“A lot of people who work for businesses — they have no idea if they’re winning or losing because they don’t keep score.”
Richard Simtob has been an entrepreneur since he was young, getting involved with his first franchise during college. Throughout his career, he has scaled franchises for chains like Wireless Toyz, Zoup! Eatery, Goldfish Swim School, Creative World School, and Official Driving School. It wasn’t until recently that Richard got into real estate, and it was all thanks to his now 21-year-old son, Brad.
Today, Richard is a syndicator and investor, serving as a GP of 401 units and an LP of 12 multifamily investments. In this episode, Richard tells us about the dynamic he and his son have established as co-GPs, how he’s been able to transfer his knowledge of scaling businesses from franchising to real estate, and his advice to young people on how to structure a company partnership.
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TRANSCRIPT
Ash Patel: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I'm Ash Patel and I'm with today's guest, Richard Simtob. Richard is joining us from West Bloomfield, Michigan. He is a syndicator, investor and owner of multiple businesses. Richard's portfolio consists of being a GP on 401 units and an LP on 12 different multifamily investments. I also had the pleasure of interviewing Brad Simtob, Richard's son, about a year ago; he was probably the youngest syndicator I have ever interviewed. Richard, thanks for joining us, and how are you today?
Richard Simtob: I am doing great. How are you doing?
Ash Patel: Very well. And I also saw Richard at the Best Ever Conference about four or five months ago. Pleasure seeing you again. Richard, before we get started, can you give the Best Ever listeners a little bit more about your background and what you're focused on now?
Richard Simtob: Sure, I'll give the quickest history. I've been an entrepreneur since a young age. I got involved in my first franchise in college, doing house painting, like student painters, rolled into a window tinting franchise in Canada, and then I started a chain in 93, renting books on cassette, my favorite way of learning - listening to motivational tapes at the time, which has now evolved to CDs, and now Audible. I exited that business in 2001, and they decided to help other people franchise their businesses, and I helped a chain called Wireless Toys. It was my focus for about four years; we grew it from 8 to 200 locations, sold it to a private equity firm. I then bought into a soup and salad franchise called Zoop, and help them franchise from 18 to over 100 restaurants in multiple states. And then at the same time while I was doing that, I started making investments in franchises. Then I became a multi-unit owner of Goldfish Swim School, a multi-unit owner of Creative World schools, and I bought an independent business with partners called Official Driving School, where we teach kids how to drive. And it was only recently, a couple of years ago my son got into the real estate business and now we've expanded into multifamily.
Ash Patel: Is your son the reason you got into real estate?
Richard Simtob: 100%. I've dabbled into commercial real estate, I own a few commercial properties where I have a building where we're the tenant in, and I have a few other tenants in the building with me... But doing a multifamily real estate mentor was something new to me.
Ash Patel: Alright, there's so much to dive into here... You had a great run with a lot of different successful franchises. What kind of returns do those typically kick off? We Do IRR in real estate, but let's do annualized cash-on-cash returns for the franchises.
Richard Simtob: Well, that's where the numbers are very, very different; they take a lot more work, a lot more effort, and the returns are significantly higher. It's very typical in a franchise - let's just take a Zoop franchise - for someone to buy a $400,000 restaurant for $100,000 down, and finance 75% with an SBA loan. They would have to work at the restaurant, and they'll make $100,000 or more by operating the restaurant. So it's part salary, part return on investment; that's how you have to look at franchising. Versus in a real estate investment, it's much more passive, where you can get an IRR without having to do the day to day management and operations of the business.
Ash Patel: Richard, with the franchises the way to win is by scaling, right?
Richard Simtob: 100%. I started with one Goldfish Swim School, it took us two years to make it successful enough that it gave us the confidence to open our second, and then we had a formula, we had a team, and it was easy to absorb more, and we built up to eight, and we're building our ninth now, after 10 years in the business. So it's not an overnight success, but the returns can be significant once you've crossed over that breakeven line, and then you start scaling up the revenue> Your top line really drops to the bottom line once you get over that breakeven number.
Ash Patel: Richard, all those years, with all those franchises, and all of those rent checks that you wrote every month - did you ever think "Man, I would love to be on the other side of this and collect the rents?" Essentially being a passive owner, versus having to work and scale your businesses.
Richard Simtob: 100%. Every one of those leases, before I signed my eight Goldfishes, I tried buying the building; the building I was in, or a building in an area... And I had a development schedule I had to meet, and I wasn't able to find a building that fit our needs to put a private swim school facility in, that had enough parking... And I was forced to rent. It was only my eighth deal that I convinced the landlord he had to sell me 35% of the 60,000 square foot shopping center if he wanted me to sign a 20-year lease. The previous landlords, I wasn't able to get that, and I wasn't able to find a building. So I always, always look to buy first, and then rent second.
Ash Patel: And when you sign that lease, is it typically a 10-year lease?
Richard Simtob: Well, for Goldfishes we do 20-year leases, because they're massive, seven-figure investments, and doing them, with lots of options, so we control the property for 40 to 60 years. So we don't own it, but we've got a really pre-negotiated fixed rent, with increases that are very tolerable for us, that we know we can support over the long term, so we don't have to move.
Ash Patel: What a win for the landlord, because somebody's putting over a million dollars into the property, and they're going to be there for 20 years; you've now added so much equity to that landlord... Have you ever tried to negotiate maybe sharing the upside, any kind of creative solutions to get a piece of what you're giving this landlord?
Richard Simtob: I wasn't able to get that on my first few deals, but I got some rents that now they looked at me and they go "What you pay is so ridiculously cheap..." Because I started signing leases in 2010 and 2011, and those rents just don't exist anymore, and I'm locked in. So they feel like they've done me a favor. But the last center idea where we bought 35%, the center was 60% vacant before we moved in. It's now 90%, and the last 10% I'm working on filling, and we've doubled the value of the center. We have been a draw to that 60,000 square foot center, and interestingly - this happened just now - the partners wanted to sell. And before putting it on the market, I had the ability to buy it from them. So we're closing in a couple of weeks, we're just buying them out. So we'll own 100% of the center now.
Ash Patel: That's a win. Alright. So going forward, would you continue to scale the franchise side of the business, or the real estate side?
Richard Simtob: So it's a tough question, because I don't want to put the time and effort into doing more franchises, but I do have a ninth swim school in construction, and I have partners, and I know what I love to do, and I want to focus on that. But I have a really large management team now to manage it. And the Creative World schools - we have three in the ground up construction, and I have a leading managing partner in that that really drives the development and growth. And as long as my role is exactly what my unique abilities are, I'll continue to grow with them. But where I'm putting my time and effort now is with my son. It's really enjoyable and fun. We're really making a difference. He's passionate about helping low-income people that are homeless, and I share that same passion, and it's an amazing way to give back and do good, and bring fair returns for our investors.
Ash Patel: Richard, you're a GP on 401 units. Are those joint ventures with your son, or are those deals that you did on your own?
Richard Simtob: Oh, he 100% brought me aboard on them. He needed me to co-GP, to sign the loan; otherwise, he could have done it all on his own. He drove the deals.
Ash Patel: And I know the two of you fairly well from an in-depth conversation that we had... I'm assuming you didn't cut him any favors; you treated him as any other syndicator.
Richard Simtob: Exactly like any other syndicator. I think any other co-GP would take an equal share of the sponsor share if they're going to be signing on the loan and helping raise the funds. He manages, he gets paid for management, and his success is what drives his returns. We have preferred returns that have to be paid; I obviously put capital in every deal, and he put the capital he had in every deal, too. But he is treated as any other person would be treated. He doesn't get any special favors.
Ash Patel: What does an agreement look like on one of these deals? You bring all of the investors, or does he bring some as well?
Richard Simtob: All the investors are people that I know, but he has a relationship with some of my friends, and they love talking to him. So he definitely does some of the calls, and then there's some people he doesn't know well, so I do those calls. We run the webinar together and answer all the questions together.
Ash Patel: What percentage of the GP do you get on these deals?
Richard Simtob: So we typically kept 30% for us, 70% -- right out of the Best Ever Apartment Book I read two years ago; we've done a couple where they were a little bit more complicated deals, and they were smaller deals, so we did 60/40 splits, 60 for the investors and 40 for us. But on the larger deals, the 70/30 seems to be very fair. And on the 30 it's 15 for him and 15 for me.
Ash Patel: What kind of returns do the investors get, the LPs?
Richard Simtob: We offer an 8% minimum quarterly paid preferred return. And the way we've been lucky the last two years - the properties have performed exceptionally well in value. We already had our first refinance, just completed last week, and we have many opportunities; we could refinance the next year. It'll just depend on the timing and interest rates and where we're at. But we haven't done 100% completion of any project, except for that one that we refi-ed. We still have a lot of units to renovate.
Ash Patel: Aright, Richard, you know I am a non-residential investor; I do everything beyond multifamily. You've seen all different sides of different real estate assets, and you've seen how passive owning strip centers can be. Why focus on multifamily now, when returns are much lower, there's a lot more money chasing those deals, cap rates are coming down... Why not try to find more strip centers?
Richard Simtob: If we were trying to buy A class 4 cap rate apartment buildings, I would just be buying shopping centers at a six and seven cap; much better deals. And I don't understand people that do that. But I guess there's a lot of money out there in the market, and they find it as a safe haven, and with appreciation. What we're buying is typically a six cap on historical numbers, where we proforma it at an eight cap based on expense reductions and proper management and rent increases... And then with the possibility of the renovations and the ever-escalating rents, we're going to see double digit, close to 20% returns on all our investments. And I don't see that on my retail investments. It's very hard to get to a 20% IRR in anything retail.
Ash Patel: If you were to do it over again, would you have gone the franchise route, or knowing the syndication model, would you have started out in real estate?
Richard Simtob: It was really, really hard to start in real estate. There was a point at that 2001 point in my life when I left the audiobook business called Talking Book World, and I was looking for my next career... I did get my real estate license, and I did spend some time looking into it. I remember going to visit apartments. I didn't understand the business, there wasn't all the podcasts and education you have today, and I just couldn't get to that first point to get started. And there was nobody mentoring me or helping me. And then what I knew, because I'd been in franchising, I can make money right away awarding franchises to people, and helping people grow their business through franchising... So it was immediate cashflow, immediate income. And I knew in real estate there wasn't going to be a six-figure paycheck coming anytime soon. So I had to do what I did at that point, and knowing what I know.
What I wish I knew was I would have started investing in as an LP, instead of putting money in my 401k or in the stock market, and I think I would have seen much better longer returns, and better returns over the last 20 years if I had done that. And then I would have slowly started raising money for other people, and gotten into deals, and I would have probably gotten a 10-year headstart over where I am today.
Ash Patel: Yeah. And it was a different time, and it was harder to get established in Real Estate. Today, however, those barriers are, for the most part, gone. So would your advice today be to a young person, maybe a year or two out of college, start with franchises or real estate?
Richard Simtob: If they have no capital, and they don't have a mentor in real estate to take them sign the seven figure loans, it's a great way to get started in a franchise; it's better than starting a new business. Start an established business and make money, because you could turn a $50,000 investment into a $250,000 purchase of a business with the SBA loan program, with just decent credit, but no collateral. That's what's amazing about the SBA program. And that $50,000 investment could be a $200,000 your paycheck for you. You could start socking away money, start buying a home, or two, then a 5-10 unit apartment building, and then you could scale into the real estate business.
But I know it's helped me and getting all the loans we've done; [unintelligible 00:16:13.06] $20 million worth of loans is that my balance sheet looks really healthy, and I have weekly cash flow from all my businesses. So I have a very solid foundation that to the banks is a very low-risk investment, because I can make the payments.
Ash Patel: And Richard, you are obviously an expert in scaling. How have you brought your knowledge of scaling businesses to real estate?
Richard Simtob: I run all my businesses on the EOS process, the Entrepreneur Operating System, founded by Gino Wickman. And that system has been implemented in Simtob management right from the beginning. We have core values, we have a big, hairy, audacious goal, we have a three-year picture, our uniques, and we have a one-year target, and we have 90-day rocks. And we have a weekly level 10 meeting to keep our management team together. Once a quarter, you also do what's called a state of the company meeting, where you share the vision, what you're working on, what are the highest-priority projects, and it gets the construction workers, the property managers really excited to quarterly hear that this company has a plan, a vision, it knows where it's going, we're not all scatterbrained all over the place... And it's so clear, it's easy when you come to work... We have scorecards for every department, so you can measure if you're doing well or doing poorly. A lot of people work for businesses they have no idea if they're winning or losing, because they don't keep score.
Ash Patel: Can we dive into some of those specifics? Scorecards, for example... What scorecard would a construction manager have?
Richard Simtob: So construction manager has a couple of things on their scorecard - the number of units renovated this week, and the number of units that are in progress, that aren't completed, and the number of done. So we have a goal of 144 renovations this year, and we're 88 completed so far. So we're on track to our 144 completed renovated units this year. Then we have a labor scorecard, which is the total cost of labor, divided by the total cost of units renovated, so we know our labor per unit, and the total cost of construction materials. So those numbers are looked at every single week, and they go up and down based on the performance each week on spending and on management and on production.
Ash Patel: Do you have a scorecard? My personal scorecard is on all parts of the business, but every time there's a fundraising, I have a chart, and it's just going through; and if it's a $2 million raise, every day my scorecard is getting to that 2 million. Right now, our scorecard was getting [unintelligible 00:18:42.20] under contract. Happy to say it was about two months of not signing any PAs. It's been a really weird market; I got out bid on every single offer I made, and most of those people backed out, and now we've had a lot of deals come back to us, and we just put a 281-unit, our largest deal, 14 and a half million dollars, under contract.
Break: [00:19:09.15] to [00:20:54.03]
Ash Patel: How do you find deals?
Richard Simtob: It's all relationships with brokers, and with landlords Brad did a letter writing campaign, and through that campaign we've found two people that, not through a broker, but called Brad directly, and made a deal. We had to save the broker. And the other ones - and I'm learning this more and more - the brokers don't list most of their deals. I think 70% of deals done by brokers are done from a broker who knows a client himself, he knows a client that's looking for that product to buy, and they put them together and they save that whole process of fielding all the questions, doing all the tours, doing all that work. At the end of the day, they know the guy is gonna buy it, the guy that knows the property the best.
Ash Patel: Here's another off the wall question... So your son I'm guessing now is about 21, because I bought him a beer when he was 20. Is that right, is he 21 now?
Richard Simtob: You bought him a beer two weeks before his birthday.
Ash Patel: Okay. What dynamic issues do you guys have working with your son?
Richard Simtob: Well, I've accepted the role, as I am coaching and helping him. He is not my employee, and I'm not telling him what to do every day. Because I don't want to have to convince him to get out of bed, I don't want to convince him to go and work harder. He has taken the role where he is leading this, he's responsible for this, and I'm his coach. Now he comes to me for help, and "I'm stuck on this, I need help with that", and I will help on anything he asks for, but I really have made this his thing, and I'm here to help him coach him along. There's times he says "Dad, stay out of this. I got this. Don't worry about it." There's a lot of that, because I'll sometimes overreach as a father, or as an investor, ir as a partner, and he'll push back... And I understand my role.
Ash Patel: So on the org chart, is that your role, mentor/coach? Or are you CEO/COO?
Richard Simtob: There was one where I was visionary, which I'm sort of a visionary, but right now, the new one, I'm just a controller. I oversee the money. We have an accounting manager, but I'm making sure that every number balance is imperfect.
Ash Patel: Alright, so speak only when you're spoken to.
Richard Simtob: Yeah. [laughs]
Ash Patel: Awesome. You guys are in two markets right now in Michigan, right?
Richard Simtob: Correct. Kalamazoo, Michigan and Lansing, Michigan.
Ash Patel: And you've got this vast history of scaling. Why are you still in two markets?
Richard Simtob: Well, we've been really working hard on getting into Grand Rapids. It was a goal this year, it's written. I still think it's a possibility that by the end of the year we'll have one property of at least 80 units in Grand Rapids. That's our written plan. And we started making offers in Indiana, and we got outbid there. But there's close to Kalamazoo, like an hour away, with a similar product... The prefabricated single-floor homes that are set up as apartments. We are good at that, we understand that product, and the broker came to us and said "We're selling something that's exactly like the property you want in Kalamazoo, an hour away. Would you look at it?" Brad did a full investigation. We got outbid by a little bit, probably by a million, but I think it might come back. I don't know if they'll close.
Ash Patel: What's the key to breaking into new markets?
Richard Simtob: Well, first, it's relationships. I was gonna go to Indiana; that time we got pulled, but we are looking at going into Chicago, and we're looking at going to Indianapolis, so we're just starting to talk to people and create relationships there, and ask "Who do we know here that knows someone there?" Because that warm call and that warm lead makes all the difference in the world.
Ash Patel: Richard, with all of your years of experience, what's a deal you lost money on, and what was a lesson learned?
Richard Simtob: Yeah, I lost a lot of money, on a deals. [laughs] But I'll tell you the biggest amount of money I lost was in 2009, after we sold Wireless Toys. I decided I wanted to break [unintelligible 00:24:45.14] I wanted an online business. I saw everyone making money online, and I came up with a concept that I was going to have a lead generation website for franchise leads, but I was going to charge differently by success, instead of by lead. And it was called Franchises for Sale. I bought the domain, I built an amazing site, and I spent a year and a half and over a quarter million dollars building this business, and it ultimately failed.
I did create some amazing relationships through that business in franchising. I got into business with my brother, and we got [unintelligible 00:25:19.24] so a restoration company that he built, and has sold, and I only got that relationship because I had that business... But it wasn't income from that business, but relationships were created. So that was the biggest loss.
Ash Patel: Did it fail because it was ahead of its time, or you were trying to solve a problem that didn't need to be solved?
Richard Simtob: I tried to solve a problem that is very, very hard to solve, because people would rather pay only when they sell a franchise, to pay a fee; we'd charge $10,000, versus $50 For every lead. But it's almost an impossible problem to solve, and the cost to do it right would have cost me millions of dollars, I realized. Building a website is only 50 grand, you need $5 million to get people to show up at it.
Ash Patel: And then when you scaled - there's a lot of people involved; where there a lot of partners involved?
Richard Simtob: In that particular business?
Ash Patel: No, no. Just in general, throughout your career. Did you have partners over time?
Richard Simtob: So I'm one of those guys - and I know it's the opposite than other people I know - I've not owned any businesses without a business partner. Even my Goldfishes I have a partner, my driving school, my Creative Worlds... And it's enabled me to have a lifestyle that I enjoy... And I'm not greedy. I don't need 100% of the profits. If I have 25% to 50%, I'm a happy camper. So I'd rather own multiple businesses with less share, than have 100% of one business and it's all I got.
Ash Patel: And I've learned that over the years, too. And I've heard "If you want to go far, go together." And I've had some tough deals with partners. I had a partner that wanted to buy a building with me - it was an office building that was kind of half built, ran out of money, vacant for five years... And he was a builder. So he wanted to go in on this with me, he sought me out, and we became partners, and as soon as we signed, it turns out he doesn't work. He just outsources everything. Well, that's not how value-add commercial works, right? We're the boots on the ground. And I've learned some hard lessons with partners over the years. What are some good lessons that you've learned on partners, or mistakes that you've made?
Richard Simtob: Well, I brought in partners in that business [unintelligible 00:27:30.16] in 1997. And I was enthralled, they brought in millions of dollars to the table; it didn't go to my pocket, it went into the business to scale the business, that had 40 locations, and we're going to scale it to 100... And I did very little research on them, and I didn't work with them a lot. Similar to you, getting into a partnership and you find out after you've signed the papers he's lazy. And I've learned that you have to work with people for a long time, and find a way to pay them, or get paid on commission, something, before you become a partner. It's very hard to unwind an ownership stake.
So my partner in my Goldfishes - I worked with him at Wireless Toys. He was a VP of operations. We worked together for 10 years. I knew what he was good at, I knew what he was bad at, and he knew the same about me... So we had a great partnership going into Goldfish, because we knew our strengths and our weaknesses, which we both have. And even when I got into Wireless Toys, I worked as a consultant for two years on straight commission, and then they wanted me as a partner in the company, and they offered me a percentage of the company to come and join full-time... But they knew what they were getting right up front, the good and the bad. And it was a great partnership.
Ash Patel: Yeah. No different than a marriage. And your partnership agreement or your operating agreement is no different than a prenup. So for the Best Ever listeners out there, don't hand out partnerships lightly. Really work with the person, like Richard was saying, test-drive that relationship before you give away half of your company... Because again, like you said, it's very hard to unwind. Let's take a hypothetical example... I know a lot of younger Best Ever listeners will want to get into real estate, and they'll get a buddy or two, and they become partners, and then start this company. And then, more often than not, I've seen where the partnership doesn't work out, because again, they have differences of opinions, one person doesn't work as hard... How would you suggest younger people that are getting into real estate structure their company or partnership?
Richard Simtob: It's a great question. My suggestion would be you do a partnership on a particular property only, not on a company. And on that property you define the capital, just like the sponsor area and the investor part. So if they were to find a million dollar building, and they knew they had to raise $300,000, they put out a fundraising for 300k and decide by who raises more money gets a different percentage of the 30%, and then whoever does the management gets paid for the management. If they say "We're all gonna manage and we're all gonna raise money", you should know upfront it's not going to happen. So why don't you just call a spade a spade, and say, "Listen, you're the fundraiser, and I'm the property manager, and you're the accounting and bookkeeper. Let's get paid for our roles, and we can still share in the sponsor 30%." So the property manager gets paid his 4% or 5%, and the person who does the accounting gets paid his $500 a month to do all the bookkeeping for this property, and the guy that's gonna get fundraising is gonna get a one-time fee from the acquisition fee for raising those funds. They're not going to all be equal; it's hard to pay everyone equally, and do the exact amount of work. It's impossible. It will never work the exact same if me and you were in the same deal; one is going to work different hours, or a different effort than the other.
Ash Patel: I love that, great advice. And very quickly, you'll find out who's a rockstar and who doesn't produce. So yeah, Best Ever listeners, re-listen to what Richard just said. It's very, very important. It can help you avoid a lot of heartache. Richard, what mistake do you see a lot of other real estate syndicators make?
Richard Simtob: I definitely see over-promising. And right now I don't want to say they've underdelivered, because so far they've done okay... But I hate over-promising; it's a scariest thing. I get deals, I invest as an LP as a partner too, and that's why I have to see the underwriting to a deal, because I want to see how [unintelligible 00:31:47.05]
I just had a deal that the fundraiser was really excited about, and I went in and it was all based to get a 20% return on a five exit cap rate, five years from now. I'm like, "Well, if I change that cap rate to seven, all of a sudden my return goes to 4% IRR." And there was only cashflow because it was interest-only, and the minute it wasn't interest-only, there was no cash flow in the deal. I'm like "You have no ability to rebound or make up for a mistake here. It's perfection only." So over-promising to investors is probably the biggest mistake.
Ash Patel: Yeah, I interviewed somebody recently who said "We spend more time researching appliances than we do researching the syndications that we put six figures into." I've done it... [laughs] I've written checks and not asked a lot of questions...
Richard Simtob: Yeah. When someone tells you "Oh, it's a good deal. Go put your money." And I did it a couple of times. I lost a few $50,000 investments, and I'm mad about those. And I realized it's my fault. It wasn't theirs. It's my fault. I should have asked more questions, I should have dug in. I'll never ever blame the person that introduced me to something for a loss, when I was the one that made the decision.
Ash Patel: Yeah. And it only takes a couple of times to learn that lesson, and then you figure it out. You said something earlier in this conversation that I've never heard before, and it struck out to me. You said "We offer a minimum of a percent pref." Is that a variable return? I love how you phrased that. "We'll offer you a minimum of 8%?" Could it be higher?
Richard Simtob: Yeah. Because the pref is 8%, and then you're going to make more than eight, because we're going to make more on the property. So the pref is 8%, after 8% it's a 70/30 split.
Ash Patel: Got it. Okay.
Richard Simtob: Just because we went under budget on construction, or we had some great events where we were able to pay back some of the initial capital already without even a refi. So they've been able to make more money back.
Ash Patel: Okay. So you don't wait until the end. If you have increased operating profits, you'll deploy that to investors.
Richard Simtob: Yeah. If I don't have a better use for it in the business, I'm not going to sit on 100k staying in an account if I only need 30k. So I'll put back the 70k to the investors, because that's a better use of the funds, and let them invest it.
Ash Patel: And does that reduce the amount of capital they're getting a pref on?
Richard Simtob: It does?
Ash Patel: Yeah. Awesome. Richard, what is your best real estate investing advice ever?
Richard Simtob: I'd have to say get started. Start with something small. I remember that very first deal two years ago, I was a little hesitant. I knew nothing about managing an apartment building, and Brad wanted to try it... And I'm like, "Let's take a 111-unit apartment building, and what's the worst that could happen?" And we took a risk. And I could have put up all the money, but I wanted him to learn how to syndicate, so I said "Why don't you call these three friends of mine and pitch them?" He made a pitch deck, he made his proformas, and he pitched all three friends for $12,500, and they all said yes. They'll put money in. So I got to be 50/50 partners on the equity side with three of my friends, but now my son wasn't just responsible to me, he was responsible to other people too, and I made him write investor updates every quarter [unintelligible 00:34:58.25] Just get started with something small.
Ash Patel: Richard, did you have a mentor in your franchise business?
Richard Simtob: I don't have a particular mentor that I met with, but I consider Brian Tracy, who wrote many, many books, he's a published author and audiobook - I've been listening to since I was 17 years old, and I consider him my remote mentor. I've listened to everything he's ever spoken, I've learned an incredible amount about business and life from Brian Tracy... So he's that mentor to me.
Ash Patel: How important is having a mentor in real estate?
Richard Simtob: I think it's very important. I have several friends in real estate that I go to. So it's funny, I don't call them mentors, but they own property; one sold his portfolio of mobile home parks, another one owns apartments in Detroit... And I'm able to call on them and ask questions about how do they deal with this, what property management software they use... And ask questions like that. And that's been really helpful.
And I'll tell you, syndicating was really, really new to me, and I didn't know anyone around me that was doing it... And the book that Joe Fairless wrote was a huge jumpstart for me to understand all the steps of the research, finding, researching and raising funds and structuring a deal. That was really valuable to me, too.
Ash Patel: Yeah, that is the Bible of syndication. 400-something page book.
Richard Simtob: I listened to it on Audible, and it was an amazing listen.
Ash Patel: Did he record it?
Richard Simtob: It was not his voice.
Ash Patel: I read the cliff notes version of that book.
Richard Simtob: I listened to every word, and I'll tell you, he had so much good stuff in it... For someone getting started, start with that to learn how to syndicate.
Ash Patel: Alright, Joe, I'll listen to the book... I'm probably not going to read the 400 pages. Alright, Richard, are you ready for the Best Ever lightning round?
Richard Simtob: Yes. I don't remember the questions...
Ash Patel: Alright, then we'll just hit you fresh. Richard, what's the Best Ever book you've recently read?
Richard Simtob: I am listening to Sapiens right now. It is about the human race and how we developed and evolved and how we are where we are today.
Ash Patel: Yeah, my wife really loved that book. Richard, what's the Best Ever way you like to give back?
Richard Simtob: I give back in two ways. I give back my time to several charities. The main one is a food pantry in Michigan that I've been part of for 25 years, and presidents of... And then I have a whole giving plan that I give donations to a certain number of charities every year, that have a big impact in the community.
Ash Patel: And Richard, how can the Best Ever listeners reach out to you?
Richard Simtob: Well, my email is easy, it's my first name @ my last name.com. Richard [at] simtob.com. You can just go to the website, simtob.com. There's a place to contact us if you want to be on our mailing list or learn anything about things we're doing in the future.
Ash Patel: Richard, thank you for taking time out of your day today and sharing what I think is two lifetimes of success and mistakes with all of us and the Best Ever listeners. You've given us a lot of great advice on scaling, some of the failures, some of the successes, so thank you again for your time.
Ash Patel: Thank you, Ash. You were wonderful today.
Richard Simtob: Best Ever listeners, thank you so much for joining us. If you enjoyed this episode, please leave us a five-star review, share the podcast with someone you think can benefit from it. Also, follow, subscribe and have a Best Ever day!
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