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Episode 57: Generating Passive Income: How To Achieve Financial Freedom For Your Family
CEO, Podcast Host and Published Author James Prendamano sits down with Lennon Lee and Stony Stonebraker, two investors with engineering backgrounds, generations apart, who discuss their system to make money through passively investing in real estate. They both met each other at a real estate networking event and quickly realized they shared the same common goal: achieving financial freedom for their families through commercial real estate.
Stony’s Story
Stony received his electrical engineering degree from Georgia Tech. While there, he says, he built an electric car, which he drove from Boston to St. Louis. Impressively, he also had the opportunity to work on the instrumentation unit of the Saturn V rocket during the Apollo program. Following that he got into telecommunications for airlines and utilities. Stony says he was always entrepreneurial in nature and scratched that itch by starting several consulting companies with a few others on the side. He retired in 2002, and then became inspired by the most popular investing book of his day, William Nickerson’s How I Turned One Thousand Dollars into 5 Million in Real Estate in My Spare Time, which was originally published in 1959. Stony then start dabbling in real estate investing, just not a lot, he admits. He invested in some single-family homes and vacation homes primarily in North Carolina and Florida. About five or six years ago, Stony rekindled his love for investment real estate. He had started listening to real estate podcasts, watching expert real estate videos on YouTube, and reading books about investing again.
Lennon’s Story
Eleven years ago, Lennon Lee along with his family, came to the United States from Venezuela and settled in Miami. He had his undergraduate degree in Telecommunications Engineering, similar to Stony’s background. In Miami, he worked on his Masters degree for Engineering Management. He accepted a great job doing supply chain and logistics for a printing company, but he didn’t like the 9-5 one bit. Also entrepreneurial in spirt like Stony, Lennon started buying properties in Miami, along with the help of his family; he would then manage the properties. In 2015, Lennon saw that the properties in his portfolio weren’t doing as well as he had though they would, but there was a lot of equity in them. Lennon says he and his family knew they wanted to stay in real estate; they had always been in real estate in one way or another. The question he asked was – How can we find something better in real estate that still allows us to be passive? Lennon then got his real estate license and started selling off some of the properties in his portfolio.
An Attraction to Commercial Real Estate
After getting his real estate license, Lennon Lee says commercial real estate really caught his eye. It was so different from residential real estate that he had been accustomed to – in the basic sense of how it’s valued. James Prendamano emphatically agrees with the sentiment. Lennon says this idea made a lot of sense to him. It seemed that you could have some control over the property if you implemented the proper business plan. He then discovered multifamily investing. Lennon and his family wanted to work with that asset class, but again remain fairly passive. Lennon soon discovered real estate syndication and that changed everything for him. He realized he could be part of multi-million dollar deals without being a multi-millionaire. He met Stony Stonebraker at a real estate networking event and they quickly connected and did a deal together. Then they both did a second deal and a third deal together. Lennon Lee says he and Stony started Passivo Real Estate Investments over a year ago to formalize their partnership.
The Secret to Success
James Prendamano notes how remarkable it is that Lennon came here just 11 or 12 years ago, and now he’s sitting on a company between LP and GP investments that has more than 2,000 units in a portfolio that’s pushing $200 million dollars. Lennon says they are passive investors or limited partners before anything else, and that’s how they approach everything they do. He notes one of the risks in commercial real estate is how well you can execute a business plan. The most important thing, in addition to diversifying your portfolio with different asset classes, is building and maintaining relationships with different teams, meaning different sponsors or syndicators.
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