Shawn DiMartile: Air Traffic Controller To 500 Unit Investor in 2 Years
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Shawn DiMartile started as an air traffic controller in San Diego diligently investing in his 401k. Fast forward 2 years and he and his partners will own close to 500 units. How did that happen? He determined the "traditional" way to retirement wasn't for him, he put in a TON of hard work, he read everything he could about real estate, and he networked to find some top investors to mentor him. His first investment out of the gate was a 32 unit building in Indianapolis, IN which took a lot of work to get going for 3 guys with no investment experience to show lenders, yet they got it done. Shawn has now mapped out a plan to net over 600k per year in his investment business over the next 15 years. Learn more about his journey here! Shawn and his partners are also the hosts of "The Multifamily Takeoff" podcast where they discuss multi-family real estate investing.
In this episode, hosted by Mike Swenson, we discussed:
- Shawn is the host of the Multifamily Takeoff Podcast, and has quickly grown his business investing in multifamily buildings in the past 2 years
- When he got out of the Navy, he got hired by the Federal Aviation Administration to work as an air traffic controller.
- After his second full year investing in real estate they will end the year with just under 500 units owned
- When investing in commercial real estate, it's much different than residential because you're not able to put in criteria to search for like the MLS. You have to do more networking with people to find what you want
- Shawn was able to buy a $1.2 million property, despite him and his 2 partners not having that in net worth because they put together a strong business plan
- Shawn could probably go get another property similar in size to his first building, but he wanted to scale and go bigger next time, and they are actually getting a property right now that's 150 units.
- He learned the value of having a great mentor. They are going on deals together raising money together, and it's really more of a relationship that, he thinks it will be a lot more fruitful.
Timestamps
00:00 - Intro and overview on Shawn’s career
03:49 - When he buys his 32 units.
07:04 - How Shawn identify his properties
11:31 - How he began his financing piece
25:00 - What increments Shawn typically looking
28:15 - His process for his mentor
32:05 - What he wants to accomplish
40:04 - What advice can Shawn share with others
Links in this episode:
👍 Learn More About Shawn here: https://www.multifamilytakeoff.com/
👍 Listen to The Multifamily Takeoff Podcast: https://podcasts.apple.com/us/podcast/the-multifamily-takeoff/id1490657109
👍 Want to invest with Shawn?: https://www.pac3capital.com/
👍 Learn about Tony and John Azar: https://maccvp.com/
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Full transcript here:
Mike Swenson
Welcome everybody to another episode of the real freedom podcast. And today we have a wonderful guest, we've got Sean D Martell here, and he's going to talk to us about multifamily investing. He's had a background as an air traffic controller and decided that to achieve his financial goals long term that wasn't going to be the spot that he was going to be in. So he took up some some multi unit investing. He's also the host of the multifamily takeoff podcast, and is just really doing a lot in the in the real estate space and to go from no experience to now having a lot of experience. He just has a wealth of wisdom to share with us. So thanks for coming on. Why don't you just take take a minute and give us a little bit more about your background.
Shawn Dimartile
I appreciate that. Thanks, Mike. Thanks for having me on the show. And I'm happy to provide whatever value I can to your listeners. But a little bit about me I started out I did, I served five years in the United States Navy, I was an air traffic controller in the Navy. So that's where I got my experience. When I got out of the Navy, I transitioned and got hired by the Federal Aviation Administration, the FAA to work as an air traffic controller. And I got was honestly my dream job is here in Cienega California at the exact facility I wanted to work at, which I didn't think was possible. So I was stoked about it. It's a great six figure job, the American Dream type of deal. And I thought to myself, when I first got that job, like right now I got to do is live work. And I have plenty of money to spend it as I as I want to.
Shawn Dimartile
And then it sort of evolved over time. And to me, you know, I was maxing out my tsp aka my 401k. And I had more money to invest. And what was really the catalyst is I met a buddy where I one of my good friends and old roommates was a real estate agent, love real estate and told me I should check out the BiggerPockets podcast. But one day, I was travelling with my girlfriend on a road trip and I threw that thing on and the rest is history. Because I was I was hooked. It was speaking to me it made sense. And I was hearing these stories of people being successful in real estate. So that really started this whole idea of investing outside of my 401k. And, without digressing too much into all of that I I started to really study what I was currently doing.
Mike Swenson
Wow. And to recap for those folks that don't know your story, when when did you buy that 32 unit
Shawn Dimartile
About that 32 unit in December of 2019. So not really that long ago.
Mike Swenson
Yeah. And that's amazing just to think about, you know, for those people that listen to this podcast that have been in real estate for 10 1520 years, and haven't invested yet. And a lot of times what we hear is I've I've always wanted to get into investing, you know, you've got as an let's just say you're an agent with 20 years of experience, you haven't dipped your toe into investing. And here we've got an air traffic controller that's leaping in a 32 unit complex in a state that you don't live in. And here we are less than a year and a half later.
Shawn Dimartile
So the both both of them were a traffic controllers with me. And that's kind of where all of our branding came into. So like you mentioned at the beginning, our podcast is called the multifamily takeout podcast. And so we kind of just incorporate all that, but we're all three of us. I say where traffic controllers because my partner rich has already quit that job, no technical job. But we all worked at the same facility here in San Diego, and the three of us connected just because of our passion for real estate. They already had small investments, like, you know, my cat, you know, four Plex, and you know, a couple small condos, things like that.
Mike Swenson
Yeah, that's it. That's amazing to hear. So, so talk about identifying those properties. You know, where did you start looking? And and how did that go from? Okay, now we've identified this is the property for us. And we're gonna we're gonna jump into that.
Shawn Dimartile
Yeah, so that was a long process. Because for a lot of reasons, so what the way we started, as we started from what we had learned on how to sort of identify certain markets for certain criteria. So we developed a criteria of we don't want to be in blue states, just honestly, in general, because they're going to have much stricter landlord tenant laws. So you know, we also wanted to be in places that were a little bit more affordable. So that kind of takes out all the coastal markets.
Mike Swenson
We want is where you live. So the familiarity of, Hey, I'm in California is thrown out the window.
Shawn Dimartile
Exactly. We also wanted to be in places that were had growth, but we're also not at the tippy top of that, where all of this competition was. So that took out places like Texas and Florida, I mean, Texas, if you try to get into the market there, you're competing against 30 4050 other offers. And if you're just not getting into the apartment business, it's way harder to get started. So we you know, that took out some other major states. And then from there, it was a matter of researching various cities, looking at their population trends, is it decreasing, stagnant or increasing? We would look at, you know, the jobs like what's the job makeup? Is it all one industry like Detroit was or do we have like a good mix, and so we slowly trickled it down. And we came up with a couple of markets. And the Indianapolis market was one of them where we felt like the pricing guidance made sense. And it made up met all our metrics, and we felt like we could get started there. So from there, you know, that was a month long process.
Shawn Dimartile
And then from there was contacting all of these commercial real estate brokers and starting to build relationships there because in apartments for your listeners that don't know it's a completely different game, you don't log on to Redfin and look for apartments, though they I have seen them on there that's not you know, where you're typically going to get them, right. And there is a sort of Redfin, it's called loop net, but that's where all the trash deals are. And everybody in this business knows that. The way that you do it in this business is you contact real estate mortgage or commercial brokers, and they have email lists, they literally email like, it sounds old school, but they will email out their deals and the properties that are being sold by their clients, to people that are, you know, whose criteria aligned with that particular asset, right? So in order to get them to send you the good deals, they have to trust that you can close on the property that you know what you're doing that you have the money, all of that stuff, so it's really hard to build that trust. So that was probably a that alone was probably another three, four or five months of working with brokers to get start getting deal flow. And then from there, it was months of looking at deals underwriting them. And till one day, we the deal that we got came across our desk and it made sense for us and we jumped on it
Mike Swenson
And what you said does does make a lot of sense. I mean, just in terms of looking at office space in the past for some of the other companies that I've worked for, I found that out too, in the commercial industry, because it's like, Hey, you know, we log on the MLS, we put in our criteria, bing, bing, bing, these are the 15 properties. And it's really hard to do that into commercial, like, it's more of who you know, and what they know, type of mentality. And it is, it's a lot harder. It's, it's not like I could just say, Okay, now I want to look in this, you know, this city and find anything under this amount of square feet. It's, it's just, it's not that way. And so that's where your learning curve is even harder. Because you do have to make those relationships, you can't just plug in the information and all sudden, I have MLS access, and I can find whatever I want and analyse it, you've really got to talk to a lot of people. So
Shawn Dimartile
Yeah, for sure it takes it takes a lot more work. It's it's kind of weird how it works that way, though, about it being a relationship business. But that, but that's just the truth of it. And they it I think trust is just one of the main things to because in this business, it's a lot harder to close on one of these deals than it is to somebody go buy a single family home, right. So I think that has a lot to do with it. But it's just a whole nother ballgame. Like it's it's a completely different business. So it takes a lot to learn how to how to get to the closing table.
Mike Swenson
Now talk about the financing piece in the beginning, you know, how are you able to pull that together in those conversations to get to where Okay, now you you're you're approved, and you can purchase this property.
Shawn Dimartile
That was probably the biggest hurdle that we had, aside from actually getting deals sent our way for because in commercial real estate, like I alluded to earlier, it's a lot harder to really do anything when it gets just just getting started. But to get a bank loan is very difficult. And that took a lot of convincing on our side, because typically the banks require that somebody signs on the loan that has a net worth equal to or greater than the loan amount. So in this case, we're buying a $1.2 million property, somebody needed to be sending out a loan with $900,000. In net worth, none of my, my two partners together didn't quite equate to that. Right. And in addition to that, they want to see experience, they typically want to see two years of multifamily experience by somebody signing on the loan.
Shawn Dimartile
So really, the it's the you know, in this business, typically people do they get a mentor, which we eventually did after we got this property, so that you can have somebody that that has the experience to kind of help get you started. We didn't have that though. So the banks, most banks said, No, we had a mortgage broker that was shopping us around to I think like 100 different banks. And the vast almost all of them said no, that they didn't want to do it, we didn't have enough experience, you know, we don't have the network, we don't have the liquidity. So we finally found a bank Bank of the West that has a really good relationship with our mortgage broker. So our mortgage brokers essentially package packaging up our BIOS and everything that they can about us to make us as attractive as possible to the bank. So we had to like come up with all these detailed business plans, they wanted to see our underwriting and our pro formas they wanted to see basically everything they they also wanted to see actual bids from contractors for the work that we were planning on doing because they just really didn't trust that we were going to be able to estimate that which is fine.
Shawn Dimartile
So we had to go the extra links before we even close to actually go and get you know, there was I was the person that did this I had to reach out to numerous different contractors get you know, concrete bids in place and then for that to the banks. So it took a lot of work. But eventually we got them to agree. We didn't get great turns on the loan. But I don't regret that one bit because To this day, we're gonna make quite a bit of money on that property. But we got it done so that you know anybody that's out there thinking they want to get into the apartment business key you know, hear me out and knowing that your path to success will be so much easier if you find somebody that's already in the business that you can partner with to get started because if he to it just from scratch, it's going to take a lot
Mike Swenson
You mean the banks didn't really like a couple of enthusiastically young guys they just didn't date take your word for it.
Shawn Dimartile
No apparently not man they apparently a couple air traffic controllers they just don't suspect will understand the business of apartment investing Go figure.
Mike Swenson
Well, and I think that's another thing too, as we kind of look at at character traits here that are important is your your relentless, and you're you're willing to put in the time and do what's needed to done which shows your level of commitment, you know, to buy a property of your size. You can't just say I'm really excited about it. And then you get told no once or twice like Well, I guess it's back to air traffic controlling you know, I'm, I'm done. You know, I got told no a couple of times you you pursued that and you worked really hard and and and showed that you're committed doing that, you know, so that then speaks a lot to it. So yeah, so what So talk to me then okay so you you you got your your unit what what needed to happen to it What did you guys do to fix it up and make it look pretty and to now where it's worth a lot more than it was when you bought it a year and a half ago.
Shawn Dimartile
So we joke about it that we basically bought a big pile of bricks because it's a brick building. Because just about everything need to be replaced, we call it was a distressed asset, which means that it was economically distressed. It was below a stabilised occupancy, I think it was right around 80% occupied or something like that when we bought it. The units were in terrible shape. The previous owner was basically a sophomore, if you want to look at it that way. She didn't take care of the property whatsoever. The outside needed a bunch of work, you name a component and in a building, and it needed to be read on this just make it easy. But the good thing about this property was that it was located in a really good neighbourhood. So we're talking to median household income around $60,000, which in the Midwest and just outside of Minneapolis, that's pretty good money, you can have a good life with that much. And for the median household income to be that the schools were all like top rated schools. It had really great population trends, the crime was low, it met everything that we look for in a neighbourhood.
Shawn Dimartile
So we knew that if we could just reposition the asset which in the apartment, Rhodes's basically means flip it, we can make a really good profit. So we went in and started with the interior renovations on the vacant units. And as units went vacant, we completely renovated them basically from top to bottom, new cabinets, countertops, floors, you name it. And then shortly after we got started on the exterior, so we've replaced all the windows, we've actually replaced all of the balconies. So that's two storey buildings. And all the second floor units have balconies, or decks or whatever you want to call it. And we tore them all down and rebuilt them all and poured all new first floor patio, concrete slabs. We replaced all the front doors, I mean, the list goes on. So that now when you drive by the property, the curb appeal is actually pretty nice. And there's still more work to be done. We're about to be replacing the roof. So we're going to redo the landscaping, we're going to reseal and striped the parking lot. So by the time we're done and another 12 months or so, the property is going to be worth about 1.5 million, well, actually about $1.8 million more than what we purchased it for. So
Mike Swenson
1, 1.2 or 1.3, you said you bought it for?
Shawn Dimartile
That's right 1.2 Yep. And we've put about, I want about $450,000 into it today, we're actually refinancing the property right now to pull a bunch of our cash back out, we're pulling out about a half a million dollars. And we're going to use that to then put most of it right back into the property to continue improving the value because we know that in another 18 months or so we can refinance again, and pull out all of our money that we initially invested plus a lot more. So that's that's what our plan is right now, it's been going really well, there's obviously been bumps in the road. But and for your listeners that don't know, the great thing about apartments is that they're not valued like single family homes. So if you're listening the show, so you're flipping homes, you know, are valued based off of comps. So you pull the comps on what recently sold in the last six months or so for properties that are exactly like that one.
Shawn Dimartile
And that's how you can kind of determine use that information to determine the value. apartments are valued like a business. So it's based off of the net operating income, net operating income noi. So it's To put it simply, the more money that the property makes, the more valuable the property's going to be to or even if the Kami or the real estate market softens, and prices aren't going up, or they even decrease a little bit, you can still increase the value in apartment complex, as long as you can increase the net operating income. So we've done that by renovating it so that we can raise rents, which increases the income, we've put tenants on a ratio, also known as rubs, which means that you Bill back for utilities based off of how many people live in the unit, how big the unit is, etc. And they get billed back for water, sewer and trash. So that's decreased our expenses. Also, you know, by and putting in all new windows and things like that has decreased the expenses. The list goes on. And now our net operating income is more than double what it used to be.
Mike Swenson
Yeah, and that's the interesting part of, of a building is there's so many moving pieces that you can just improve this part, this part, this part, this part, this part and slowly over time. Now you've you've made a drastic change to where Yeah, now it's it's worth 65 70% more than what it was in just 18 months and it's it's a much more attractive asset if you guys ever decided to sell it now because it looks Better, it's got better occupancy, and it's got higher rates. And so you're you're taking it's it's a, it's an entrepreneurial playground, it's a business within a business here, and you're just making that apartment complex business a lot more successful based on how it looks, the money coming in the tenants, the strength of equity, and then you can, you can flip it, or you can just hold it, which you guys are gonna do. Exactly. So how does that turn into? Okay, so now we've we've got a very nice, strong unit, you've got a good reputation. Now, you've got some experience, how does that work into the next step here? And eventually we'll get into kind of your long term plan here for financial freedom, which is why you're doing this. But But how do you knock down the next Domino.
Shawn Dimartile
So to knock down the next Domino and to scale up, it still requires us to, to bring in partners and to grow because we still don't meet the requirements that the bank is looking forward for larger properties, we could probably go get another property similar in size to this one, but we want to scale and go bigger next time, right. So we're actually getting a property right now that's 150 units. But and what we've done is we brought we've we have mentors now, john and Tony is are these guys are guys that have been doing this business for a very long time, I have right around 5000 apartment units that they own right now. And over the course of their career, I've owned over 1000. So what we do is we partner with them, and bring them in on the general partner side, and we split that with them.
Shawn Dimartile
And then they're able to sign on the loan with their balance sheet with their experience so that we can get you know, larger properties. So now we look for, you know, 150 200 unit 100 unit properties that have online lead on site, leasing staff, etc. And we're able to take it to the next level by syndicating. So if your listeners don't know what syndicating is, that's the term and the apartment world where these apartment operators like myself and my partners will raise money from investors who we know. And we'll pull all that money together to then go buy apartment complexes, really big apartment complexes, and then, you know, reposition them, flip them, essentially fix them up, increase the income, and then make cash flow distributions to the investors over the whole period of the asset. And then when they go to sell, the investors get a big check on that as well. So our investors get a great return and we're able to buy larger profits, and we split the profits with our investors. So it's really a win win for everybody. So the next Domino is syndicating apartment complexes, which we've started doing this year, and will just over time, build our portfolio as we find more and more assets that meet our criteria.
Mike Swenson
So for those people that aren't familiar with syndication, then can I choose? Let's just say, okay, hey, I really liked this guy, Shawn. I've listened to his podcast, he's phenomenal. I want to partner with him and his stuff. So I could specifically say I want my money to go to your company, or to go to the the syndication the properties that you have, just like I'm picking a stock, and I'm saying I believe in the value of this company, you know, essentially now that company is you and your partners, and I can put my money with you in what type of increments for those people that may not know.
Shawn Dimartile
Yeah, so that's exactly what you can do. The passive investor that's that where their work lies that the passive investor who wants to invest in an apartment syndication, the work they put in is vetting out the sponsor, the operators is a bunch of names for him, but betting betting guys like me to say like, Okay, which one do I like? Do I mesh? Well, with Joe, I like what he's doing his their track record, etc. You can find apartment operators like that, and then tell them that you're interested in investing and get in on their deals. Now, this is an industry that's very highly regulated. So typically, with deals, you know, with apartment syndicators, you have to establish a pre existing relationship to invest with them.
Shawn Dimartile
Because most properties are bought with what was called a five regulation d 506. b. sec offering. So the Securities and Exchange Commission has very defined rules for how that can be done, right. And so typically, you're going to need to know that person. So you'll have to, you know, hop on phone calls with them and, and get to know them, which you're probably going to do anyways if you're gonna invest with them. But that's usually a step that's required. But there are deals out there that are under a regulation d 506. c, where the operators don't need to know you. But in those cases, you have to be an accredited investor, which means that you have to have a million dollars of net worth, not including your primary home, or you need to make $200,000 a year the past two years with a reasonable expectation, you'll make it this year as well. So that's kind of like the different avenues you could take to invest in syndications.
Mike Swenson
And what type of financial commitments would you be putting in here is it you know, hey, I've got $10,000 I want to put in I've got 50,000 I've got 100,000. What kind of what increments are you typically looking for?
Shawn Dimartile
So typically, what you're gonna see is a $50,000 minimum investment with our investments thus far, it's a $50,000 minimum, sometimes you can find a $25,000 minimum, in particular with like a smaller asset, that's not as expensive. And the reason for that being, is that, first of all, if you're raising money from unaccredited, investors, which most people are going to be, right, they're not going to meet that million dollar net worth, they're not going to meet the $200,000, income threshold, things like that, you're limited to 35 of those people. So you got to think if you're only raising money from 35, unaccredited, investors that only invest $50,000, you're not gonna be able to buy very large apartment complexes, right.
Shawn Dimartile
So you have to set some kind of a minimum, and try to get a mix of accredited and non accredited investors to raise you know, a simple amount of money, whether that be three $4 million, that you know, to get these kind of properties. So there's, that's one of the reasons and it's also very expensive admin, and then on the administrative side, to do the syndication. So for example, we just paid $15,000 for our attorney fees for the syndication, and there likely is going to be even more fees going to go along with that. But everything from front to back is way more expensive than a single family home. So if you're only raising money, you know, $10,000 increments, you got to raise money from a lot of people, right. And you can't raise that money from unaccredited investors, and then accredited investors, if they had that kind of net worth of probably more likely to invest more anyway. So there's this fine line between trying to set a minimum where you can actually get people involved and try and you know, help your friends and family invest in a great investment, but also raise enough money, huh?
Mike Swenson
Yeah, you know, yeah. And it's nice, because then, for somebody that doesn't want to be involved or doesn't understand things quite to that level, yet. It's a great way to say, Okay, I may not know what to do, but Shawn does. And so I'm going to link arms with you and essentially experience the benefit of all of your hard work. And I get to be passive in that and receive my, my investment without having to be the one to figure out okay, now, where in Indian, are we going? Or, you know, which building are we picking? I don't have to worry about that. I just say, here's my money, I trust you go, go make me some more money.
Shawn Dimartile
Right, yeah, and you don't take on the risk either, because you're not signing on the loan. So you know, the guys that sign on the loan, they're on the hook for the loan. So if something goes wrong, the banks coming after those guys. And you don't have to, you know, meet all these requirements I talked about and learn how to operate an apartment complex. So there are a lot of benefits to the passive investor, that they just get to sit back and, and enjoy the show and reap the benefits without taking on the risk and a lot of work. And it is a lot of work. I think that the anyone listening that wants to get into this business, I'm telling you, it's way more work than you thought it's way more work than I thought, especially just to get your business up and running for sure.
Mike Swenson
Now Talk to me a little bit about that mentor piece, you know, your your process for going and finding somebody that's going to sign on the dotted line for you. How do you find these people? Where do you look? What are those conversations look like?
Shawn Dimartile
Yeah, that's a really good question. Because I always recommend to people they find a mentor, but that is, admittedly not easy to do. Because there's a lot of different types of mentors. out there, there is the programmes, where you'll see a lot of these in the apartment investing world where, you know, a successful apartment investors will have basically like a little school that they develop, with, like modules, you'll go through and they have these coaches that they assigned to you. And it's basically like a little online university that they've made for apartments. And you'll pay anywhere from 25 to $50,000, typically for those mentorship programmes, and they're pumping out, you know, 3040 students at a time.
Shawn Dimartile
And in most cases, and then you have the individual mentor that, you know, as somebody that's in the business, that's they don't have a bunch of students, they just got you. And they're literally they don't have a predetermined curriculum. They're just speaking to you on a daily or weekly basis and teaching you the business and answering your questions and showing you things. I, myself and my partners were really attracted to the second example as opposed to the first, right. And we interviewed a lot of different programmes. A lot of those like school type programmes were interviewed, we interviewed most of the top ones. And what we didn't like was that most of the time, for example, like if you follow a particular apartment investor on a podcast or something like that, and you think that they do they great, like, I want that to be my mentor. Well, you go to the find out at their programme. He's not actually going to be your real mentor. He taught somebody else and is paying an employee to then teach what he taught them.
Mike Swenson
Yeah, they're selling a coaching programme.
Shawn Dimartile
They're selling a coaching programme which you know, it works for people I know people that have been very successful that have gone through those pro But you know, you're limited to, okay, you get a one hour coaching call every other week, and then you're going to do these modules and you can learn the business that way. But that's just not the way that it that didn't mess with my learning style and what I wanted to pay for it. So from there, it just, it just becomes Okay, well, now we've got to find somebody that we really liked, it would be open to that kind of a relationship. So we found ours from our podcast. So we had brought on to the show, john Azhar, and john and Tony are brothers that are apartment syndicators that have a really strong, you know, I told you about their portfolio already. And we had a great podcast with john and when we were talking, you know, kind of shoot the crap after the show, telling him what our position was looking for a mentor and how we're looking to grow. And john was just really impressed with us like what we were doing. And we had a good conversation about it.
Shawn Dimartile
And he said, Hey, you know, I'll go talk to Tony about potentially mentoring you guys. And long story short, and ended up working out, we had several phone calls with both of them. And we started the programme a couple months later, right in the middle of the pandemic, but that relationship is more of that one on one mentor mentee relationship. There's no you know, pre made material. And it's hopping on lots of zoom calls, being on text messages, calling them going and flying out there walking properties with them. So that's been how our mentorship programme has been, they also partner with us on deals now. So we're going in on deals together raising money together, and it's really more more of a relationship that, I think is gonna be a lot more fruitful.
Mike Swenson
Yeah, yeah, that's awesome. So talk about the financial freedom piece here, you know, you've you've got a fancy spreadsheet, you've got a fancy plan of what you want to do with your life and, and numbers that you want to hit. So, you know, I know, you know, the traditional 401k wasn't the way for you. And so you saw another plan to do that. So how do you see yourself knocking down these steps? And ultimately, what what do you want to accomplish with us?
Shawn Dimartile
So I, like you alluded to, I've done the math and a bunch of different times and a bunch of different ways on figuring out what kind of financial freedom I can actually achieve scaling this business. So you know, I did the math with the 401k, you know, that I was looking, okay, if I continue maxing out my contributions to my 401k, what's that going to look like at 65 years old. And when I saw it, it was okay. But when you live off of the 4% rule, which I won't dive into all of that, but if you live off of the amount you're supposed to live off at on your 401k. It's not as much money as you think, right? Do all your listeners out there, and I advise you to go check out and and and read more about that. But that wasn't the modest life, I wanted to live in retirement, I didn't want to keep saving until I was 65, just to have that.
Shawn Dimartile
So I did the math with my real estate. And if I calculated if I just bought the exact same property that I bought in 2019. So let's just say every two years, I go and buy the same size property or just the property with the same return. So the same cash on cash returns the same equity multiple, whatever return profile you might like. So as I mentioned, you're one we've owned the property for one year now. And we're refinancing right now and pulling out most of our money. And another 12 to 18 months, we're going to refinance again, when we're when we're completely finished with the property to pull out all of our money, plus a little bit more to then roll into the next property. So I just said, okay, when we bought that property, it wasn't a great deal. We just want to get started. So that's nothing like the best deal possible. So I said, Okay, being conservative if I if I just keep getting deals about like this, and every two years because refinancing after 12 months is not normal.
Shawn Dimartile
So I just said okay, we'll skip that. And let's just assume every two years, I'm able to refinance and pull out 50% of my money, which is half of what I'm actually going to pull up. Alright, so every two years, I pull out 50% of what I put in, I reinvest that into the next property, I keep getting my cash flow distribution, saving that up and reinvesting. Where will I be at in 10 years? Will I be out in 15 years? Well, I calculated that all i got it without reinvesting another dime, just starting with that original property and never investing any more money other than what that property makes by year 15. I will be reinvesting $1.2 million. And I will have over $600,000 in cash flow in my pocket each year. So that's,
Mike Swenson
You've got it, you've got the asset.
Shawn Dimartile
So if that's right, it's gonna continue right. Because what the 401k right you you've got a nest egg and you start selling shares, and that nest egg eventually runs out with my real estate. I make more money every year because of rents go up, okay. And I'm able to continue doing better with the property and building upon that so I only get richer every year with with real estate and that's 15 year plan sounds a hell of a lot better to me than my 401k plan. And with this plan, I have way more tax advantages as well. And it requires less of my time because I eventually I'm still working my w two job as an HR controller, but in due time, I'm going to be quitting. And I get to decide what I'm going to do with my time throughout that 15 years while I'm building that portfolio. So to me, that just sounded way better. And, as I alluded to earlier, we're already buying 150 unit buildings now. So that plan is going to be expedited. It's like way faster than that, that was a conservative plan that I wrote up. So I'm gonna blow it out of the water.
Mike Swenson
Yeah, that's awesome. So then talk about the the freedom of that, because, you know, just just thinking about lifestyle, what you want to do goals that you have in life, you know, now that's totally changed, because instead of how do I put a little bit in a little bit in a little bit in a little bit into finally be able to cash out at 65, or, you know, whatever that is, and now your whole world has opened up, because now you're sitting here looking, okay, 15 years from now, I could be making $600,000 a year, your brain flips, it flips a switch in terms of what's possible with my life, versus how long can I milk, this air traffic controller thing to hit the number now it's, oh, gosh, I could do all these things that I never thought I could do before.
Shawn Dimartile
Yeah, it's really just it's real estate, it's completely changed my life. Because of that. It's opened up new possibilities for how I want to spend my time, the kind of vacations I'm going to be taking over the next 1015 years. You know, we'll go into work. And most people could probably relate to this go into work, and even at a great job, like your child control. After a couple years of being at the job, you're just thinking yourself, man, I've got you know, you're counting down to retirement, you know, the people that have been there for a while they're like, yep, five more years, yep, 10 more years, whatever the case may be, now that I'm doing well, in real estate, that that thought process doesn't exist anymore, because I'm not going to have to do that. It's looking forward to every next year where I just continue to grow the portfolio, and I'm enjoying what I'm doing. I love investing. I think it's I think it's fun. It's exciting. So I think my entire life has changed. I don't have to wait now until I'm retired to think of enjoying life, I get to think about that so much sooner I get to retire early. So it's just a It's a whole new mindset that I don't even know how to explain
Mike Swenson
What are some other stories maybe that you can share, just in terms of things that you guys are working on right now. You know, what, what, where do you see yourself investing here in the next couple of years now, in light of what's happened the last year and a half?
Shawn Dimartile
Well, now we're going to be heavily investing likely in the Carolinas, North Carolina, South Carolina. And the reason being is my mentors, our mentors are so they have such a stronghold there, they own their own property management company that it just makes the most sense. And it's easiest to start building there, where we can be vertically integrated with their property management company, etc. And we're already seeing that this year with a lot of great apartment deals coming our way. So we're going to be building very rapidly over the next, you know, 1224 months. So that's, that's really what's on the immediate horizon. But I would say to your listeners, too, we've talked about all this, we've talked about my journey. One of the things I think I've learned through this whole process is the power of the mind and how powerful it really is. I used to think people saying that was really cheesy when you read those like coach, self coaching books, and things like that.
Shawn Dimartile
But all I want to say is when you're when, cuz I didn't make good grades in school. I didn't make great grades in college, I dropped out of college to join the Navy. I studied very hard for a traffic controller because I wanted that job so bad. But then I found real estate and I just kind of became obsessed. And I think that if you want something bad enough, and you think about it every single day, when you wake up all day long when you go to bed, and every day you're doing whatever you can to get one step closer, I really do think that you could do and accomplish anything. It just takes that absolute tenacity and obsession, though. So whatever that may be, it might not be real estate for somebody, but they'll find something that they're really passionate about, and that they want so bad, that they'll do whatever it takes to get there. And that happened to me with real estate. And it's just an absolute obsession to where my partners and I just do everything we can every single day and work every single day seven days a week on improving the business. So I think that anybody listening, if you have that kind of drive, don't worry about all those barriers that I told you about because you'll you'll find ways around them.
Mike Swenson
What advice would you give, you know, so if I'm listening to this now and it's like, oh, man, I've never really thought about multifamily to that level yet. Or maybe it's just I haven't thought about multifamily. Maybe I've only thought about you know, single family Like condos or whatever, what, what advice would you give to somebody?
Shawn Dimartile
Well, a couple different pieces of advice, I would say, you know, if you're if you're into real estate and you're not sure about getting into the multifamily, that's okay, find your niche and just crush it and that niche. I would also add to that, though, that if possible, do whatever you possibly can to go as big as possible as quickly as possible. Because the economies of scale are just massive. When you the large you go. To put it in a really easy way for somebody to understand, think about you buying that single family house or that duplex, whatever market you're going to be, and you're going to be spending I don't know, in Minnesota 200,000 something dollars for a house, maybe maybe a small house 100 something 1000.
Shawn Dimartile
Same thing pretty much anywhere in the Midwest, if you're in some of these other nice markets, even North Carolina where we're investing, you'll be paying 200 something 1300 $7,000 for a house, okay, just like when you go to Costco and you buy like a whole bunch of toilet paper rolls per toilet paper roll, you're spending less because you're buying in bulk, right? It's the same concept, we spend $80,000 per apartment unit. on that first apartment we bought, we spent about $30,000 per apartment unit, the $30,000 apartment units are renting out for 800 and something dollars right now, the $80,000 apartment units are renting out for almost $1,000 if you were to go rent a house in the same neighbourhood, you might only spend $100 more. So on a per unit basis, you're going to spend less and you're going to get more in rent, that's the key there. And the more units you get, generally the more economies of scale work in your favour, because now once you're getting into larger units will even like if you were to get a 10 unit, a property management company is going to charge you less because it's easier to manage 10 units as opposed to 10 separate houses they got to drive to right, once you get into the 150 unit plus your expenses go way down.
Shawn Dimartile
Because now I've got full time maintenance staff, I don't have to pay some electrician to come and fix the light bulb that charges crazy amount per hour, I'm paying that guy $40,000 a year. So the per hour cost is way down for me and I'm gonna have him you know, fix everything as needed. And were able to keep supplies on the property. I mean, just I could probably go down that rabbit hole and go on and on and on. But I would just say to keep it simple. The economies of scale is what's going to get you rich, and the bigger you can go, the sooner you can, the richer you're going to get the fast you're gonna get rich, to put it simply. Awesome.
Mike Swenson
So cool. So for those folks that heard your story, and it's resonated with them. How can they reach out to you How can they learn more about what you're doing?
Shawn Dimartile
So probably the easiest way there's a couple of ways you can go to our podcast website, the multifamily takeoff.com our website for like our syndications and things like that is called pack three capital calm and that's pa see the number three capital.com you can email me personally Sean sh AWN at Pac three capital calm and you can email me let me know you want to hop on a phone call and ask me questions. If you're interested in investing, whatever the case may be, don't be afraid to reach out.
Mike Swenson
Awesome. Well, thanks so much for sharing john. It's It's It's an exciting to hear about the ride you've already been on and it hasn't been that long. So yeah, very excited to see what's to come for you in the future. Thanks, Mike.
Shawn Dimartile
I appreciate thanks so much for having me on the show. I appreciate it. Awesome. Thank you.
