Aileen: [00:00:00] Thank you, everyone for joining today’s episode of the, how did they do it? Real estate podcast. We are your hosts, Seyla and Aileen and today’s guest. We have Jerome Myers. Jerome is the founder and chief inspiration officer of Dream catchers. And the Myer’s development group. He is passionate about helping people manifest the things they imagine and create social proof that dream should be real. His company, the Myers development group built multimillion dollar portfolio following the principles of Myer’s methods. The real estate education company created to educate investors on his four steps approach to owning and operating apartments. Jerome is also the host of the dream catcher podcast.

We’re so excited to have you here. Jerome, thank you for joining us today. 

Jerome: [00:00:39] Good to be with you. Thank you for having me.

Aileen: [00:00:41] So we have a lot to get in today. Before we get started, can you tell the listeners by starting off  telling the listeners a little bit more about your background and how you got started with real estate?

Jerome: [00:00:50] Yeah. So I’m a corporate America dropout. Before I left corporate America. I had a fortunate building a $20 million division for a fortune 550 company. And at the end of the first year, we had layoffs and it was pretty frustrating for me. In fact, I remember having a call on Christmas Eve with my supervisor saying, hey, Jerome, you don’t have to lay them off with somebody else can pick them, but you probably should do that so that they, so that you have the team you need in order to continue moving forward.

And I was scratching my head and asking him, like, we just made $6 million in profit. Why are we laying anybody off? We had a really great year and that didn’t matter. The decision was made and I had to do what I had to do if I was going to be in the role that I was in. And so I picked the team of people who are going to move forward in the new year.

I promised myself I’d never do that again, though. And so fast forward to November of the next year, we’re doing the exact same thing. And that point I decided I was going to leave and I walked out and  I thought back to when I was a sophomore in college, me and my buddy, Darren were sitting there doing a little bit of math cause that’s what engineering students do on their fun time.  We realized that the guy that owned the property was making $700,000 a year. We’d never seen him. We never talked to him. man, this is amazing. How can we do something like that? We probably don’t need 700,000, maybe we could get 50 or a hundred thousand, but we didn’t know anybody. We didn’t know where to get the education. We didn’t know any of that stuff. So we went off, finished our engineering degrees and went to work.   Well at this time, I had a little bit of cash in the bank. I had some credit, had some experience. So I thought surely the bank would be excited to lend to me to buy one of these properties now.

So I went to the bank, knocked on the doors and 10 of them all told me, no, you don’t have experience. I said, what do you mean? I don’t have experience, I just built a profitable division. And he said, yeah, that doesn’t count. I said, I’m a professional engineer. Yeah. So a MBA. No, that’s not good either.

I’m a six Sigma black belt. That’s gotten me something right. Nope. And then the last one is project management professional. Is that get me any credibility? It’s no, you haven’t bought a property of the same size. I ask you the same business plan. So you don’t have experience doing this. Go find a partner.

So So I went to talk to a few people that I knew and they didn’t have experience either. So I was out of luck  and, so what I started doing was fixing and flipping houses because I realized that real estate was going to be the way and when I got into multifamily, it came in a round about way. So there was, when I was knocking on those doors, I had to go in hand, I was like, I want to do this property. I want to execute this business plan. When I was sitting on the step of one of my fix and flip projects, a guy came up, he said, hey, let me check out the finishes so that we do something similar on the house going down the street. And I was like, sure, come on in. And then he started talking, he’s do you know anything about this building?

I was like, yeah, I tried to buy that four or five months ago. I love to be in the deal with you. You’re the guy I’ve been looking for. They said, I need experience. And he just done one. And he said, what are you going to bring to the table? I said, I don’t really know. But what I do know is I’ll figure it out. Like, just bring me in on the deal and we’ll work the rest out. Of course he didn’t need me. So he went in and did it with by himself, but the offer that he made got  rejected. So he wanted to talk to one of my buddies and  Hey, I need you to come into this deal with me so that I can get it approved.

And he said, okay, Oh, that’s the ones Jerome was talking about. I’m only doing it if Jerome’s in the deal. And so in a round about way I ended up backing the deal and. I was fortunate enough to be selected as asset manager for the team. And what that did was when the broker’s company that sold us the property or facilitated the transaction, did the press release, my name was in the paper. And so the banks were reaching out to me on the other side now because they want to know what else I had in the pipeline and what I had my eye on. And this, that, and the third,  so that’s really how I got into multifamily and my priestess and fixing flips.

Aileen: [00:04:32] Going back to talking about how, you met your partner in that first deal and everything like that, how did you personally know that, he would be a right fit for you?

Jerome: [00:04:41] I didn’t. And he wasn’t, and that is the first misstep and my journey and multifamily. Every partnership is like a marriage.

Whether you want to admit it or not, your timeline’s tying your financial future together, along with a bunch of other things. And so if you don’t actually know who you’re getting into business with, it can be extremely detrimental.  For this particular project, we don’t have any real financial ones, but at the start, there was a lot of friction.

I’m somebody who likes to have a lot of stuff figured out and ironed out before you get in.  We ended up having more than two partners in that deal. We had about five in total and if everybody’s not on the same page from communication style or values or you name it, you want to make sure you get those things ironed out because that becomes a real problem.

And it’s not really easy to hit an undo button like you can in Microsoft word or Excel, you end up usually losing some money, getting through the transaction if you’re not careful.

Aileen: [00:05:34] So are you still in that deal or have you moved on from that one?

Jerome: [00:05:37] Yeah, we’re still in the deal. And it’s actually turned into a pretty strong success story for us.

We bought the property where rents were at $695. We now rent that property for $1195, did a huge renovation and basically made the property new. And for us, it was a amazing opportunity. We’ll have a pretty big payday at some point.

Seyla: [00:05:57] How is the deal structured, did you join it as a syndications or joint venture?

 Jerome: [00:06:03] Yeah. So for, anybody’s heard me before, I’m a joint venture guy through and through. I think syndication’s all the rage, but starting out, I certainly don’t think it’s the right thing to do. Going out and raising money for  people that you don’t know to do something you haven’t done before is extremely risky.

And these aren’t situations where you can just grit it out and just a bunch of hard work that won’t fix it. You got a bunch of different variables in there. And, having a bright idea doesn’t solve it. It’s not like coding or selling widgets.

Seyla: [00:06:34] If someone wanted to participate in a joint venture, what’s are the mistakes to avoid when doing so.?

Jerome: [00:06:42] Yeah, I think the first one is picking the wrong partner and you guys already grabbed it that right? I think following that, it’s, self-educating only, I really think that people need to get some curated content to understand their base.  there’s a ton of different podcasts out there. And everybody’s got a different perspective or philosophy, and there’s a lot of people who haven’t done deals who have podcasts.

And so they bring different operators on who are traditionally educators. And so you’re trying to go through and you hear all these different stories. You don’t really understand the frame, that the solution from the story that the operator applied. Was. And so now you go try to apply that against the wrong frame and you end up with a mess because the solutions only work when certain assumptions are act or applied.

And if those assumptions are wrong, you end up in a really bad spot. And it’s like. When you’re passing a car on the highway, right? It’s one lane in each direction. If you mis-judged how close to that car is in the other lane, you can run into them, they can run off the road. You can try to put this other person off the road, there’s so many different outcomes. When you make a mistake on the assumption on how far away that car is and how fast it’s coming. You really want to have somebody who’s looking over your shoulder from my perspective. To let you know, Hey, you’re going to get in trouble if you pass right now, Yeah. The line is dash instead of being solid, but this isn’t the right time. And I think when you’re buying stuff this big, cause there’s usually several zeros behind the first number that people make mistakes. And so I  think that’s the first thing. The next thing is,  once you take raising money from other people away or people that you don’t know away, it goes through the deal size.

I think a lot of people are trying to do really large deals before they even know if they like doing multifamily.  It’s a very different business model from single family.  There’s a lot of intricacies involved. And so what I tell people to do is get two and then the boat, before you go home, he’ll be dead.

 And when you get to tune in the boat, you get the go out to sea, you get to experience the ocean and all the rocking in a wave and you get the cash, you get to reel it in and you get them to go through the fight. See if you like, actually enjoy the process, because if you don’t enjoy the process and you’ve made it a huge investment to do a deal, you can lose a lot of money on the backside. So I liked the idea of testing, getting some experience and then coming back. And so those are the things that I think you do really well in the joint venture structure. Now, if you’ve got capacity and if you’ve got friends who have big dollars, you can do bigger deals and you can still use a joint venture capacity, those would be the things that I think of right off the bat.

When I think about mistakes that people make when trying to do a joint venture or syndication. And I say that because I don’t really think there’s a whole lot of difference between joint ventures and syndications, other than the passive investors.

Seyla: [00:09:29] Great advice. Thank you. For someone who is a beginners at multi-families space, can you tell our listeners what’s the difference between joint ventures and the syndication?

Jerome: [00:09:40] Yeah. And so this was one of my favorite ones to talk about, right? So I characterize the syndication cause I like to poke at the syndicators as flying a jumbo jet. I think majority of people have been on the flight and so you get to the desk where they scan your ticket, that person’s getting paid by the airline.

You walk down the jetway, you get on the plane and you wave at the stewardness cause they’re always smiling. You poke your head in and you look at the captain and the copilot and they might wave at you. They may act like they’re too busy to talk to you then you go sit in your seat. That’s a limited partner on a syndication.

They’re just along for the ride. You might look out the window, see the baggage, people putting the stuff on the plane. You see the food truck come. All those people are getting paid, right? And the sin, the person that’s, the limited partner is only getting a percentage of the dollar that they put in an equity.

So let’s say it’s an 80, 20 split  80% equity for the 20 cent and then that’s when he’s saying it spread across all the people who are in the general partnership, the people that are getting paid to make sure that the plane gets safely from point a to point B. And so the stewardness, the pilots, the food service people, the lady taking your ticket, they’re all in the general partnership. And they’re responsible for the operation of that plane. And so that’s the syndication. 

Joint ventures are different in this. They have all the same people except for the people that are just passengers. And so in a joint venture, the ideas, everybody has an active role. And so I call that a fighter plane.

You still have people that need to fill it. You still have all that stuff, but then you got the pilot and whoever else is responsible for shooting stuff. And they are tactical. And they’re fully invested in making sure that the mission is successful and then not just getting a report or a check back and saying, Oh yeah, go ahead.

And so I wanted to be a fighter pilot when I was a kid. And so that’s why I made a joint ventures, fighter pilot, or fighter planes.

 Great comparison, and,  Seyla: [00:11:32] now for the joint venture, how do you structure your joint venture deals?

Jerome: [00:11:37] Yeah. So it’s very similar to a syndication from the standpoint of there is some whole bag. So we de-value equity. We don’t think the personal with money is a person that deserves the majority of the deal, just from the standpoint of having money. And so the person who finds a deal, we give them some equity in it.

And that doesn’t mean like you went and found it on the MLS or something like you found it off market, or you were able to negotiate a deal that wasn’t just list price on, you know the market.  We hold back equity for people who signed the loans because a lot of times those loans are recourse. And even if they’re, non-recourse putting up your personal balance sheet and your liquidity to make sure that the property does well.

And if you have a short come on income or you have really a high expenses in a given month, you may have to write a check. And so having the right people around that can backstop those types of things is super important for us. So we hold back equity for that, and then everything else gets divided.

And so anybody who puts cash in the deal gets the same amount of equity from that cash.  If you put more cash in than other people, you get more equity as you should , we think there’s some really high value activities that happen prior to the dollars being invested in it. And so the splits can be whatever makes sense for the deal, and what the people who are putting their assets require in order to put their assets up and what the person wants for finding that actual deal.

Aileen: [00:13:03] So for the different roles and responsibilities in the joint venture,  is everybody choosing their own roles or are they being assigned?

Jerome: [00:13:12] From my perspective, I think people should know what’s available and then they get the opportunity to pick. And then what I do is over since I’m the asset manager on all the deals that I’ve done, I’m willing to do everything. But I allow my partners to have whatever they want. So if they want to get experience with reporting, then they can be responsible for reporting, but I would look over it and oversee it, if they want to be responsible for managing the manager, the property manager, there’s opportunities for them to get involved in that capacity and so on, and so also on due diligence, all of the different activities, dealing with brokers, when we get ready to sell all of that stuff comes up at different points. Then if people want to get that experience so that they can go do their own thing, because in essence, that’s what we want is people to be qualified, to go do their own deals.

Then they can get that experience while being in the deal with us.

Seyla: [00:14:04] So in joint venture, do the members have  the abilities to make the decisions together, or how do you structure the decision making?

Jerome: [00:14:13] Yeah, so that the decision making is based on a voting structure, which is tied to the ownership and the deal.

 So let’s say somebody found the deal and then they brought, and then they put in 25% the cash, they would be a owner of let’s call it 40% of the deal, That would give them 40% vote on whatever happens. And then maybe there’s another person who has 20%, another person that has 30% and another person with 10.

Between that you’ve got your different hurdles based on the type of decision that’s being made in general. I think a lot of decisions will be made based on consensus because everybody sees things the same way. But if you get to a point of impasse, you’ve got things laid out in your operating agreement that says, if it’s this type of decision, then this amount of people need to, or this amount of the voting percentage needs to be a breach or this is the hurdle in order to move that decision forward without everybody being in agreement. I think one of the worst things that you can do is allow somebody to hold the deal hostage because the only thing that’s going to happen is it’s going to decrease the value. If you can’t move through the decision making process.

Seyla: [00:15:21] The Myer’s method. can you go over, the methods and what are they,  little bit of a summary, for our listeners ?

Jerome: [00:15:28] Yeah. So Myers method is our four step process for buying a multifamily investment properties. what happened is buddy Jay is who was a partner in just about every one of our deals said, Hey, we’re doing, we’re using the Myer’s methods because we did it more than once.

And then he saw the same structure and he’s Oh, And then there was another Patty Oh yeah, those are the Myers methods. And I was like, what are you talking about? And he never put it down. And he kept saying over and over again. And so I just okay, if this is what it is what it is.

And so it’s our four step process. We find deals, fund them, fix them and flip them and finding a deal is what everybody’s doing. They’re trying to get lead generation, Once you find leads. You filter through those. And some of them are actually deals that you want to pursue.  so you go through, you create your business plan, and now we’re in the funding phase.

You’re creating your business plan. You’re putting your team together. You’re getting sources for banks and property management. I’m talking to contractors for quotes, going through your due diligence inspections and all the things that you do during. The funding phase. You get all that situated when you go to the closing table, that’s when fixing it kicks in, right?

So close on the deal. It’s now yours. Yeah. If you can execute your business plan. And so fixing it is working through the property management company, working with construction, doing all the actual operations of the business, and then flipping it is one or two things. You executed your business plan. You force the appreciation.

So now the property is ready for a refi. And so you can refi it, flip out your money that you put in initially, or you can sell it to somebody else. You can flip the deal to somebody else and harvest all the equity and, go buy a Ferrari or go buy another deal depending on what your fantacy is. And we do that over and over again.

Then there’s some mindset stuff that we put on the front end and, a quick start guide on the back end for the people that go through our virtual course. And we also implement those things when we’re working with people one on one and our coaching program.

Seyla: [00:17:19] So from a personal standpoint, which part of the process of the Myer’s method that you like the most?

Aileen: [00:17:25] Yeah, so I’m an operator, right? So fixing it is my jam. I love fixing it. And the fact that matters is the longest piece of the process, finding it. Is finding it and funding it or maybe six months overall. And then once you get into the deal, you probably have 60 months owning it.  And then the backside is depending on how long marketing takes, but once you actually get an LOI or under contract is something less than four months.

And so I like the value creation in the operations. The difference between single family and multifamily is you actually have to operate a business, single family homes or appraise based on the sales price of the things around them. Multi-families based on how much money you can make it make, right?

So you gotta figure out how to drive that net operating income. And so I talked about being a six Sigma black belt at one point, that’s all about being operationally efficient and improving processes. And so that’s where I apply that skillset to make the property either increase income, decrease expenses or a combination of both is what I really like so that we can drive that net operating income up, get the value up and then play with the equity and hopefully make big returns for me and my partners.

Seyla: [00:18:37] how can, uh, your backgrounds, be really good for the multifamily?

Jerome: [00:18:42] Yeah, I think I use all of it. So anytime you’re doing renovations, it’s a project, right? So that’s, I use a project management skills there.  six Sigma allows me to go through the P and L. And look for our operational efficiencies, both during operations and during due diligence, We’re looking for things that are out of tolerance. And if they’re out of tolerance, we can identify that there’s a problem and then fix that problem so that we can, normalize it. And realize some real value from a operational perspective. Once we take down the property, the engineering stuff, just from a standpoint.

So my engineering licenses civil with a concentration in construction. So I’ve got a pretty good idea of what stuff’s supposed to look like. I can walk into a building and see what the structural issues are. So on and so forth and then being around it’s given me additional depth.  the MBA is really just helping put together a business plan and presenting it in a format that both the banks like as well as potential partners in the deal.

And I guess the other piece would be the management cause you’ve got all these different parts and pieces being involved. And we get to manage those folks. And so that’s part of the human resources piece of the MBA.

 Seyla: [00:19:52] That’s really a great journey so far.  So what is your next focus from here?

 Jerome: [00:19:56] we’re just working on our tours, our North star, which is a thousand doors by 2028. And so just putting together deals, focusing on operating this stuff that we have. yeah. I’m looking for opportunities to harvest equity when people are interested in our properties because they want to buy a stabilize asset.

we’ve got 120 unit development deal that we’re working on here in Greensboro, where we’re going to build an, a part of the town. There hasn’t been any new development since the late eighties. And we’re super excited about that. But yeah, I mean, going to a thousand doors is our, our next benchmark.

 Aileen: [00:20:28] so how did you find that, this next deal, the 120 unit one.?

Jerome: [00:20:32] Yeah. And so that deal, I serve as the chairman of our. Industrial advisory board at the university I went to and I was involved in a senior project for some of our architectural engineering students, where we were looking at donor development and aid a part of town.

Then it had some vacant land that was owned by the city. And we got invited to present that project at a housing county, a forum here in Greensboro. And one of the people that was, there was an affordable housing developer who had a site that they weren’t going to be able to utilize. And so they offered the site to me at a really great price so that I could go in and develop it since they weren’t going to be able to do it with tax credits.

Aileen: [00:21:17] This is the first development project that you’re doing.

Jerome: [00:21:19] It is. 

Aileen: [00:21:20] how did you feel comfortable jumping into, development? what kind of things did you do to prepare yourself for that?

Jerome: [00:21:25] Yeah, at the end of the day, it’s just more construction projects like everything we’re doing is renovations anyway.

So we’ve already done construction. The things that I didn’t like about it, one, It’s not proven. Anytime you buy something, it’s already there. You’ve got an idea of what it’s going to rent for, because it’s already ready for that. You have a business where you got existing cash flow for this one, we’re building an area that doesn’t have any proven rents because nobody’s built there.

So that’s super uncomfortable, but I’ve got a partner in the development whose family is third generation in this market. And they’ve been building stuff using the program that we’re going to use. For 60 or 70 years. So they’re coming in, they’re the big kahuna in the deal. And I’m not just along for the ride.

They’re letting me steer the ship, but they’re making sure that I don’t run off the road like going into the passing lane. And it’s funny because. Now that we’re doing this will, I’ve taken them. Other development deals are other purchases. And those purchases they’ve said, this isn’t the right time to buy. We really just need to focus on development. And so they’re offering us the opportunity to learn and do a deal together at the same time, which is super exciting for me.

Seyla: [00:22:35] That’s very exciting  and congratulations on your first deal in the, development. what has been the highlight of your real estate career so far?

 Aileen: [00:22:44] The highlight, I think the highlight for me is being able to positively impact families, right? So when we make investments, we’re looking to make an impact and when we could get to places and we see that owners aren’t actually taking care of the property and leaving the residence 11 squalor, it does something to my soul.

And so the goal is to take those properties and do the best that we can to make sure that people have quality places to live. And with those places, we do a great service for the community because at the end of the day, the goal is to make the community better.

Seyla: [00:23:20] So if someone wanted to start in the multifamily business, what is a one thing that sets those successful people apart in this business?

Aileen: [00:23:30] Yeah,  if you want a fast start, invest in some quality education, get some curated content to get your foundation and then use those principles to go and apply them against the different deals that you want to do.

The thing that makes a person valuable, who doesn’t have any experience, it doesn’t have a ton of capital is being able to find a deal. And the only way that I think you’re able to find a deal is if you have the knowledge and expertise to know whether or not a lead is a deal or just a lead in something that should be pursued, a lot of people go get something and say, Hey, will you partner with me on this?

But they don’t have any idea on whether or not the deal is something that should be pursued or the lead is something that should be pursued.

Seyla: [00:24:11] What tools or techniques have you used to improve the efficiency of your business or personal life?

Aileen: [00:24:16] Ooh.  the tools, I think the one that is probably most important for me right now is Calendly.

There’s a lot of people who want to spend time with me and. It’s playing calendar. Shuffle is just no fun. I really enjoy the opportunity to say, Hey, find a time that works well for you. Now that we’ve agreed about what we’re going to meet about, and then they can go through select that time. And then when the appointed time comes, they show up and then listen to that.

The software does the reminders and the other stuff necessary to make sure they don’t forget. 

Seyla: [00:24:48] thank you so much for being on the shows and, talk to us about the Myers methods, your backgrounds, and the joint venture.  If our listeners wanted to find out more about you or connect with you, where would they go?

Aileen: [00:25:00] Yeah, I think the best way place for them to go is JeromeMyers.CO. So J ER O M E M Y E R s.co. There you can find out about all the stuff we’re doing. You can see the conferences, you can find the multifamily, missteps, podcasts, and a bunch of other stuff that’s available to the different listeners that are out there.

Seyla: [00:25:20] thank you so much on behalf of our listeners, we realy appreciate your time on the show  today and giving us all the education, for available for all our listeners. So a really good advice, good tips, and how to join a joint venture.

So thank you so much, Jerome.

Aileen: [00:25:36] Thank you.