The beauty of real estate is how diverse it is and offers multiple ways to grow from one area to the next. Kyle Jones, the Cofounder and Key Principal of TruePoint Capital, LLC, speaks with Taylor about his journey in the industry and how and why he transitioned from single-family to multifamily properties. Giving tips to other investors out there who are new, Kyle talks about the lessons when it comes to working with your own money in contrast to working with other investors’ money. He also shares some of the most productive methods he has used to forging relationships with syndicators and brokers.

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Kyle Jones on The Lessons From Multifamily Investing

I’m excited about this conversation. We’re talking with Kyle Jones of TruePoint Capital. He is now in Sydney, Australia, although he does not live there. He is there for his day job and we’re talking real estate. He’s got a high-level sales job at a prominent company and he also buys multifamily real estate. He’s killing it. He’s a key principal on over $12 million of multifamily real estate. He got another property under contract. If you were at Michael Blank’s event in November of 2018 in Northern Virginia, you’d see him. He spoke on stage. He talked about a particular deal that he had done and that’s why I’m excited to talk to him because I was there and it’s great to hear a story. We’ll talk more about what he’s doing. Kyle, thank you for taking some time from your trip down there in Sydney to talk to us.

Thank you for having me, Taylor.

You’ve got an interesting setup and you’re doing very well. It’s exciting to talk to you. Can you tell our readers a bit about the multifamily properties you’re buying, where, what you’re targeting and all that good stuff? Give us your background too.

My background is I’m in a high-tech corporate sales job. I’ve been in technology sales for my entire career after I graduated from college, so many years of experience doing high-tech sales across services and software and things like that. I started looking at real estate seriously a few years ago when I saw my dad get laid off from the industry as well. He was working for a high-tech company and that company was going through a transformation-type effort where they’re bringing in more younger folks or youthful folks who are aspiring to get to that level. A lot of people saw a lot of people get pushed to early retirement and my dad was in a position where he wasn’t ready to retire comfortably. He probably could have but would have had to change his lifestyle pretty drastically. I saw that going on and he’s here at 61, 62 trying to find a new job. At that point, that’s what pushed me over the edge to just jump in and try it out.

I started buying single-family homes. Literally, I woke up and went out and bought five houses thinking that would scale. We renovated them all and we’re going to try to hold some on, my wife and I when I say we. We try to hold some to get renters. I got a renter and I look up and it’s like, “This is cashflowing nicely and then netting about $100 to $200 a door,” and I’m sitting here doing the math in my head is like, “How do I scale that?” I need X number of houses and them already running low on capital from doing that so I started looking at multifamily almost immediately. I pivoted shortly after closing that fifth house and I remember thinking, “I got through a lot of the rehab on the others,” and figured out I need to move to something else to scale if I want to keep doing this. I’m condensing the schedule or the timeline but I went out and bought smaller multifamily or put up 21-unit under contract.

Shortly after that, I put another fourteen-unit under contract, ended up closing a fourteen-unit. The 21-unit fell out due to Hurricane Harvey. From there, I knew I wanted to continue to scale and even going into the fourteen-unit knew that we had limited capital that we were working with because we were self-funding a lot of this from just working in high-tech sales, bonuses, savings and stuff. That’s when I made the shift to not only multifamily but now syndications and learning how to raise capital. I ended up partnering with a couple of folks to get me into the familiarity with raising capital, Michael is one of those, which is why I was able to get on stage there. We slowly moved into continue to scale and each deal we’re getting better and better. We put our six-property under a contract which will be a key principal in and looking forward to continuing to scale. That’s a short, condensed version.

As far as you got into the single-family and then realized, “It’s going to take me forever to create any significant amount of cashflow. I’m basically out of money. I can’t buy any more of these things at this point,” so you got into multifamily. What have you found has been one of the big things bringing capital in so you’re raising money from investors? What have you found have been some of the big lessons there when it comes to working with your own money compared to working with investors’ money?

When I first started out with my own capital, I was also going in with the mindset that, first of all, you never want to lose money but the reality is you could. Even if I take a little bit of a hit or if I take some punches to the face, I’m okay with that because I’m building my track record, I’m building the experience. If you look at the cost of college these days in comparison, maybe you might depending on the size of the deal, but I wasn’t doing a large enough deal where I felt like I had $100,000 at risk or something like that. It was a super small risk but I was willing to look at it that way. By having that and by going through the processes of learning the business and dealing with tenants and then firsthand in dealing now with property managers, it’s giving me that much more confidence to be able to start taking in investor capital which is where we are. It’s building that track record and building the confidence for you to be able to do that was key. I know not everybody is in that position, but if you don’t have your own capital saved up or enough savings to go buy smaller multifamily or something like that, you could still partner up with somebody who does to give you that comfort level and grow that way.

You’re bringing money for investor’s stuff like that, as far as meeting investors and building that relationship from your end, what have you found and we’re mostly talking to the passive investors out there. From the other end of the syndicator meeting investors, what have you found has been a productive way to forge that relationship and build that relationship? Most great syndicators, the big guys will tell you that a troublesome investor can be just as much trouble as a troublesome tenant or troublesome property manager. It’s a two-way street. If we want to invest in a deal passively, the syndicator has to like us. Building those relationships and getting that going, what’s been the most productive methods for you?

You said it right when you said it’s a relationship. A relationship takes two people no matter if it’s friends, high school buddies, wife, kids, whatever. There’s usually more than one person involved. I still bring out my sales background in every situation. That’s what helps me with the communication style, allowing the investor to get comfortable with me, trying to build a rapport. My style, I’m definitely not an aggressive salesperson even in my corporate job, I’m more of, “Let me just come in and show up, get out to lunch every now and then but let me mostly listen to what you want.” From my corporate job, a customer’s perspective, they’ll tell you exactly what they want if you allow them to and if they get comfortable with you.

It’s the same thing with an investor. They’ll tell you exactly what they’re looking for. Most people these days generally are looking for same types of returns, high value-added deals, B and C-class properties, syndicator with a track record. A lot of those are the same things. How are you different versus somebody else who has more experience? For me, how I tried to portray myself as being truly myself, being generally authentic, and being as transparent as possible with giving them any type of information they want to see to get them comfortable with the deal whether it’s financials or underwriting. It’s allowing them to underwrite their own deals if they’ve got that type of neater experience. It all comes back to building rapport, getting them to feel comfortable with you and trusting you.

Kyle, something that I wonder about when you have all these responsibilities, you wear so many hats. You have your day job, you have a business on the side, you have your multifamily investments, you’re married and you have kids. That’s a lot. Time management is huge there. How do you think about your sleep schedule? There’s so much out there in the entrepreneurship world and multifamily world about how I can survive on two, three hours’ worth of sleep. What do you do? Especially with all this travel you do and all these hats you wear, how do you manage that and not sacrifice your beauty rest?

For me, coffee is a big part of my day. I’m intentional with my time. I’m intentional with my sleep as well, so I’m usually going to bed or starting to go to bed around 9:00 and I try to fall asleep anywhere in between 9:30 and 10:00. I’m usually starting to get up around 4:00. I say starting because my alarm clock goes off at 4:00, but usually I don’t get out of bed anywhere from until about 4:15, 4:30 some days. I take those couple of hours before I need to get into it to get myself back to going through a morning routine. Getting a workout and doing meditation, journaling, things like that, a lot of those things that a lot of the gurus are talking about. For me, sleep is very important. I don’t think I could operate if I was tired all the time with these three different areas. When I say three with the corporate job, real estate business and appraisal business, and then family being the most important of that. It’s very intentional there to where I’m getting adequate sleep so that I can operate at the highest level that I can. It is hard especially being in Australia, when I get back my body clock is going to be so out of whack. That’s going to take a couple of days to get back into it. You have to be intentional with it and I know it’s going to suck. Embrace the suck as they say.

Back to managing all of these real estate deals that you’re doing and you’re hunting for deals, you’ve got the deal flow going. You’re putting deals under contract, you must have good ones coming into you. How have you built that system up? How do you get that deal flow going? The naive question would be, are you finding these deals on LoopNet? Where are they coming from?

It’s mostly through brokers. There’s no other way around it. People are always looking for the off-market deal, but ever since I’ve been in multifamily, I’m getting so many letters from people saying, “I want to buy your apartment.” I don’t know how to keep up with that other than just put it in a drawer in my desk and let it sit there. The brokers still control a lot of the deals whether we want to admit that or not. It’s building the rapport and relationships with the brokers. The conversation we were having about how to build rapport with an investor or for me a customer that’s going to purchase the software that we sell. It’s the same thing with the broker community. How can we get them to trust us that we’re going to be able to deliver?

Number one, close on the deal. Number two, be easy to work with. Do what you’re saying you’re going to do with the relationship. That’s what I’ve done. I was intentional with the fact that I went out face-to-face into these markets. I’ve met with the brokers. I used the LoopNet deal to get some broker information, but then I flew out and spent blocks of time with them, two hours, sometimes half days, full days, whatever it took to spend the time with them. Now I don’t have to do that as much because I did it early in my real estate career. Obviously, there are new brokers I don’t know.

I still do that occasionally when I can, but by doing that and having closed on some of the deals that they have fed me, it’s sped up that deal flow. Now it’s like, “Look at this off-market deal. I’ve always sent it to ten people.” Whereas now it’s, “I’m going to be in this market. I’m going to look at this property for the first time to meet with the owner. Why don’t you come along? We think it’s something that you’d like.” I’ve got to go to a property with a broker, pretend to be a broker myself. I got a firsthand look at dealing with the owner, visiting the property and its vulnerable state. It was a cool experience.

Now I get deals all the time, even if it’s not that type of setup where we’re touring with them. It’s like, “I got these financials for the first time. He may want to sell. Are you okay with this?” I’m looking at financials for a property from an owner who may not ever sell but these are what the brokers go through. It’s like, “I just got these. Let’s look at it. Let’s put an offer out there and see where it goes.” I’m spending more time looking at those types of deals where they’re not even off-market deals. I don’t know what you call them. They’re property the seller has or that the owner has sent a financial. All that took a lot of time. Ultimately, it comes back to you’ve got to get out there face-to-face. A lot of us are looking at deals and markets that we don’t live in. If you and I are competing in a deal and neither one of us has met the broker. All he’s going to have to go off of is what we tell him in a Word document for our track record. That’s very hard for them.

Their priority is to close the deal and not have their own relationship ruined with their property owner based on them putting it another contract with somebody who didn’t know what they were doing or the buyer didn’t know what they were doing. What is the best investment you ever made?

I would say for me it’s more an investment in myself. It starts with educating myself in the real estate world in general. It’s all the money that I’ve spent on books. I’ve spent tens of thousands of dollars in a coaching program as some people have, but I have spent probably hundreds, maybe a couple of thousand bucks on books, different tools and resources and stuff. I would say for me, those are the best investments that I’ve made because it has allowed me to see another world that I never thought I’d be a part of.

On the other side of that, what is the worst investment you’ve ever made?

There are probably a lot of dumb things that I’ve done with money, but real estate-related, fortunately we haven’t lost money or anything. We’ve been through some hardships on a couple of deals, but they’ve flipped around when we made the necessary changes. It would come down to not starting fast enough in the multifamily space. On a couple of those houses, I broke even on a couple of them. If I would have maybe not purchased those two houses and started in the multifamily space sooner, who knows where I could be by this point. I’m where I am right now in my life where I need to be. To go through those experiences helped me build the thick skin, build the callus that I need to be able to be in this business.

You weren’t prepared in the past to be in a situation you are now. Those situations, experiences and investments had to teach you and turn you into the person and the situation that you’re in right now. My favorite question, what is the most important lesson that you’ve learned in investing?

I’m a big action guy. It’s taking the right action or taking any action to get into it. I actually hit on it. You’ve got to have the thick skin and the callus. You can only get that by taking action. If you’re looking at this business because you just want to make some money or because you have some other goals, whatever, you’ve got to think about the other side of it. If this happens, be careful what you wish for because it might come true. If it does, are you prepared to handle things like that? Experiences that we’ve had in this, I had a tenant pass away on one of the first deals in the unit. You think it was somewhat tragic for that individual as an elder gentleman, so he was nearing that time of his life anyways, but the mess that was left there. When people pass and they’ve been sitting in a unit for three days before somebody finds them, that was a messy deal. We’ve had other things where property managers are flat out lying to you where they’re doing certain things but they’re not. To my knowledge, I haven’t had anybody stealing from me yet, but I’ve had people lying or they’re using our funds for another purpose.

That could be considered stealing but using our materials and our maintenance staff to do work for other properties that they were operating out of our deals. The biggest lesson that ultimately comes down to you, you’ve got to take action, you’ve got to have the thick skin and you’ve got to be prepared for those scenarios if you want to be in it. If you’re not prepared for that, if you just want to take action, then maybe you’re better off as a passive investor. A lot of people don’t like that because it’s as sexy and you can’t create more equity from the sweat equity. They’re looking at it and being passive takes longer to get to the financial freedom goal that you want. You’ve got to be able to handle it.

On the other side of that, the passive investors out there need to remember or should remember that the people that they’re looking at actively investing with the need to have those characteristics. They need to have that thick skin and they need to be willing to go get it.

Perseverance is huge. I don’t know if you remember this story, but I told it at the live event that I spoke at. Even dealing with a seller who quickly realized after we put the deal on their contract how under market he agreed to for the purchase of price. He delayed that deal. He did everything he could to get out of that deal and he took every opportunity where we had to engage our attorney and I wasn’t sure. I’m in the middle of trying to close this deal. We had already raised all the capital. We had all these investors in here. I was losing sleep at that time because I was not sure how to handle it. I hadn’t dealt with that issue in the past. After the fact, it’s a huge sigh of relief. We made it through. We closed on the deal, but it was about a nine-month close because of this guy. He’s just not cooperating.

I’m looking at it again and the same broker came back to me with another deal and he said, “By the way, it’s so-and-so’s deal.” I said, “Let’s do it.” We’re looking at it. It’s the same seller. Once I’ve gone through that process and learned my lesson, we go back and button up the contract even more with some certain areas that we probably shorted ourselves on. At the end of the day, you’ve got to have all of those characteristics to keep going because it’s not just sunshine and rainbows as soon as you close on the deal. I’ve heard too many stories from some other friends who are in the business too that are living this testimony.

What’s up next for you? Where can our readers get in touch with you?

My website is TruePointCap.com. What’s next is I’m just continuing to acquire deals. I’m not in a huge rush. I do have some goals that I want to hit each year but at the same time, I know where we are in nowadays market that it’s challenging to find a deal. I’m trying to be patient and be ready that when I do come across something and be able to move quickly. I’m still looking in a lot of the same markets that we’re in now, which tend to be mostly in the southeast region of the US. The one that we put under contract, it’s in the same city in which we’re already in, Gulfport, Mississippi. Continue to look there for multifamily. I’m also starting to look at a couple of other asset classes, getting familiar with it. We haven’t taken any action other than purely educating ourselves in a couple of these markets or classes. We’ll see where that takes us. At the end of the day, my foundation is still multifamily. We’re looking to continue to scale there and who knows where it can take us. We’re excited about it. We’re excited about the future.

Thank you for joining us. Kyle, I hope you enjoy the rest of your time in Sydney and safe travel getting home. I’m sure you’ll have a good time out there with your family and doing business and everything. Thanks for your time. I certainly appreciate it.

Thanks a lot.

Thanks for reading. If you’re enjoying Passive Wealth Strategies for Busy Professionals, it’d be a big help if you would leave us a rating and a comment on iTunes. Share it with your friends. If there’s anybody out there interested in getting into investing and growing their wealth without buying themselves a second job, we would very much love to have them as part of our tribe. For now, I hope you have a great rest of your day, a great week and we’ll talk to you on the next one.

Important Links:

• TruePoint Capital
• LoopNet
• TruePointCap.com
• iTunes – Passive Wealth Strategies for Busy Professionals

About Kyle Jones

Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.

In addition to TruePoint Capital, LLC, Kyle is a Global Sales Leader for a large Fortune 100 technology company and responsible for revenue attainment of over $250M worldwide.

Kyle obtained a Bachelor of Science degree from Texas State University-San Marcos, where he also played Division 1 Baseball.

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