Syndication Series: Interview with Josh Cooper

How long have you been working for Michael Blank?

I started listening to his podcast in 2016, I read his ebook in the summer 2016, I purchased the syndicated deal analyser in July 2017, I bought the course in October 2017. I went to the second conference he put on in April 2018. I found a deal in June 2018 and partnered with him through the deal desk and closed on that in December of 2019. In February 2019 he asked me if I would be interested in setting up a nationwide meet-up to find investors. That project has fallen apart but while we were working on that he asked me to work on the Slack channel, specifically the mastermind channel that is used by students and also his mentorship students. To make sure those folks who pay extra get support. We nurture conversations and make sure people get their questions answered. We don’t give advice on not to buy a property but make sure they use the SDA properly, give advice. I also help as an admin on the Facebook group and the deal desk where he is starting something new: a group with students to pull deals down. If a student brings a deal and they can’t help him or her (deal or market too small, they don’t like the sponsor...), he would see that those deals would still happen, outside of Nighthawk but within his network.

Do you get compensated?

I get money for it.

Have you guys done deals together?

Yes, it was a Loopnet deal, was part of a portfolio. People say Loopnet is where deals go to die. That one was part of a portfolio. You need to underwrite each property on its own and then aggregate them to formalize. It was in Birmingham, Alabama. I made an informal offer. 1 month later 3 of the 4 were sold that were close to the university. The 4th one didn’t fit in with their plan of turning the units into student rentals. I received new financials. At this stage I had not put it on the deal mastermind for peer review. I said I was interested at $1.7M. A week later the agent called me back saying he needed a second offer to submit to the seller. I submitted an LOI for $1.7M. They countered at $1.75M. I asked for some time and put it on the board and set up a call. They liked the deal for 3 reasons: 1. it was a “self-comping” property: average rents were $550 in that 40 units, several renovated units had leases at $690 2. it had a new roof, new windows, exterior had been painted, half of the units had been redone, 20 classics and 20 deluxe. Our business plan was to convert them all to premium over 3 years 3. we had a management group 1 mile south of the property, their biggest property 200 units was 1 mile north of the property so they were interested in managing the property. Michael agreed it was a good deal, we did a JV. I paid for the property inspection and my travels, I got reimbursed at closing. I didn’t have the earnest money deposit so we used Michael Blank’s network to raise money for the deal and I got a piece of the pie. We split it up GP 25% - LP 75%, no preferred rate of return and I got 15% of the GP. That’s infinite returns considering what I put into the property. It is proof of concept - including to my wife. My wife is supportive but skeptical. I got laid off in 2012 from my day job and started a company in 2013. We have learned to live from her pay check. We use my business bank as our savings account.

Did you get paid on closing?

We had an acquisition fee. $1.725M was the final price. I got a closing fee on it, I got my share of the $52,000.

One of the benefits is that I got to know Michael and Andrew Kniffin. I shared my experience with the deal desk. Not every deal closes said Andrew, some we walked away from because we don’t like to be rushed, no quick closes when highly distressed. Lots of people are not ok with the share they get. I am involved in every decision, we are executing my business plan. I did it for the experience. I just wanted to get one deal done. I didn’t start in single families or small apartment buildings.

What other purchases did you do since?

I am in the process of closing on a few. I am helping some guys close on one in South Carolina, other one in Tennessee. I have management connections.

There are two risk factors with small properties: 1. property management, 2. difficult to find a buyer.

Those two risks don’t bother me. I consider small 24, anything under 40-50. I would rather be in the 80 units and above. There is less competition with those properties. I won’t use Michael for those smaller properties. His goal is 80 units and above. My minimum size with good property management is 6 and above. Outside of that area would be 80 and above. I think I have enough contacts in the pipeline to close on my own, without involving Michael Blank. I always want to use other people’s money

My efforts to find properties I consider my skin in the game. At some point I want to bring in my earnest money and risk capital (inspection...). There is enough investors out there. Some want to be in for short periods of time, others demand 5-10-15 years of experience, some demand 8% pref (preferred return) and 90% of the deal.

How do you go about finding capital?

This is the biggest networking game there is. Be out there and tell people what you are doing. I started a meet-up in Nashville with 300 members. 5-10% show up at the meeting. I send them emails. If you do it enough, time will help you. Look at your circles of influence, your phone, your contacts... Most people have a million dollar in their phone and don’t realize it. I ask people how much they have to invest.

You have a side business

We raise money for schools. Schools are only getting so much money for their budget so we help schools raise money. My wife is a broker for office products wholesale.

How is Michael Blank to work with?

He is by trade a software engineer, has an engineer type brain. He has forced himself to be more social. I like that he has a heart to help his fellow investors. He is a very busy person. All of our conversations are usually 30 minutes so I need to be prepared upfront. He is very organized. He is a problem solver.

How did you educate yourself in real estate

In 2015 I started reading books and listening to podcasts and take real estate courses. I didn’t want to do whole sale, single family, flips… It wasn’t scalable, too many transactions. Once I settled on multifamily I then focused on that and how to run a business more efficiently. I bought Michael’s course and went to conferences to learn and I watched YouTube videos by Neal Bawa, most of it is free and he does a lot of data driven stuff to establish good markets. He wants you to invest with him.

Do you do only syndications?

My ultimate goal is to syndicate up to 2,000 units, I want 200-300 doors of my own. Syndication by nature has an end date: 5-10 years. I want to buy real estate and hold it. Syndication is good to help me increase my network, my cash and my experience.

Could you walk us through a syndication process?

Basically, it is regulated by the SEC to protect mom and pop investors. As a syndicator, you are finding all the different pieces of the puzzle and putting them together: find the property, put debt on the property (you will need someone with a balance sheet equal to the loan amount - the sponsor), you need someone with liquidity: about 6 months worth of note payment in a bank account and experience. They want to see experience. You have to have experience with property management - you find a good property management or you have a track record if you do it yourself. You need a good lawyer who could write up a PPM, a Private Placement Memorandum. I use a real estate lawyer who is also an investor and understands I need to make money and takes me from the LOI to the end of the process. He has guided me from the get go. He gets a signed LOI and creates the purchase and sales agreement for it. The syndicator or sponsor is like a conductor. The last part of a syndicator-sponsor is raising money, you need to have capital. The sponsor raises it through their network or bring someone good at it through their network. I can’t pay a commission on that but I can give you equity in the GP. And my job in the GP as a money raiser, I am the party between the sponsor and the capital owners. There are a few helpful books: Joe Fairless’ The best Ever Apartment Syndication Book, it is probably the most exhaustive book on syndication. Michael Blank has an overview book: Financial Freedom with Real Estate Investing.

Looking back, what would you do differently?

I would have started earlier. I bought my first course in 1994, No Money Down by Carlton Sheets. I still have it but never did anything with it. I kicked around for 20 years before I actually took action.

Do you have daily routines?

I get up at 4:30 am, I read the book The Miracle Morning and this is what I got out of it: the value of a routine in the morning. He interviews a bunch of CEOs and business owners to find out the key to success. It boils down to 6 different things: SAVERS, Silence, Affirmations, Visualization, Exercise, Reading and Scribing. What appealed to me is reading and meditation. I use prayer time as well and think of things I need to do.

I get coffee, I am home with the kids in the morning. I read, answer emails, we get the kids the ready then I walk at the green way at 6:30 in the morning. It is a linear park along a river. I walk for 2 hours. 11,000 steps, 5-6 miles. That’s my thinking and visualization time. I then eat something and start working. My day after that is still a work in progress. I try to stay away from my me time when I schedule appointments, usually after 10 am. I try to be done when the kids come home so I can be present for them. My parents were present for me so I feel this is something I need to continue.

You have a Meet-Up group?

Yes and that gave me credibility. I started it in 2018. All I did was find us a place to meet. I bring in people I want to talk to. I just wanted to find people I could connect with. You are being a facilitator by finding a place to meet, you start a conversation. The person starting the conversation gets credit for the content, it is like a transfer of knowledge. You put yourself in a position of authority. Remember: your network is your net worth.