“People move away from pain doubly, then they move towards pleasure.”

-Tim Lyons

Tim is a 16 year veteran of the New York City Fire Department and currently serves as Lieutenant in the borough of Queens. Until recently, he also worked part time as an emergency room nurse at a level one trauma center. He brings years of real world management and leadership experience to his real estate investment career. Tim’s initial goal with real estate was to create passive income and in turn, be able to spend more time with his wife and three little girls. After partnering on a multifamily property, he saw firsthand the power of real estate investing as an opportunity to create passive income and build wealth for his family. Tim has since started cityside capital, with the goal of not only growing his own portfolio, but also to help others realize the power that real estate investing can have on creating passive income and building wealth. His company, suicide capital has 79 million assets under management, including 561 multifamily units, has also invested as a limited partner and a 256 multifamily unit deal in Texas and then a large retail super center, and Tennessee. temperate tributes his early success in real estate investing education, and resting in coaches and mentors, and surrounding himself with like minded people. And most recently, in April 2021, Tim became an Amazon number one best selling author and a book he co authored with other authorities.

In this episode, Trevor and Tim discuss:

  • How Tim started his real estate investing career.
  • The steps you need to take prior to starting your own real estate investing career.
  • The process of buying the First Three Family.
  • How force depreciation works.
  • The process of syndication deals and how it works.

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Full Transcription Of Today’s Episode

Trevor Oldham  00:44

Hey, everybody, welcome back to the real estate investing exposure podcast and today on the show we have Tim Lyons. Tim is a 16 year veteran of the New York City Fire Department and currently serves as Lieutenant in the borough of Queens. Until recently, he also worked part time as an emergency room nurse at a level one trauma center. He brings years of real world management and leadership experience to his real estate investment career. Tim’s initial goal with real estate was to create passive income and in turn, be able to spend more time with his wife and three little girls. After partnering on a multifamily property, he saw firsthand the power of real estate investing as an opportunity to create passive income and build wealth for his family. Tim has since started cityside capital, with the goal of not only growing his own portfolio, but also to help others realize the power that real estate investing can have on creating passive income and building wealth. His company, suicide capital has 79 million assets under management, including 561 multifamily units, has also invested as a limited partner and a 256 multifamily unit deal in Texas and then a large retail super center, and Tennessee. temperate tributes his early success in real estate investing education, and resting in coaches and mentors, and surrounding himself with like minded people. And most recently, in April 2021, Tim became an Amazon number one best selling author and a book he co authored with other authorities such as the real estate radio guys, Robert Helms, Jim Rome’s 18 year business partner, and master marketer, Kyle Wilson, and many more. And that book is called bringing value, solving problems and leaving a legacy. Tim, super excited to have you on the show today.

 

Tim Lyons  02:29

Trevor, thank you so much for that introduction. Sounds good when you say it’s pretty much opened up here.

 

Trevor Oldham  02:36

Most certainly, and a temporary audience that may be hearing for the first time. Do you mind walking them through that first property that you had in real estate investing more was your thought process behind it, especially from someone that was, you know, working in the fire department for such a long time? And then sort of making that jump into real estate?

 

Tim Lyons  02:53

Yeah, absolutely. So you always, and I’m a regular guy, I’m a blue collar guy. But I also went to college. And you know, just like everybody else wanted to do the right thing and make money and have a family. And growing up, money was always an issue. If we spoke about money around the kitchen table, it probably wasn’t about a positive or a good thing. So I think growing up in that kind of environment, I just always wanted something kind of a little bit better for my family and to do better for my family as I grew up, and you know, growing up, I, you know, was kind of taught, you know, go to school, get a good job, pack money into your 401k. And save diligently for a down payment for your house as the house is going to be your greatest asset. And then someday, maybe you get a job with a pension, and then someday, you’ll be able to retire and you’ll be living a nice life. And I think a lot of us, you know, we kind of subscribe to the same kind of philosophy growing up. And it took me a long time. I’m going to be 39 this week, you know, so it took me a long time to kind of change that paradigm. But I did. And I started reading different books. And I started listening to different podcasts. And I started surrounding myself with some more like minded individuals about how to invest differently, or how other successful people build their wealth aside from bringing a company public or working on wall street or you know some of those jobs that we think about having a ton of money. So the more I got educated, the more I was kind of zoning in real estate and I always had a soft spot in my mind for real estate. And I always knew at some point I was going to be involved in real estate. But it wasn’t until I read Rich Dad Poor Dad while on a family vacation sitting on a beach in the Outer Banks, North Carolina summer of 19. And I couldn’t put this book down. And it was one of the books that I had in my firehouse overnight bag stuffed on the bottom. And I never read it for maybe a year. And at the time, I just wasn’t a big reader. But anyway, I read that book and I swear I finished it and I looked up and I said Holy cow. I wish I would have read this book, you know, 10,12, 15 years ago. I told my wife that day it is babe I said we’re gonna be a real estate investor. You know, and she knows that I’m always on to the next thing. I’m a hard worker as he was like, yeah, sure you are Tim, you know, absolutely, I’m 100% behind you. And to be quite honest, like, that’s huge for me, because when you’re getting into something like this, having your wife support, where you’re pointing to support as you so that was the summer of 19. By November of 19, I was closing on a three family property. So like, literally, four short months later, I just took this massive action that everybody talks about on podcasts and on audio books. And it sounds a little bit cliche, but there’s a point that I’m a very conservative guy at heart. And I don’t like to lose money, I don’t even gamble on things like the blackjack tables, the $5 blackjack tables, and I’m on vacation, because I just don’t want to lose that $5. So when it comes to other people and giving, I’m like the most, you know, generous guy, when it comes to me and my personal finances, I’m a pretty conservative guy, I’ll put it like that to be nice, right. So when I decided to do this, I certainly wasn’t chasing after that shiny object. I certainly wasn’t trying to get rich quick overnight. But it really took that intense education and reading and having audiobooks and hitting podcasts, and going to real estate meetups, all that little short four month period. And you know, I came across a term called analysis paralysis. It has a significant meaning because it turns a lot of people away from doing a thing that’s a little bit uncomfortable or a little bit unknown. And having that risk, they say in sales and psychology, like people move away from pain doubly, then they move towards pleasure. And anytime there’s fear that you know, the mind is built to kind of protect us anytime we have a fear about something we’re just not going to deal with. So within that four month period, I just kind of had that certainty that real estate has been around for millennia, people have made a lot of money in real estate, and as long as you buy it, right, finance it right and manage it right, you know, you will come out on top with a three family property, and cash flowed it, you know, for a couple of months, and I did a little better on my taxes. And at that point, my wife had some kind of buy in as well, she saw that it was working, she saw that you know the power of it now. And you know, although Christina doesn’t want to have a material participation in what I’m doing, she understood why I was doing it and how it works. So kind of right after that brought us into 2020. And, you know, COVID is kind of ramping up a little bit. And I had enough capital to maybe do one more similar type of purchase. But it took a lot of my time. And you know, with real estate, you know, you’ll always hear like the cliche terms of passive income and basically set it and forget it and so easy, but it’s really, it can be a lot of work. And being a landlord is certainly not passive by any stretch of the imagination. So that first property, we put a new roof on, we put siding on and renovated the first floor unit, all while working two jobs and having three little kids. My wife was like, dude, I thought you were going to get into real estate because you were going to have more time with the family. And I was spending a lot of time with this house. So I kind of was starting to think about how to make this more passive. And again, I was educating myself by reading audiobooks, audible podcasts, and I kept on hearing about multifamily. And before I get into my multifamily journey, I’m gonna throw it back to you to see if you want to unpack any of what we just talked about.

 

Trevor Oldham  08:12

Yeah, I think the thing we’re really sticking out to me is that first three families and deciding to purchase that. Do you mind running our audience through the numbers on what it looked like if you can give the details of purchase price, how much you’re making per unit, the rehab costs, I think half of our audience listening to it is looking to get into investing in real estate. And then the other half is invested, looking to take their portfolio to the next level, which I’m sure we’ll get into the city side capital part of the story. But I’d love for you just to walk our audience through the beginning of buying a three family and just what the whole process was like.

 

Tim Lyons  08:42

Yeah, it’s kind of hard to cash flow up here in the northeast. So you have to really kind of get into each area, you just have to get localized. I mean, sounds very cliche again, but it’s really block by block and neighborhood by neighborhood. And then it’s looking at the comps and then talking about the one three and five mile population growth and the median income and can the median income, support your rents and having access to data. I mean, we have more access to data now than we’ve probably ever had, once I narrowed down the neighborhood, because I certainly didn’t want to invest in a war zone. So I can just cash flow and I didn’t want to go down the appreciation only route and lose money, even if it was just a little bit of money each month. You know, I definitely was 100% in trends in the cash flow positive best thing for cash flow and appreciation is a cherry on top. So it really came down to how to underwrite a property. And you know, I relied heavily on you know, BiggerPockets comm and their calculators and you know, friends and family who had kind of gone down this route before and there’s a ton of Facebook groups and just kind of getting my questions answered that way. And then there was a local meetup that I went to and there were some people that I relied on to help me say, yes, is this a good investment or not? So the property that we ended up buying was a three family property built in 1920. So it was almost 100 years old, right, and the asking price was 315. We purchased it for 276. And the property taxes were 6100. And at the time of takeover, the gross rents were 3200. So you kind of hear, you know, that’s the 1% rule that people talk about, sometimes the gross friends should be approximately 1% of the purchase price. So an asking price of 315, and gross rents of 3200. That was right around the 1%. So I definitely didn’t want to buy it at that point. So we negotiated, that guy offered 250, and they laughed at us. But then, you know, they came back and we went back or whatever. So 276, we settled on. But you can see how that delta between the 3200 of the gross friends and rents hadn’t been raised in a number of years. Of those tenants, they’re all long term tenants, and the first four units were gonna be vacated by the owners, nephew or something like that. So give us an opportunity to get in there, refresh the first four units, we did plant flooring, we painted the whole place with a couple different hardware, fixtures and stuff like that, and new light fixtures, ceiling fans, and then we did the roof and we did the siding. So all in it was we did 25% down. And then we spent about another say 30k on all the upgrades. So we might have been into it for maybe 75,000 or so if I’m doing my math correctly. Right away, we were able to, you know, raise the rent on that first four units because they were getting a sweetheart deal, because they, you know, they knew the owner. And now Today we’re at 3454, the gross potential, you know, the gross rents. And initially, when we bought the property, we used an LLC to buy it. And again, like you know, there’s a ton of you know, activity on chat rooms or bigger pockets or whatever about do I buy it in an LLC, do I buy it in my individual name, because if you bought in the individual name, just so your listeners know, you know, you can get the best financing, you can get the lowest rates, you can get 80% LTV, and you can get a 30 year fixed amortized won’t be buy it through an LLC, then you gotta qualify for what’s called commercial financing. So we had a 10 year note amortized over 20 years, and the rate was higher, I believe was four and a half percent. So we were doing fine. We’re still cash flowing nicely, but we actually just refinanced and got a three and a half rate and a 30. year fixed. So now we’re just gonna cashflow this thing forever. So I mean, that’s really the overview of that first property, and just getting the education about being a landlord, right. So like, how do you collect rent? Well, there’s tons of apps and programs. So we use a free app called cozy CO, which ended up being bought out by apartments, but we can do our marketing through there for new tenants, we can collect rents, we can assess late fees, we can get work orders, we can do accounting through it. So it’s really robust, and it’s free. So that’s what we use, you know, so for some of your listeners who might be new and trying to figure out like, do I use spreadsheets? Or do I use a program like there’s good free and low cost programs, I can certainly help you out on this journey.

 

Trevor Oldham  13:05

That’s excellent advice. And first deal that you’re putting together and I believe through cityside capital at yourself and your brother, did you guys both go in on this property? Or was it just yourself that was going through the process with it?

 

Tim Lyons  13:17

No. So this was a friend of mine, our kids go to school together and play sports together and stuff like that. And I was always interested in talking about real estate. And he was also interested in talking about real estate, so we kind of just hit it off. And so I did it with a partner. And that’s the other thing, too. It’s always so much scarier doing any of this stuff by yourself, right? If you’re by yourself, and you’re like, man, like that fear and that anxiety, you know, am I doing the right thing, but you know, in real estate, really, if you can surround yourself with mentors, or coaches or a partner, and you can do this together or group a mastermind meetup. I mean, just having that access to all these resources and free resources that once these meetups, you can really kind of get that comfort and that level of certainty that you need to pull the trigger, especially for your first purchase.

 

Trevor Oldham  14:09

That’s perfect. I definitely could see how having a partner could help in that situation. And I think we’re audiences curious. Next is, it’s 2019, two years later, 2021, you went from owning this three families. Now I believe owning over 550 units. That’s quite a big job. And I can imagine, there’s probably a good amount of stories within that. And I’d love for you just to go through the mindset of shifting from the three units and you know, going out and buying these other properties that are out there to now having, you know, over 550 units.

 

Tim Lyons  14:39

Yeah, I mean, that’s great, that’s a great point. This is what I actually I’m so passionate about talking about because, you know, I could have waited and said, You know what, I want to have $100 million in a portfolio and 500 doors with 700 doors, right? And I could have waited until I could jump in and do that one thing. Well, guess what, like you’re gonna wait forever, right? Because you just have To simply take action so people ask me all the time, Tim, would you do what you did that first property? Or would you go for multifamily now that you know all about multifamily? And the answer is I would never do the three family and I would go right into multifamily. You know what I am in multifamily? You know what I’d be where I am today. If I never got started with those three families? The answer is 100%. No. So with that being said, Now, we’ve made that pivot into multifamily. Because Listen, I had the proof of concept with the three unit property. And then I had cash and capital, maybe one more similar type purchase, but I’m saying to myself, all right, you know, they always say there’s a rule not not a rule, you know, but people want cash flow, say 150 to 250 per unit per month. Right? So if you have one house and you’re at $200, for that single family house, like you’re doing pretty good, right? But is that really gonna move the needle for somebody? And yeah, it might be if you get a smoking hot deal, and maybe you can refinance, if they’re a few years and take those proceeds and put it into a new property. And, you know, little by little, you know, just build up that portfolio, there’s absolutely nothing wrong with that. And that’s probably what I would have done had I not done multifamily. But getting into the multifamily space, people talking about being able to scale and go quicker and go bigger and build out a team. And it’s a lot easier to raise money for a 200 unit nice complex in a great market than it is on a 1920 built three family property in the northeast. There’s just no scalability, because eventually everybody runs out of capital and everybody runs out of deals. So that’s kind of how people go from that single family duplex triplex quad space into multifamily is, they’ve maxed out the number of loans they can get, they’ve maxed out the number of loans their wife can get, you know, they don’t want to necessarily go to the hard, hard, hard money lenders or other creative financing routes, and then they like, Listen, we’re I’m gonna sell my portfolio and get into multifamily with a 1031, or, you know, whatever. It’s kind of like that progression. So now I’m into multifamily. And I decide, again, I am a couple months into my three family and the beginning of 2020 COVID is being talked about. And now I’m hot and heavy into real estate. And at the time, I’m still working as a firefighter full time, and a ER nurse. And I had to kind of make a decision. I had read some books, the one thing by I think Gary Keller, Ray, you got to focus on one thing and kind of niche down. This down to it hurts, right? And I said to my wife, I’m like, Listen, if I’m going to go into real estate in a bigger way than i got i Something has to give, I can’t be a good dad, I can’t be a good husband, I can’t be a good firefighter and a good nurse, and still have my sanity, right? There’s just not enough hours in the week. So I had to make a decision, you know, am I going to leave that comfort zone, have that side hustle, I’m a full time firefighter. And we all have side jobs, and an ER nurse and a level one trauma center was my side job. And it was a hard one and I loved it, I was fulfilled. But it was trading time for money trading my precious time away from my family for dollars. So essentially, we decided together that it was a risk we were willing to take. So I resigned from the hospital right before COVID kind of ramped up, which is maybe not the best move, I guess. But then I decided to get a multifamily. But at the same time, I’m listening to these podcasts talking about coaches and mentors and how much they cost. And I’m like, man, I would never pay for a coach. I would never pay for a mentorship. Because at the time, I had a very limited, you know, pool of capital. And I’m saying to myself, well, what’s the return on investment? If I use this capital to go get a coach? And what if it doesn’t work? And what if this and what if that and you know, all these limiting beliefs that I had thinking so super small, but it’s hard when you’re faced with, you know, a limited pool of capital and you want to put to work, but then you have an opportunity to be mentored by some of the best people in the business and kind of rip off and duplicate right r&d ripoff and duplicate what they’re doing. How did they become successful? So together with my wife, we’re like, okay, so we decided to invest in a mentorship program and I vetted a number of different sponsors and had us. It was like speed dating on steroids, you know, and I finally got to the Jake and Gino multifamily mentorship program. And I immediately knew that I had found the guys that I wanted to work with. And that’s what we did. We invested in mentorship, and oh boy, I could talk for hours on how that absolutely was a rocketship of opportunity. By doing something like that.

 

Trevor Oldham  19:27

I can definitely attest to having mentorship and a coach. I know back in July of 2020, I hired a coach for myself and just the accountability, the way that they push you, the insights that they give you it’s just a bar, a bar none to anything else I’ve ever spent my money on. It’s almost like I wish I had a coach my entire life and why they just wait until the last couple, you know, a year or two ago to get one so I can definitely attest that and and as you started working with them, what was that sort of first deal there you were able to put an under contract or start to invest in that was I would say probably a little bit better. Bigger than the three families?

 

Tim Lyons  20:02

Yeah, so very quickly, my coach was a guy who was from New York, and I’m from New York, right? So we kind of hit it off. And he’s a young young guy. And he had done six or seven projects by that point. And I was really, like, just so intrigued by his story and how he had the success and his work ethic. And basically, he took me under his wing, and you had an opportunity for a syndication that he was going to do 43 units in York, Pennsylvania. And I didn’t know anything about your Pennsylvania, I didn’t even know that there were the park buildings out there. So he said to me, awesome, this would be a great learning opportunity, do you want to kind of come along the ride? And I said, Absolutely. Because when I joined the community, I was pictured doing like 510 2025 unit properties, with maybe my brother and my dad, and maybe some friends. It’s a JV opportunity, right joint venture, I didn’t ever think I’d be doing syndication in a million years. So now he gives me the opportunity of a lifetime. And I’m seeing how the due diligence works. I’m seeing how they get property under contract, and I’m seeing capital raising and doing zoom calls and Investor Relations. And all this is kind of coming together. And I’m saying Holy cow, this is incredible. This is absolutely incredible, that investors can basically pool their money by a really nice asset that’s cash flowing from day one. And in multifamily, you can do something called force appreciation of the property. I’ll be more than happy to get into that if you want. And then there’s a timeline. And as an exit are projected numbers. And Holy cow, it just totally opened up my mind to syndication and investing passively. And I was immediately hooked. So he had given me an opportunity to raise some money. And, you know, I thought I was going to raise all this money. I know so many people from New York City, tons of people with money, I mean, this is going to be so easy. Well, guess what, when you are known as Tim, the firefighter, and Tim, the ER, nurse, and everybody in my circle, they know, like, and trust me, right, but they don’t know me as Tim, the real estate syndicator. So I was able to raise about 150,000 for that first deal. And really, it came from people that were just like me, hard working guys blue collar, you know, maybe had a side business, you know, and a family and they’re putting hours and hours and hours into their business, we’re working on the side, and they want to put some capital to work for them. And they didn’t know this was available to them. So by just having that conversation, it opened up a lot of people’s eyes. So then I immediately knew that I had to start changing how I was going to, you know, operate, I was going to be in the multifamily syndication space. And I needed to get my message out to my friends and my family. So, you know, you start hearing about thought leadership programs, thought leadership platforms, I should say, actually, and blog posts and video blogs and podcasts. And I’m like, holy cow, I barely have enough time to get through my day, like, how am I going to fit any of this in, right? And then, you know, I have to invest in a website and a company name. And I’m like, it was overwhelming. But I’m like, you know, what I was, I was so focused on the outcome, that it all made sense to me. And you know, my brother saw what I was doing, and he, you know, wanted to kind of be involved. He’s a W two guy, he goes down in Virginia, and, you know, we’re tight. And so we decided to, you know, and that’s how the cityside capital was born. So I’m gonna throw it back to you, and I can kind of take it anywhere you want to go?

 

Trevor Oldham  23:32

Yeah, I think what stands out to me is something you’d mentioned that forced appreciation. And in my mind, I can picture it on a two, three family, for a family even like a  10, 20 unit property, I can picture how force depreciation would work. But in this particular case, when you’re investing in these properties, let’s say you have 50-100, you know, 250 units, what does forced appreciation look like in those scenarios?

 

Tim Lyons  23:56

Yes, so you know, when you’re, when you’re buying a one through four family property that’s considered residential real estate, right? five units and above is considered commercial. And once you kind of, you know, split residential versus commercial out, they’re valued in two different ways. So your one to four unit properties, they’re valued by the comparable sales in the immediate area, maybe at the one three and five mile mark, right? By the comparable sales, maybe in the last six or 12 months. So basically, in essence, you know, whatever the neighbor’s house kind of went for, that’s kind of, you know, if your house is kind of similar, that’s how your house is going to be valued. Now, in commercials, you know, it’s all driven by what’s called the net operating income. And that’s nothing more than your gross income coming in, taking out your expenses, and that brings you to your net operating income, and that’s your income before you pay your debt service. So when you’re evaluating a commercial property, the healthier the line item of the net operating income is, the more valuable that piece property becomes. So how do you force appreciation? Maybe there’s, you know, maybe there was a mum and pop landlord, and they were just so comfortable with owning this property and not raising the rents because they don’t want to ruffle any feathers and have to redo a unit and whatever. So that’s called the loss to lease. So maybe market rent is 1000 a month, and they’re, they’re getting 750. You know, so that delta is $250 per unit per month. I mean, that’s $3,000 at the end of the year. And every dollar you can get into the net operating income is a multiplier for that value. So, you know, so maybe you buy that property, and you can slowly burn off the last lease, right? So maybe you live upon that person’s renewal. You’re saying, Listen, you’re paying 750, you get you hand them a rent report, right? Forever, you know about them, or whatever those reports, right? And, and you say, listen, the market rents 1000. So I don’t want to crush you all at once, but maybe we’re going to go to 850. And they’ll say yes, we like it here, we’ll stay or no, we’re going to look elsewhere. And now somebody else comes in and they come in and maybe 1000, maybe you do a little renovation, light renovation, heavy renovation, whatever you might need. And now you just close that delta with them and move in. So basically, every market has what’s called a cap rate or a capitalization rate. And that’s really granular, and you really kind of got to get in touch with the brokers and see what the other units, similar type properties are trading for in whatever particular market you’re in. But if you can get your net operating income, and you divide that by your cap rate in the prevailing cap rate in the area, that is the value of that property. So you can see very quickly upon takeover, if you burn off loss to lease, if you you know, renew people at the higher rents, or if you if they don’t, if you kick people out, or whatever the case may be and you can renovate and command a premium rent very quickly, in 12 to 18 months, say you can you can really drive that valuation. And now you can refinance, you can refinance out your original capital, and now you have infinite returns, maybe refinance out half. So now you only have half skin in the game, you know, and you’re still cash flowing. So in a nutshell, that’s forcing appreciation in multifamily. And that’s why you’ll see these properties trading so often is because when a new group picks it up, they have maybe three to five years to make it operating in a better manner for that appreciation, and then the trades off to the next group. The next group picks up the bowl, and then they run with it. So that’s basically multifamily in a nutshell.

 

Trevor Oldham  27:29

Now, I want to hop into the syndication side of the business and for our listeners, and let’s say that they’re looking to start investing in a syndication deal, say 2550, you know, even 100k at play, when someone goes with, let’s say, someone like yourself, and they invest 25 or 50k. In that process, depending on the deal, you know, it’s a it’s a, it’s a standard deal. from a standpoint, how long does it take for that investor to get you know, let’s say make that full 50k? back? Do you think it’s a five or 10 year timeline? Or does it just differ from property to property?

 

Tim Lyons  28:03

That’s a great question. And there’s so many variables, right. So there’s, you know, the sponsors. So you have sponsors that are brand new and you have experienced sponsors, you have different markets that you want to look in, and you have different asset types. So there’s syndications for single family portfolios, there’s syndications for multifamily for self storage for office for retail for industrial for data centers, hotels, so there’s syndications for literally, most asset classes. So once you find an asset class that you like, you have to find a good sponsor with a track record. And then see what kind of deals they have, you know, in an office, that might be a 10 year, you know, hold, they hold their holding periods. With multifamily, you’ll, by and large see anything from three to say, seven years, mostly, I mean, there’s a longer term, you know, multifamily syndicators out there that I’ll do, like maybe a 10 year old would like maybe a refinance or two in that whole theory. But generally speaking, you’re gonna see like three to five, three to six year hold periods, you’re generally going to see a $50,000 minimum, although some of them are 25. And then right now, it’s kind of, I guess, you know, popular to see a preferred return structure of say, seven to 9%, seven to 10%, depending on the class of shares that you want to invest in, and then a three to six year hold period. And the idea is to double that money in that whole period. So it’s called the equity multiple. So if you think of an equity multiple of two as doubling your capital, so you put 100 grand in over that five, six year period, you’re going to get 100 grand from cash flow in each month of that six year period, plus the net proceeds of the sale of the property at the end of the whole period. And then once that happens, you get your original $100,000 investment back and now you can deploy 200k into another deal. I mean, that’s an oversimplification. Right, there’s tax implications and you spend some of the cash flow. But literally you know these syndications, they offer a cash flow on either a monthly or a quarterly basis, monthly quarterly reporting. So if you go with an experienced sponsor that has done this, they’ve had successful exits, and they have conservative underwriting, everybody thinks their underwriting is conservative these days, but you can actually have somebody like myself, and we have a, we have a whole underwriting team that we work with now, to really vet these deals, because at the end of the day, I think I told you guys, I was a little bit on the cheap side, in the beginning, I hate to lose money, you want to make sure that you’re I want to make sure that I’m a good steward of my investors capital, because I have a lot of friends and family, a lot of co workers who are investing with me. And at the end of the day, this is not a get rich, quick scheme. You know, this is not overnight success. This is building out a pipeline of passive income on a monthly and quarterly basis and being able to have that velocity of money every three to six years. Does that answer the question?

 

Trevor Oldham  31:00

Yeah, yeah, that’s, that’s perfect. I think that gives a great example for someone that’s listening because obviously, for someone you know, even like myself, that’s, that’s looking, just adjusting a syndication deal. And 25 50k 100k is a smaller chunk of change. So to speak, from my standpoint, I just want to make a quick further clarification on hold on hold on how the whole process works. I’m sure that that’s super helpful for our audience.

 

Tim Lyons  31:25

You know, and the other thing, too, is like people always come to me they’re like, Tim, how do I how do you expect me to, you know, part ways at 50k? And a lot of the conversations and I love having these conversations, by the way, so if anybody wants to reach out, absolutely reach out. But you know, you may not think that you have access to capital, but maybe you have, maybe you’re 50 years old or 40 years old, you’ve had a couple of different jobs and typically different careers by now. And you have a rollover, 401k, let’s say 50, or 100, or 250k in it. And you know, just because you have all these different rollovers, maybe you settled into fidelity or Vanguard and one of the big boys right. Well, guess what, there’s something called an EQ RP, and a self directed IRA that you can purchase real estate with. And one of the things you can purchase is syndications. Once you get checkbook control over your retirement funds, you can then invest in these syndications and all the monthly or quarterly distributions go back into your retirement account, right, you don’t have total access to it, but they go in tax deferred. And then when the property that refinances or sells, well guess what those net proceeds go back into the retirement account, tax deferred, and now maybe you doubled your money in three or six years. And you can deploy the money out again. And then so instead of being in the stock market with a retirement account, you can use it in real estate, you can do the same thing for note investing or single family fixing plants. I mean, there’s so many different things you can do with a retirement account in real estate. It just takes a little bit of education, and finding somebody that can walk through that process with you. There’s also people who refinance their own personal residence or take a HELOC. Because let’s face it, you know, the return on your equity and equity in your house is beautiful, right? You might feel rich, but the return on equity is always going to be zero. And I got that from podcasts that I listen to religiously called Get Rich education by Keith weinhold. And He always talks about how the return on your home equity is zero. And that if you want to unlock that equity and put it to work for you, it’s a great way to get started in real estate investing. Is there a risk there, of course, but there’s always a risk reward. But if you can get a HELOC, I’d say 4% or four and a half or three and a half percent right now, whatever you can get. And so you can get 100k or 250k. And you invested in a syndication that offers you an eight or 9% return. Well guess what? Now you’re arbitraging that eight or 9% return and then once it sells in a couple years, you’re now at an average annual return of say 1819 20%. Now you just may not have thought you had access to the cash but there’s other ways that you can access your cash you get started in real estate.

 

Trevor Oldham  34:01

That’s perfect then as you mentioned the E qR p I know we’ve had a client of ours for man, it’s probably been two or three years. So if anyone that’s looking to get started with EQ RP, check out Damian Lupo, I forget his business name, I think it might be I think his website might be EQ RP Co. So for those listening, feel free to check him out. But Tim, I want to say, definitely enjoyed this conversation. And I want to be respectful of your time. So I just had a couple of additional questions I wanted to ask you before we end the show today. Yeah, I know you mentioned Rich Dad, Poor Dad. But do you have to have another real estate investing or business book they’d recommend for our audience to check out?

 

Tim Lyons  34:40

Yes. Dr. Tom Burns has a cool book called why doctors don’t get rich and I kind of outline. If you just substitute doctor for any other career path, whether it’s teacher, firefighter, police officer, engineer, whatever you substitute doctor with whatever you’re doing that by work really drives home the need for passive income, why should you start? How do you build it out? It’s a blueprint for how to get started and everything we just talked about today. The other one is story brand by Donald Miller. Anything by Donald Miller, if you’re starting a business, it’s incredible. Simon Sinek starts with why atomic habits. I mean, there’s so many books out there that I’ve been obsessed with that I’ve read multiple times. But yeah, those are the ones that come to mind.

 

Trevor Oldham  35:26

That’s perfect. And the last question is, where can our audience find you?

 

Tim Lyons  35:32

Yeah, so our website is citysidecap.com.  My email address is tim@citysidecap.com. I’m on Facebook. I’m on Instagram, although I’m just learning how to use Instagram. And I’m also very active on LinkedIn. If you guys go to my website, you can download a free copy of the Amazon bestseller that I was so grateful to be a part of, but some giants in this space, just put your name and email address and we’ll send that right over to you and a digital copy.

 

Trevor Oldham  36:04

Perfect. I’ll make sure to put that in the show notes. And Tim, thank you again for your time today.

 

Tim Lyons  36:09

Awesome. Thank you for having me.