Buy Cash Flowing Real Estate or Develop New? with Andrew Schena

Transcript:

Andrew Schena  0:00  

How to build it, how to invest in it, how to finance it, and really how to sell it, you know, the whole gamut and being able to speak to investors about the benefits of long term cash flow with appreciation, depreciation tax incentives, stock investing, generally doesn't give you any of that. What's going on everyone?

Taylor   0:19  

This is the passive wealth strategies podcast. Thank you for tuning in. I'm your host Taylor load. longtime listeners of this show know I am a multifamily real estate investor, I syndicate real estate. I invest in real estate syndications, and I'm here to talk about building long term wealth as passively as possible, primarily through real estate. Today, our guest is Andrew shadow who's going to talk exactly about that. Andrew is a real estate investor, a longtime real estate investor, based in Boston, and he's going to teach us about his experience moving from a real estate development into investing in cash flowing assets and why cash flowing assets are moving You're better for long term wealth creation, then development. He's got an inside scoop on that. And we're going to get that today. This is a fun interview. Andrew is a fun guy to talk to. And without further ado, here we go with Andrew Schena from capital Equity Partners. Andrew, thank you for joining us today. Absolutely. I appreciate you having me on. happy to talk with you. Can you walk us through your background and how you got into multifamily syndication?

Andrew Schena  1:26  

Absolutely. So capital Equity Partners, we started out in 2011. And you know, as syndicators, we started out really syndicating development residential multifamily development here in Boston. South Boston specifically is where we're is really our market. And we started really syndicating before we even knew it was syndicating, we were, you know, raising money from friends and family and kind of putting it together and an operating agreement.

And as that process continued, we just began to learn more and fine tune our operating agreements and really understanding the syndication world and bringing in more professional legal advice and things like that. So we've been technically developing in syndicating and developing in in Boston here since 11. So about today eight years, we pivoted a little bit into multifamily because probably about three years ago I started looking at you know, really what was kind of the horizon a five year timeline horizon and developments great Don't get me wrong if you've got the itch, scratch it, it's it can be awesome. It can be brutal, but it's it's part of it's in my blood growing up kind of around trades and things like that.

But sooner or later developments great until it's not great and and when the music stops on the development train or when the real estate market really cools and buyers pull back out of the market. You don't want To be you know, you don't want to be left without a chair when the music stops so I decided to really start learning more about multifamily and it's a little bit of a different underwrite. So it took us a little bit of time to educate ourselves and really understanding markets and understanding where we should be for on a macro level watching population trends and job market growth and you know, the the key factors as an operator wants to see but also what your investors really want to see in, in a market that they may not be familiar with, to be able to ensure them this is a path of progress.

This is a growth type of market. And, you know, to be able to cater to their investment needs and to find yield, because at the end of the day, the yield that multifamily gives off here in Boston isn't the same type of yield that is going to be given off in let's say, the Midwest or the southeast, the market dependent of course now, so a few years back, we started that process and educated ourselves and running kind of went through the wringer. And we bought our first deal out in the Louisville, Kentucky MSA. That's just about 11 months 11 to 1211 months as of today of this recording, but But yeah, so we've been in it just about a year. And it's, it's been going great. So we've started to really dig down into that marketplace and, and start to really look at others.

However, we haven't taken a ton of action in the past about six months, six to nine months after we closed on that due to the fact of really, you know, getting familiar with managing a manager and managing the process of increasing rents and stabilizing a property and really getting it to perform the way we needed it to. So before we went outside and jumping into a whole nother asset and it gives it the same market or different market. We wanted to prove to our existing investor base as well as future investors that you know, we've got a track record and this is This is what we've executed. We're not just jumping into something that, you know, we're not entirely familiar with. So that was important to us. So we're kind of taking that slow and steady approach to really expanding in the multifamily side.

Taylor   5:13  

Okay, so you you're making the shift from developing to acquiring existing cash flowing assets. And you're in Boston. So which is one of the most expensive real estate markets in the entire world? Honestly, can we talk about some of your experiences as a developer in Boston, and maybe some of those things that started to show you the light of the weaknesses in development as it relates to that five year plan?

Andrew Schena  5:40  

Yeah. So I would say the, you know, our experiences in development in the city of Boston have been, you know, good and bad. You really, that there is a lot of stress and a lot of things that are out of your control when it comes to developing in the city of Boston. Excuse me that I think that is probably one of the largest challenges outside of that when you talk markets stability and and the economy, population, it's it's excellent like this. There's so many things like you alluded to Boston is one of the, you know, top 10 markets in the country. The difficulty with trying to look at multifamily in Boston for us now from from and everybody's got a different position as an operator and every syndicators gotten a different investor base.

So I can speak specifically more to our position which might be completely different than somebody else's. So where we've been developing in, in South Boston, I mean, we may deal with, you know, our, our average capital raises probably, you know, 650 $800,000 and that's generally just the by three Anything from a two to four unit residential multifamily. You know, because we're buying these properties anywhere from, let's say, today probably about a million and a half to 1.8, and putting in anywhere from 1.2 to 1.5. And exiting anywhere from, let's say, three to $4 million. So the numbers are at a much different scale here in Boston, compared to maybe what you might find out, you know, what I'm familiar with, which is the Louisville Kentucky market.

You know, I'm buying three families almost for the same amount of money, I can buy 28 units for in the local market. So the difficulty between development in Boston and cash flow in Boston is the yield that you can get. And one of the and I'll speak individually to current our investor base was that, you know, we were providing, you know, we've sold roughly around $30 million worth of real estate here in the past eight years, developed and sold, and, you know, we've been able to achieve You know, let's say 30% annualized return, on average across the last eight years. Well, when we pivoted to get into multifamily, let's say, in a different market and more of an emerging market, do the returns can be excellent over a five year time horizon where, you know, your investor capital is tied up for a longer period of time, let's say five years versus the development, which may be, you know, 24 to 36 months.

And you could provide a 30% annualized return over that time instead of a, let's say, you know, an average 20% annualized return over on, you know, any high teens to 20% was really what we're trying to find. So, on a multifamily basis, you have your investor capital tied up for much longer, rather than the an average 24 month project and the returns, you know, year over year on an annualized basis aren't as great. So what we had a difficulty doing was on our first purchase, it was a 28 unit deal and it you know, it was roughly around the same type of Capital raise.

But we found that our investor base was a little bit, it was just different. They weren't necessarily tuned into that they wanted us stay in the Boston Market. So cash flow in Boston is like and that's why we went to Louisville, the Louisville market or two or more of an emerging market is because the cash flow in Boston is, is less than that it's more appreciation market. So our investor base didn't want to be tied up in a in a property for five to 10 years in Boston to make, let's say, a five to 6% even leveraged return. And in right out the next five to 10 years, they wanted to turn their capital over faster.

So and that's why the the capital raising for development was just so much different than the capital raising for a multifamily cash flow. So one of the things that we've had to do over the last year is really just diversify our investor base and to raise more capital for different types of projects for what we do locally. And for cash flow projects that we Look for in emerging markets. So those are the kind of differences that, you know, you see, really as an operator. And I love Like I said, I love development, but I also love the cash flow. And it's just really focusing in on on your investor and what they're looking for, and to grow really, you know, different basis of capital. And that's it's really necessary, dependent on the markets that you're in

Taylor   10:24  

night. So I think as a developer, you have a lot of advantages that many other multifamily syndicators don't have and that you probably have a better understanding of the costs of doing certain things, even though you're coming from a Boston area, you know, price level compared to Louisville or something like that. But you'll have an idea for a rough idea of some of some what's going to cost more than other things and the whole process project management around that. So that's great.

Andrew Schena  10:54  

For sure. And that is kind of one of our strengths, like why we look for value, add deals. We know on an operational basis from a construction basis, the order that things need to happen and for the most part, you know, material costs are relatively similar across the board, depending on the materials and the style or the class of finish that you're that you're doing. It's, it's the labor costs that that takes a little getting used to. So but, you know, you can also, you know, understanding average market salaries and dependent on the markets that you're in, for, for construction workers that are quality in different markets. Once you get your head around that you should be able to really tie in what a cost and what you can achieve on a per dollar basis.

When you are doing a, you know, a reposition of, you know, let's say an asset, you just interior or exterior work or things like that, and obviously, relying heavily on vocal property management is also very key in that as well. Well, but it's all about developing relationships, developing a team that you trust them. But from a development perspective, you know, for sure, you know, taking a building from the ground up. And you know, dealing with what's, you know, you can't see under the ground, to just doing full gut renovation rehabs and taking a structure to its core and rebuilding luxury condos from there. So we've we've seen the gamut. And we do believe that does give us a little bit of gives us a little bit of, I guess, an advantage. Sometimes you look at something like oh, yeah, we could do that. And other times you like, we've tried that with don't do that.

Taylor   12:36  

I think it's a I think, as, as printed investors, I think tend to underestimate the value of their own experience and skills, especially experienced investors kind of tend to maybe make an assumption in their head that, oh, everybody knows that thing, whatever might be, you know, this certain kind of period. All right, they were doing aluminum wiring, so we're going to need to make these changes and all those kinds of things might take it for granted. I know everybody knows that. Not everybody knows that.

Andrew Schena  13:03  

Yeah, no. And I think that's and I think, I think for me specifically, I mean, when you when you look back to where we started, you know, when we started first doing syndications, you know, it was I struggled. I mean, this is back in 2011, there was nothing out there really, that was really, you know, out there to talk about syndication to talk about how to model how to raise money, there was very little, I wouldn't say I won't say there's nothing but there was very little. And over the past eight years, I've gone to countless different conferences and events and, and that's just an obviously doing podcasts like yours.

I mean, they're out there for everybody to learn. So it is I find it. It's difficult. And hopefully, I'm not the only one to be able to turn around and look at where I was eight years ago and be like, you know what, I should talk a little more about that, or I should, you know, because it's something I already know and I've put in the database be like, Oh, yeah, I know that. It's You know, who else doesn't know that? And it's tough to sometimes reflect back and be like, yes, there are a ton of people who may not know or understand and they're just getting in and, and to be able to put that knowledge out there and to share. I mean, that's, you know, that's part of one of the things that I love doing is just being able to share what I do know. But it takes certain things to trigger to be able to help share that, which is why you know, I love you know, speaking to you is just being able to kind of mind dump sometimes. So sometimes it'll be tough to just to shut me up.

Taylor   14:32  

You've been in real estate for the number I have is 18 years. Is that up to date? Yeah.

Andrew Schena  14:38  

That is that is well, I'd say yeah, yeah. 18 years. That's correct. We're approaching 19. Very soon. That's pretty cool. So you, you you saw the wave. Can you

Taylor   14:48  

tell us about your involvement before 2011 before you before you got into development? I mean, sounds like your career for you became an investor yourself.

Andrew Schena  14:59  

Yeah, absolutely. Absolutely. So I got in when I was 2220 excuse me, 23 I believe I got my first job in the mortgage business and residential mortgage origination fell into it. And back then was the Wild West, you know, as far as what it is today. I mean, it's heavily regulated today. I mean, they were, it was amazing once once I really became educated about it. You know, it took about six months to a year to really kind of process and understand it. It was just a sales job in the beginning. But it really became more than that when you're legitimately sitting across the table from, you know, Mr. Mrs. Smith and talking about refinancing or trying to purchase and take on the largest debt that they're most likely going to have in their life.

It morphed from working with those types of homeowners to working with people trying to buy investment properties in really starting to understand a cash flow model or you know, so in combining written this is already Residential really wasn't commercial, but it was all residential origination from owner occupied, you know, two to four units to investment three families and just a single family acquisitions. And and I did that I originated for a solid 10 years and ended up you know, once legislation passed and the Dodd Frank Act passed and and that ended up I got licensed. And I ended up giving up my license back in I believe 2012 or 13 to focus more on the syndication business, but all of it helped you know, as we were getting our businesses off the ground. So that's really where I got the financial education part of it down. And that's really what drove me to understand cash flow and really understood how the financing part works and leverage and and just property and then I got my sales like my sales persons license just to be in real estate and how to buy and sell real estate in 2008 was 31 at the time and And then by 2000, I was starting to scratch the surface on development and things like that.

And then the economy kind of crashed. And things were really slow and I didn't have an investor base behind me and nobody wanted to touch real estate at that point. So I kind of put it a little bit on the back burner and just tried to, you know, focus as much as I could on on mortgages and trying to write whatever I could. And then by 2010, the market started kind of creeping back and we just started really scratching that surface again and started the development companies and by 2011 was great. So

Taylor   17:36  

by math, you started in the mortgage industry, and 2011 or sorry, 2001 sorry, 2001.

Andrew Schena  17:47  

Yeah, 2001 2001 was was that

Taylor   17:50  

pretty 911 or post?

Andrew Schena  17:54  

It was post it was post 911 by about Okay, months. So I started November of 2001 was my first. Okay, so

Taylor   18:03  

kind of what I'm driving at with that point, and I think it might still be valid as you've experienced a few shocks in the market and your time 911 impacted things and obviously the Great Recession impacted things. So how,

Andrew Schena  18:20  

yeah, and and Yeah, good. I'm sorry. I was gonna say me. Yeah, it was kind of similar to today. You know, we can always see, you can honestly say, I mean, some of the some of the loans that were being written back in 2007 2006, that impacted were a big downfall of the financial crisis. You know, I remember sitting with colleagues being like, how are these people getting loans like, this is this is just ridiculous. Like, it's like, something's gotta give. And and, you know, we're at the point in the cycle now where people like, how can people continue to afford these things? Something's got to give. So it's It's a very similar sentiment. And, you know, even though fundamental, so let's talk macro, one of the fundamentals are very strong, you know, wages, you're seeing wages slightly increase in some markets.

And, you know, when you look at, you know, Fannie Mae's, just, you know, I take it back to what my core education was back in the early 2000s, which was, you're looking at debt to income ratio. And Fannie Mae wants the front end ratio to be at 32%. And for people who don't know, your front end ratio is your, your, your housing payment, you know, for a homeowner, its principal interest, taxes and insurance relative to what your monthly income is. And what you're seeing now, and I think what's really caught on with a lot of landlords is that they're doing the same thing, but they're making the rental prices at what the the that front end debt to income ratio is. So, for what you know what I've seen a lot of markets even Boston, it's like, you know, a two bedroom South Boston rents for like 30 $500.

I mean, it's, it's, it's banana land, but but when you look at if you have two young professionals who come in that are making, let's say $80,000 a year each, you know, right out of college couple years out of college, and you know, that's Boston, it's a great job market, you know, spending 15 to 1700 dollars a month, you know, which would probably include parking to through okay with that, or if it's a if it's a couple that is, let's say that they're, you know, they're together, they're getting engaged, or they're starting a family, that they have no problem spending that because it's their lifestyle, it's what they want, where they want to be. They work a mile from the house, they're in downtown Boston, they're in the seaport. That's what's driving that and, you know, as long as you see that median income in the neighborhoods in which you're in, continue to elevate, you'll continue to see rental demand or rental prices increase and until people start pulling back on that, you know, That's, you know, as as rental prices go, that's how the cash flow market goes. It's sooner or later. Yeah, well, people get burned. I'm sure some people will feel some pain, but that's every market. And that's every cycle.

So you just we try to look at properties that make sense and we try to buy on existing cash flows and how best building performs here. We're way out of the ballpark on some when we look at our properties, but hey, that's okay. You know, we're going to make big Mrs. But, you know, when that music does stop, especially on the cash flow side, and things softened a little bit, will be in a good position where other people's might be over levered.

Taylor   21:37  

Absolutely, I think that's a great way to go. I mean, we had Jake and Gino on the show recently, and one of the things that Gino said on that show is no deal is better than a bad deal. Meaning to not do a deal is much better than to do a bad deal. And as you're alluding to, there are people out there doing bad deals right now. Maybe just to To do deals, and yeah, it's better to not do one.

Andrew Schena  22:04  

Yeah. And I do think there, there's probably there has to be. I don't want to say with conviction that I know for sure. But I'm sure there is a certain faction of syndicators that are out there. And, you know, they're jumping into big properties. It's big fees, because at the end of the day, when you start getting big, and you've got huge dollars behind you, you know, it can get to the point where it's, it's a fee based model, where you might be giving away a large portion of the deal, just to continue to get deals done. You know, can you hit the numbers as an operator, can you hit those numbers that that you're projecting? You know, I just looked at a deal. God it was last week or week or week before last those down in the triangle down in Durham.

And I just, you know, I looked at excellent market, probably one of the top two to three markets in the country for multifamily right now. Unbelievable, but I looked at the numbers and I'm like, I don't, you know, there were red flags that were popping up to me and in the numbers and I'm like, I just don't see how this operator is going to be able to achieve that. So, you know, and this was a deal that we were looking to passively invest in. So I was like, I just, I don't like it too many red flags. So we passed on it, but you know what, I'm sure they'll get the full subscription and and execute the deal. And hopefully I'll be there if the deal decides to implode in a few years and and we'll take it from the bank but that's fine. You know, that's, that's a mom. So it but like you said, I mean, there are there are certainly things that you know, you always want to be cautious of and you know, we always would rather do we'd rather Miss by mile on a deal then then just to get into something to make fees and push forward.

Taylor   23:47  

Yeah, yeah, absolutely. I think what I'm what I was leading to, you know, asking about when you the year you started in, started in the real estate industry in general, just as a job as you said as a sales job. You've I've watched over time I'm a couple of cycles and you've watched people have problems and you've learned from that experience by watching and i think we UI and the listeners out there, can learn from your learning your education, by experience, and, and read into that and understand, you know, where you're coming from.

Andrew Schena  24:22  

Ya know, for sure, and

Andrew Schena  24:25  

you know, and the thing is in the last cycle, I mean, the things that triggered it all was real estate was it was people taking on too much debt. And, you know, everyone can talk, you know, if you've watched the, you know, The Big Short or any of those movies were excellent. I mean, what a what a depiction of that industry back in the day, I mean, nailed it. But, you know, understanding, you know, people being over leveraged and over credit people just pulling out money, you know, just to pay off consumer debt. I actually personally had moved, I moved out to Arizona for a A short period of time Arizona and in Las Vegas writing mortgages more from from a brokerage, I went to a retail bank and was working out there and, and still in my 20s and and to see double digit growth and talking to the people who may have bought this brand new house two years ago and then pull $150,000 out of it because of the double digit growth that that was that people were experiencing out of there. And like, this just doesn't make sense.

Like, I can't see how this is going to hold and eventually it didn't. And I came back to Massachusetts before it all toppled. But you know, I kind of I saw a little bit of the writing on the wall when I was there. And and it's, you know, I don't it's tough to it's tough to pinpoint in this marketplace where the downfall will come. I mean, affordability is an issue but it's not just an issue. It's an issue everywhere. But you know, job market funding metals are super strong, and that's what the economy likes to see. But, you know, I just don't know how strong it really is. And, you know, I'm not I'm not really one to pontificate, you know, markets. I'm certainly not an economist by trade and I just try to do what's right by my investors and ourselves. And I think it's time to play conservative. I'll play conservative and and I'd much rather be two years too early than two months too late. So that's good. I

Taylor   26:28  

like that. I like that mentality. A lot. I think there's a lot that we can we can learn by, you know, listening to what you have to say. I mean, if you asked Peter Schiff, for example, about where's the weakness or what's the next thing it's going to happen? He would tell you the dollar is headed down, you know, Chicken Little on the dollar. So,

Andrew Schena  26:47  

exactly. And, you know, I've, you know, I'm a big Kiyosaki guy. I love listening to all of his stuff, and I actually just booked for today Forget the title

Taylor   27:00  

of the book, The monster from Jekyll Island or something like that. Yeah, yeah.

Andrew Schena  27:03  

Jekyll Island. Yeah, something like that. Yeah. And, and I mean, I certainly I mean, I take a lot of information from that and I'll make my own decisions on that i'm not i'm not certainly a disciple of anybody I just gather as much information as I can to make intelligent decisions. But certainly a gentleman like Peter Schiff is is a million times smarter than I am when it comes to the economy and it's not something I've studied. It's not something I'm necessarily a master in which he is so but understanding what somebody else's viewpoint is, and to not look at what maybe a rosy picture some people may paint, like, let me see the underside. Let me see the underbelly. What What don't I know and, and do I agree with those things? And I certainly think that there is a lot of valid points to, to what he says and it you know, but it makes you pay attention to a lot of different things. And I think by doing that, you understand From an investment perspective, where to place your capital, where should it be?

You know, thinking just cash flow from an investor standpoint. You know, obviously, I think real estate is is to me is is, I think it's the ultimate, I love real estate, it's secured, it's insured, and it's not going anywhere. It's not a paper asset. It's it, you know, it's not as volatile as the stock market. Now, yes, you can make booms and busts in the, in the stock market. You know, it's some of the statistics that that I've read recently in the stock market were along the lines of like, if you missed two of the top trading days, in the past decade, you have you know, your, your portfolio had missed, like 30% gain or something crazy like that. And it's like, you got to be in for the long haul with that, and I get that. But to me, it's, it's about real estate, because real estate is a long term play and people always need it's a basic, it's a fundamental element.

Having a roof over your head. So, to me and, you know being, I like to consider myself a student of real estate from, you know, how to build it, how to invest in it, how to finance it, and and really how to sell it, you know, the whole gamut and, and being able to speak to investors about the benefits of long term cash flow with appreciation, depreciation tax incentives. stock investing generally doesn't give you any of that, which is why I love I love real estate and why I advise anybody who is considered considering investing continuing to invest even they're just IRAs or four one K's that they may have rolled over, like Do yourself a favor, peel off 50 K, if you have it in self directed, put it into a piece of real estate rather than leaving it certainly and I like that mentality a lot. And for anybody that didn't get catch the book reference it was the creature from Jekyll Island. Thank look about the Federal Reserve which was essentially more or less founded in a private meeting with six bankers. Literally on a place called Jekyll Island. It sounds made up. It's not made up. I haven't read the book. I'm aware of it. I have not

Taylor   30:16  

read it's on my list though.

Andrew Schena  30:17  

Yeah, I'm, I'm looking forward to reading it. I you know, I drive a ton for work. So I tried to download it and audible. So that's why I listened to a ton of podcasts. I tried to download it in audible and I couldn't sound like you're just gonna have to read it. But yeah, I

Taylor   30:32  

think there's a lot in there and I mean, I had a call with my CPA today and he pointed out some more you know, tax advantages that I can get that I haven't been taking advantage of in the past and it just gave me you know, real it that that fire of like, all right, I gotta keep up with this. And I mean, I think getting started Absolutely. Like you're saying peel off 50 k if you can, and just get started investing real estate is a great advice. Find a tax professional that's educated in real estate, a CPA. Oh my god, I can point you in the right direction. 100%

Andrew Schena  31:04  

and, and I gotta tell you, I mean, you know, a lot of people, a lot of people don't want to pay attention to their taxes because it's confusing. The IRS is after you know, nobody wants the IRS in their back nobody. And in when you hire a CPA professional to do your taxes, you think that they are, you know, oh, they're a CPA, they're doing everything they just know. You know, so look, somebody some somebody has to finish last class, okay. Always from from attorneys to CPA is we had a CPA that, you know, didn't give us what we thought we felt they should have given us better advice.

They didn't give us the advice that we felt like we should have had. And you know, we have three of us and a partnership all lost $40,000 in taxes because of that in one year. So, you know, needless to say, I've changed My CPA since then, and you know, pay attention to your taxes and pay attention to those things because as dreary and boring and excruciating that I'd say I find it in it is it's tough. It's interesting, because taxes are the most expensive thing or the largest expense that you will have every single year. So you gotta pay attention to it. You got to learn and if you're going to be in the real estate game, you got to understand it because it's it's vital to really growing your profits and there's so many avenues to to growing profits using programs, tax deferred programs, things like that, that can help you compound wealth, that it's something you just need to absolutely,

Taylor   32:48  

absolutely and as it as busy professionals out there, especially those learning earning w two income that's going to be probably the highest taxed income that you're going to earn till you You know yet in real estate is going to be lower tax bracket. So you really need to up your taxation game and getting a CPA can help you do that.

Andrew Schena  33:09  

know for sure and, you know, reading, you know, reading books I've read, you know, obviously again, back to Kiyosaki, he had a tom wheelwright was the author of a book on on tax strategies and just tax basics. And, you know, that was one of the books that I began to read when I was like, you know, what, I really need to become more familiar with this. You know, look, as we all as we all age, you know, nobody's nobody's professional and absolutely everything. So you just have to learn enough to know I need to surround myself with the type of people that understand this and an understanding that you know, people's knowledge base on real estate operations alone, even as a syndicate or having a regular CPA that doesn't maybe doesn't specialize in real estate.

It's probably a mistake, because a tax professional that our CPA that focuses mainly on real estate investors and in the real estate business, they're going to know much more than the traditional CPA, especially more than professional that's probably sitting at h&r block. So that's, you know, and they're going to cost you more money, but in the long run, they save you more money. So that's, that would be another kind of tip is to Yeah, just just educate yourself and surround yourself with the with a great team. Absolutely.

Taylor   34:37  

Absolutely. So we're gonna take a quick break for our sponsor. All right, Andrew, I got three questions asked every guest on the show. Are you ready? I'm ready. All right. Number one, what is the best investment that you've ever made?

Andrew Schena  34:53  

best investment I ever made in my education. You know, I know a lot of people will Look, you know, I don't like going to gurus. I don't like, you know, I don't want to pay a ridiculous amount of money for a program where we did so, back in 2010. You know, we had a really my business partner and I, when we started, we had a real estate kind of finance background. And it wasn't something we necessarily went to school for. It was just a job that we've done for a decade. And, you know, I came from a background where my father was in the trades as an electrician. So I grew up around construction, and I knew I wanted to get into that. So we jumped into a program.

And we spent $25,000 at the time on it, and we looked at each other saying, I can't believe we're about to do this like this. But But you know what, like, we had, you know, we learned a lot and we took action, and we did it. And we made you know, we made that back in our first deal. And if we never did that, I don't know where we would be today. It wasn't so much about the real estate part of it, it was more along the lines of the business systems part of it, and how to actually operate that business. And Funny thing is as a syndicate that really wasn't a strength of that core program, the business systems were and they were excellent. We still use them to this day, and they've helped us grow. But the syndication part never really was. So we had to go out and continually invest in our education on the syndication side. So best investment is my is my education.

Taylor   36:32  

What about the worst investment that you ever made?

Andrew Schena  36:39  

The worst investment I ever made was, it was a it was certainly a it was a real estate deal. And we overpaid for the property. And you know, obviously, in hindsight, we overpaid for the property because we didn't think it needed as much work as needed and when Once we started getting into it, and got some walls open, you know, we had to bring everything up to code, and we almost doubled our construction budget. And, you know, our investor gave us a sizeable check. We had one investor in that deal, I believe she gave us $370,000. And, you know, thank God. I mean, we didn't lose anybody's money, but the project was a it was Doa, you know, so it went flat, and we were able to return the return the money with with no profit on it.

And I'm not afraid I'm not ashamed to admit that because if you meet a developer or syndicators or multifamily person who says they haven't lost money, then they haven't been in the business long enough. And, and it's it's not if it's when, and how transparent are you? You know, how forthcoming Are you with your investors? How communicative Are you with your investors? And, you know, I'm proud to say that investor, you know, has since then reinvested the A couple hundred thousand dollars more with us because, you know, we've done excellent by her on all the other deals that she's got into it. So she knows we've got a great track record. And I'm not ashamed to say that we've you know, we've struck out on one, it is what it is. Well, that's business, you know, that's life. And you know what you learn a lot more from your failures than you do your mistakes, then then your successes at times. So, you know, we'll take that one. And we'll keep we'll keep moving on. And we're not afraid to show our scars. Nice. Nice.

Taylor   38:30  

Well, my favorite question here at the end of the show. So last one, what is the most important lesson that you've learned in investing?

Andrew Schena  38:38  

I, you know, I'm going to take this from a from a syndicators perspective

Andrew Schena  38:43  

is to always, you know, to your business, is your investor, right? The most important less than I've always gone is that your investors are the lifeblood of your business. And if you're not treating them, right, if you're not looking, if you're looking deals for yourself, and what you can make out of them, then, you know, you're really, you're not, you're not serving others, right, you're not serving your investors. If it's not for your investors, you've got no business. So, you know, my most important lesson that I've learned from is to always make sure your investors come first. And make sure that the the deals and what you're getting into are beneficial to them, that you're mitigating as many risks as possible for their capital.

Because since we've done well, by our investors, I've now had the ability to be on the investor side and be a passive investor. So understanding and especially as a syndicators, and a passive investor myself, you know, the team that that's behind it and making sure that they're trustworthy and that they know what they're looking at and they're know what they're doing that they're putting the investors first. That's,

Andrew Schena  39:54  

that's the most important, valuable

Taylor   39:56  

lesson that I've learned. Nice. Nice. I like that. Well, Andrew, thank you for all the Lessons today and sharing your almost two decades real estate experience with us if people want to learn more about what you're doing Where can they get in touch?

Andrew Schena  40:10  

Absolutely greatest place to grab us is that our our website its cap ca p as in Peter, Equity Partners calm and our phone numbers on there. There's an investor prospectus you can download on there. And honestly, you ever have any questions you know, feel free to reach out just email us call me and always happy to talk real estate. It's a passion so it's a little sickness, it's passion. Either way. I love talking investing, growing capital real estate.

Taylor   40:39  

That's great. I always you know, I might break the fourth wall on this podcast a little bit too much but it is almost 8pm on a Tuesday. You know that Andrew loves this stuff if he's on the line with me doing this interview at this late an hour when he says you know clearly got a family to be their priority. So yeah

Andrew Schena  41:00  

Absolutely, man. Yeah. And actually, if the people didn't see, you know, one of my daughters bust into the room just to say hi,

Taylor   41:06  

before I walk. Oh, sweet.

Andrew Schena  41:10  

Yeah, it may not be me. I was it was she's,

Taylor   41:13  

that's all good. That's all good. We like those things. Absolutely.

Andrew Schena  41:16  

But thank you very much and honestly, you know the other keep doing what you're doing and you know, keep spreading the message as you know, I think what you're doing is an invaluable service for

Taylor   41:25  

I certainly appreciate that. I'm having a lot of fun doing it. Although, you know, as I said, breaking the fourth wall, it's you know, it takes time to do and but but it's a lot of fun. And yeah, I'm learning a lot. So thanks for everything today. Awesome. And thank you for joining us, everybody out there. Thank you for tuning in and tuning in. If you're enjoying the show, please. I'm going to say this again. You're enjoying the show, please leave us a rating and review on iTunes is a very big help. You know anyone that could use a little bit more passive wealth in their lives, please share the show with them and get them involved. I hope you have a great rest of your day and a great week and we will talk See you on the next one. Bye