Omni Casey 0:00
I kind of define investors in one of three categories cashflow is that second tier that cashflow, investing for financial freedom. The income is really what you’re looking for the first tier is someone that’s doing it as a profession, you know, that might be a broker that might be a fixin flipper or a wholesaler. But that financial freedom aspect is really cashflow dependent. And then the third category I put us as generational wealth once you maybe don’t need that cash flow or that financial freedom, then you can do bigger things that are probably more tuned into equity appreciation, path of progress and things like that. And so I do all my investments in one of those three categories. And that helps me at least to just clarify Alright, not every investment is going to be across the board. Everything
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J Darrin Gross 1:02
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is the podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guest is Omni Casey. Omni has been a real estate investor, broker and coach for nearly 20 years. He invest in small to mid size multifamily, cash flowing real estate from Virginia to Hawaii. And in just a minute, we’re going to speak with him now about investing in cash flowing small to mid size multifamily properties.
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Omni Casey 2:22
Happy to be here. Big fan of the show. Thank you for having me on.
J Darrin Gross 2:26
I’m really looking forward to our conversation today. But before we get started, if you could take just a minute and share with the listeners a little bit about your background.
Omni Casey 2:35
Absolutely. So I My story started in Hawaii, I’m born and raised in Hawaii, that’s where my family is grew up there. Fairly entrepreneurial family, father owned construction, roofing businesses, my my mother had home based businesses and allowed them the flexibility to kind of create a life that by design and and my mother homeschooled us, and that’s something that she wanted to do. There’s eight of us kids. So it sounds crazy for someone who wants to homeschool eight kids, but they were able to do that because they kind of controlled their, their, their income and their time there. And I didn’t know what I want to be when I grew up, I just knew I didn’t want to be an employee. They kind of set that mindset for me real estate wasn’t really a part of the discussion, or picture but I did love business. Fast forward a few years found rich dad poor dad as a book and realize, okay, business is what it is and eventually got into the real estate side of things after a few other businesses and got in as a real estate investor, and then became a broker coach trainer, you know, over the last 20 years as well helping real estate agents and our clients investors as well. So that’s been my focus and that’s kind of how I became alumni for the investor guy and for the last few years.
J Darrin Gross 3:53
Awesome. And I’m sorry, how long did you say you’ve been investing?
Omni Casey 3:57
About 20 years now 20 years?
J Darrin Gross 3:59
Okay. And did you start in multifamily? Or did you start in single family or what asset class did
Omni Casey 4:04
I did not. I took a very meandering path probably I probably tried every single type of real estate investing there is started out with whatever I can afford and I had no money so I couldn’t afford much. You know, but lucky enough to find the right partners and the right and really mentors as a young kid that was willing to guide me or let me tag along for the ride and learn so started in Hawaii on the condo side of things and I quickly realized that Hawaii was outpacing my available cash flow or available funds and learned how to invest long distance and and so I’ve done condo rentals short term rentals multifamily I’ve done wholesaling. I’ve done fix and flip. I love the burst strategy. I’ve done mixed use. So I’d love to say I picked one path and stuck with it for the last 20 years but I’ve I’ve dabbled in just about everything else.
J Darrin Gross 5:00
Got it. And for our listeners and kind of get some perspective here, you currently now focus on the small and the mid sized or small to mid sized multifamily. I’m curious, what do you define as small? And what’s the differentiation between small and midsize? What? What’s the real
Omni Casey 5:21
Great question and I don’t know if it’s the official definition, but how I define it. Small multifamily is two to four units, that’s the residential side of multifamily. And that really defined by the the debt that you can put on that, but 30 year fix is much easier when you’re in that space, and then anything over five, and I say five to 20 is mid size for me. And basically things that you can take down by yourself, I invest just me and my wife got three kids. So we don’t have a big company by any means. And we don’t take on many partners or syndications or things like that. So things that we can do within our scope, versus taking down a you know, 300 unit building, you typically need a big syndication or some sort of fund to be able to do that.
J Darrin Gross 6:07
No, I hear you loud and clear. That’s kind of a mirror of what we do. So let’s talk about the cash flowing. You know, a lot of people they get all excited about real estate. There’s definitely tons and tons of upside. You know, from from all angles, I mean, the tax advantages, the asset accumulation to the cash flow. But I’m curious, from your perspective, in your experience, when you acquire properties, are you able to experience cash flow from day one? Or how are you? How do you find that, that that starts and are where when do you find that you’re most likely to have your positive cash flow start?
Omni Casey 6:59
Yeah, absolutely. And so that the cash flow side of things is I kind of defined investors in one of three categories. cashflow is that second tier that cashflow, investing, for financial freedom, the income is really what you’re looking for the first tier is someone that’s doing it as a profession, you know, that might be a broker that might be a fixin flipper or a wholesaler. But that financial freedom aspect is really cashflow dependent. And then the third category I put us as generational wealth, once you maybe don’t need that cash flow or that financial freedom, then you can do bigger things that are probably more tuned into equity appreciation, path of progress and things like that. And so I do all my investments in one of those three categories. And that helps me at least to just clarify, alright, not every investment is going to be across the board, everything. And so when I focus on cash flow, I go all in on the cash flow aspects of it. And I typically do find something that is either already rented out and and I’m able to inherit tenants or a few tenants as well, or, really, the majority of what we do now is what we call portfolio repositioning. And so we actually buy portfolios, from small Mom, mom and pop shops, and so someone that’s been doing it for the last 2030 years, and they’re thinking about it ready to exit, you know, they’re depreciated all their assets down to two to zero at this point. So they’re not seeing the same return. Average mom and pop that we work with is anywhere between 10 and 20 properties. And those properties are mixed between single family and smaller mid size multifamily. And the reason I like this one, it’s it’s a different strategy than most are working on and allows me to scale that up at a higher volume versus buying one at a time is just that’s a lot of transactions to deal with. But if you look at it from the perspective of a mom and pop portfolio landlord, there’s, they typically have great investments and they have some headache investments, right? And there’s there’s a mixed batch of them, we all have that, right? We all have like if I could just get rid of this one, right? And but unfortunately, if they’re thinking about exiting at some point, they’re like, I could definitely exit my good ones. I’m worried about exiting and being stuck with just my my bad properties or my headache properties. And then the other option or obstacle that many of these landlords are coming up against is, at some point, they paid off debt, or maybe they bought them cash, and then they decide to pull out equity. But you know, maybe they’re smaller properties and you can’t get a loan on just one small property. So they say let’s just do a portfolio loan across my entire portfolio. And they’re cross collateralized, which is is great for many people until you try to sell it. And often you can’t sell one property at a time you have to sell your entire portfolio because every single property is you know, collateral to that bank, and they want you to sell them all at the same time. So not many smaller investors are able to go buy an entire portfolio So we try to position herself where we buy out these smaller mid sized portfolios all at one time. And then we reposition them, because we are willing to buy all their good properties and their bad properties. Clearly, we don’t want to keep the bad properties, we either want to fix them up, make them better, or sell them off, you know. And so, in a typical portfolio, I would say, somewhere in the realm of 60, plus percent, we actually keep as long term rental properties, and then the rest, we look at development, whole selling them off, or fixing them up and actually selling them out. And so we keep the best parts of the portfolio, it’s a lot more work, but compared to buying 100 unit apartment building, you can’t really just go sell off one of those or two of those, you know, bad units there. So allows me to be a little bit more hands on and really create the value in a very difficult, you know, process that there’s not a lot of people in that space.
J Darrin Gross 10:56
I like the approach, you know, because like I said, the, the portfolio loan, if you if you have everything cross collateralized, it does make a little more difficult to exit in, you would be a solution there. Let me ask you, in the intro there read how you invest from Hawaii to Virginia? Are you employing the strategy with the mom and pop nationwide? Or do you try and focus in an area that you already have a footprint.
Omni Casey 11:28
So the last few years, I’ve been trying to focus more in my area, I’m in Northern Virginia now. So I’ve said the last five years, I’ve really put a heavy focus on buying more in this area. And not because it’s the best place to invest, I believe you could be successful investing in almost any market, if you understand what you’re looking for, and you employ the right approach. I have three kids. 13 is my oldest, my daughter’s nine and seven. And I started to although I’ve been talking about this for a while with them, and they understand it on paper, I really want them to have this financial education, I didn’t have things to point do things to take them to. And so most of what I do now, a huge percentage is in the Virginia, Maryland, you know, West Virginia market somewhere within a two hour radius of where I am, specifically so I can keep my kids involved.
J Darrin Gross 12:18
That’s, that’s great. I was just talking with an investor yesterday about how he had employed his kids to help with some janitorial duties, you know, and, and he’s talking about just some of the duties they were ever getting involved in. And, you know, some of the early lessons in life, it really does make you appreciate some of you know what hard work is. And that sounds good. So your strategy, basically, are you finding or airless back? How are you marketing or finding these sellers that you’re that you’re able to work with?
Omni Casey 12:55
Yeah, the reason. So I guess starting out, it was the same way that everyone marketed right at you. It’s direct to seller calls, texts, emails, postcards, build broker relationships, one of the reasons why I became a real estate agent and broker and I’m a licensed in five states, I don’t actively sell myself, but I coach people doing that. One of the reasons I got into that space was so that is one less barrier of entry to find these leads. And so that was a traditional way, I would say, since I’ve established myself in several markets. And once you find a really good team, whether it’s a real estate agent, or property manager in that area, they become your main lead source. So huge percentage of my business comes from my existing property managers, my, my goal in when I’m connecting with a property manager now is to not have them manage 1234 property, I want that I want to be their number one client. And I actually asked him that, like, what would it take for me to be the most important works person on your books, and they tell me a number and I figure out can I, you know, achieve that at some point. But my goal is to for at least my rockstar property managers to be their number one client. And once you make that commitment, or get there, every single one other person in their database or clientele, they don’t want them to sell to anyone else, they would rather sell it to you. So they know when the mom and pop is ready to exit they know before anyone else. And rather than going to the market, they say Well, let me let me introduce you to a guy, I think he can help you. And so I get warm handoff leads from my property managers more than anything.
J Darrin Gross 14:34
That’s great. I mean, you’ve kind of stepped out of the competition and before you make a comp or competitive situation. That’s, that’s great. And also I think one of the things that I think that not everybody understand is that selling a property is not always easy and there’s a lot of tire kickers out there and you can get beat up quite a bit. As a seller. A lot of the the market is full of people that are ready to work you down. Kind of thing. And and if you’re especially if you’re a less sophisticated seller, maybe you you’ve been doing it on your own and you’re not as clued in or you’re not as aware of, of what you have, or whatever there, it’s easy to to feel like, oh, yeah, does have this does have that problem does, you know and, you know, just succumb to the pressure as opposed to just have a chance to deal with somebody straightforward. And that’s, I’m assuming that you probably did a lot of the sellers, like working with somebody that they’ve been referred to, as opposed to just call it out on the open market? Do you find that to be true?
Omni Casey 15:42
I think they do. And not every seller is the right fit for, for us or for any anybody, right, some sellers need to go to market because they, they need to get max value, or whatever the case may be, and they have time, right, they have three years to parse out their portfolio and sell them off one by one. And that’s probably what they should do. For those who are whether there’s time constraints, like they gotta get, they got to sell out 22 properties in the next 30 days, right. And, and it has to be sold to one buyer, there’s not many buyers out there that can do that, you put it on the MLS, or close or wherever, it’s tough, because most buyers are not looking for that, because they’re gonna look at the portfolio and say, Well, you got some gems in here, but you have some dogs in here as well. And I just buy the gems, and no one wants to inherit the properties that they don’t really want in their portfolio, we’re able to, we’re willing to absorb them all. And just know that we’re gonna parse those out and eventually offload them to the right buyer that that specializes in that type of property. So the mutual connection that I typically have with the people I’m dealing with, is we both employ the same property manager, and it’s usually a great property manager that we both love. And so we already have this mutual connection about that person might must be smart, because he hired a person that I did as well, right? So you have that connection, and it usually works out well, not everyone falls into the category of people we work with, but we’re typically able to help them on the brokerage side as well, like, so if I can’t buy them, we’ll help them go to market and sell it as well.
J Darrin Gross 17:07
I mean, think about that. The the broker option, there’s definitely powerful, that’s, that’s good. So, when you acquire these these properties, whether they be you know, portfolio or or individual properties, do you do you look to to buy and hold? Are you trying to reposition them and sell them? You know, talk a little bit about what’s your, your big picture plan? And how you, you operate with your acquisitions?
Omni Casey 17:40
Yeah, that’s a great question and are keep revisiting and I’ve adjusted strategies over the years, and I get asked quite often, it seems like the next step for everyone is to start a syndication or a fund of some sort, right, if you get good at investing, and it makes sense to kind of go bigger and bigger and bigger. And the one reason why I’ve never done that is I don’t like the requirement to reposition and sell in five years or seven years, because most of those are tied to some sort of balloon debt of five 710 years, where you have to make a decision. And obviously, there’s value there. And that strategy worked for some, my strategy is, if I can buy it and never ever need to sell it, then then I’m okay with that not to say I don’t sell properties, I absolutely do sell properties. But if I can buy it, and never ever need to sell it, then that’s a safer investment for me, and I’m buying it, you know, for that cash flow aspect of it. And so when I purchase and that the reason why I’m seeing in this space is I’m typically able to, I usually buy cash most often and then I reposition and I refinance, do what’s called the burst strategy, maybe fix it up a little bit, add some value and pull out some equity on 30 year debt for that property. So that’s my goal is to put 30 year debt individually on most of these properties, some of them we grouped together, and the ones that just absolutely don’t fit, then we either redevelop it altogether, or we sell it off to another investor or you know, a buyer that wants to just you know, live in that single family home and it just didn’t fit our portfolio.
J Darrin Gross 19:13
So you mentioned that you do your you don’t raise capital and have any outside investors. In the initial there you were the intro there. You talked a little bit about how you started in Hawaii and kind of realize he ran out of capital. How did you overcome or what is it just been a matter of momentum that you’ve grown your portfolio large enough been able to refi and cashflow enough now that you have enough capital to go out and buy these are you are you getting any kind of creative finance strategies or or how are you? How are you doing?
Omni Casey 19:50
Great question and it is something maybe all of the above is probably the best answer. I wrote a book a few years ago never actually published it actually I’m publishing it this is the cash flow Breakfast Club and it kind of put that my story into it right of what I’ve done. And it really is stacking, it’s buying, buying these small little incomes. And then I’ve been really good about not, I think most people, the more money they make, the more they spend, like, alright, I met this income bracket now now I need to go buy a bigger house, I mean, this income bracket, I need to move to a different zip code, right. And so I think I’ve been able to convince my wife, it’s probably my biggest feat of not have that income, lifestyle creep with with our investment income increases, and all we’ve done is put that into an account and just recycled it and every single year, we’re just buying more properties and buying more property. So it has nothing to do with any active income that I have. It is my properties by my properties. And over time, they built up cash flow funds that we’re using. And then clearly as appreciation happens, if we’re able to refinance them, they still are positive cash flow, but now we have equity that we’re using to buy other properties. That’s been our main strategy. So we do a lot of what’s the called the burst strategy on the residential side, on the commercial side, it’s just like a regular repositioning or taking down a building. But typically, in a six month period, you can add value to the property, you rent it out, raise the rent, put a new tenant in there, and refinance out upwards of 75%, on average of the new higher value equity. And often that’s everything that you put in purchase price and renovation. So you get your money back in about six months. And the end result is you still have a property that’s bringing you any cash flow every single month.
J Darrin Gross 21:35
Now, that’s that’s great. And and I think the thing I’ve learned most of that is speed, if you can get in and get your renovation done as fast as possible and get somebody in there and get those higher rents. That’s actually kind of the key as opposed to some sort of lingering project that takes longer and more capital than you intended. That’s, that’s kind of a slowing death, or at least a painful situation. So Gotcha. So if you were to identify more, or say, this is an ideal opportunity, what’s an ideal opportunity for you?
Omni Casey 22:13
Ideal opportunity is is a portfolio. It’s a landlord, who really needs to sell wants to sell, maybe has tried to sell in the past and just could not find the right buyer. The majority of what I buy, still more small multifamily. So if someone has 20 single family homes, I’m typically not buying it from them. It just doesn’t fit my my strategy, cashflow strategy and portfolio. But we might have other investors in our group, you know, we currently created a mastermind group locally where people are doing similar what I’m doing, but maybe in other asset classes, but someone that has a portfolio of duplexes, triplexes, quad plexes, up to 20 units or so that’s the ideal buyer, because we can typically pay more than most buyers out there as a whole and let them exit at the exact entire time. And you mentioned, sometimes there’s creative strategies involved, sometimes there’s seller financing involved, because, you know, they take back a note and then that allows us to pay even a higher price up front, because our lending costs or out of pocket cash cost is much less.
J Darrin Gross 23:18
Well, that’s one of the things I love about, you know, the whole real estate opportunity is he’s, you know, the limits are basically your imagination a lot of time, so it’s good. He on a if we could like shift gears here for a second. By day, I’m an insurance broker. And I work with my clients to assess risk and determine what to do with the risk. And there’s there’s three strategies that we typically consider, we first look to see if there’s a way we can avoid the risk. If that’s not an option, then we look to see if there’s a way we can minimize the risk. And when we can either avoid or minimize the risk, then we look to see if there’s a way we can transfer the risk. And that’s what an insurance policy is risk transfer vehicle. And so I like to ask my guests, if they can look at their own situation could be their clients, investors, tenants, the market COVID however, you would like to frame the question. But take a second and identify what you consider to be the biggest risk. And for clarification, while I am an insurance broker, I’m not necessarily looking for an insurance related answer. And so if you’re willing, I’d like to ask you on the KC, what is the biggest risk?
Omni Casey 24:44
That is a great question. I think there’s a lot of little things you can point to you mentioned environment and and you know what’s going on in the world. You know how that might affect your individual acid at the time or your strategy at the time, but my answer is probably a little bit more abroad, you know, because what I’ve found over the years, no matter who’s in office, right, no matter what’s going on in the world, you can be successful in what I do in real estate investing, and you just got to be willing to change your strategy, when you understand what’s happening there. So I think the biggest risk is really not understanding the rules to whatever game you’re playing. So understanding the rules is so important. And some people don’t even understand the game, so maybe not understanding the game. And then, like what I’m doing, you could actually choose to play a different game, right? There’s, there’s a very common game out there, I’m like, Well, if I can get good at my own game, no one was actually in my space playing the game that I’m playing. So I don’t have a lot of competition. So it’s actually much easier for me, because I created the own rules to my game. Once this picks up, then maybe I gotta go figure out how to create a new game. And so when you’re looking at some constants that we think are constants, and maybe they change, how does that affect vote, for example, um, a lot of talk about inflation, right, we’re north of 7%, and who knows where it’s gonna go. And, but that’s a rule, that’s a rule in the game. And if, you know, I use the analogy of gravity quite often, like if gravity changed today, like if the like, if, for whatever reason, gravity was at 50%, and people like borderlines started to float away, we would have to change the rules to how we live our day, right, we’d probably have to wear heavier clothing and you know, not jump around, or whatever the case may be. But we’d have to adapt and get used to it. And so 7% 8% 10% Inflation is crazy. But as long as we’re adapting, and we know what to do, we have to invest differently, like my investment decision today is different than it was five years ago, based on inflation. Same thing with insurance. Well, same thing with interest rates, if the interest rates continue to rise, alright, that changes my strategy, my strategy is drastically different. But understanding that all they are just rules to the game, I gotta shift what I’m doing. So it’s really a self analysis of what your goals aren’t what you’re doing, and understanding that everything that’s going on around you are just rules to a game, if you understand them, you can use it to your advantage.
J Darrin Gross 27:05
That’s, that’s a great way of looking at it, it’s a game. And I think, to me, that’s a way more healthy way to look at it, then it’s not fair, you know, the the child expectation that that, you know, should be equal for everybody, as opposed to being able to identify what the opportunities are and how you can take advantage of it. I think that’s really well put. So appreciate that. Um, no, where can the listeners go if they’d like to learn more connect with you?
Omni Casey 27:39
I have a website, it’s on nine, the investor guide.com. So they can find me there. They can find out information about the book, a lot of the free training and coaching that I offer. There’s links to it there as well. I am mostly on Facebook and Instagram. Same handle on now the investor, guide guide.com. against my will I have a tic tock account as well. I don’t do any dancing on there. But my publisher said that’s something that we got to have as well. So anywhere, if you just Google it investor guy, you can pretty much find me.
J Darrin Gross 28:10
All right, well, we will post that in the show notes. And I encourage any of our listeners to check you out and learn more. I’ve enjoyed this tremendously. I can’t say thanks enough for taking the time. And I hope we can do it again soon.
Omni Casey 28:27
I look forward to it. Thank you very much.
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