Starting out as an underwriter fresh out of college, Justin Goodin started to teach himself about commercial real estate investing, relying heavily on YouTube and local meet-ups. The hard work paid off, and today he is a GP on 400 units. In this episode, Justin shares how he found his first deal, sourced investors, and created an effective direct mail campaign that helped him close an off-market deal.
- Founder/CEO of Next Level Equity. They focus on capital preservation while striving to deliver strong, risk-adjusted returns to their investors. Exclusively focused in apartments as a multifamily syndicator.
- Portfolio: 400 units as a GP
- 3 years of real estate experience
- Based in: Indianapolis, Indiana
- Say hi to him at: NextLevelEquity.com | Facebook group ‘Next Level Apartment Syndications:’ www.facebook.com/groups/nextlevelapartmentsyndications
- Best Ever Book: Best in Class by Kyle Mitchell and Gary Lipsky
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to The Best Real Estate Investing Advice Ever Show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast where we only talk about the best price ever, we don’t get into any fluffy stuff. With us today, Justin Goodin. How are you doing, Justin?
Justin Goodin: I’m doing fantastic, Joe. Honored to be on your podcast and looking forward to delivering some value to your listeners.
Joe Fairless: Oh, I’m glad to hear that on all fronts. A little bit about Justin. He’s the CEO of Next Level Equity. They focus on capital preservation while striving to deliver strong risk-adjusted returns to their investors and they focus exclusively on apartment buildings. His portfolio is over 400 units as the general partner, has had a busy last couple months closing on deals, –we’ll talk about that– he’s got three years of real estate investing experience, based in Indianapolis, Indiana. His website is nextlevelequity.com and he’s got a Facebook group that you can go check out. You can search “next level apartments syndications” and you’ll likely find it, it’s also in the show notes. With that being said, Justin, do you want to give the Best Ever listeners a little bit more about your background and your current focus?
Justin Goodin: Absolutely. A quick high-level background about my story is born and raised in Minneapolis, Indiana, I studied finance and supply chain management and business school here in Annapolis. While I was going through business school, I was searching for different avenues of passive income that I really wanted to find out about. So I started out in day trading, swing trading, kind of dabbling in the stock market. I quickly found out that was not passive at all, and really volatile, really unpredictable, which kind of drew me in towards real estate.
In the beginning, I kind of had that mindset that real estate is only for rich people, you have to come from a wealthy family to get involved in that, and that’s the wrong mindset I had going in. But fortunately, I was able to purchase a single-family home as a rental; that’s how I got started. When I was purchasing that single-family house from another investor, he actually told me he was liquidating all his assets and going to buy apartments. Again, just like going back to my mindset, I just thought that was crazy. Like how is an average-looking guy my age going to go out and purchase apartment buildings? Pretty much shortly after that transaction, I just stumbled upon apartment investing by doing a ton of self-education, reading books, listening to every podcast I can get a hold of. Eventually, ended up hiring mentors, going to a lot of networking events, and just got hooked. I was extremely interested in apartment investing, I knew that’s what I want to do with my career, my life.
A little bit of backtrack, but after graduating from business school, I was working as a commercial multifamily underwriter for a bridge lender in Indiana. That was a fantastic experience for me kind of starting out, seeing how lenders underwrite deals, how they looked at properties, how they evaluate sponsors. That was a fantastic transition to what I wanted to do in my career.
Fast-forward after doing a ton of self-education, hiring mentors, I’ve been able to close a little over 400 units as a general partner in three different markets now, looking to continue that if not double that in 2022. Just working with passive investors to generate wealth and [unintelligible [00:03:55].26] There are tremendous benefits that, I’m sure we’ll get into that, that apartments have to offer. A lot of busy professionals, when they get tied up with their family, their jobs, their careers, they don’t always have the time, even the desire to go out and learn how to buy apartment buildings by themselves. That’s where syndications come in, and that’s how we help passive investors enjoy the benefits of real estate.
Joe Fairless: Thank you for that. What a fantastic education that must have been, to be a multifamily underwriter for a lender. We’ll get to that in a moment. You mentioned you hired mentors, you attended networking events, you learned from whatever educational material was out there… So here’s a question – unfortunately, we have to go into your past and we have to wipe away all those paid mentors and all that free content, and you no longer have that experience, except for one paid mentor and one channel of content that was free. What do you choose to take with you on this new journey?
Justin Goodin: As far as naming out a paid mentor that I would choose?
Joe Fairless: Yeah. What’s the one paid mentor that you paid, that you have to have had them on your journey? And then what’s one non-monetary channel or education or networking event that you went to that you must have had on your journey to get to where you’re at?
Justin Goodin: Absolutely. The first free educational resource that I would turn to is YouTube. YouTube is just an abundance of information about real estate, investing, apartments, raising capital, underwriting deals… There’s just an abundance of information about any topic on there.
Joe Fairless: What’s one or two channels on YouTube? Or do you just search for whatever you’re looking for and then you just listen to whomever?
Justin Goodin: Yeah. Honestly, if I have a question or a topic I want to learn about, I just type in that subject and there are a variety of different channels that will pop up about that subject. So in a broad sense, I would just say YouTube has been a fantastic form of communication and educational resource for me.
Joe Fairless: What’s something specifically you learned real estate-wise on YouTube?
Justin Goodin: Underwriting. I did gain fantastic experience from that, working on that for a commercial lending company. But it was more focused on the perspective from the bank side, if that makes sense. So learning how to accurately look at deals and evaluate deals from a multifamily syndication perspective – it’s very similar, but a whole different ballgame, in my opinion. There are a lot of webinars and YouTube videos on underwriting deals, how to look at deals from an investor standpoint, and I’ve used YouTube for that many times.
Joe Fairless: What about a paid mentor?
Justin Goodin: The paid mentor that I would absolutely recommend is a company called Goodegg Investments with Annie Dickerson and Julie Lam. They have been fantastic mentors and business advisors in my corner over the past couple of years. I would highly recommend their program. They’re really genuine, honest people, and they’re really committed to your success. I owe a lot of my success that I’ve been achieving to them.
Joe Fairless: When did you get your first deal as a general partner?
Justin Goodin: First deal as a general partner was early this year in 2021.
Joe Fairless: What was the deal?
Justin Goodin: It was 236 units in Jacksonville, North Carolina.
Break: [00:07:24] – [00:09:03]
Joe Fairless: My assumption is you are not the only general partner on that deal.
Justin Goodin: Absolutely not. One of the ways that I would recommend newer investors that are getting started or looking to get into syndications is to find more experienced operators that are doing what you’re doing – that could be a mentor, that could be somebody that you network with in your own city, and you’ll find ways to add value to them and their business, and find ways to join the general partnership and work with a more experienced team. Because as you know, 236 units is a huge project, $14 million purchase price. There are definitely more than a few people on a deal of that size. When you’re raising capital and doing things for your investors on your very first deal, it makes sense to join an experienced team that has done this for 10 to 20 years, where you can leverage their experience and their track record.
Joe Fairless: What did you learn from that first deal and what were your roles?
Justin Goodin: My role on that deal was helping passive investors come into the deal, so raising capital, on the asset management team moving forward, and then also helping underwrite the deal when it was first out as well.
Joe Fairless: What did you learn from working on that deal?
Justin Goodin: So many different things. To point out a few different highlights, there are so many different variables and so many different things to look at when you’re going into purchasing a large asset like that. One of the things is walking the property and getting multiple contractor bids on the deal. We were doing the classic value-add strategy on that deal, renovating interior units, adding a dog park, improving the leasing office. So there are so many different variables in going into construction and timeline and things like that, so it really makes sense to work with an experienced general contractor, who can give you an accurate estimate to go into your underwriting, and get multiple bids.
Another thing that I learned just from working with an experienced team is to raise more than you think you’re going to need. That can really save you a huge headache and save you a lot of stress, when you’re coming down to the last hour of closing a deal and maybe you don’t have enough capital to get the deal done, or maybe you’re just like on that line. Raising more than enough capital can really save you some stress and give you comfort knowing that even if unexpected things come up are a couple of investors fall out, that you can still get the deal done and move forward with it.
Joe Fairless: What was the next deal?
Justin Goodin: The very next deal was a 77-unit portfolio in Indianapolis, Indiana.
Joe Fairless: Now we’re in your home territory.
Justin Goodin: Correct.
Joe Fairless: Okay. How many general partners on that deal?
Justin Goodin: Just two. Myself and another local partner in Indianapolis.
Joe Fairless: Okay. I imagine you have a lot more responsibility on this one than the first deal.
Justin Goodin: Absolutely.
Joe Fairless: How did you find the deal? And tell us about it.
Justin Goodin: In this portfolio, there was a 29-unit and a 48-unit that were both combined into a portfolio. Both properties had a really similar story, they both had similar value-add strategies we were going to implement, and we were going to use the same property management company for both properties. So it made sense to bundle them together as one investment for investors, to not only just make it a little more simplistic, but also give investors a little bit of diversity. The 29-unit was found from a direct mail campaign; we purchased it directly from a longtime owner of 16 years. A really unique story on this one; I’d be happy to dive in more, but at a high level, the owner owned it for 16 years, as I mentioned, lives on-site, he was a general contractor himself, and added a lot of good value over the years to this property. He did put a lot of good money into it, improved it up over the years… And it wasn’t being run as efficiently as it could. He was paying all the utilities on the property, which is not common in Annapolis. The units were outdated; the parking lot was gravel, which was a huge eyesore. So when I found this property, I just saw gold, I knew it was a fantastic opportunity, and really jumped on it.
The 48-unit came off-market from a close broker relationship. Really similar story. It’s in a great part of town, longtime owner, mom-and-pop owner, that just wasn’t running the property as efficiently as it could be; outdated interiors, curb appeal was really nonexistent… So just a lot of really standard but also unique value-add opportunities on both properties.
Joe Fairless: Direct mail. Tell us about the direct mail campaign that you did.
Justin Goodin: Yeah, absolutely. I think direct mail, depending on your goals and what you want, but I think direct mail is a fantastic way to find off-market, direct-to-seller opportunities. I have a free eBook on my website, go to nextlevelequity.com/directmail, you can find an eBook that you can download. I’ve used direct mail over the years to purchase properties direct to owner. While they can be more effective for some of the mom-and-pop type owners and smaller asset sizes between 30 and 60 units, I think it is more than possible to find some larger assets as well with it. But it does seem to be more effective with some of the mom-and-pop type owners and smaller asset sizes, I should say.
Joe Fairless: Regardless of what you say and talk about as it relates to direct mail, and during this conversation, I know it’s going to be beneficial for everyone to download that eBook and read it in detail. But I am curious, what do you write in the direct mail, and what type of response rate do you get?
Justin Goodin: Great question. I would say my response rates historically had been in the one, two, maybe 3% range. But I like doing a number of things to my direct mail. I’ve used letters, I’ve used postcards in the past. I’ll just name out a few things. I like making the message on the letter pretty short, sweet, concise, stating my team, my experience in a very brief way, and giving them a few ways to contact me. So leaving my number, my email, my website from the lookup.
I like including a picture of myself, which makes the letter a little more personable. That it’s not coming from a huge company or just like a random real estate or something like that. But I’ve used the handwriting medium in the past, I actually had a person working for me handwriting my postcards. I think it’s a lot more personal as well. Another unique trick – you can take the stamp of the letter postcard and just rotate it diagonal just a little bit. It makes it look like a machine didn’t put it on, and an actual person was willing to kind of stamp it and send it out. It’s little unique tricks like that.
Joe Fairless: I like that. If you could only send one out, what would it be? There are multiple variations of what you just mentioned, but what’s been the most effective?
Justin Goodin: The actual message? What do I send?
Joe Fairless: You said handwritten, versus maybe it looked like it’s handwritten, and I’m sure there are different messages in the direct mail, even though there are some consistent components…
Justin Goodin: Sure. I would send a postcard or a letter. The letter can be effective, but you don’t always know, one, if they’re going to receive it, two, if they’re going to open it. A postcard, if and when somebody does receive it, they see your picture, they see your message right then and there, they don’t have to open it, they don’t do anything; they see your message, they see your picture, they see that you want to buy their apartment building. So I would definitely choose a postcard, put your logo on it, make it look professional, choosing a somewhat short message; don’t make it too lengthy, where somebody has to spend five minutes reading it. But just something really simple, stating who you are, what you’re looking to do, purchase their property at this address, here’s a deal or two that you just closed recently in the area, here’s a couple of different avenues where you can contact me at, here’s my website… I hope to hear from you soon. Something simple like that.
Joe Fairless: What’s the main picture on that postcard?
Justin Goodin: The main picture would be of myself, in the corner. But overall, I’ve put a general picture of a city. When I was sending them out to Indianapolis owners, I included a broad background picture of the city of Indianapolis, and then kind of get a picture of myself in Florida.
Joe Fairless: How much money did you raise on the 77-init portfolio?
Justin Goodin: $2.2 million.
Joe Fairless: Wow. Congratulations on that.
Justin Goodin: Thank you.
Joe Fairless: That’s impressive. Approximately how many investors was that?
Justin Goodin: Approximately between 25 and 30, I believe.
Joe Fairless: Okay. So around 75,000 or so per investor?
Justin Goodin: Yes. That sounds right.
Joe Fairless: I’m not looking for a name, obviously, but think of your largest investor – how much did he or she invest and how did you know them?
Justin Goodin: I’ve gotten to know a lot of investors from LinkedIn, and especially my in-person meetup. I think if you really want to be successful in this industry and be an active operator – as you stated many times, having some or multiple forums that a thought leadership platform is crucial. One of my thought leadership platforms that have just been amazing for the traction I’ve had is in-person meetup. It’s your chance to, one, meet your investors in person, build your brand and your business… But you can meet people in person, you can show them that you’re a real honest person, you’re here at this meetup, you’re delivering value to them… So for a number of different reasons, an in-person meetup has been a great way to kind of get to know investors and deliver value to them.
Break: [00:19:10] – [00:22:06]
Joe Fairless: Just thinking about that 2.2 million, knowing that’s the case, can you think of the person who invested the most, and then was that person introduced to you via your in-person meetup?
Justin Goodin: Correct.
Joe Fairless: It was. Okay, got it. How much did that person invest?
Justin Goodin: 100,000.
Joe Fairless: 100,000. Okay. So you had a lot of investors who were investing around the same amount then. Was the minimum 25,000?
Justin Goodin: Correct.
Joe Fairless: Okay, so between 25k and 100k. Got it.
Justin Goodin: Yes, that sounds right.
Joe Fairless: How often do you do your in-person meetup?
Justin Goodin: Every month.
Joe Fairless: And what about the thought process — because I’ve heard it from people who are getting started in syndications, where they say, “There are so many other meetups around. Why would I start another meetup? There are too many of them already. Why don’t I just attend meetups? Why should I start one?” What would you say to that person?
Justin Goodin: You should start one – going back to what I’ve mentioned, but you want to be the person in charge, you want to be the person in the limelight, being perceived as the expert. If you’re doubting yourself as being in that position, you’re probably struggling from something called imposter syndrome. But yeah, I think you want to force yourself to step outside your comfort zone, be the main person doing the meetup. You’ll gain so much more traction being the person in the limelight and running the show.
I was actually thinking about starting, or wanting to start my own meetup, and exactly to your point, there was already a few different meetups going on. This is an awesome story… I reached out to another experienced investor that I’ve already known of, and asked him for tips on how he started his in-person meetup, because I was thinking about starting my own. He’s a busy guy and we both had a lot of the same ideas and same goals. So long story short, I ended up not starting my very own meetup, but speaking at a meetup that was already running and already existed.
The next month after reaching out to that more experienced individual – his name is Kent Ritter; also locally in Annapolis – Indiana, I spoke at his very next meetup. Then after that, I began co-hosting the meetup with him. Then after that, the relationship was going really well, we partnered on the 77-unit here in Annapolis. Just going off of that, you never know where one meetup is going to take you, or one phone call is going to take you; it can really set you up for success in the future.
Joe Fairless: It’s awesome. Thank you for sharing that story, and the importance of putting yourself out there, and how cool it was, how you two were able to raise that money in that short period of time for this portfolio, the 77-unit. What is your best real estate investing advice ever?
Justin Goodin: Best real estate investing advice, again, would be to start a thought leadership platform. That could be an in-person meetup as I mentioned, that could be a Facebook group, a podcast, posting blogs online… Something where you deliver value for free to other active or passive investors; just something that you can be consistent about and deliver for free. I think that’s just going to be a game-changer, as long as you’re consistent and willing to get outside your comfort zone.
Joe Fairless: We’re going to do a lightning round. Are you ready for the Best Ever lightning round?
Justin Goodin: I’m ready.
Joe Fairless: Best Ever book you’ve recently read.
Justin Goodin: Best Ever book I recently read would be Best in Class by Kyle Mitchell and Gary Lipski. That goes along with asset management, and – just really quickly, everybody is looking for deals, when to close on deals, but not a lot of people talk about asset management and what happens after you close the property. That could really quickly turn a good deal into a bad deal, if it’s not run properly. So Best in Class is an awesome book you really need to read so that you can asset-manage your properties well and keep them performing well throughout the life the investment.
Joe Fairless: What deal have you lost the most amount of money on?
Justin Goodin: I want to knock on wood, but none yet.
Joe Fairless: What about made – what deal have you made most of my money on?
Justin Goodin: The 77-unit portfolio we just closed on.
Joe Fairless: How much money have you made personally from that so far?
Justin Goodin: We haven’t done any kind of distributions yet.
Joe Fairless: I’m talking about money in the bank account. What deal have you made the most amount of money on that you actually saw on your bank account?
Justin Goodin: As far as like acquisition fees or…
Joe Fairless: Just whatever. It could be, yeah.
Justin Goodin: On the 77-unit portfolio, I cashed in a $17,000 acquisition fee.
Joe Fairless: Nice. That’s about – what, 10 years’ worth of profit on a single-family rental?
Justin Goodin: Yeah, exactly.
Joe Fairless: Ain’t that a nice feeling?
Justin Goodin: For sure.
Joe Fairless: Oh, man. Single-family rental days… They are not as profitable is what they’re cracked out to pay, right?
Justin Goodin: They are not.
Joe Fairless: What’s the best way you like give back to the community?
Justin Goodin: Fantastic question. I am a volunteer for the Big Brother Big Sister Organization here in Annapolis. Also, like yourself or like you did previously, I also volunteer at a local hospice in my spare time.
Joe Fairless: I still do, and I just got a flu shot yesterday, because I had to in order to volunteer again. So I am volunteering in about a week and a half with my next–
Justin Goodin: Awesome.
Joe Fairless: At my next [unintelligible [27:22]
Justin Goodin: Yeah, I really enjoy that.
Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?
Justin Goodin: Yeah, you can go to nextlevelequity.com/freecourse. I have a free seven-day passive real estate one-on-one email course to tell you exactly, step by step, how to get started passively investing in syndications the right way. It really outlines step by step on what you should look for and how you can get started. As well as you can go to a Facebook group that I created, Next Level Apartments Syndications. I’m really active in there as well and like connecting with like-minded individuals.
Joe Fairless: Thank you so much for being on the show talking about, in detail, your path to where you’re at now or how you got here… You specifically got into details on the 77-unit portfolio, the 48 and 29 that were combined, the direct mail campaign, how you think about creating effective direct mail campaigns… You’ve got that eBook on your website, so there are more details there. The thought leadership approach too, and then also the education process along the way that you’ve chosen to undertake and better yourself, then, as a result, generate a lot of results and more money. Thanks for being on the show. Hope you have a Best Ever day and talk to you again soon.
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