Earn More Money in Less Time in Real Estate, with Larry Abramowitz

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Larry Abramowitz  0:00  

I'm not going to buy just to buy a deal. I mean, I buy to make money and I'm putting, you know a lot of my money to play in these deals I invest with my investors. So I'm very patient. I mean, and I want to find the right deal, not just any of you.

Taylor   0:12  

Hey there, welcome to passive wealth strategies for busy professionals. Today, our guest is Larry Abramowitz. Larry is going to teach us about how he increased his return from his real estate portfolio, while decreasing the amount of time that he spends on managing his real estate portfolio. Not going to tell you about his history right now he's going to tell you about all that. During the interview, Larry's got a great story. 

There's a lot that we can learn from him both in the real estate world. And in the general business world. He's had a lot of success. He has a lot of education around business, in addition to his actual business experience, a lot of great lessons in this one today. Without further ado, here we go. Here's Larry,

Larry Abramowitz  0:57  

thanks for having me.

Taylor   0:58  

Happy to be talking with you, you. For our listeners. Can you give us a background where you came from and what you're doing now? Both in the business world and in the real estate world?

Larry Abramowitz  1:12  

Yeah, I'll try to summarize but I grew up in Costa Rica went to move to the United States in the 90s to study my Manufacturing Engineering at Boston University. Graduated went to work for General Electric and aircraft engines and appliances. After that I went for an MBA at Wharton at the University of Pennsylvania right before that, I had married my wife and she's Columbia. And so after I graduated from my MBA, we moved to Columbia and I was working there running a recycle paper factory we're making the paper to do corrugated boxes is by did that for about three years in Colombia and then we decided to leave Colombia around 2000 you know, the economy there was pretty bad there was some time there were security issues going on in Colombia, I mean, it was in now it's a complete different country, but it was a different time. 

So we decided to move to Miami and I started a flower importing and distributing business which I still have and we sell to wholesalers and supermarkets across the USA and Canada. And around 2014 I decided to I mean, I've always been involved in real estate but I decided to be more involved in real estate and started buying actively foreclosures In I started in Miami where I live I right now live in Miami, Florida and I started buying around my neighborhood some houses in foreclosure there were still some pretty good opportunities in in 2014 you know there was a lot of still need left in the bone on these deals I was buying out of the auction the court now it's online but I mean it was buying online houses that I found on the auction and just bought him and you know, started fixing them flipping them I kept some for rental you know, bought some commercial properties retail warehouse office or done a little bit of everything in that same apartments houses, so yeah, I've acquired and sold a bunch of assets that way. 

I mean, so then the market dried up. So I mean, that's what that's what happened around 2016 I mean, it was very hard to find any deals like that anymore. I mean, they were I mean a lower although foreclosures were already kind of bought out or they were selling at higher prices so they were they were not underwater anymore so that the market kind of

Taylor   3:56  

ended. Yeah, and then a year ago as well, we're recording this you closed on your first deal as a multifamily syndication sponsor, can you tell us the high level details of that property?

Larry Abramowitz  4:11  

Yeah, I decided to move to syndication 2018 because I was renting I was managing self managing all my properties and houses and apartments and I kind of got sick of dealing with the with day to day of the of dealing with the tenants and unplugging toilets and floods and you know, everything that goes on with a property which is normal. So I decided to go into something bigger, so I can third party manage and I have to be involved on the day to day of managing the property. So I started looking at hundred plus unit deals, Central Florida. And I was able to find this deal in Daytona actually through property manager that I was managing the deal. And he brought me the deal and in and out you know, he already had on their contract actually, while he said is if yet are under Li but he basically offered me to deal and said that, if I wanted the deal. I mean, price already negotiated and I could go for it. I mean, it was. So I he actually offered me two properties, one in Largo, Florida, and one in Daytona Beach. And I had like, a couple of days to make a decision. So I got in my car went to Largo. So one of the properties, then drove to Daytona. 

And so the other property and then robot coming, I think I drove I can't even remember, it was over 1015 hours driving, I mean, just across the state. But um, I decided to go with an atonal property. I just liked it better. I mean, it was a very attractive property with a lake in the middle garden style. And they had a lot of meat left on the bone as far as value UI deal. Well, you can remodel the units and get a big bump on the rent.

Taylor   6:06  

So as far as meeting this property manager, and him presenting his deal to you, did you build that relationship over time? Did he present that deal? The first day you called him? I mean, what did that process look like?

Larry Abramowitz  6:21  

I was looking at deals before that. And one of the deals that I was underwriting in, it was in Gainesville, I was interviewing property managers, and I call them and we started talking. And it ended up that they were managing some properties from other people in the flower business. 

And they also lose that kind of created some type of relationship. And they told me that sometimes they get deals under contract, and they work with investors like me, and if that when they got a deal that will let me know that about Nova was two weeks or a month later, they called me with these two options are these two deals and I mean, I basically took took one of them, I wanted to do both. But it was probably too much to do at the same time. So I decided to go to the square one.

Taylor   7:12  

That's smart to to not overextend yourself. Now and you mentioned your you made the shift from single family to multifamily where you can bring in an outside property manager, can you tell us about the time commitment, the relative time commitment between your single families and then now this multifamily hundred and eight unit property?

Larry Abramowitz  7:40  

Then what I found with the single family, even the stuff I bought very inexpensive in Miami, which I mean, Miami tends to be a pretty high price market. I was more in the Middle High End homes. I mean, even if you're buying right? weather insurance and property taxes, they eat up all your profit. That means we basically, yeah, you're paying off your mortgage every month. 

So that's, that's part of your returns. But as far as cash flowing, you barely break even or lose money in these properties. I mean, so you're holding for appreciation, which, in my opinion, it's a gamble. I mean, because you never know if it's really going to appreciate or not, over time it should long term. But you know, if you're buying and selling, you never know, you know what, When is that going to happen. But I end up spending a lot of time managing each house or apartment, I mean, I get phone calls, from a tenant a couple of times a week, usually, if it's not the AC, I mean, like, I'll give an example. 

So one of the houses I haven't been able to sell and I got a call this week from the tenant. You know, the AC wasn't working, then they got the the plumbing huddle backup in the house. So I have to get the plumber, I have to get the AC guy, then they had an issue with a shower. I mean, so you keep on adding and that mean probably spend 234 hours this week on that house, and it doesn't give me any cash flow. 

Wow, my honor in a unit property and have a phone call once a week for maybe an hour. Michael, another half an hour to property and other dangerous was EO things are going and then I visit maybe once a month or every two months, I go there and spend two days. But that's my involvement in I'm actually making, you know positive cash flow on the deal. And I'm also earning for managing the property and asset management fees. So I mean, I think it's up for me, it's a no brainer to switch to multifamily. I mean, it's it just from my experience,

Taylor   9:33  

the business case, the business itself works a lot better, a lot more smoothly for the person running the deal and multifamily. So that makes a lot of sense. But how about for the investors? I mean, you syndicated a deal. So you brought in investors, Are they friends that you've known along the way that you got to know at Wharton all those years ago? And you're still friends today? Or whatever look like? And is that the first time that you raised capital for any deals? Or were you self funded completely before? What did that all look like?

Larry Abramowitz  10:09  

there before I was self funded, except maybe a couple of my last two deals before that, where I, I got a friend to put some of the money. And it was basically an operating agreement, we're partners on the deal. And I was managing the deal, but they just invested in really, there were no fees or anything like that. It was more like, I needed money to close and just brought somebody into the deal. 

And they you know, it worked out well. But I started talking to people before when I decided to start syndicating I talked to some investors and friends about what I was doing. And then you know, when I had a deal on the contract, I really went full force and try to raise the money. I mean, that was really it was mostly friends and family. So yet, but it was the hardest part the syndication really raising the funds, especially when it's your first deal, even though I have a lot of experience in real estate and running businesses.

I mean, at the end of the day, they're the investors are trusting you with their money. And I think it becomes a it's all about trust. I mean, the, in liking the deal. I mean, it was it was a combination. But you know, they know me, and they trust me, so they feel comfortable giving me the money. And that's what it's all about. You got to earn their trust. And that's

Taylor   11:29  

hard to do to get there and someone's trust, especially when one doesn't have a track record. How much did you end up raising from investors for that deal? How many dollars was a four and a half million dollar raise by just the raise? And then what was the price of the property? Because I'm assuming you use leverage?

Larry Abramowitz  11:50  

Yeah, we leverage, it was $11.7 million. The purchase price, we raised four and a half. And we had to put in a cafe about another $700,000 that we budgeted for topics for the value of them doing some quick math

Taylor   12:05  

years at four and a half million dollars versus an $11.7 million purchase price to get that right.

Larry Abramowitz  12:12  

Yes.

Taylor   12:13  

That was a 38% raise was any particular reason you're going to closing costs and things like that. Did you? Is there any particular reason you didn't leverage a little bit more heavily? or What was your decision on your calculus related to the depth that you took on that the

Larry Abramowitz  12:32  

one is more conservative. And also the deal was, was constrained? I mean, the debt service coverage ratio was limited. I mean that for an agency loan to want to be a one to one point 25 debt coverage ratio. And there was the bank wouldn't lend more. I mean, that's pretty much that was a limit.

Taylor   12:54  

Get an hour. So very much driven by the numbers that you mentioned. You've had you have years of real estate investing experience. And we were talking before we hit record, that you've actually been investing in real estate for much longer than before 2014, you started buying foreclosures. You've been in real estate for many years before that. Can you tell us about some of your international real estate investing experience and how that's different from investing in the US and in multifamily?

Larry Abramowitz  13:27  

Yeah, it's, I've had experience in Colombia, Costa Rican Spain, investing. Costa Rica grew up. So my family had some real estate and I ended up managing those properties. And you know, probably the last, I would say 20 years I've been managing a lot of those rental properties commercial and residential. And in Colombia invested in 95. And development deal we're going to develop with we partner up like, by people to develop warehouses. At that time Colonia was booming, though Did you know that just tells you how things change it very quickly. But from 95 to 96, the economy took a victory and everything just dived. 

I mean, it was suddenly no demand at all for anything, and we got stuck with a lot. Well use it to park we actually got lucky because we use it to as parking space for parking trailers there. So at least we cover our expenses, we had a lot empty for about four years, just sitting there and a developer came up with an idea to do to do housing, low income housing, and he was able to, to turn around the deal. And so give us a very good return and after data we rolled the money into two of his deals. And he did very well, by the third time and didn't want our money anymore. 

He had enough but he was doing great. So that worked out well. But you know, that was just one of the experience I had in Columbia mean in one of the things you know, that you learn by doing real estate in other countries is that we we're privileged in the US with the amount of information we have on our computers, I mean, you just hit up on the internet and you can find out the comps, you know what sold in the area, you can go into the appraiser and get the taxes I mean, you can do everything from your computer or except seeing the property and seeing the market in person. 

I mean, so you know, in Latin America, you don't have that or in other countries or there isn't a lot of you know, you don't have co star you don't have Zillow, apartments, calm, I mean, all these things that we use right now to really quickly analyze a deal within there's nothing like that available. So that makes it a lot more challenging to know if a deal makes sense or not. I mean, you really have to be local, be on the ground and really know the market to, to understand that and invest in it. Yeah, that's that's really to me. I mean, there lenses of information availability,

Taylor   16:03  

information availability, that's a good point, it definitely is something that we take for granted. Have you noticed, as far as operating properties, operating the deals, any other stark differences between doing deals outside the US generally. And granted, those are the countries you've done deals in, outside the US, other than being Spanish speaking, they're all very different places. I'm sure none of these things are, are across the board. But operational differences,

Larry Abramowitz  16:32  

the main thing I've seen is how they protect the tenants, the tenant protection laws in some of these countries are absurd. I mean, people can have paid, they don't pay the rent, and that you can't kick them out. I mean, it's an added situation in in Costa Rica, where we had a tenant that took us five years, who, without getting a penny and rent to get him out of the property. Wow. appeals and attorneys enough Spain spending I'm talking in the hundred thousand plus dollars in attorney fees. 

I mean, in five years in court, we finally were able to kick him out. I mean, it's, it's the kind of things you deal with, I mean, it's very hard to, to manage properties in that type of environment. I mean, and I was telling before and you know, investor with a friend that lives in Barcelona, we bought he found building and foreclosure and apartment building, and we bought it. And the plan was to get rid of all the tenants and then sell it to a there's these developers, I'd like to take these old apartments and fix them up and, and then either sell them in like a condo conversion type of deal. 

And the same thing, you can't kick up, you can't kick out the tenants and one of you have to pay them off for them to leave and one of the buildings the last 10. And we we ended up having to buy him a new apartment and another building for them to move out of this one. But that's what it takes to empty out the building because a building empty will worth 50% more than one tenant. So it was worth to take them out. So I mean, that's the kind of things that you'll see in

Larry Abramowitz  18:08  

in some of these countries as far as 10 and protection laws.

Taylor   18:12  

Wow, that is incredible. You had to you had to buy them another unit somewhere else. Yeah, just so you could get the tenants out that deal. That is wild. So in your hunt for multifamily properties, what did you what are some other things you learned along the way looking for that property, as compared to when you were buying foreclosures? 

I mean, when you're buying a foreclosure, there are only a handful of places that have foreclosures. Whereas when you're looking for multifamily properties, there are brokers all over the place are tons of brokers how do you build relationships with them? And you got your deal through property manager, but I'm sure you're looking for more? What have you learned along the way, in terms of building that deal flow and getting those opportunities to make offers on?

Larry Abramowitz  19:04  

Well, one is to try to focus on areas. I mean, right now, I'm pretty focused on Central Florida. But there's usually three or four brokers that kind of move the market. So you end up talking to them almost weekly about deals are every two weeks. 

These are building a relationship, just by the consistent conversations on the deal flow. And I know and talking to them about the deals that you're they're sending you and you know, going with them to see the deals who just build relationships the more you talk to them.

Larry Abramowitz  19:36  

And eventually you hope to get some deals that are not listed yet.

Larry Abramowitz  19:40  

And hopefully be able to get better deals, because what I've been finding out lately that everything is listed, you can buy. I mean, there's always somebody willing to pay a lot more. I mean, when they put these things up for bid. I mean, it's crazy. I mean, the first round, second round, somewhere third round, I mean, so we just get some, it's too competitive. I mean, it's a great seller's market right now,

Taylor   20:02  

lots of best and final offer types of situations are you seeing as these prices get kicked higher and higher? I mean, how do you think those folks are justifying those prices? Are they the added underwriting? I don't know what, what where's the missing puzzle piece here that they're unable to offer so much. And the rest of us are like, how are you paying these prices?

Larry Abramowitz  20:29  

It's scary. I mean, I was talking to a broker about this yesterday, and they said they're seeing more than ever a lot of new buyers that they haven't seen in the market before. So it's either people that are not from this area that are they don't know the area, they're buying and paying crazy prices or, or they're seeing that there's still room to grow in the future. And they don't care about making a small return right now. 

You know, rates dropped. So, there's, that doesn't help as far as you know, I was looking to buy deals only because now people are being more aggressive because it can pay more with low rates. So that that also hasn't affected. But what I heard is that the typical big buyers are not buying out there, being the guys that have been doing this for a while are sitting on the sidelines. 

So I mean, you start hearing this and it's you know, it's kind of a scary environment to be buying on. I mean, I haven't bought anything in a year, probably I analyze I would say 60 hours a week. Wow, maybe send a couple of days a month because I don't spend an eye on those. It makes sense.

And I have been able to get anything. I mean, every time I'm invest in final, there's somebody willing to pay 20 30% more than what I'm willing to pay. So it's

Larry Abramowitz  21:46  

that's how competitive it is right now. And I just

Larry Abramowitz  21:49  

I mean, I'm not going to buy just to buy a deal. I mean, I buy to make money and I'm putting a lot of my money to play in these deals I invest with my investors. So I'm very happy for me to know you. I want to find the right deal, not just any of you.

Taylor   22:03  

Yeah. I like this out of that I want to find the right deal. Not just any deal. And I'm not gonna buy just to buy. So we are going to take a quick break for our sponsors. Larry, I've got three questions. I ask every guest on the show. Are you ready? Go ahead. First on what is the best investment that you ever made? in real estate?

Larry Abramowitz  22:28  

I bought all retail I was a restaurant though in foreclosure was empty restaurant in a rural area near Miami. And retentive and sold it for four times what I bought it for two years later. Wow.

Taylor   22:49  

Wow, that is a nice deal.

Larry Abramowitz  22:51  

That was a nice home run.

Taylor   22:53  

Nice foreclosure. On the other side of that though, what is the worst and last month you ever made in real estate

Larry Abramowitz  23:02  

also bought a house in foreclosure in Miami very cheap, it was a $70,000 what seemed cheap $70,000 house and we did the inspections and everything that you're allowed to do before you buy it. 

And once we started the work, we found out that the entire structure of the house was eaten it was a wood structure and everything was eaten up by termites, you could actually stick your finger through the wood. And we had to pretty much cut out the entire house redo it all the wood structure. I mean, it was a it was instead of being a six month turnaround, it was a two year project. And actually, I'm supposed to close this week after over two years of working with the city and permits and all that. 

But I mean, luckily by Friday will be closed. I mean, it's been a and that's the kind of stuff that you know, drains me. And it's been taking me two years to finish this deal. And it's probably taking a huge chunk of my time without without really getting any returns. I mean, I think Yeah, we're gonna make money, but it's not gonna be for two years. It's not a

Larry Abramowitz  24:05  

it was not a great investment. I mean, as far as time wise.

Taylor   24:08  

Yeah, the dollars per hour are not going to work out on that deal. Now, what did you end up? How did you end up fixing that? Did you I mean it was it a complete tear down? Or how do you even approach fixing that?

Larry Abramowitz  24:20  

Yeah, you tear all the walls and you start you, you put these beams to hold the house together. And then you start taking out all the old stuff and putting in all the new structure and drywall and electrical and plumbing and all this stuff that we're not going to do. We have to pretty much the entire house brand new. So you get to the point where it's almost easier to build a new house. Wow.

Taylor   24:42  

That is incredible. Now, before we move on from the Best Worst deal, I want to go back to that. The last one, assuming that was a triple net property right? You have put a triple net 10 it in there. Yes. Okay. Cool. 

So we you've addressed triple net on the show before so anybody wants to know what triple that commercial is? We'll put a link in the show notes that you can learn about that. But triple net investments are definitely very appealing from a passive standpoint. And it's even more appealing when you can forex your money. That's a great benefit there. Like you had to Larry, my favorite question here. I that I asked at the end of the show. What is the most important lesson that you've learned in investing?

Larry Abramowitz  25:28  

I mean, I think that networking, I mean, I think I've said this before another podcast, but I just think networking with brokers, property managers, owners, I mean, going to events, meeting people. That's how you find deals, and you get new ideas to run your deals. Well, I just think that, um, for me, it will be the best advice.

Taylor   25:49  

Get out there. Get in there, get networking, meet people that are out there doing it. I love that advice, I think for new people and experienced people alike, getting out there and meeting people who are successful, especially when you're new. You can learn how they're doing it. You can get inspired, learn what's out there, learn what's in your market. It gets great advice there. if folks want to learn more about what you're doing investigate multi family in Florida. Where can they reach you?

Larry Abramowitz  26:21  

They can email me at Larry at Broadviewcap.com, and that's broadviewcap.com. They can also go to the website, Broadviewcap.com and get more information.

Taylor   26:40  

Cool. And presumably if they want to know about importing flowers, you're also there, man.

Larry Abramowitz  26:47  

Yep. Well, we sell to wholesalers in retail in supermarkets. But yeah, they can probably find us in any of those places around the US.

Taylor   26:57  

Sounds interesting enough to learn about it's budgeting business. So there's there's got to be a lot to learn there. Well, Larry, thank you for joining us today. And sharing everything that you've learned or just a portion of what you've learned. investing in real estate is what I should say. And yeah, thank you for bringing that knowledge to us.

Larry Abramowitz  27:16  

Oh, thanks for having me, was great.

Taylor   27:19  

My pleasure. It's everybody out there. Thank you for tuning in. If you're enjoying the show, please leave us a rating on iTunes would be a big help. You know anybody that could use a little bit more passive wealth in their lives. Please share the show with them and bring them into our little tribe we're forming here. Once again, thank you for tuning into passive wealth strategies for busy professionals. That'll be Have a great rest of your day and a great week and we will talk to you on the next one. Bye

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