Apartment Syndication 101 with Lee Yoder

Posted by Shannon Robnett Posted at September 21, 2022 Posted in Podcast

If you have financial freedom, it is possible to live the life you want, pursue your passions, and spend more time with your loved ones.

Lee Yoder, a physical therapist, business owner, and realtor, will discuss how having the appropriate mindset, acting on what you believe, and not being afraid to start helped him achieve his sustainable income flow through apartment syndication in this episode.

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Apartment Syndication 101 with Lee Yoder

Hey, everybody. Welcome back to Season Two of the Real Estate Rundown today. I have the pleasure of having Lee Yoder on my podcast today. And I just want to welcome you to the show. Welcome. 

Yeah, Shannon, glad to be here. Thanks for having me. 

So Lee, you’re involved in apartment syndication in your particular market in Cincinnati, Ohio. Tell us a little bit about how you wound up doing this for a living? Why Cincinnati? And what you see is the value of how you got where you’re from, to where you’re at?

Okay, yeah, sure. Well, I’m a physical therapist. By trade, I went to school, forever to become a physical therapist . It was a good job, I was actually doing home health physical therapy, where I drove around to older people’s homes and did therapy with them in their home. And it was a great job for the family. But I was just bored out of my mind, it was not fulfilling or challenging for me. 

So the company I was with actually brought me in the office, I became the clinical director was actually a startup staffing company. So I was really kind of rising, you know, climbing the corporate ladder, moving toward the Director of Operations, but then I was on the other side of the chain and where I was really enjoying my work, but now it was like, not good for my family. And so it was kind of having some conversation with some co workers and maybe felt the same way. And, you know, someone turned me on to real estate a little bit. 

I read, you know, the little purple book, Rich Dad, Poor Dad, and thought, okay, maybe because I thought, “Man are my two options, you know, do a boring job, you know, home health, physical therapy, but be really good for the family, or, you know, do a job that I really enjoy, but it’s not good for the family”. 

And after reading Rich Dad, Poor Dad, I thought, you know, there’s a different way to do this, you know, I could, I can kind of have both, that’s what I was going for. And so I left a corporate job took a pretty big pay cut, went back to home health, physical therapy, but I did real estate as a side hustle. 

So I left at the end of 2016, toward the end of 2017, fall 2017, I bought a house to flip, then did a duplex next year, got into a couple of small multis the next year, those I’m working full time, but as I kept getting a little bit bigger, and by the time I got into the small multis and I had 34 units, we were really starting to cash flow and seeing the power of owning rental units, you know, whatever, whatever route you want to go, you can do well with single families too. It’s harder to scale. 

You just start seeing the power of, okay, I’ve got a property management company managing these for me, you know, I did a lot to help turn them around. I kind of acted as the GC. I didn’t have to do that but I wanted to do it but by the time we were done with that, it’s like there’s nothing more for me to do on these really because somebody’s managing them now. I gotta check in every once in a while, but they’re just gonna pump out income. 

That was the proof of concept that you read about in books like Rich Dad, Poor Dad and others, you know, more multifamily. And so at that point, Shannon, I just said, you know, I love it too. Not everybody has to be in this actively and do it full time but I loved it. 

So I really wanted to jump full time. I was able to do that at the end of 2020. And I just said you know, I want to do more of this and… The reason I like syndication specifically is because you get to bring more and more people into it with you. On the small multis. 

I just brought one or two people on each deal. And they made, you know, a lot of money right alongside me. And that was really fun. So with syndication, it’s fun because I get to bring even more people in. So yeah, that’s kind of how I got into it. Why I like it so much. 

So you started this in 2016. 

That’s when I left my job. I didn’t really get started until 2017. And…

So you but you read Rich Dad, Poor Dad and 50?

Yep. 

Okay. So in a very short period of time, you were able to create the lifestyle.

Yeah. 

Which is really what I think. I think that if you were to poll syndicators, I think the thing that they’re after isn’t really the love of real estate. It’s really the love of the lifestyle, right? The fact that just like you said, by the time you have done the “You buy it, you fix it”. 

You put it over here with somebody that’s taking good care of it, and you swing by once every month, once a quarter, depending on your relationship with them, and how long you’ve been working with them, and check on it. 

But that provides you with the lifestyle that we’re all looking for. Because I don’t know if you’ve figured out some of my habit, Lee, but we only got one right around this rock. 

Yeah.

At the end of that time, our time’s up. And what we make of it isn’t necessarily about what we build physically. But what we build in the lives of people in the lives of our family. And that only comes from the lifestyle that this affords you.

Yeah. 

So when you’re talking about syndication, break this down for my audience. I know that a lot of people are very, very familiar, but I like to make sure that everybody’s aware of what the terms are, when you’re talking about syndication. What does that mean?

Well, really all it means Shannon is, you know, buying an eight unit, you know, we went out and bought an eight unit. And I did that with a buddy of mine. And you know, here in the Midwest, and this was, you know, a couple years ago, I thought things were hot back then. But it’s nowhere close really now. And so we just, you know, we both put in $30,000. And we could buy eight units. 

But when you go to buy, you know, even the first one, we did a 45 unit, now we needed $550,000 To close, and me and my buddy didn’t have to 25 apiece, you know, or 270, sorry, 275 apiece, to put into it to close that one, you know, 30 is one thing to 75 is another thing. So you need to bring on more people. And when you’re bringing on more people, and you’re not going to be your own, all of the people in on the deal are not going to be active, that’s technically a syndication. 

So it just means you have to file with the SEC, you know, do some paperwork, and those people have to fill that out. And you kinda have to go that route. And it’s just because we need to bring in more people, because we’re buying bigger deals, so we need to raise more money, and all of those people aren’t going to be active. 

You know, you don’t want to have too many cooks in the kitchen. I mean, you could do it that way. 550 is still not that much. Now, you know, we’re raising a couple million each time. But yeah, that’s what it is. You want to buy a bigger property. So you need more money. So you need more people. So you do syndication? 

Yeah. And so you know, the other thing about syndication is you’ve got the general partner that does all the work night and, and signs for all the loans and takes all of the risk in that regard that if things go south, it’s not just about the loss of the initial capital, people will be showing up to get your cars and you know, things like that. 

I mean, the side that we never like to talk about, but that’s what the general partner does in the general partner takes care of all the daily management, all the reporting, all of the filing gets the taxes done. This is the fun time of year, we got to make sure everybody got their K ones, all those kinds of things, right. And then there’s the limited liability side or the limited partners that don’t have any risk other than their initial capital. Right. Right. 

They can lose that. I mean, that’s a very real thing that people I make sure that people understand. But it’s mitigated, right, because we’re professionals, and because we know we’re doing and so in that we do all the work, and we get a disproportionate capital return. 

We put in some of the capital, I don’t know how you do it, a lot of people put in 5%, some put in 10%. You know, some put in a little bit more, but you put in some capital, but you get a return on your efforts gauged by how well your investors do. Right? 

Yes. 

And so when you pull all that together, it really is a great marriage or great partnership for people. Like your former self, right? 

Yes.

Nothing but money coming in and no time to do anything with and wanting to get started on this, but not really. Maybe they didn’t hate their job, right? Maybe they didn’t interfere with their family. 

Maybe they don’t have a thirst for the freedom that you have. Right and so they’re able to participate with you and allow you to do what you’ve become a professional now at. 

Yeah. 

…and help guide them through that. So when you were looking at that it walked me through how you became the syndicator, you did the first deal with your buddy, then you went, you know, you got “Charlie Sheen” going on. 

Now you got a bigger itch, you got more to buy? What? How did that work? I mean, take me through that progress one more time. 

Yeah, really, you know, I just build up slowly. Shannon, I think, you know, when I tell people like, if you really want to get in, if you want to be an active apartment, syndicator and it is a job. Yeah, you have to, it’s my full time job. You laid it out perfectly, when other people have different full time jobs, so they can just invest their capital. 

But if you want to go full time, I think you’ve got two options, I think you have to either start small, and learn the ropes and build it up yourself, where you gotta go partner with somebody that’s already doing it. Then you can like, just jump right in, you know, some people will do the coaching programs, and they’ll find somebody and they’ll team up, whatever. So I just started smallish. And, you know, I had, you know, my first multifamily was a duplex. Now, that’s still residential, but, you know, I managed that myself. 

So learn a little bit about, you know, how that goes and manage. And then I’ve got a 16 unit and eight units and a 10 unit. I had a property management company managing those, but I was the asset manager, and I was a GC. And so for a year, you know, just spent the whole year turning around those three properties and learning what it’s like to be an asset manager, and, and, you know, making a lot of mistakes and learning from those and things like that. 

When it came to, you know, our first syndication was a 45 unit, it was really just buying, you know, a little bit bigger apartment building, we use the same property management company. And so it’s really just like, taking a step up and adding another zero, you know, and buying more units and having more investors and again, hiring some syndication attorneys to take care of that side of things. 

But yeah, I think to really answer your question is just, it was the experience I had of owning three small multifamily properties, and managing those and working with a property manager and getting the debt on those and all those things. That’s, that’s really what just gave me the hands on education to become an apartment syndicator. 

It’s funny, because a lot of people think that you’ve got to go to school to do it, or you’ve got to go to, you know, you gotta take this mastermind, you got to do these things, and all those things can be helpful. 

Yeah. 

I think I find more successful syndicators stories are a lot like yours, not to minimize your story. But they made their way down this path by bumping into the wall, right. And they made it there, because they looked at it as simple as this. 

This is the next step. And then this is the next step. And they kept going. And by the time they realized what they did,here they are, they’ve created a financial freedom for themselves, like you have that’s created the time freedom that’s really allowed you to disconnect your time spent with your funds earned. Right?

Yeah. 100% Yeah. 

Well, now, Lee, when you started this, did you think it was hard?

Um, when I was very first, you know, we did a flip first. And that was hard. And, yeah, you know, definitely parts of it seemed hard. It just seemed like a big challenge. And again, Shannon, that’s what I really liked about it. I wanted a challenge. And I just say each step just felt like, like a huge step. 

Then jumping into it, I think, often, it was maybe a little bit easier, just because you have people helping you like the property management company doing a lot of things. But each step. Yeah, there were definitely some hard parts. And really, it was a mindset thing, getting my mind around it. But there were some hard times for sure.

And now that you’ve done it, and you’re looking back on it, same thought.

Um, yeah, I don’t know. It’s a really interesting question. There were, again, hard times. But I wouldn’t change it. That’s for sure. But yeah, I mean, difficult. But overall, I’ll tell you this, it went much faster than I could have ever imagined.

The way we bill that just went, and the way like, you know, we just built this momentum, and the momentum just kept going. I will say that happened a lot quicker. And it was, I guess, just easier and the amount of time was much less to get to where we are now, that’s for sure. 

I think that’s kind of like anything, the more you do it, the better you become at it, the more you are successful and get to the cashflow result. The more you believe that you can continue to do it. And the more you know, I think the thing is that I find a lot of people, you know, very similar story to yours. They didn’t really set out to do it. 

You know, it wasn’t like they decided, you know, at 18 years old, “I’m leaving, I’m not going to college, I’m going to become a syndicator!” right.You know, what are you going to be when you grow up? What you know… But I think that people find that out of necessity, it becomes quite easy to do. 

Then there’s the other side of the problem that you’re solving for the people like yourself in your previous life that don’t have the time and the knowledge or belief, right? 

When you’re looking at what you’ve created, and you’re looking at how you got here, what would be some advice that you would give to someone that’s just starting, that’s the sitting there, it’s the same job that you had the choice of keep the one you liked, that your family hates, or keep the one your family likes that you hate. Go with what’s behind door number three, and read a little purple book and take a purple pill. 

Yep. Yeah. Great questions. And I would say, a couple of things, one, networking, for sure. I mean, educate yourself. But that’ll only take you so far. The more you can network with people and get around people that are maybe… it’s great to be around some people that are just a step or two ahead of you. Then It’s good to be around some people that are 10 steps ahead of you. 

The people that are, you know, just a few steps ahead of you are really going to be able to show you, hey, you know, I’m here and you feel like I’m so far beyond you. But just a year ago, or just two years ago, I was right where you were. And here’s what I did. And I’ve heard other people say this Shannon… I like when people say think big, but start small. 

I mean, again, there’s other ways to do it. But that’s how I did know that eventually, I wanted to buy apartment buildings. I knew I wanted to own rentals, but I still started with a flip. And I wouldn’t necessarily say you should start with a flip. But a duplex might be a good place to start. And the reason I say that is because the hardest part is like if you’ve done nothing, I think the hardest part is just getting started. 

So I would say it’s almost like starting with anything, you know, if you know somebody that’s buying a fourPlex, see what you maybe you can get on that, “Hey, can I bring some money in? Could I do some work?” And could I get it, just get started and get the ball rolling, the quicker you get the ball rolling, you know, you’re gonna start building momentum, you’re gonna start learning, you can’t learn most of what you need to learn until you start doing it. 

You know, books and podcasts can only teach you so much. So I will try to get started as soon as possible. And you can start small, you’ll surprise yourself. If you just get started. Even if you start small, you’ll surprise yourself at how quickly you can scale and get to where you want to get to. versus saying I only want to own 100 apartments, 100 units plus apartment buildings. 

So I’m waiting for you to know, I’m only doing that luck, especially in today’s market. So I would just get started. But get around some people that are just a couple steps ahead of you. It’s really going to help you. 

Well, and I think you bring up a valid point. I mean, everybody, I mean, your journey is not unusual. It wasn’t for you. Right? You wouldn’t come from the classic college background. You did the thing you were supposed to do, you know, but it’s not an unusual story in our world that started out with a gateway drug of a duplex. Yeah, no.

Yeah. 

The next thing, you know, you’re doing larger deals, and you’re seeing how valuable that skill set can be. And, you know, this was one of the things that I learned, you know, I’ve been in real estate development for 3537 years, right? Nobody ever wanted to help you. In this, you know, nobody wanted to help you as a general contractor. Nobody wanted to show you how to build more efficiently or to negotiate better contracts because they weren’t working with. They weren’t. They weren’t in a position. 

One of the things that I’ve really seen that you hit on in multifamily in this world of syndication is everybody seems to want to help everybody else. And it feels a little weird. At first, you know, like, you’re going that I just, you know, Why is everybody so helpful. 

But the reality is, we’re not necessarily competition. In fact, if we can bring good underwriting, good skill sets, and good mentoring to the marketplace, we’re going to have a better rental pool, we’re going to have a better rental market manager, we’re going to have better products, we’re going to have better sales techniques. We’re all going to level up. And the market itself levels up. Right. 

Yeah. 

And it’s one of those things that I think that because we come from a background of wanting more. I don’t think that most syndicators have that scarcity mentality that says this is mine, and I can’t share it with you because then you’ll have my advantage. And I can’t let you have my advantage. 

Yeah, absolutely. I think because again, especially the bigger you get Shannon, you know, the pie is just so much bigger, it’s okay to split it up. Like there’s enough pie to split it up. And you’re actually you know, just gonna be better off. I mean, when I talk to people, yeah, I’m always thinking like, this guy or girl might go find a deal and not be able to take it down. 

They’ll come to me, you know, and so I am trying to help them but it’s like this, this could end up benefiting me. We could just partner on it because it’s gonna be big enough. If someone brought me a duplex. There’s not enough cash flow there. For me to even, you know, put in the work necessary now, I still think people should start there. Now, but when you go bigger, I mean, it’s a big enough pile to split up three, four or five different ways if you have to,

And it’s just like learning to ride a bike or drive a car, right? I mean, you don’t really want to start out in NASCAR trying to learn to drive. Right? 

Yeah. 

I mean, you gotta I mean, a duplex is a great place to start, right? Or partner with somebody or be part of a team or bring your talent that says,” Hey, I can do this or this.” Right. But it allows you to grow in how you come out of this. And you know that? I mean, you’re so correct. I mean, you know, I heard this said the other day that being of value to valuable people is the easiest way to get valuable information. Right. 

Yeah. 

Because if you’re sitting there going, “Hey, can I ..” I mean, and I think this is a lost art, right? I mean, 300 years ago, everybody had an apprentice, right, you went through that apprenticeship program, where you were the blacksmith’s apprentice. And then when he finally [died] from a heart attack, you became the blacksmith, right? 

I mean, that was just the natural progression, you have to wait for somebody to die to advance. But here we are, in this world where now we could be a value to valuable people or be of value to people that we see value in what they’re doing. 

Then they can help us level up just like you said, Hey, I got to deal with no way to cut this up. I can’t figure this out. I’ve never eaten an elephant before. Oh, come over here to Lee’s Lee’s house. Lee makes elephant stew all the time. Right? 

Absolutely. Yeah. 

So when you’re looking at how you get started? I mean, those are some really great nuggets there on how to get started. But what are some of the things that you found once you got started? And you’ve gotten down this road? Five, six years? What are some of the things that have really changed in your world?

You mean, just like my lifestyle, things like that? 

Yeah. I mean, your mentality, your thinking, your lifestyle, and all of that is wrapped up? And then all of that was why you started the journey. What’s been the result along the way? 

Yeah, I’ll tell you, Shannon, I mean, I was talking to somebody… and my wife and I were talking about the other day, and I said, “You know, we’re not where we want to be as far as reaching our real estate goals. And I’ll probably never be because I’m just, you know, always wanting to build and always wanting the next challenge. But as far as my schedule [goes], I’m pretty much there”. 

I mean, I love the schedule I have, my wife actually stays home as well, our kids do a hybrid homeschool program. So you know, I’m able to get up. If I need to get some work done in the morning, you know, I’ll do that pretty early. And then I jump in, I have breakfast with my kids, every single morning, I help out with Homeschool three mornings a week, the other two, they’re in school, the full day, and then I jump into work, you know, I eat lunch with my wife, sometimes. 

Sometimes I’m taking potential investors or other multifamily investors out to lunch, dinner with the family every night. And then, you know, I might do a little bit in the evening. But then, you know, for me, I don’t, I get a lot from work. So I usually work a little bit on Saturday, but it’s just, it’s whenever it makes sense. It’s when you know, kids aren’t napping anymore. 

Before it was, you know, when they were taking a nap. And Sunday, same thing that everybody’s doing. And even Sunday morning before everybody else gets up, I might be doing work before we head off to church and things like that. So I’m working a lot, it’s when it makes sense for the family, I wouldn’t have any other way. Because I’m really bored when I don’t work. 

I mean, that’s another thing I like is, even when we go on vacation, I get to do some work, because I just get bored if I spend too many days without doing anything stimulating and challenging. So I love that I get to work hard. But kind of when I want I mean, you know, I don’t really have anybody telling me what I have to do. And sometimes that’s a challenge, but I wouldn’t have it any other way. 

So I love the schedule. I love how challenging it is, how stimulating it is. I like working with other people, again, we use third party property management. You know, we’ve got our lenders, we get all our investors, I’ve got a partner that I work with. So yeah, it’s fun, exciting, challenging work. But it fits around my lifestyle, the life that my wife and I believe God has called us to and our family work fits in around that. 

And to your whole boredom thing I heard John Maxwell, this last weekend, say that, “people talk about working until they’re done”. And then what do you do after that? You know, he said, I will work till I’m done. But that will likely be when I leave this planet. Right. And, not that you I mean, it’s funny because people that don’t understand they understand the J.O.B. — just over broke. 

Somebody else controlling their time telling them when to be there telling them that this Saturday, we got to work on this project. We got to do this, to have that freedom that you can create the cash flow you can create the lifestyle that why would you ever quit? You know? Why would you ever stop doing it? This is having lunch with your wife and kids. 

I mean, I think at some point your kids won’t want you to take them to college classes and participate, you know, but I mean, “Dad, come on, you know, school in college would be a little bit a tricky”. I just see how people that get into this lifestyle, find the passion because it allows them everything that they ever wanted out of life, right? 

Yeah. Exactly. And another cool thing that I liked about the syndication chain is, again, with the partnering thing, it does allow you to specialize a little bit in what you want to do. So when I had the small stuff, I did everything. Even though I had some partners, they were really just money parties, I was doing everything. So wearing all the hats, whereas now today, I brought on a partner and I said, “Hey, I just want to go out and be the front end of the business. Can you handle the back end?” 

So he’s the one that talks to the property management company every week and sometimes seems like every day and, and kind of managing the properties we already have. I get to go out and hunt for the new properties and hunt for new investors every day. And that’s why I enjoy doing so again, it just got… Why would I stop doing that? Because this is the kind of stuff I really enjoy doing.

Well, that’s you know… again, you didn’t start out headed down this journey. You didn’t think you were wearing hats. You thought you were just doing a flip, and then you’re doing a duplex. And how all of a sudden it gets to the point where I have five people in my business that do other parts of the business that I… Well, they tell me that they don’t like it when I do that part of the business, right?

It’s not that I don’t enjoy it, it’s that they don’t enjoy picking up after me when I only get it halfway done or don’t do it right. Like you, I enjoy being out in front. I like talking with new investors. I like talking with new people paperwork, not so much seeing a deal underwriting a deal. I like that part. Am I really good at getting the 12 cents in there? Not really. 

That’s why I got Cody, you know, and we are partnered on that stuff and we work through that. And it’s awesome to see that your journey started out as a solopreneur. Now you’re an entrepreneur, and now you’re bringing other people in? What do you think is the biggest benefit that your business creates for your investors?

Yeah, I think just allowing them my goals. I think what we’ve been able to do… You’re right, not not everybody’s gonna jump into real estate full time and some people enjoy their job. But usually people, even if they’re in a better situation than then maybe “just over broke”, as you explained, you still get a lot of people are going to get in a situation where they would like to make a little bit more money, maybe they want to take an extra vacation, maybe they want their kid their kids to go to a private school. And they just, you know, we can’t quite afford that. 

Most people, right, like they think the only way to do that is to trade more time for more money. So I’ve got to work for this promotion. Well, the promotion means more responsibility, maybe more travel, you know, just more stress. But they think that’s the only way for me to be able to send my kids to private school.

What we’re able to say to our investors is if you can save up some money, and put some money into real estate, not only does it create a nest egg for you, because we are building long term wealth as we pay down the debt and create equity and things like that, we’re going to pay you.

Now you’re going to get a quarterly check, a quarterly distribution, it’s going to pay you today. So if you can put some money to work for you, then you can, you can make enough extra where you can send your kids to private school without spending more time away from your kids. 

That’s kind of our dream and our hope for our investors is. What we have been able to do for some of them, is give them extra cash today, to improve their life. To improve their financial situation for the family without the traditional way to do it. It’s just, “I gotta trade more time for money” which [is] great, send your kids to private school now. 

But you got to spend even more time away from you… Got to be even more stressed out more, you know, maybe short tempered when you’re home. So our goal is to be able to kind of give people that extra financial cushion that they need or, you know, kind of some options in their life without trading more time. 

You know, and that’s true. I mean, you know, the other thing that I look at too, and I’m starting to teach this to my adult children is that, “If you want something, get the investment that pays for that something, right?”

It’s not necessarily about… I mean, if you trade the time for money, you go work those more hours, and then you buy the private schooling. When it’s done. It’s done. That’s not a great investment. But what if you traded that time for the investment, then bought a duplex that put off enough money that you can send the kids to private school on a monthly basis? Then when the kids are done, you’ve got enough equity in the house to send them on to college. Yeah, you still have the asset, right? 

Yep.

So what people forget is that there’s cashflow and there’s more. I mean, there’s real appreciation where it continues to grow. And it’s such a beautiful thing, right? 

Yeah.

I find that most investors focus on one of two ways. Either focus on cash flow, right, or they focus on appreciation. One of two, but we often forget [that] if my focus is appreciation, I forget that there will be cashflow. Yeah, if my focus is cash flow, I forget that there will be appreciation, right?

So, you know, one of the things that we all look at is, “How we’re able to trade the time value here and get those things done”. Well, what have you found? You know, it’s that time of year when we’re all starting to think about taxes? What are some of the tax benefits that you find that you’re getting out of your real estate properties? Yeah.

You know, one thing is, some of that appreciation, when we have sold, we’re paying long term capital gains tax instead of tax or taxes, ordinary income. So we’ve definitely experienced that where we’re paying much less taxes, we did do a cost segregation study on this 96 unit that we just bought in December. So all of our passive investors are gonna get enough depreciation on this particular property, if they only use it against the cash flow on this property. For the next three, four, maybe even five years, they will not pay any tax on the cash flow that they get. So not only are we providing you again, you know, some good cash flow,

You’re not going to pay any taxes on it. So that’s really cool. On the GP side, the benefits are incredible. You know, we’re gonna get enough depreciation where, you know, I won’t pay any taxes for everything I made last year, because we got so much depreciation, so that’s better. 

You’re gonna we know what you’re gonna do with the money. You’re gonna go buy more real estate, aren’t you? 

Absolutely. Yeah.

And people often call it cheating on taxes. But the reality is, this is doing exactly what the IRS wanted you to do. Right. What the government wanted you to do. Because right now in America, we’re 9 million housing units short, right? Yeah. We’ve always, throughout history, have been short housing units. It’s the financing. That’s always been the problem, right? 

Yeah. And so as funding is ebbed and flowed, that’s what caused 2009, 2010. We had the market crash because people had “funny loans”. Then we go through this period, where nobody can get a loan, it doesn’t matter how good your credit is, or if you gave one up. And so we went through these two different segments, but it had nothing to do with me.

Out of that we didn’t build any houses. So now we’re in a super dire need for housing. And now you’re going to reinvest in more housing, you’re going to take your tax benefits for the rich. 

You’re going to take your money, and you’re going to reinvest in more income producing assets, that’s going to give you more of a tax problem. So you’re going through this continual circle, but what you’re continuing to do is improve your communities, right? 

Yeah, absolutely. And I think if you read a book like Rich Dad, Poor Dad, you know, when I read that, I thought, You know what, you’ve got two choices. You can be mad about that, you know, what you just explained? Or you can join it? I mean, that’s kind of what Robert Kiyosaki says, “Guys, yes, the tax code was written by rich guys. Okay, so you can be mad about it, or go do it.” They’re telling you the tax code is telling you what to do. So be mad that other people are doing it or go do it? 

Well, the other side of it is, you know, I look at it like it’s a tax code, but people look at that as a penal code. And it’s not, right. It’s an instruction book, right? If you do this, you will reap this benefit. If you don’t do this, you will not get the benefit. Right. 

You just flip it over, and I get it, you know. But so, so there’s so many other benefits. You’ve got time freedom, you’ve got tax benefits. You’ve got work that you did five years ago is still paying you today. You know, you’ve got appreciation more than a thank you. But then there’s the things that you’re doing with your investors that are helping them do the things that they aren’t able to do or not wanting to do. 

You know, not everybody loves the idea of spending their Saturday driving around, drilling, and looking at property right? Yeah. Some people call that a stalker. I don’t think that that’s just driving for dollars, just so you know, Lee, that’s not a stalker. You can’t stock real estate. It’s an AMA. It’s an inanimate object. 

Yeah, I agree. I agree. 

So are you primarily in one market? Are you branching out all over? What are you doing with your growth plans? 

Yeah, so for right now seeing we’ve been all in one market, and I mentioned Cincinnati, Ohio, because more people know that market. But I actually live between Cincinnati and Dayton, Ohio. And everything we bought so far is really actually in the Dayton market.

Our property management company is pretty big for the date market, but that’s the only market they’re in so we’ve got a good team here. So it’s much easier and I’m much more confident and just continuing to add in the date market. So we’ll keep picking up you know, 40, 50, 60, 80 unit stuff and Dayton but we are very interested in moving to other markets.

The more I’m in this space, I do a podcast as well, I’ve been in a mastermind. So I’ve connected with a lot of people that are in other markets. I would love to buy, you know, somewhat close to me, but like in Lexington, Louisville, Kentucky, Indianapolis, Indiana.

I would love to buy one of those markets, if I did that, it would be a bigger property would have to be 100 units. Plus, I wouldn’t want to own something small and another market, I want to own somewhere where a bigger, bigger regional property management company could control that and have somebody on site and things like that. 

Maybe I think that’s probably, I think, this year, our main focus would be just continuing to grow our portfolio where we’re really where we’ve really got a good team, which is Dayton, Ohio. But along this year, we’re definitely gonna be looking for opportunity to expand into another market that that’s, you know, within 234 hours of us.

It’s so it’s great to hear you say that because everybody thinks that you know, you want one… You want to diversify. So you got one in California and then you got one in Kentucky, and then you’re up in Iowa, and then you’re down in Florida. To concentrate your efforts is really key, because then you can perfect your craft. Now when you take it four hours down the road, you already know what you’re doing, right? 

You’ve got it figured out, you’re just moving down the road, you’ve got some other options, but it’s not that you’re stretching and straining your network. You know what you’re looking for, when you go into it, every market is a little bit different, they’re all still fairly the same, but there are a little bit different. Knowing those nuances, it’s easier to pick up on that than trying to learn how to do it with one in Dayton, Florida and one in Dayton, Ohio. You know, same name very different results.

When you look at that, and you look at your growth pattern, and you look back at what you’ve put into this… What do you think has been the some of the some of the lessons that you’ve learned that have made you a better entrepreneur? Better not just not just in real estate, but just all around entrepreneurship through this journey?

Yeah, I love that question, Shannon. Because, for me, specifically, there’s been a lot of growth there. You know, often God puts us with somebody who’s very different than us. And that’s my wife. 

We didn’t know that until I started becoming an entrepreneur and started getting into real estate. And I remember her saying, I didn’t know you were like this when I married you. And I said, I didn’t either, you know, I had no idea. 

As long as they don’t put that other sentence in there. “I didn’t know you were like this, or I wouldn’t have done it”. Right. Haha!

Well, she might have… Yeah, she might have just, she might have been thinking that. But yeah. You know, so we’ve learned a lot about each other. And so she’s very risk adverse, you know, I’m a gambler. Like, I want my chips on the table. I want to play you know…

I tried to tell her, I’m a football guy, and I am telling her all the time, we didn’t stop acting like we lost, we only threw an interception. The game is still going on. Let’s, you know, “quit acting like we’ve already lost the key”. And she’s like, “No, I feel like we’ve already lost”. We lost. Yeah, voting it’s over. We’re going home. And I’m like, “This is the first quarter”. Exactly!

No, and my wife now that you bring it up, my wife and I are very similar in that, you know, once you’ve won, that… You can’t ever risk that… You can’t ever lose that you can’t… There’s a lot of things in this business that have some bit of uncertainty to it there. You can do a lot to take that out. But there’s always things that go south, right? 

There’s I mean, we bought a property and, you know, property disclosure said one thing and you found out another or, you know, but like, you know, like I said, I was with John Maxwell this last weekend, and one of the things that he said is that that’s fine. It’s not a failure till you keep doing it. 

A mistake is one thing. And that’s something that you learn from and you create a different system. And you don’t do that again. You know, I remember the time that I lost a $50,000 earnest money was my personal money. My wife keeps reminding me, you know, and no, she’s not excited. Absolutely not excited, but we’ve changed what we did. And while that was a $50,000 masterclass, it’s not something we will ever do again, right. 

And it’s not something we’ll ever put ourselves in a position to ever risk our investors’ money to do that. But if could I have learned that lesson? Without that mastermind class? Maybe not? Yeah, I would have liked to think that I could, but there’s so many things. I told my dad. “I would never do that!” That I did. Yeah. I don’t know. 

I have a very similar you know, I totally agree with you. There’s like you just have to learn by doing. I remember when when we hadn’t started yet. We were getting the flip and my wife said “Lee, are you sure you know everything you need to know, to do this?”. And I said, Hannah, I know everything I can possibly know from reading a book, everything else I’m gonna learn… it can only come from doing it. 

Are you sure you’re in physical therapy, that sounded pretty lawyer esque!  know everything I need to know from reading a book like I’m disclosing, absolutely. From the book. 

Yep, yep. But know what’s been causing it, it’s really been a great thing. God put us together for a reason. And she slows me down a lot. But what that’s done for me again, because I’m like, let’s go, let’s go. Let’s go, let’s go. We flipped one house. And it took us one flip, to learn that flipping is not investing. Flipping is just another job. And it’s really because she forced me to slow down. She said, Lee, that was terrible. 

Because I was doing a full time job, did a flip on top of it. It was like I was back at that corporate job that I just ran away from. I said, this isn’t good for the family. And now we’re like back in. And she’s like, I thought, like you told me real estate investing is like money comes in. And it’s passive. And you know, and here we are, you know, doing a flip. And, and I was ready to do another one. Let’s do another one. Let’s get this going. Let’s get this going, we’ll get better. And she’s like, Nope, we’re not doing that. Let’s stop. Let’s rethink this. 

By the time I took some time to think about, I said, “You’re right, that’s not what we want to do”. So we jumped into a duplex, and then kind of the same thing, “Hey, this duplex is much better than the flip. This is investing”. You know, we had some renters in there. We only we didn’t even own it for a year, but we saw our income is more than our expenses. And it’s gonna be that way, for as long as we own it could be forever. So this is totally different. 

But I said, you know, she again [goes], “Wait, like, Is this really what we want to do kind of slow down”, and I said, “How many duplexes are going to take us to get to where we want to go? 20, I don’t want to own 20 duplexes”. So let’s go to the next…

So the whole time, Shannon, I’ve really felt like we’re not moving fast enough. Because my wife is you know, frequently kind of nope, slow down, slow down, slow down. But we went single family duplex 16 unit, you know, one year after another. And so we only bought one property a year, but we went from a single family to a 16 unit. cCmpared to a lot of people that’s really moving at lightning speed. And for me, I felt like it was lightning speed when I look back, because we slow down. 

One thing I like to do is to keep telling myself, “This is the goal is to not be efficient, the goal is to be effective”. And so you can be efficient and flip, you know, 25 houses a year, and maybe have a good outcome. But if I could have been efficient and flipped six houses in those first three years, but I would own nothing, and I would have been anywhere closer to my goal, I would have just made more money. 

I probably would have made the money back that I took in a pay cut going from my corporate job back to home health, physical therapy, which is exactly what my flip did for me. So sometimes, you know,  you got to slow down, you got to work on the business, not in the business be effective. What should be the next thing you’re doing? And my wife really helped me do that? Because we’re different. So that’s been kind of cool for me to learn that in the entrepreneurial journey. 

And we’re actually going to play this for all the wives on Valentine’s Day. But that’s so true. I know a guy that does passive investing out of his flipping business, right? Oh, perfect. You No, but he loves the flipping part, right? And you’re right. 

I mean, I did one remodel, right, actually moved the house and put it back on a basement and did a remodel. And it was one of the most horrible experiences of my life, right. And so I know what I don’t like, because I’ve done it to figure out that I don’t like it, right.

And there’s some people that are smarter than you and I leave that can look at it and decide that they don’t like it before they go and do a flip or do a remodel or do these kinds of things. But it’s really great that you’ve got that partnership with your spouse, that you can do that kind of a thing where you can come through it and go, “This is what we liked about it. This is what we didn’t. And here’s our goal, and this is what we’re going to do”. And this is the thing that I love that a lot of people forget, because they’re so programmed for a J.O.B. is you can come out of the deal. 

Re-triangulate toward your goal and go okay, “We did it that didn’t quite get us where we want to go, we’re going to shift over here and we’re going to go this direction to get us there”.

You’re really adjusting as you go to get to that finer point that by the time you get to the place where you’re like “Bang Bang, Bang Bang Bang”. People like “man, how do you get there?” I got a bunch of stuff back here you got to know.

Oh yeah. Yep. 

You know, funky lots that you’re building on or or duplexes that you’re trying to turn into a quad or all these little things that people go through that you’re just gonna go, whoa.

But that’s the growth pattern, right?

Yeah, absolutely. Yeah, you gotta go through it. 

Yeah. So you mentioned Lee, you got a podcast. Tell us about your podcast and where we could find you in the world. Because after this conversation, I know my audience is gonna want to definitely check out where you’re at. 

Yeah, sure. Appreciate that. Threefold Real Estate Investing is the name of our company. That’s the name of my podcast, Threefold Real Estate Investing Podcast, where we talk [about] multifamily, very similar to yours. Talk a lot about faith and family as well. You can find me through my name Lee Yoder on Facebook or LinkedIn and then jump on our website three. 

We’ve got a free ebook there and some other stuff so jump on our website for sure. 

And if you ran through that a little fast, look over his shoulder. You can see Three Fold there on the wall. You can get that nailed down. It’s big enough for those of us that didn’t wear their glasses. Let’s see if we got it. 

But guys, I want to thank you for showing up and listening to another episode of the Real Estate Rundown. Lee, I want to thank you for coming and being our guest. It was super great to get to know you and know your market, hear your experiences, and your thought process. I appreciate you sharing that with our audience. 

Absolutely. Thanks for having me on Shannon. It was a pleasure. 

So guys, if you liked this episode and want to get more go to our YouTube channel go to Spotify. Click him there, hit the bell that way you’ll get notified every time we upload another episode of The Real Estate Rundown.

Keep you up to date on all these fine people that were able to interview. This knowledge that we’re trying to bring to you guys. And best of all, guys, let me know what you think. Send me a Like, a remark. I’m on YouTube as well. I’m on all the social channels. 

You know where I’m at guys. Thanks again for joining us on The Real Estate Rundown. We look forward to seeing you. Have a great day guys.

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About Lee Yoder:

Lee was practicing physical therapist when he realized his true passion was building his own business and investing in real estate. He took this passion and considerable action to quickly build a portfolio with several small apartment buildings. He was able to quickly reposition this portfolio, bring it full cycle, and provide an incredible return for his investors. Today, Lee is focused on syndicating larger apartment buildings.

He is the founder and visionary behind Threefold Real Estate Investing, and he’s committed to forging a path that will generate incredible wealth and opportunity for all involved. His focus is driving the business forward by forging new relationships with top-notch professionals in the real estate world and bringing on more partners to invest alongside Threefold.

Lee also hosts a podcast, Threefold Real Estate Investing, which discusses multifamily real estate investing, while also focusing on pursuing better relationships with family and a better walk with Christ.

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