Podcast Episode 137 Transcript

Episode 137: From The Marketing World to Real Estate Investing: Best of John Casmon

are you ready to bring your real estate
game to the next level my name is James
prendamano I'm the CEO and founder of
pre-real and over the past 25 years I've
closed over a billion dollars in
transactional real estate each week I'm
meeting with outstanding investors High
performing individuals and Visionaries
operating in the real estate space these
are the people that are actually out
there in the real estate game right now
getting it done this podcast aims at
bringing anyone
this is the pre-real podcast
[Music]
real podcast we got a treat for you
today folks we've got a multi-family
syndicator podcast host Marketing
Consultant
unbelievable heck of a guy
we had a little uh background chat that
that maybe we'll touch on as as we get
rolling here but we've got John Casmon
he's the managing partner of Casmon
capital group John thank you so much for
taking the time out today absolutely
thank you for having me I'm really
excited to be here and to talk about
real estate real estate investing and
all that we got in store so I'm excited
for this absolutely so uh folks
as they they used to say right when EF
Hutton speaks people listen John's got
over a hundred million dollar portfolio
worth of Apartments as a general partner
as a GP
um he's the host of the multi-family
insights podcast and the Creator or
co-creator of the Midwest real estate
networking Summit uh a hell of a resume
so we're gonna we're gonna get in the
weeds here and cover some
some of the traditional things John if
we can
um but I'd also like to to talk a little
bit about the moment in time that we
happen to be in in the market a lot of
interesting happening on the horizon uh
before we jump in I thought it was
really interesting when we were hoping
you were going to join us on the show
and we were doing our homework you've
got a heck of a marketing background
right yeah man yeah yeah marking it for
15 years uh was uh marketing was my
dream uh you know I I was a kid who
uh was undecided you know on what I
wanted to study and all that stuff no
one in my family went to college I was
the first one to really go to college
and um or my senior year I had a class
on uh
Communications I think it was and uh I
just remember sitting in that class and
there was a question asked to me uh by
my my teacher and he said
you know why do you think we have
TV and radio why is it free
and I was like well so they can
communicate to us who is they
had to think like well the government of
course
wrong
he said advertisers
and I was like huh now again this is you
know maybe 20 25 years ago so this is a
time when you have free TV free radio
right so when you think about that
programming well it's like well
someone's paying for it right it's going
out to all these people for free because
people are paying for it are the
advertisers and that took me down this
Rabbit Hole of learning about public
relations and marketing and
Communications and crafting and
narrative and all of these different
things and why it's important to have a
voice and why it's important to have
representation of that voice because
otherwise other people get to craft this
narrative and you don't get a chance to
really understand that so that got me
into the space while I was in love with
it loved marketing loves learning about
products and services and how to convey
the right benefits to the right people
at the right time and I did that for you
know companies like General Motors Nike
Coors Light Mountain Dew and other big
Brands like that but the challenge was
um
I realized in the corporate world I
couldn't
I couldn't dictate what my career is
going to be you know it didn't matter
how good I was someone else always had a
say on who got that promotion I remember
in particular
um my boss
um ran into some issues and they they
were going to move them out of that role
and they wanted to promote me but I was
actually two levels uh beneath the the
level of that job because of where they
hired me so they couldn't promote me
because I would have had to jump up two
levels so instead they brought in
someone else and I was running circles
around this person and that the
marketing space and it frustrated me so
much and I finally went to my boss and
said you wanted to give me this job
I get it you couldn't give it to me but
now I'm not even learning or growing I
feel like I'm you know I'm basically
teaching my boss how to do their job and
it just it made me step back too because
I learned a lot about corporate and how
to navigate that and she didn't actually
build a great relationship after that
and realize like she was not trying to
hold me back but I did honestly I felt
like she was at that moment because I'm
like in my head she had the seat I want
it and it's like she's like John I don't
want the seat but we need to work
together so I can keep the seat warm so
you could take it uh but anyway uh but
yeah I enjoyed marketing but I also got
to a point where I realized being in
corporate no matter how much you enjoy
it
um it didn't align with my real life
goals and for me my real life goals are
more about being a present father
um and that was top of the list and I
had to kind of make some changes in
order for me to really fulfill that
portion of what I was looking to get out
of life you know the the marketing
background
um the real estate industry has changed
changed so much that one of the core
principles here in in my company is you
you've got to be a marketer today as
well as a deal maker it's not enough
anymore to be an outstanding deal maker
you got to be able to Market yourself
and when you can Market yourself and you
believe in yourself and you believe in
the product man oh man
sky's the limit really truly sky's the
limit you can't fake it but when you
have that skill set and you learn how to
Market in today's world there's there's
not much you can't do so uh so how do we
go from that point to 100 million dollar
portfolio as a GP in multi-families what
what was the first step talk to me about
that yeah I mean so so everything we
just talked about was marketing right
and I I believed in the training I had
done up to that point right I've I was
in the New York Times at one point I was
in Black Enterprise Magazine this was
one of the top advertising and marketing
professionals
so I had a lot of confidence in a track
record in the marketing world real
estate whole other story right it's real
estate I started Brick by Brick man I
started with a duplex and that was
Modern necessity so we lived in one unit
we rented out the other unit then we
bought a three unit building so you know
this is now we're gonna we're gonna push
this some more our first true rental
property right now we got a three unit
and I surrounded myself with other
people and that's really one of my
biggest hacks surround yourself with
people who are doing whatever it is you
want to do they don't have to be your
best friends I'm not saying replace your
friends but I am saying you need to make
sure you have a safe space around these
people so that you can feel you know uh
nourished in the the vision of what
you're trying to create because if
you're the only person in your friend
group who's looking to invest in real
estate or or do something that other
folks aren't trying to do
you might start to question yourself
yeah man maybe this is riskier than I
thought or maybe just you know maybe
this just isn't the right way or maybe
I'm maybe I'm overthinking this or maybe
I'm too optimistic here so you've got to
surround yourself with people who are
actually doing this so that you can get
that affirmation of hey you know what no
you're actually doing greater this is
exactly how I did it or you know what I
talked to my mom she told me I was going
to lose everything and be homeless and
move in with her whatever right figure
out who are those people just to get
that gut check in that pat on the back
to say you're on the right path you know
and that was critical for me so I got
that once a month I used to go to a a
Rios or real estate investment
Association group and it was like 45
minutes away from us it was all in the
Chicago suburbs so I had to go all the
way out there for this but I went
because it's how I got my confidence and
kept my confidence high but doing that
also met a young lady who was she did
her own meet up so I started going to
her Meetup as well and I watched her go
from a three unit property to a
non-union property to a 90 unit
portfolio all within about 18 months
and when she went from the three to nine
it showed me this was possible because
this is the first real person I've met
who was actually growing a portfolio you
know I've met a couple people who had a
property but I've actually up to that
point I didn't know anyone
who was growing their portfolio because
it's just not something people openly
talk about right and at that time you
know it's their social media obviously
but you know Facebook was fairly new
still people are using it but it's it's
not like now where your grandma's on
Facebook right so you just didn't know
and just knowing this person who was
growing a portfolio it made it real to
me and it made it tangible it wasn't
just these people in the books it wasn't
just these random people on a podcast it
wasn't just these random avatars on some
you know Bigger Pockets or some other
form this was a real life person who I
talked to six months ago and she told me
you know about her three unit and the
concern she had and the challenges she
was facing and boom now she's got nine
and boom now she's got 90 and I'm like
wait a minute from 9 to 15 I make sense
9 to 20 maybe 9 to 90. and I said can I
buy you breakfast I just I just need to
understand how you did it if she's the
first person who really helped me
understand what it means or what it's
like to work with my other investors I
obviously had thought about that or knew
about that but I hadn't really
considered it for myself and she made me
think about that in a way
that I had never even considered before
I never thought about raising a dollar
for Real Estate before I thought you
went out there you saved your money you
bought what you could buy with the money
in your bank account and that's what we
were doing and
having people like that in your network
it helps you expand what's possible and
that's why I say you have to surround
yourself with the right people because
it changes what you see and then I can
take that and then I can look back at
the experiences I had in Corporate
America and the wins I had and sometimes
you just gotta you just gotta give
yourself a pep talk you know we forget
how great we are you know we always want
to be humble and all that and that's
cool but sometimes you need to pull out
that resume and remind yourself who you
are what you can do and what you can
accomplish so you can shoot for the moon
and not just play small you playing
small helps nobody right so you have to
understand that if me having that
reassurance from someone someone telling
me how to do it telling me how other
people when they their Network have done
it that opened the door and what
literally happened next is about 30 days
after that meeting
I met the person who became my mentor
and my mentor ended up growing a crazy
portfolio he's got like a two billion
dollar portfolio right now
um probably like two and a half billion
at this point but uh he grew that and
then this is now another person on
network well I'm watching this person
grow
from a seven million dollar portfolio
from 7 to 20 20 to 30 30 to 60. and it's

like wait a minute what what are you
doing huh so what is the syndication how
does this stuff work so now these are
the people I'm surrounding myself with
so when these are your friends and these
are people you're working with you
expand so for me on a tactical level
what happened is learned about apartment
syndication working with other investors
and a lot of apartment syndication is
finding a good deal being able to
operate it but also being able to raise
and attract capital for these deals and
that's really where some of the
marketing background was able to come
into play to help me be effective and
successful there multi-family investing
um
as a GP which is where you're you're
operating is uh is a complicated
um and a competitive
space right so uh and it's not for
everybody you know the you you see quite
often people on social media talking
about how they've traded in their nine
to five and now they're you know
doing whatever it is that they're doing
um and it doesn't quite go that way you
you being aligned with the right GP is
everything if you're going to be a
passive investor so I was wondering if
you could spend a few minutes John
talking about uh some of the nuts and
bolts of how your your identifying deals
uh what are the metrics you're looking
for is it straight cap rate return are
you looking for upside you know what
what hits the sweet spot for for John
yeah our philosophy has not changed and
probably will will not change very much
but we look for uh value-add deals right
when I say value out what I mean is
we're looking for properties that are
already making money where we can come
in with our business plan that might
include renovating some units or loan
expenses or adding some amenities but
with our business plan we can generate
more profits and based on those things
we can deliver a solid return for
investors usually look looking at Double
investors return over the course of five
to seven years so we are typically
taking a longer view you know a five to
seven year hold if we can exit earlier
we certainly will consider that but we
tell everybody all the time plan on
being in a little bit longer these are
illiquid assets which means you can't
come in invest and then four months
later decide you want to buy something
completely different you need your money
back it just doesn't work that way so
for us we like stability we like
predictability uh and this is where
really my background in Corporate
America comes in handy right we do a lot
of sales charts a lot of financial
projections a lot of hey here's what
we're on the trajectory to hit this
month or for this quarter how do we
adjust it or what sales can we implement
or whatever the case may be and that's
really what a lot of this is we're
taking a look at it we're looking at
what the current financials are okay if
we change xyzer we did this this here's
where we think we can get the revenues
or here's where we can get the net
operating income and based on that the
property would be worth this and then we
want to build in kind of are
conservative approach so what if we're
wrong what if we're wrong up what if
we're wrong down how do we make sure we
put some cushion in there so we can
protect ourselves and protect our
investors we like b-class properties and
by b-class what I really mean are good
properties that are in demand these
aren't necessarily luxury Class A
Beautiful high-end apartments but
they're also not you know really rough
beat up tough Neighborhood Apartments
either we like affordable places where
people want to live where they can't
live decent to good schools nice
amenities good attractive location
accessible to other places places where
people want to rent or can rent are
happy to rent you don't want to be in a
place where people you know the only
people are going to rent there are
people who have no other options right
because what does that mean for us as
investors well these are the people we
can rent to so everything now has to be
based on cost and being cheap as opposed
to creating a a comforting home where
some someone can be proud about where
they live on the flip side we're not
developers we're not doing you know
class a luxury super nice everything we
just don't know if those people always
want to rent some of them choose to rent
right now but the market changes there's
a lot of competition from other
developers but that b-class space that B
Class space is nice because you have the
widest range of potential renters and if
you think about it from single family
think about if you are a flipper you
want to flip kind of the house that is
the bread and butter of a city or
neighborhood uh when I flipped that was
a terrible flipper by the way
um but we flipped we were set in the
market with our flips that was a
terrible strategy because we were the
first ones to find out the market uh had
softened up right but if you've got that
bread and butter product you have the
widest range of potential buyers so you
can you know how to navigate it you know
what to do you know what levers to pull
you know what range to stay in
um and that's the way we think about it
for b-class apartments right let's take
out some of the mystery let's not assume
that we are you know the greatest
developers and you know rehabbers in the
world let's give ourselves some cushion
let's mitigate some of those risks and
have a product that the masses are able
to take on and if we could do that do we
give ourselves a lot of chances to to be
correct yeah no no doubt meat and potato
investing I love it it's so he's proven
for me being through three full economic
Cycles now uh To Be steady Freddy baby
and in real estate that's the name of
the game so uh geographically are you
investing in you know across the country
you know what what is the focus for you
yeah we like growing parts of the
Midwest in the Southeast region so we do
like to pay attention to population
growth uh industries that are diverse as
well as kind of the political climate
less about you know red and blue States
and more just ease of doing business
what are the landlord laws is it you
know landlord tenant friendly just
trying to understand some of those
things why because we want to make
projections you know we want to be able
to understand how our business is going
to operate in that particular Market our
new business is going to set up shop do
new businesses want to grow their
existing businesses there we're doing to
add employees will they attract more
people to the area we're always trying
to look at demand you know where's
demand act today and where is demand
heading
So to that end uh 10 15 years ago
political uh threats
in your analysis
were almost never accounted for
um those legislative threats now uh are
they come up just about with everybody I
speak with uh that's a really important
piece of weighing the potential and
determining growth in the markets uh
I'm curious with there's this Confluence
of So Many Factors now right there's
decentralizations of some of the cities
um and there there seems to be a buy-in
from Corporate America for the first
time that remote working and not being
in the office
which was it's so funny that that some
of the the younger uh folks that work
with me don't understand how frowned
upon that was not too long ago right it
just wasn't an option just a few years
ago yeah you were in six days sometimes
seven days a week and and you had as you
had said earlier you know you put in the
grind and you kind of climb the ladder
and that was it now it seems that
Corporate America is starting to embrace
this and say hey we can cut salaries we
can really slash expenses uh and
decentralize and I'm seeing a lot of
companies now opt for trade trading in
those super expensive digs you know in
in Midtown uh and locating in outer
boroughs and and Beyond
these markets as the look look this is a
cycle and it never ceases to amaze me
how people forget that this is a cycle
it's gonna go up it's gonna come down
it's going to go back up again
um
typically in these secondary markets
these tertiary markets they're the first
to get hit with the luxury right those
are the first markets where uh last go
around Florida in 2008
you know it was red hot one day and then
for two years you couldn't give
something away uh I'm wondering what
your Insight is what's your perspective
now has there been enough
decentralization
um is there enough of a shift now in
people's habits where those secondary
markets have now become primary markets
is that what we're seeing here
well I I think everyone's got to look at
the factors they look for uh and make
that determination for for us you know
we think about primary secondary and
tertiary typically people are looking at
population and msas to help make those
decisions
um it's funny because we're a
multi-family standpoint if you ask me
like the top multi-family market for my
peers I would tell you it's DFW if you
look at population you know DFW should
technically be a secondary market so it
just kind of depends on how you look at
it here's what I would say though to
answer your question
everything is cyclical and you have to
understand
the different levers that impact uh for
us we're always looking at rate and rent
growth so rent is going to be a
reflection of demand it's going to be a
reflection of occupancy it's going to be
a reflection of something that they call
uh absorption rate which is essentially
when they're building new apartment
buildings well how quickly do they get
rented you know are they building enough
apartment buildings or are they over
building the apartment buildings are
they under building apartment buildings
so that absorption rate lets us
understand you know where they're at in
that development cycle so when you get
into some of these secondary and
tertiary markets where they're not
building very much you're not as exposed
because the demand is so high so the key
for us is paying attention to the
underlying metrics not necessarily just
the results right if you only look at
rent and rent growth you can make some
big mistakes I'll take a look at work
like Phoenix Arizona and Phoenix is one
where I've talked to some folks who are
active in Phoenix it's one that I don't
know as well but I'll tell you what I
looked at the historicals it's a market
in a lot of West Coast markets do this
they're very cyclical you know when the
Market's up they are hot they're
exploding double-digit growth on fire
but when the market goes down they
plunge and they take a hit and they take
a while to recover and that's one thing
just to to look at again I'm not picking
on Phoenix I don't know the markets and
what I what I have talked to people
about is what's driving Phoenix right
now is more fundamental growth because
you have jobs and employers moving there
so I do think it'll be more sustained
but those are the things you want to
look at I want to look beneath the
numbers they'll just look at population
growth and rent growth and say okay cool
this Market grew 12 let's go there why
is it growing 12 is that continuing to
happen I might look if it's let's say
it's job growth right let's say there's
a couple big employers Amazon's moving
shop all right go read Amazon's report
the quarterly reports what's going on in
the business are they planning on
opening up more locations there more
warehouses more facilities you know or
they cutting back you know they have a
surplus if they beat their estimates
they're in expectations or that they
they come up a little short and they're
a little surprised at things softened up
I want to understand again am I
expecting these things to continue or am
I going to expect change and I'm also
not trying to do this quarterly because
when we're investing we're going to be
in for what five to seven years so I
need to pick something that's fairly
stable I don't want something that's hot
you know today or these last two
quarters but stunk it up last year right
I want something that is on a nice
steady growth metric and
for the foreseeable future the
underlying metrics that are driving that
growth should continue to be there and
should continue to drive it so that's
what I'm looking for I try not to get
too caught up in the cycles of it and
that's why I like multi-family that's
the reason I'm not really in office and
some of these other things it's not that
I don't don't like them it's just that
there are a lot of other factors that
come into play and maybe you know
understanding whether or not the time is
right is there with multi-family it's
really straightforward we have a
shortage of housing it won't get fixed
to at least 20 30. and most people need
a place to live in a rising interest
rate environment you're going to have
less homeowners and home buyers what are
they going to do they're going to rent
rents are going up all across this
country they're it's almost impossible
to build affordable housing without
government support so you're not
building apartment buildings and renting
them out for 600 it's not happening so
there's plenty of opportunity in many
markets that doesn't mean that you can't
have good underlying fundamentals
driving your decisions though I love it
so uh before I let you go can you speak
a little bit about the capital markets
what's the strategy uh been and has it
evolved with securing debt in these
transactions you know what does that
look like for you now yeah I tell
everybody you know the loan should match
the business plan so what are you trying
to do for the property get a loan that
matches the business plan if it's a
value-add deal when do you plan on
exiting make sure that the loan you have
gives you flexibility to exit at that
time but also doesn't force you to exit
prematurely so there's an interesting
balance there that someone has to figure
out to select a loan I hear arguments
all the time about fixed versus you know
variable financing Bridge loans versus
agency loans or versus you know um other
bank loans and stuff like that right now
I think it comes down to business plan
you know what state is a property in is
it a light value ad is it a heavy value
add you know what are you actually doing
what Market are you in there are a lot
of different variables there that you
have to come into play
um for me I would say that we are always
looking at mitigating risk as much as we
can while also getting the right loan
for the right business plan on that
property I love it John what's the best
way for folks to to find you
you know the best thing really is I'm on
LinkedIn so you can connect with me on
LinkedIn the other thing is we have a
sample deal package on our website so if
you're curious about apartment investing
whether you're gonna be in the active
side or you just want to be passive and
put your money to work uh it's a good
way to wrap your head around some of the
terms you know the way the deal
structure is just some of the things you
should be looking for you can check that
out at casmoncapital.com sample deal
uh I love it I think the
you know when When selecting GP's folks

and we look at those cut sheets and
those decks right uh I always remind
people that those decks are made to look
a certain way for a reason right like
I've never seen a deck ever that didn't
work and there's a reason for that yet
at the end of the day a lot of them
don't work this is invaluable Insight
um I love what you got going on John
best of luck and can I can I throw one
thing in before we wrap because I think
that's a really good point
one question that I I think every
passive investors should ask and quite
frankly any investors looking to partner
with someone else or even higher
contractors or other potential Partners
ask someone about a deal that did not
work out
okay and you can even say did not work
as planned but
the reason you want to do that is to
your point we all have nice slick
marketing packages I'm a marketing guy I
get it
but to really understand someone in
their character and how they operate and
what they've learned you have to ask
about some of the challenges and I could
I don't care quite as much about the
fact that there's a deal that didn't
work out what I'm listening for is how
this person talks about it
you know do they take ownership did they
learn from it did they grow from it are
they in this deal right now or was this
10 years ago I'm trying to understand
and learn a little bit about who this
person is based on that experience and
what I'm really looking for is someone
who is accountable I'm looking for a
leader I'm looking for someone who is
going to help
lead through whatever situations we may
come up with that's me as a not as a GP
if I'm partnering with another operator
I want to hear that somebody who's going
to roll their sleeves going to trenches
be accountable hey guys we did we didn't
account for this this thing happened
I'll try to fix it right now here's what
we're gonna do I want that person right
I don't want the guy who's going to
point this sooner say well John you were
supposed to do this huh right even if I
was I would rather have the person who
says hey you know what this got missed
here's let's try to figure out a
solution so we can fix it a lot of
people you want to partner with right so
I would ask that because you are going
to be in partnership with these people
for again five to seven years on our
deals so you want to make sure you're
partnering with the right people who at
least will do everything they can to
solve the situation and I think for
vendor selection Partners anybody in
your business I just think that's a
great way to start to get a sense of the
character of the people and all I'm
looking for is this person accountable
for their role and what they could have
done or do they just blame that
contractor who did XYZ well who hired
that contractor right I mean at some
point you still got to take on that
ultimate responsibility and uh whether
it's you know extreme ownership and that
kind of mentality but the reality is I
want someone who I feel I'm going to be
able to trust to to do well as a partner
as opposed to you know just blindly
hoping this person knows what they're
doing work yeah no question about it
that's a brilliant point and and I don't
care who you are we've all had deals in
real estate that don't go as scripted
that's what makes exceptional uh
Investment Partners that's what makes
exceptional deal makers is where problem
solvers at our core and if you can take
accountability for the problem you're
not looking for the solution we've all
had them and and to John's Point those
that take ownership uh for it and
demonstrate leadership that's who you
want leading you out of it because it's
just it's all about solving problems
we've all had them and that's what
separates the great operators from the
not so great operators so great great
Point John I really appreciate the time
today John Casmon uh managing partner
Casmon Capital group tremendous
tremendous all the best uh of luck to
you as you continue forward really
enjoyed our time together today John
best of luck thank you take care
appreciate your time as well absolutely
absolutely as always everyone out there
please stay safe