- Who is Jim Lee?
- What Jim did with a $50,000 bonus
- How did Jim develop his current mindset
- Jim’s self-realization
- The transition from W2 into realtor into syndication
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- Email @: corwyn@corwynmelette.com
Episode 85: Staying on the Edge; Real Estate Syndication with Jim Lee
CORWYN:
So good morning. Good morning. Good morningbg guys and welcome to another fabulous episode of Exit Strategies Radio Show. Hey, I am your host Corwyn J Melette, broker and owner of Exit Realty Lowcountry group in beautiful North Charleston, South Carolina. Look, you’ve been on a miraculous ride with us, we’ve been having a lot of fun. We’re bringing a lot of information to you. And today is no different. We have been tapping into the pipeline, quote, unquote, busting holes in the pipe, so that we can drip this knowledge on you. Okay. So that is what we are doing. That is what we’ve been making happen. And today is no different. We find an ideal place in the pipeline, which is our world in this conduit of this real estate space of investing. And we have none other than Jim Lee, with Formosa investing with us today. So Jim, how are you doing?
JIM:
I’m doing well. Thanks for having me. Corwyn
CORWYN:
You’re welcome. You’re welcome. So, first of all, Jim, you have an interesting story. And I’m gonna pull some pieces out here in a moment. But if you don’t mind, tell listeners just a snippet about who you are, or what it is that you do.
JIM:
So my name is Jim. I’m an immigrant from Taiwan. At the age of 11 years old, I came over here. My parents sacrificed their lives to bring us over here to have an opportunity at achieving the American dream. And from there, I studied hard and received my Bachelor of Science degree in economics from UCLA in 2010. And my first job out of college was working for LoopNet Costar. For those that don’t know, LoopNet. It’s Zillow for commercial real estate. So I worked as an inside sales eventually transitioned to become a realtor and into the syndication business.
CORWYN:
So that is interesting. That’s a good explanation for Costar because most people don’t know what that platform is. For me, it is an amazing platform. So Jim, one of the things– so for our listeners, guys, look at I need y’all to go ahead. And I need y’all to slow down this morning. I need y’all to pay attention to what we’re going to be talking about. Because we’re going to be on the mindset train today about what you need to do to impact and have that change take place in your life. So, Jim, you study economics, at UCLA, and you learned about money? All right, boom, great. So we’re learning about money, you learn how to make money make money, correct?
JIM:
Actually, to be honest, with UCLA, all they taught us was based on theory, nothing practical, I didn’t learn about the importance of having multiple streams of income through my first job working at LoopNet, because I was able to speak to real estate investors, agents, property managers, and lenders daily. And that’s how I learned, passive– having another additional stream of income.
CORWYN:
So you learn the importance of that passive income versus active income. Okay, that makes perfect sense. So in your bio, as I was reading through it. Something that stood out to me is that first of all, you’re a Top Producing sales guy. That’s what was a niche for you, and what I read, and I want to spend a little bit of time on this, this goes to mindset, but you got a $50,000 bonus from one of your former employees, correct?
JIM:
That is correct.
CORWYN:
And you took that bonus and what did you do with it?
JIM:
I bought my very first real estate property, which is a two-bedroom, one-bathroom condo. And I pretty much saved all this money my entire life plus that 50k And I paid that condo in cash. It was a short sale, and it took a year to close that building.
CORWYN:
Oh, wow. Okay, that’s even better. So what I just heard is that for our listeners, this is the piece I want you all to take. But what I just heard in there, is that you didn’t have a mindset of okay, I just got this influx of cash and I’m gonna go out and go on a shopping spree and blow it and spend it, you immediately thought, what can I do with it? What could I divest it into that will be an investment in me for the future, right?
JIM:
That is correct. I like to add more to that that I was born and raised in Taiwan, as mentioned before with a Saver mentality. In Asian culture, we’ve been taught if you can’t pay for something in cash, you can’t afford it. In our mind, debt is slavery and cash is freedom. So that was the mindset I have, for the longest time, until I acquired this two-bedroom, one-bathroom. And that’s when I start to realize I need to, there’s so much I don’t know about investing, and I need to educate myself. And the very first book I picked up was Rich Dad, Poor Dad, like most people. And if you read that book, all Robert Kiyosaki talk about is why would you not use debt. You were stupid! You tax write-off, you get all this stuff. You’re using other people’s money to make more money, and you also amplify returns and all that good stuff. So it was a bit of a mind shift, mindset shift. But it took some work.
CORWYN:
That’s interesting. So you went from, okay, my first property that okay, go mama, pay cash for it. So now, you’re over on the other side of the fence of leveraging cash to make your acquisitions. That’s interesting. So what did it take you? Or what did you have to go through? What was that process for you? To kind of get to that understanding? I know, you read Rich Dad, Poor Dad, but what are the books or whatever? What other things did you tap into to help you develop that mindset that you now utilize?
JIM:
Once I become a realtor, I realized, if I need to take this seriously and make a career out of it, I need to start educating myself on what I don’t know and there’s so much to learn out there. And I pretty much consumed the majority of the real estate books out there. And, that’s also part of the reason why I was able to explore syndication because it’s such a niche area, part of real estate where you can make money, but it takes a lot of work. And a lot of relationship building, partnerships to be able to establish something like that. So I would say to answer your questions: Just set yourself a goal to read one– For me, my goal was to read fifty-two books a year so that’s on average one book per week. And also if you’re not a reader, then you can always listen to podcasts, like this show, or go on YouTube. Resources are everywhere nowadays. So there’s no excuse for you not to be educated in the area you’re looking to start.
CORWYN:
So let’s go back and let’s define syndication. Define syndication for our listeners, Jim
JIM:
Yeah, absolutely. So, syndication is a partnership between investors who pooled their resources into one single investment. This allows you to invest in multimillion-dollar deals like multifamily, which is the asset class I’m involved in, or pretty much any commercial building. Syndication eliminates much of the risk while sharing the upside, the property generates an income that will be split amongst investors. So it’s a win-win situation for both the operator and investors. Now, if you’ve never heard of real estate syndication just think of it as in motion pictures, for people to shoot a movie, they need a tremendous amount of partnerships, right? They need to raise capital, they need to do this and that’s syndication itself. For real estate development, that’s also syndication. Right? You can do that.
CORWYN:
So what most people miss is that in that definition, partnerships, and joint ventures just pull people together for them to share the risks, but also share the reward because it’s harder to come up with a million dollars versus leveraging capital from the bank, leveraging capital from this investor, this investor, in this investor, to offset. After all, the lender may not– own a loan to an LTV on a million-dollar property they may not go any further than maybe 600,000. So, you got to have the full 100,000, the 40% in additional capital, and splitting that up amongst several pools of investors, limits the risk, but it also allows the project to take place and in turn, get the entire deal done. And you can do that on a smaller scale, or a larger scale, you can do a $10 million deal. Or you can do a half-million-dollar deal. It doesn’t, it doesn’t matter. Um, so that’s, that’s good. So syndicating, you got it. How did you get to that? You started with this first property. Was that a natural migration for you? Or was that something that you had to put a lot more effort into and work to make that shift?
JIM:
Oh, that was a tremendous amount of work and effort, a lot of obstacles, and a lot of self-finding as well, what works and what doesn’t work for me, right? So once I got a break away from the W2 job from working at LoopNet and became a realtor, I thought I was going to be able to find my deals and make a career out of it. But it wasn’t as easy as I thought it would be. So doing that for two years, I found that I wasn’t a good fit. And it was around during lockdown when one of my investors introduced me to this radio show called Real Estate Guy podcasts, the real estate guy podcast run by Robert Helms and Russell Gray. So on that show, all they talk about, they pitched about syndication so much where I’m like, What is syndication, but it was– that was the turning point of educating myself about syndication because I was exploring other avenues of making money using real estate. Since as a realtor, my hands are tied, I couldn’t hold an open house to find leads during lockdown. So I make use of that time to educate myself. And as soon as we opened back up, I went out to network with the real estate guy people. And that’s how I transitioned from being a realtor to a syndicator.
CORWYN:
So you said something in there, and this is the broker in me because you said in their gym that it was not as easy as you thought it would be. And I tell agents all the time, people, that want to get into the business, overall, that it’s a lot more challenging than what it appears from the outside. So, let me bring you back and not go off on that tangent. But let me bring you back over to this migration and growth for you in the syndication. So you spent a lot of time– So out of COVID, out of lockdowns, you’ve benefited because you invested in yourself, educated yourself on these various processes and procedures on how to do and get into syndication. Let’s talk about what did you learn. You say you also learned some things about yourself. So what did you learn about yourself? Like, what didn’t work for you, that you’ve learned and picked up during this process?
JIM:
Yeah, great question. So that’s something I want to touch upon as well as the transition from being a realtor. I mean, the transition from working on the LoopNet W2 job to being a realtor was a tough one, too. Because you’re now you’re switching from W2 to becoming an entrepreneur, right? And you have to have that mindset for it. And for me, I was still stuck in the W2 job mindset. The reason why I say that is because I am an introvert. So the reason why I started as an inside sales because I can make phone calls in an office all day long, I have no problem with that. But when you ask me to go out and face people, you’ll meet people face-to-face. It’s like, ah, it makes me cringe. And so as a realtor, I was avoiding that. And all I did was stay in my office, make phone calls, and to the absentee owners, and rental property owners. And that’s how I develop a list of investors and be able to leverage that in syndication. But at that time, when I was doing all that, as a realtor, I didn’t know better. I didn’t want to get out of my comfort zone, right? And once I started syndication, they talked about you got to put yourself out there, you got to network, you got to build a relationship. And those are the key things that I was avoiding, as a realtor, and that was when I realized, okay, I need to get comfortable being uncomfortable. I gotta get myself out there. And the only way to do so is by educating myself so that I create enough confidence in myself to put myself out there. So that was the process of it.
CORWYN:
Okay, so you boost yourself by learning more so you learn more, so you feel more confident in having conversations. So you say you do multifamily now. So your first investment, again, was this condo? Were they any other asset classes, different types of properties that you kind of dabbled in before getting over into syndication and working In the multifamily arena,
JIM:
Yeah, I looked into right before the lockdown happened, we looked into RCFE, which is Residential Care for Elderly. Yeah, basically, like nursing homes. Yeah, where you can charge about, like anywhere between 5000 to 10,000 per head, and you can put two people in one room. So yeah, that’s something I explored. And I went into a partnership with two other people, but because of the lockdown, both my partners decided to back out, and they don’t want to do that anymore. And that’s when I started to explore syndication.
CORWYN:
Okay. That’s very good. A lot of for our listeners that might have an appetite, or what have you for this, there’s programs– rural programs for that type of facility nursing homes, or assisted living facilities, in rural areas– lacking in our area, I don’t know about yours, but they are lacking. So there are government programs, to help people with financing those types of properties, buying the development of assisted living, you gotta put the whole plan together. And ideally, one thing, and, Jim, I know, you may or may echo on this, but putting together that type of deal, getting the whole thing together, getting it all developed, getting all built, getting it all staffed and filled up with people, and then selling it off to someone else who wants that type of investment long term, who wants to manage it, because a lot of people don’t want to manage, they don’t want that responsibility. So they don’t want to do that. So let’s touch on passive versus active, and I want to, I want you to hit it two places for me. Because a lot of times people forget. I was internally today having this thought process, about how we’re always quick to go to work, we want something. You pass someone who’s driving a new vehicle. And you realize, okay, when you just bought a new vehicle, you probably got a new debt. And you got to go work for that. Versus someone saying, Well, look, I want this, let me invest over here. So that my investment, then in turn offsets or pays for that expense. So let’s talk about active versus passive income if you don’t mind. And then let’s flip it over and what active versus passive investing looks like for you. Your definition?
JIM:
Yeah, so my definition of active versus passive is: Active, you’re, you’re actively involved in your deal, right? So, I’ll give you an example, my first deal, two bedrooms, and one bathroom, I did everything from A to Z on my own, I found tenants, ran the background check, and did the maintenance. Pretty much everything is on my own. And it was one of the biggest mistakes I made. Because if you’re looking for a more passive route, you would delegate all that tasks, you would build the system, and you don’t have a vendors list or have a property manager that looks out for the best interest in you to manage it for you. So there are ways you can automate things where you don’t– you’re not dealing with it hands-on. And then passive would be something like a syndication where you just put money into a deal and you invest passively, you don’t have to worry about the operation. You don’t have to worry about tenants not paying, evicting tenants, you don’t have to worry about any of that stuff, maintenance, and you just get a return on investment on that. And while you’re able to focus your time and energy on doing what you do best, and what they are is being an engineer or a doctor or lawyer because that’s your bread and butter, that’s where you make the most money from, you shouldn’t have to worry about is your property performing today.
CORWYN:
And that’s it right there, people get caught up, Jim, and being micromanagers, if you will, and we understand it, but investing we know has risks, but we also understand and realize that investing really and truly is a long-term, long ball game. It doesn’t, we get caught up on thinking that, well, hey, I’m gonna put this money in today, and tomorrow, I’m gonna take out twice as much. No, we got the compound, we got to see things happen. So what do we need to do to get that to where, quote-unquote, we want it to be? What does that need to look like? So you’re passionate about what it is that you do. Can you tap into it and tell us where this passion derives from? What is the driver for you in being an investor and working with other investors collaboratively to help everyone win? What was what’s the passion for you, Jim?
JIM:
I think it comes down to me just being a giver, I think from my life experience, and I’m not just talking about career wise or syndication, I’m talking about just in general speaking, when I find out when I give, the more I give, the more I receive, and it’s not the idea of expecting to receive anything, but it just makes your life so much easier and efficient. When you give to people who want to help. You’re going to be recognized as that person. And so, for me, the reason why I’m so passionate about syndication, as soon as I explore this opportunity to be able to make money not only for myself but for my friends, for my family, for my employees, whoever wants to learn about financial freedom, I can teach this to the whole crowd, I can help everyone around me, because essentially nowadays, everybody wants to be financially free. But how do we get there? What’s the easiest way? What’s the quickest way? And people have explored that, and as you mentioned earlier about real estate you’ll be able to get rich slowly. Slow game, right? You just have to be patient with it, if you play it right, if you continue to persist and not give up. It’s a very lucrative industry, But you cannot give up. And I think, for me, it’s about giving back to the community. And that’s what makes me feel great about choosing this path for the rest of my life.
CORWYN:
That’s pretty profound. And I liked that. And being a giver you want to share this wealth and this information and knowledge with others and these opportunities. Jim, we’re quickly getting toward the end of today’s show. And always ask our guests for that jewel, that nugget that thing that they could leave with our listeners, they can drop on I‘m, if you will. And I guess we can also look at it as the mic drop, that will change their life. So if there is anything that you could share with our listeners today, that they should be focused on, thinking about, or otherwise acting on? What would that be?
JIM:
Good question. So I get asked this question pretty often. And I would say that my answer is just, I would say change your attitude about trying new things in general. For me, I can tell you, from my experience, I used to be very close-minded. And I guess when I get older, I’ve learned that it’s always better to look at the other side of the coin. To me, there are three sides to the coin, the heads, tails, and the edge, if you can stay on the edge, you’ll be able to be able to learn the most. So don’t be so one-sided, don’t be so far left or far right, stay in the middle.
CORWYN:
I like that. There’re three sides to the coin. That’s interesting. I like that concept. And it also speaks to– that’s powerful. It also speaks to that it’s a narrow path on the edge. So both sides are very broad. But that edge is very narrow. So if you stay on that narrow, they saw men that gym(?), I like it, I might do something else and say something else about that later. Now, I do want to leave our listeners with because we didn’t talk about how far you’ve come. You’ve been doing this syndicating investing for a few years now. And you have been involved with roughly about what, four or five 600 units now? How many– And these are all buying holds for you that you guys pull? So how many units are you guys currently holding?
JIM:
We’re holding roughly 600 units and the business plan usually it’s five years’ hold, and then we’ll sell it and we leverage everything. The equity multiple to acquire more multifamily down the road, but that’s five years from now.
CORWYN:
Okay, all right, good. And that’s something that we talked about strategies we talk about here on the show, the BRRR. It’s kind of like a wash, rinse and repeat so to speak that you acquire you may make some investment into it, you re-leverage, it may do some other things to it, sometimes you sell it, and go acquire something else, sometimes you just continue to leverage it, and then you leverage it into a larger property, or an additional property and grow your portfolio that way. So Jim, I really appreciate you being here on the show with us today. I appreciate you sharing not only your experience but also your insider knowledge. And I’ve taken away that mindset piece. So that’s what I want our listeners to get for you today is about mindset, about changing your mindset, about focusing and being direct and working towards what your goals are. You have a story, and you’ve shared it with us today. So I want to say thank you from the bottom of my heart for doing so.
JIM:
Absolutely. And if I might add something to the example earlier about the three sides of the coin. Just think of the beginning of this conversation. Right, I came from a savers mentality. And I had to figure out a way to use debt as leverage, right? And it took some education to figure it out. There’s good debt and bad debt and bad debt is the one I want to stay away from good debt is whatever I want to use. That’s staying on the edge. Now that I can leverage the best of both worlds by saving good money, saving money, and also leveraging good debt.
CORWYN:
That’s profound. So for listeners, guys, make that your take away today from today’s show. Make sure that you focus on having good debt, not bad debt, that you can leverage it and you can get to the next level. Jim, again, thank you so much for being here. Thank you for being a part of the Exit Strategies Radio Show Family, Man, I appreciate you engaging with us and talking to our listeners today.
JIM:
Absolutely. Thanks for having me on the show.
CORWYN:
You’re welcome. So guys, in closing, you know how I feel, y’all know what I say. But I’m gonna do it. I’m gonna say it anyhow. That is I love you. I love you. I love you. And we’re gonna see you guys out there in those streets.
