time, right, you have to always continue to add value. In terms of mastermind group, I would say just like I say, Go on YouTube, go on Google. And doesn't matter what topic you want to research about. And you just type in, let's just say real estate syndication, you'll see all these groups pop up research, go on their website, look, look, look at what kind of mastermind group they offer.

Jim Lee 

And then typically, these groups, they will offer like these, though, throw like a networking event, which costs like anywhere between 500 to 1000. To attend, attend one of those, right? These be around with the people who was offered, because chances are the people who goes to those networking event. They're also part of the mastermind group, right? So you'll be able to, you know, network with the people within the group, kind of get a feel for it. And then you know, just take it from there, you know, see which group that you decide to join. It does take a lot of due diligence, but it still be all worth it. And I think that's what you got to do if you want to invest in yourself.

Mike Swenson 

Yeah. And the beauty is, the more you learn, the better the more connections you make. It's really just putting together deals and people and you're just kind of putting those pieces together. And it allow you to do bigger deals, deals more quickly, not have to put in as many hours to find the right pieces. And so you're you're definitely setting yourself up for for a great future.

Jim Lee 

Yeah, yeah. And then also to answer your question, I sorry, I kind of forget, but I'm the group that use. Yes, I'm currently part of a group called Race master. It's run by Hunter Thompson. And basically, this is just the group just teaches you how to raise capital, Hunter Thompson group, this group grew from 100 people to 300 people in a span of one year. So there's a huge demand for it. But essentially, I'll just give you the quick overview. He just teaches you how to create a build a digital marketing platform. So instead of you hunting for investors, let investors haunt you by putting yourself out there all over internet OCAs webinar newsletter, ebook, website, you know, etc.

Mike Swenson 

I just gonna say this is literally sitting right next to me. Hunter Thompson raising capital for real estate. So he, he's kind of a guy that that a lot of people know when it comes to raising capital. So awesome. Well, anything more Jim that that you want to add and share with people?

Jim Lee 

Um, yeah. So if you want to get to know more about my personal story of all the mistakes I learned, learned as being a real estate investor and how overcoming these challenges, you know, created a path for me to become a real estate syndicator you can visit my website for more money investing.com on there, you can download the ebook and it basically talks about all of that, which is a very short to 20 pages read. And then you can also find me on all the social media links, you know, Facebook, Instagram, LinkedIn, almost investing.

Mike Swenson 

Awesome. Well, thank you so much, Jim, for coming on. It's exciting to see you know, somebody who's put together some some big deals pretty quickly. Definitely. If you have interested in learning more about syndication reach out to him. Just excited for you, Jim, and your future.

Jim Lee 

Thanks again, Mike for having me.