Success Leaves Clues with Eddie Austin

Tim Milazzo: 0:53

Hi deal. Scott listeners. This is Tim CEO of stack sources. One of the nation's fastest growing commercial real estate financing companies. Successful real estate investors. You stack sources, financing portal to find the ideal financing for multi-family and commercial real estate deals nationwide from our network of banks, credit unions, life insurance companies, and debt funds. Don't waste time or lose money relying on the wrong commercial lender. Visit go dot stack source.com/the deal scout for a free commercial mortgage quote. Today that's go dot stack source.com/the deal scout.

Josh Wilson: 1:31

Good day, everybody. Welcome to the deal scout on today's show. We're going to have a conversation about capital raising and real estate and all the fun things with taxes and capital gains, and maybe how to avoid it or find out a place for it. Right. So gentlemen, welcome to the show, dude.

Eddie Austin: 1:49

How are you? Great day.

Josh Wilson: 1:51

It's.

Eddie Austin: 1:51

On the show.

Josh Wilson: 1:52

Yeah, glad you're here. Eddie, who are you and what do you do?

Eddie Austin: 1:58

My name is Eddie Austin. I am the co-founder of J capital and manage your R J capital fund. Number two, we invest in real estate, mostly multi-family all multi-family and a class B class C value out opportunities. We raise private equity to be able to deploy that into a multiple assets or 5 0 6 C fund.

Josh Wilson: 2:21

What does 5 0 6? See? Right. Anytime an acronym or some type of, something that maybe the general public doesn't know about, like I like to dig into that . Tell us, you're on fund number two, right? Jamie capital, number two. You want to talk to us about that, but what is 5 0 6 C what's that mean?

Eddie Austin: 2:39

5 0 6 C you can do property level syndication through a 5 0 6 C means you can openly advertise. You can do general solicitation and that's geared towards accredited investors. Only. Now you can do a 5 0 6 B and you can raise capital with not accredited individuals, but you can not advertise over social media, nothing on any advertisements and you need to have a relationship with the investor prior to investing. There's a lot of, there's a lot of gray area there. I know a lot of guys play in that space and they're good at it with what we like to do with social media and everything else, 5 0 6 C was the best fit for us. We can only target accredited investors, Bible six biggest all non-accredited.

Josh Wilson: 3:31

All right. Got it. All right. Talk to us about fund number one, tell us about, what you guys have accomplished and then maybe even how you got into this space.

Eddie Austin: 3:40

Sure. First a fun number one was more of a J capital tenant and Collin bottle. We raised a couple hundred thousand for venture capital to start businesses. And it went really well. We tried to leverage that model into multifamily real estate, and it was with the people we talked to. It was a different model for what I'm usually doing. I usually come from building companies, stuff like that, being in bigger business. You kind of get that instant rapport. You're not trying to fly under the radar and that tenant in common model, when I went and presented that to people, they kind of felt like, man, is this a Ponzi scheme? Well, that really turned me up because I've never had that asked that question, asked anything I've done because I think I've always had a corporation or a business name. You know, were a brand. We always got that rapport of, no, this is a real entity it's real deal. Went to the 5 0 6 C and then we built it into a brand and a corporation to where were a big company. Now we're accredited by the better business bureau. We have a large social media footprint or on YouTube, Instagram, and we're able to openly advertise and it's used as a professional entity now because people can see what we do. We have nice websites with plenty of information on there. We actively post on YouTube also what we're doing, what we're looking at Instagram. So, yeah, I think we had the backup. We tried to take that tenant and Collin model forward. We just didn't get the report were looking for by building a fund. We're able to invest in multiple assets at the same time.

Josh Wilson: 5:31

Copy. How'd you get started to give us your story, give us, how you got to where you are. I got some questions, especially about the VC route that you guys took. So.

Eddie Austin: 5:42

Yeah, so, first and foremost, I was the traditional W2 worker heavy and industrial actually started. I was homeschooled after elementary school and I did vocational school early did about 12 years old. I started in a welding place, production welder with my brother-in-law business. From there, I was always in the professional industrial trades, went to a large Toyota manufacturing plant, worked my way up from an employee all the way to a top management and 2008 through 10 being an automotive industry. It was, it was surreal. I got to watch a lot of my people go and that really bothered me. From that point forward, I was really driven to build companies that could survive that. Now at the time, I didn't know what that took. I didn't even know what it meant, but I knew I was hungry to find what that is because I knew not everybody fell during an economy downturn. There was guys that did really well. I was interested who those people were and what they did to get there. Fast forward, we knew that we needed to start our own business. So we started a metal fabrication business. We built hand rails to pro street, hot rods. We had a lot of fun doing it. We've done some pretty cool and amazing things. It actually helped us with our path to getting where we work today, just because we got around the right people. We're in the middle of building a sculpture for a motel and Owensboro, Kentucky. I knew that the guy were building it for, he was, had a hotel and I knew he had some other things. I asked him, what was 2008 through 10, like for you? He said, well, it was great. It was the best years we had. And I was astounded. I was left my mouth open. I asked, I said, man, please give me the secret sauce. Anything that can help. He goes, well, I'm not going to just give you the secret sauce because you need to learn. It educated me. Education's the answer. I said, okay. So what is that? He said, reach financial books, success, leaves, clues, and follow the money. You're a smart man. You're an entrepreneur. You'll do great. Just study. You'll figure it out. From that point forward, that's all we did was study real estate. Were already doing single family fix and flips single family rental. We were already in that space, but we spent a lot of time to make of freedom. And it wasn't really freedom. We're working our butts off. My wife's a real estate broker. She's always been right beside me and everything we do and running the business, running everything else were doing, we wanted our time back. We weren't able to spend time with our kids. We weren't able to take as many vacations and have fun with other people. Most importantly, we couldn't save anyone besides herself. If somebody came to us and needed a larger lump sum of money to pay off some bills or something like that, we didn't have that overgrowth profit to be able to just give away. That bothered me as hard as we work to not be able to give back. After that, with that meeting with that person, I knew he was in real estate. He told me that real estate was the answer. That's all I did, man. I dug into it like it was just, I was majoring in that particular space. Everything I could find a bigger pockets, listen to their podcasts. The best book that turned my mindset around was rich dad, poor dad by Robert Kiyosaki. That got me to think differently because we're all in that mindset to get a W2 job, save your money, retire, buy a home, everything else. And that's so wrong. It's, there's so many other ways to make money. There's so many ways to make money while you sleep. Through the studies, it come down to, okay, the super wealthy, the people that survive any economy or do very well in economy. It was people in real estate, large real estate. They either owned storefronts, multi-use properties. Most of it come down to large apartment buildings. A lot of those guys, even Donald Trump, he used other people's money to buy and do some of these projects together, whether that be a venture capital business or raising equity to buy larger, developed large buildings. Through all the real estate and investment books that I was reading it all come back to. Okay. If you don't start with a lot of money, you have to turn other people's money into a nice profit to be able to attract them, to invest with you. You're giving back at the same time. That was really driving me to really get into the space. At that point we said, okay, well let's work on how to get started and how do we reverse everything that we've learned to get to where we want to go now? Now you've got to, can totally reshape yourself from being a multiple business owner, real estate broker, and everything else we're involved in. Now we've got to shut that stuff off because I felt the only way to go far as a single, they focused one thing and that being real estate and raising equity. We had shut down the hot rod shop. We turn loose of all the single family fix and flip opportunities. We left all that go. We got down. Now we've got one commercial building and one cabin, that's a rental, the RBL. And we're rehabbing that right now. We turn loose to everything else that was taking our time. From that point forward, that's when we said, okay, well we need to raise venture capital so we can get into this space and not have to worry about making money every day, probably to back up when I went in business for myself, cause we always ran businesses underneath the W2. In the afternoons, we doing all these things, the fix and flips the running the hot rod shop, that was all 20, 25 hours a week. We did pretty good with it, but we never really went very far because weren't focused on that a hundred percent when I left the W2 in 2020. That's all I focused on was the shop we made. Great, great leaps and bounds, but there was one thing I think that is a pretty good seat for other people that want to be an entrepreneur. We're all bred over so many years to think that there's a certain number that you need to live on. For me, I always wanted to make $1,200 a week. I always wanted to make a hundred thousand dollars a year. At a hundred thousand dollars a year after your taxes, probably about 64,000 a year, and then you buy a house and you get your car and maybe a boat, a couple other things at $64,000 a year, don't go very far. There's not really a whole lot left to invest in a 401k or an IRA. You really left to work the rest of your life, which is what a lot of people that was underneath me. I seen him do. And that drove me crazy as well. Cause I knew that wasn't the answer, but one of the most limiting things that I would tell people today, if it's so beneficial to be an entrepreneur and get your time back. Cause that's the only thing we don't have control of is our time. We can always make more money. To the point I had always had in my mindset that I need to make $1,200 a week. When I left that W2, I had in my mindset standing in my own company, I only need to make $1,200 a week. That was the most limiting thing my mind was ever bred to do. That was ridiculous because I now had the opportunity to make $1,200 in a few hours, if that's what I wanted to focus on. That's possible because you're not getting paid by the hour, you can do multiple things. You could do multiple things at the same time, you can make 1200 bucks a day. I originally wrote down the business plan that I need to make 400 bucks a day. That would suffice all the way through. If I worked six days a week, it's pretty good money. I got to think in a nobody less than 40 years old needs to think like this, you don't need to be on a golf course. You don't need to be working 20 hours a week and you spend the rest of the day on the lake, do that once you've made a bunch of passive income. Long story short, it was kind of a kick in the pants to say, Hey, wait a minute. Here. You can do. You can make as much as you want. It's up to you. I would tell any entrepreneur starting out that don't limit yourself. There is no limits in this game. You can make as much money as you want in the least amount of time as you want. You're no longer, you're no longer here getting paid for your time. You're getting paid to think. If you think outside the box, you can make as much as you want. And I think that's what's most important. Yeah. You can get your time back, the time backs. The only thing we don't have.

Josh Wilson: 15:49

Yeah. One of the things as an entrepreneur, I appreciate you sharing your story. One of the hardest things that I had is going from hourly, right? I grew up on a construction site, swinging hammers, digging ditches, right? Like I'm not the smartest cookie here. Okay guys. Going from that to then moving into real estate words, value-based you do deal, you get a commission, right? Going from digging ditches to, syndicating deals and investing and such like that was such a hard thing for me to go. I'll tell you, the temptation is always there, right? Like I had a government job and it was stable and secure. Didn't pay a lot, but I had, pension and I could work there for 150 years. One day lived the life I want. That was the hardest shift for me is going from hourly or some type of salary To value creation where I can do a deal and I can make 14 grand in a day or something. That case that doesn't happen every day. Just full transfer.

Eddie Austin: 16:47

No, but the opportunities there, especially if you're not in that previous mindset and also you're, if you have the time to focus on that. You're on that W2, you're focused on whatever you're paid to do. Yeah. Once you're outside that space and you break your mindset, then you're able to, find a, a flip wholesale.

Josh Wilson: 17:11

Yeah. I was having a conversation with the guy and I'd love to hear your thoughts on this. He was an engineer mindset guy and I was talking to him about some of the ventures I was invested in or working on. Dude almost had anxiety attack, just listening to the amount of risk and exposure and like the deals that I've lost. He was excited to just, he goes, I don't know how you did it. I'm like, I don't know how I do it either, but I'm figuring out.

Eddie Austin: 17:34

Right. And that's an interesting point too. Cause I have several friends, that's engineers or self and they have that engineer mindset. They, everything is mechanical and they're great people. I love talking to those guys because they have such a different perspective on what we do and how we do things. Yeah, I've had that shame culture shock of, I don't know if that's the right method. I don't know if that's the right thing to do.

Josh Wilson: 18:07

Yeah. The next thing that I had to overcome and I'd love your thoughts on this is Eddie is from not only when I went from trading, from time to dollars to value based in pure hunt. I only eat when I create value, right. That's active to then passive, Hey, I invest money. I might not get it back. The goal is trickling passive over time. That was that's a, that was a hard, or it I'm in the process of trying to increase active and also pay attention to passive. That's where I'm at now, personally in my life, like how do you approach that and what are you doing to, improve your own mindset, but also work with others on that.

Eddie Austin: 18:51

I think most importantly, one thing, probably off your question, but it seems like real estate is one of those things to where you can be actively trying in the space and somebody is going to notice that you're trying in that space and it's, they will almost without asking for a dollar, lend a hand to help show you or teach you ways to where you can do that act of investment into a passive investment. There's so many ways to educate yourself to get to that point. I think once you break that habit of being that trading that hour for dollar into thinking outside the box, you can do other things. There's so many avenues to learn. If somebody has zero experience with say large apartment building operations and rentals, then you can start in a wholesaling. You can start in just finding a good property or finding a good value and then giving that to a busy professional in that operating area. They're happy to pay you a fee for that.

Josh Wilson: 20:02

Totally. Yeah. So I got my start. Well, I just got my start super active where I was listing people's mobile homes in the middle of the forest, or, like list all these properties, listings, listings right now, open a phone book. I got, I, I started finding deals, wholesaling deals and I would make 14 grand. That was one of the examples when I just threw out a number, I made 14 grand from a door knock and I was like, wow, big difference. I didn't have to do all the work and investor was lined up and they're like, I would love to do a deal like this. Right. In terms of, in terms of deals, in terms of things like what are deals that you guys are hungry for? What kind of deals do you guys look for and how do you, how are you guys executing on them?

Eddie Austin: 20:47

Okay. So, in the business right now, it's me and my wife and she's a real estate broker. She's no longer selling. One of the first things we needed to get in front of us was deals. You needed to create some type of a deal source automation machine, basically, we sent letters, direct mail letters, stuff like that. When we started getting some traction there, I always evaluate your ROI on your time. Just like you are going out and looking for those opportunities and then on a door knock, you turn probably, I don't know, a couple of weeks worth of work and probably not making much on the mobile home sales to one door, knock to an instant value opportunity. That was probably a lot quicker and a lot less time on your side. That probably got you to click . For us, that click was okay, we're sending all these letters, we're finding properties, but they're not exactly what we want. How do we hone this in to getting exactly what we want? In our private placement random or on our website, you'll see that our opportunities are class B, class C 10 to 350 units. That's a very broad focus. I think you really need to get laser focused on what asset you're truly looking for. For right now, we're looking for 100 to 200 door properties. We're looking at high growth, high population areas that have a tremendous amount of appreciation, a strong rent growth multiplier. We're looking for two and a half to 3% on that rent growth multiplier to be able to continue to cashflow more every year and in cities that can support that. We started looking the deal source side, we're sending these letters, we're sending them to all kinds of properties. We're getting calls back on fourplexes six plexes. It was great, to get in front of people, but that wasn't getting us where we wanted to go. I started to guest hot car, warm call brokers. I would get on a LoopNet and I would find a piece of property in the area I was looking for. I'd call the broker up. I would show now things on LoopNet are usually that top dollar. They usually don't make sense. It's not what you're looking for. Sometimes you'll find a diamond in the rough most of the time, not so I'd call that broker up and I'd say, Hey, I'm interested in your property. I'd go take a tour. Most of the time I wasn't interested in that property at all. I was interested in the relationship because I seen that he had sold multiple properties. He had the type of property I was looking for. So I would give good. I would go walk the property. We would have great conversation. I'd ask him, Hey Amanda, what are you doing next Tuesday? Would you be available for lunch? See if I could take him to lunch. Most of the time they're busy. Maybe you cut the property tour short. If there's not another one leading up, go out to lunch that day, I guess, kind of thing. I would usually schedule my tours around 11 o'clock. We might walk the property for about 30 minutes. If he wasn't super busy that day, I'd say, Hey, why don't we go grab some lunch? Because it was kind of right at lunch timeframe. We'd go out to lunch and he would start to build a relationship to me. He would ask me about, where I come from, everybody's interested in your story. Moving forward, the magical thing was, is the next time he got a property before he ever last listed that on a loop net or any other platforms, he would give me a call or an email. Hey, I got a property. Are you interested in it? You might hone that in that he might know, okay, he's only looking for class B in this city and he's looking for something that he can just go in and repaint the walls and replace the countertops. He's looking for two or $300 a month. You kind of really hold in what you really want in a property. It saves you a lot of time. From that point forward, they would either send me one or I would call him up and say, Hey, I'm really looking for property. I need a property right away. He might go talk to his friends or management company. They probably weren't even thinking about selling, but because that broker was working for me, he'd probably find a property that wasn't even an opportunity. He would make more money because we're out here having him look for properties for us and creating opportunities. That's not even available to the general market.

Josh Wilson: 25:43

Yeah. Yeah. That's the benefit for, on the acquisition side is he can essentially scoop up properties and get both the listing in the buy side of things, construction's the deal, right? Versus you list something, then you have to build an external relationship with someone else. Working with Bob, that's why I like working with buyers when I was actively doing brokering. Cause you can get an off market property and get the full commission,

Eddie Austin: 26:08

Right.

Josh Wilson: 26:09

Then, if it's not a good fit for you, the person still might say, Hey, still list my property. I do want to sell it. It just didn't work with this buyer. It's a great way to find listings and deals as you're going through this process. What kind of milestones have you guys hit? What kind of successes have you guys had on the, either the res or the acquisition side or management side? Like where give me some success.

Eddie Austin: 26:33

Success has been a fight for sure. It hasn't been easy. We wanted to start the fund and launched this opportunity, we started in may of 2021. Now that date was significant to me because I felt that was when you're getting in the space and you've been in it a little while you get really good at reading the market, understanding what things are getting ready to happen. You look at history and you kind of know what the economy is going to do. And, and you kind of have timing indicators that you pay attention to. Knowing that we're pretty close to another economy cycle, went ahead and launched the business and may of 2021. Now what I did not predict was the government printing money like crazy and kicking the can down the road. That's something I didn't see coming. I also didn't know the name of what this might be called as far as what drives the economy down this time. With them printing all the money and inflation going the way it did property values skyrocketed. I was looking for another 2008 through 10. I was looking for, we launched the fund. Everybody's afraid to invest in the stock market. Everybody's afraid to keep messing with cryptocurrencies or mutual funds. They're looking for other opportunities that was the real estate syndication fund. We would be invest in real estate. We still offer returns even in a down economy. I would have that safe place to put that money. From that point we needed a property. The problem is if you have a dog of a property or property that was barely cashflow and the one thing 20, 21, and even in 2022 provides you'll sell that property somehow some way. Yeah. If you've got a property that you could not list and sell before because of the income and expenses, you're going to sell it today because the supplies are so low. That we wrote, we underwrote 25 to 30 deals a week. We run across our desk, just underwriting properties, getting the deal source to the door. We would underwrite. We would do the due diligence. We would look at the debt and then we would look at the syndication. We did that repeatedly. I mean, repeatedly. It come down to almost every time that the properties that were looking at buying wouldn't even afford their own debt because of price was so high and the expenses were high and the rents were low. I know a lot of people in the space struggled with that. The other thing we found, the properties that were super hot, that were very interested in. It made sense. There was a cash buyer out there with a 10 31 exchange where he probably sold his thousand 2000 units, recently multiple properties. He was sitting on a bunch of cash. Velocity of money was very quick for him. That property come available and were underwriting it for two or three days, it was too long, it was already gone. Or we put it under LOI or a PS or under close to a contract and somebody would swoop in and do all cash.

Josh Wilson: 30:07

Yeah. How do you, so how do you in these kinds of scenarios, right? Like, what's your plan? What's your strategy for, you guys are looking through deals, you're going through your due diligence, underwriting. People are so hungry for deals that they're overpaying for deals and they're doing some things that could, it's super interesting to me, but like, how do you guys, what's your plan on, on cash flowing and creating good opportunities when all are getting scooped up by 10 30 ones or op funds or hedge funds overpaying, right? Like how are you guys approaching this?

Eddie Austin: 30:43

I think the most important takeaway to that is sticking to what and don't fall in love with the property fall in love with the numbers. The, if the location is right, you can't change the location. The location needs to be perfect or at least will be perfect in the next couple of years. Or there, you could see the opportunity there, right? You have to know the opportunity headed towards that property. You have to read history going, or you have to read the future. The second thing is, is be extremely good at your numbers. You have to know the numbers are strong. For me, two things, anytime I look at a property, I have to know that it's got a good feeling to me. When I step on that property, I know it's the right property. And then two, because I've underwrote it. I know the numbers. Well, I know the demographics well, and it's going to work. When it comes down to a bidding war, I think it's most important to remove your ego and remove your emotional attachment to the deal. Those two things will cause you to overpay. Most of the time, you're not paying attention to how much you're going to put into this property, to the point that it's no longer worth it and you shouldn't have bought it. Perfect example. We had the unicorn of a property come across our desk from an off-market broker. Same way. We build a relationship with him. He called me up. He said, I got 190 units in Texas. Because we're looking at 102 hundred unit properties, we knew from a hundred miles away, what a hundred unit deal to a 200 unit deal, the price per door. We knew what the income and expenses we could tell you what it was a good property in the first two minutes on the phone. That helped a lot to be laser-focused on that type of asset that we knew it so well. He calls me up, he goes, Eddie, I've got a property. It's 190 units in Southeast Texas. So I like it. You know, I'm getting excited. I'm taking notes, got my notepad here. It's like I do. Now I'm writing things down. And I said, how much? He goes, it's a class B property. That's okay. Class B because of location class. Cause there's a lot of other classes there. On people, sometimes misclassified property, you got your regular class, class C is 30 years old class be of 20 years old and so on. And I said, okay, so class B. So what do you call it? A class B. He goes, well, it's a 1978 property, but it has class B amenities. That's okay. All right. So it's got a pool. He goes, yeah, it's got a pool community building, dog park. I smell, I like the sound of this. He goes to the operator, just put about 700 grand into rehab and the property, new roofs, new air conditioning systems. I said, okay, so immediately I'm kind of slowing down on my writing because I'm thinking the price is going to be $25 million. It's not going to be worth it. I said, what's the average rent. He goes, all the average rents are nine 50 to 1200 a door. I'm thinking I'm getting ready to hear the number. I said, so tell me about it. How much, what are we talking? He said, you can do a loan assumption of 11.6 million. I went 190 units, $11.6 million. I said, what's the loan assumption immediately, not to get excited, not to lose your basis, stick to your education, stick to what, don't jump on that, prove that it's worth it. I said, so can you send me the term sheet? 11, 11.6 million. He goes, yeah, absolutely. He sent it to me and it was terrible debt, probably seven and a half, almost 8% interest, early pay off penalty, pretty steep, a clause in there where he could not refi even for a new purchaser. I said, you know, that's not good. I said, so let's get involved in this. Let's ask the seller or the representing broker, whoever you're speaking with, what will they take straight out to buy a straight out? He said, well, what are you willing to give? I said, well, let's just ask the question first. They came back and he said, 11.8 is good. He'll do 11.8. It's a $400,000 early payoff penalty. He'll eat two. If you'll pay for two. I said, okay, let's do it. Fill out the LOI. We sent it in. And I'm looking at these numbers, man. This thing's like 40% cash on cash return. 30% IRR to my investors. I mean, this is a deal like you just never see before. It's pretty, it's going to look good on the website. We're first and best for like two weeks, but they wouldn't let us tour the property. It wouldn't let us start a due diligence, but they hadn't signed her LOI. I knew they were waiting on something. He calls me up about 10 days before Christmas, before the end of the new year. He goes, Eddie, we need you to move to $12 million. There's one other buyer. There, your terms are the same, but he's at 11.8, will you go to 12 million or so? I didn't want to show him excited. Cause I know the property is worth $20 million. The first day I signed the closing statement, we got $28 million, et cetera. We've got yeah, $8 million, instant equity of the property and it's a rocket ship of a deal. I'm not going to say, Hey, I'll how much I'll give for this thing. To show emotional attachment to it, I saw him go to 12 million, no problem. We redone our LOI. We sent it in. He calls me up about three hours later. He goes, Eddie, can you do all cash? I said, what's my due diligence time. I said, well, I needed to close before the end of the year. I said, I'm going to play cards. I'm going to say no, wait, wait. It's not that I can't it's that I want because I haven't done my due diligence. I haven't been on the property. I haven't done an environmental statement. There's no survey done. This thing might be built on an oil field. There may be toxic stuff all over the ground that I don't know about. I am not going to over leverage ourselves to be in competition. I won't do it. Just that point is there is the market is so hot. Don't get screwed up by that. Stick to what stick to what you're educated about and check the boxes. Make sure you have an environmental statement. Make sure that you're doing proper due diligence. Don't look at 10 units on a hundred unit property because those other a hundred units might number a hundred or 90 units might kick your butt. If you've over, leveraged yourself on the price you're done. You're going to get your first bad rap because you can't pay your investors. No matter what we get ourselves into, we stick to the numbers a hundred percent.

Josh Wilson: 38:13

What happened with that deal?

Eddie Austin: 38:15

So I played cards with him. I said, no, absolutely not. I said, either number one, they had access to this deal before I did, which supposedly that couldn't have happened. I had access to it two weeks before anybody. A second, they know about the property or they're just being totally risky. I said, so I'm going to stick to where I'm at. I have a better number, my due diligence longer, but no, I can't close all cash, not going to do that. My due diligence time stays the same. My closing going to stay the same work, 12 million. That's how we're going to do it. And he goes, okay. About four days after the new year, he calls me up. Or three days after the new year, he calls me up. He say, well, they closed the property. And I said, no way. I said, I want to know who he said, it was a mutual fund company out of California. I said, do what they said. They closed it in seven days. They wired the money. In seven days, I said, do a property visit. And he goes, Nope. They never stepped foot on the property once. I said, have they ever invested in real estate? Nope. I said then why? It makes no sense to me. About a week later, we go to investor meeting up indianapolis and they had a, a lone person there that was big and lending. He was telling us about the new lending programs, like the bridge debt and conventional debt and institutional lending. He also spoke about mutual funds now giving loans and apartment buildings. And I raised my hand. I said, why? They said, well, we'll get to that, but they need returns. Their returns are coming out of the stock markets and other programs that they've used traditionally. Now they're looking at real estate because it's a more stable investment. I said, and I'm sitting here going well, I wish they wouldn't. Cause I just got beat by the best deal I've ever seen. That money that would have been an easy race for that deal. 30% IRR, you'll get your money back in year two. It was great. Long story short, it gets to the end of his presentation. He said, right now the end of 2021, there was $17.6 billion in dry powder and mutual funds. I went, why didn't they just say something? We could have put it in the fund. We could have invested in real estate. They said, they've got to get this deployed into some type of investment that gives returns because they're going to end up sending the balance sheets to their investors and they're not going to see any activity and it's going to be a bad deal. They got to get their money out to the market. They got to get it deployed. And I'm like, well, what's their numbers. I'll, I'll deploy it and multifamily for them and let us do it because we are experts in the market or at least we practiced to be every day. Let us do it because we know what we're doing. And they just do what they do. They bring money in. We give them returns back. Beautiful thing. On that deal there, all they needed to do is just place capital. I don't know if they had some type of investment structure that they had to get that much deployed or what, but they just wired the money. Now, if somebody was in the office, knew what they're doing. I would say what they did was they'll turn out to flip that property. They'll probably turn around and relist it for $20 million And make 8 million.

Speaker 4: 42:02

Wow.

Eddie Austin: 42:03

Or they'll just keep it and keep returns on it or let some other big company buy it. They knew it was a good deal.

Speaker 4: 42:09

Yeah. Wow.

Eddie Austin: 42:11

Yeah. That sucked, man. That was a kick in the pants.

Josh Wilson: 42:14

Yeah. That's my head's going many in the future. What will you do differently on a deal? Let's say you and I find that deal today. What would you do differently?

Eddie Austin: 42:26

That's a great, so that did, everything happens for a reason. And that reason got us to think. And it got us think a lot. The power of a real estate fund is you can raise capital for multiple assets. It's not a tenant and common model. It's not a, a S property syndication level. We have the ability to raise capital, a blind fund where we can raise from multiple assets. We don't necessarily need to identify the assets. We can say we're targeting a 15 to 20% IRR, 160 to 230% ROI, 1.9, a 2.5 on the equity multiplier. That's the target assets we're looking for. That gives us the ability to raise. Were actively looking to raise $20 million in the next two months for this fund, just for the reasons of one. If we would've had $20 million in the escrow account at that time, and me and you found that deal, whether you brought it to me or I brought it to you, however, that might be, we could have paid all cash herself for that property. We could have backed it up with institutional long-term debt. It would have been a perfect picture. We would have probably caught up several of our friends or other operators that's in Texas. We'd have probably had them meet us at that property. We'd have probably had 30, 40 people running around doing due diligence. Over a few days, we would a rush through an environmental statement, check the boxes off and we'd have paid all cash. To learn from that, we've always been looking for that perfect property to be able to advertise and start actively raising. We shouldn't have done that. We should have leveraged the fund model to build targeting advertisement, to raise capital, to be able to deploy that at a minute's notice, if needed To give us that velocity, we have the ability and we had everything in our toolbox to compete with these big money people. We just didn't utilize it. Those are lesson learned, lessons, cost money, good lessons, cost lots. It's tuition from college, except you learn a lot quicker.

Josh Wilson: 44:56

Yeah. I've had a lot of good lessons in my life. Eddie let's do this. I got a deck of cards with some questions on it. Tell me that.

Eddie Austin: 45:06

Or stop right there.

Josh Wilson: 45:07

Okay. Ooh. Wow.

Eddie Austin: 45:13

Oh, I should pick him up.

Josh Wilson: 45:15

Who is, who's an influential figure. Do you wish you can make clones of and duplicate their character, their who they are?

Eddie Austin: 45:27

That's that's perfect. That's great. My original influencer was grant Cardone, especially because he does the same thing that we're doing. He does exactly what we want to be in the future. So he's a tremendous influencer. I love Grant's tenacity in the space, how driven he is. I'm trying to be careful here. We want to become a lot larger than grant. We want to be the next grant. We want to be the next success story over that, and then be viewed as the next Blackstone or Goldman Sachs. We want to become 50, 60,000 units strong. That doesn't happen alone. What grant has is a large team. Now Grant's business model comes from sales grant, started in a car sales to sales of sales for other people to marketing. He took his marketing career and turn it into real estate and then started a regulation, a plus to where he raises equity to bars, buy large properties. I feel like we might have a pretty good opportunity to go very far because we are reachable. We are able to be a, we're a relationship based company. We're going to build a relationship with you before you invest with us. We do get leads through the door where we immediately are asked, about our investment opportunity and they want to straighten vest. I don't like that model. I want to be able to educate you on what you are investing in and build a relationship before we ever talk about money. I do not care about transactions. I feel like grant is a very transactional company. That's one thing we would change in our business model. We feel like might take us hopefully a little farther, but like I said, I'm not taking anything from him. I love what he does. Amazing person. It takes a lot to get in front of him. We looked at kind of a mentor program from him. It was 40,000 for me, 40,000 for my wife, I think close to 10 grand to get to his conference, to be there. We were told that there probably the other investors there. I said, at what point do I get to sit down in front of grant Cardone and pitch him on my company to get him to invest with us or invest in one of our deals side by side and the partnership. That's what I'm looking for as a partnership. They said, well, for $2,500 bucks, you can do a VIP dinner where you'll be in the same room with grant. I said, so that still doesn't mean I'm going to sit down in front of him. No, no, that not usually happen. You know that I was watching some of the sales funnels that he's got one of his guys doing the day and where it's up, you know, it's free. And then it's $50. And then it's $97 and it's $5,000. You're investing a million dollars in the card on capital it's a sales influence. It's a powerhouse. I just want to figure out how to do it with less transactions.

Josh Wilson: 48:52

Copy, copy. Well, that's interesting where, the, the direction you guys want to go during this interview, two things is one. What's the question that I probably should've asked you that I may be missed. The followup to that is you could end it with telling us, where people could go to learn more about you and connect with you.

Eddie Austin: 49:10

Okay. So first question was.

Josh Wilson: 49:13

What, what questions should I have asked you that I maybe screwed up and didn't ask you,

Eddie Austin: 49:18

Oh man, I don't think he did. He hit, I think he went great. If anything, I'd probably went off the rails too much.

Josh Wilson: 49:25

Yeah. You're a relationship driven guy. You're you're you like a, you're a storyteller like you like to talk and, and to have conversation,

Eddie Austin: 49:33

Right? There's multiple things that we want to do. I definitely want to be a motivational speaker or influencer to a lot of other people. At some point, I listen to that stuff every single day. I think it's powerful to keep your mindset very strong, where you want to go. Don't let negative thoughts in your mind. Don't let negative people be around you. If they are, go somewhere else. That motivation, that mindset is temporary in my opinion. As a motivation, so you gotta write your goals down. You have to be sure that you're driven. I think anything that you're not passionate about, you should stop immediately. There is, discipline comes into play where you'll do something. Even if you hate doing it, you'll still do it because you have to get it done. You have to be passionate and driven to be able to get there. In this company, we're 100% passionate about it. We are very strong on the word of extraordinary being extraordinary. As you see on my wall here, make your money being extraordinary. That's a hundred percent us. We want to get around extraordinary people and offer extraordinary terms. That's what we want to do is be able to help a lot of people.

Josh Wilson: 50:53

Far, our listeners, people that listen in and they resonated with what they say or with what you said, they want to learn more about you maybe do a deal with you. What's a good place for people to connect with you and do that.

Eddie Austin: 51:03

Our landing page is J E capital and that's Juliet echo capital. You have I N V so J capital I N v.com. You can also find our investor portal@investdotjecapital.com. You can find us on Instagram. You can find us on YouTube. You can Google, or you can go on YouTube and look up Eddie Austin. Eddie Austin is basically me from where I come from, way back in the business to what we're doing currently. We obviously have a J capital YouTube page. You can find me or my wife, Eddie Austin at LinkedIn, Jennifer Austin on LinkedIn, Facebook. We have Facebook. We have find us on the better business bureau. You can also Google us our office here and tell city, Indiana, multiple places. And my phone number.

Josh Wilson: 52:01

Yeah, go for it.

Eddie Austin: 52:03

As our business phone is (812) 739-3413 that's 8 1 2 7 3 9 3 4 1 3.

Josh Wilson: 52:13

Very cool. It, thanks for coming on the show, fellow people, fellow dealmakers, especially in the audience. If, if you want to connect with our guests, all their contact information will be in the show notes below, connect with them. If what they're saying resonates with you, if you are working on a deal specifically, want to talk about it here on the show, head on over to the deal. Scout.com. Fill out a quick form. Maybe get you on the episode next until then talk to you all on the next episode. See everybody.