TGCI 213: Creating a syndication business while working full-time

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Episode 213: Creating a syndication business while working full-time

Copy of EP #18 - 2 Guests

Summary

In today’s show, Pancham interviews Shane Brooks – project engineer, and partner with Wild Oak Capital.

Shane Brooks embodies the concept of work-life balance. How did he manage his investments as a real estate investor while working as a project engineer for a midstream company? Through effective time management!

In this episode, learn from his experience as he shares how he was able to pursue two of his dreams! He’ll also unpack his knowledge and investing mindset as he shares his current portfolio, where he focuses on his investments, and why he still continues to invest amidst the current market status.

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2022-11-08 at 4.11.11 PM
Shane Brooks

Tune in to this show and enjoy!

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 0:38 – Pancham introduces Shane to the show
  • 1:38 – On pursuing engineering and real estate investing at the same time
  • 5:17 – The importance of time management and generating productive work
  • 10:57 – Qualities he looks for in markets and investment properties
  • 12:59 – On having consistent deal flow amidst the current market status
  • 15:31 – How his morning routine helped him to be more productive
  • 18:37 – Taking the Leap Round
  • 18:37 – House hacking a condo as his first investment property
  • 19:54 – How he overcame his investing fears
  • 21:35 – How management issues damaged his 6-unit investment property
  • 23:14 – Why you should align your goals and aspirations to your plans
  • 24:32 – How you can connect to Shane

3 Key Points:

  1. Practicing proper time management helps you maximize your time, achieve time freedom, and generate productive work rather than unknowingly wasting time.
  2. Looking for deals that would fit your metrics and be able to provide value-add in the properties is one way to achieve growth in the real estate industry.
  3. Even if there are a lot of events happening in the market right now, buying deals is still ideal as there is still consistent deal flow.

Get in Touch:

 

Read Full Transcript

(intro)

 

Welcome to The Gold Collar Investor Podcast, with your host Pancham Gupta. This podcast is dedicated to helping the high-paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host, Pancham Gupta.

 

Russell Gray

Hi. This is Russell Gray, co-host of the Real Estate Guys Radio Show, and you are listening to The Gold Collar Investor Podcast.

 

Pancham Gupta

Welcome to The Gold Collar Investor Podcast. This is your host, Pancham. I really appreciate you for tuning in today. My guest on the show is Shane Brooks. He is from Southwest Colorado and received a degree in engineering from Fort Lewis College. Currently, he is a project engineer for a midstream Company in Houston, Texas.

 

Also, he is a partner with Wild Oak Capital, a value-add multifamily syndication company focused on Oklahoma, Texas, Arkansas, and Colorado. Shane has been investing in real estate for over 9 ½ years and currently operates 316 units totaling $31.385 million worth of real estate assets under management, along with being a limited partner in another 818 units.

 

(interview)

 

Pancham Gupta

Shane, welcome to the show.

 

Shane Brooks

Thanks, Pancham. It’s great to be on. Thanks for the invite.

 

Pancham Gupta

Thanks for coming on. Thanks for your time. Before we get started, are you ready to fire up my listener break out of Wall Street investments?

 

Shane Brooks

Of course, I am.

 

Pancham Gupta

Let’s do this. So, Shane, tell us about your background, how you got started in the business you’re in and, more importantly, the person behind that background.

 

Shane Brooks

Yeah, of course. So, I’m originally from Colorado. I currently live in Houston now. I’m a senior project engineer for a midstream company. I also run a syndication company for the real estate side of things. So, I’m active on both ends. There are a lot of similarities in between the two.

 

Really, I got started in college. It was my first investment. I really didn’t want to pay campus housing. And so, I started investing pretty early on, about 10 years ago, through school. That’s started slow. Really, you’re traditional path — single families at a time and go into some small multis, and then eventually into some larger or mid-sized apartment complexes. So, it’s kind of your gradual standard path in a quick nutshell. That’s really where it started. I’m from Colorado, born and raised there. Really, till about six years ago, I moved down to Houston for my current position in the insurance space.

 

Pancham Gupta

There is lot to unpack there, right? I think your story is unique, that you started while in college. At the same time, you scaled up while in college and after college. At this point, you are working a full-time job and also have the syndication business on the side that you’re hustling.

 

A lot of the listeners to this podcast, they really want to do something different outside of their full-time job, maybe a separate gig that they have. They’re not excited, for whatever reason, in their current job. For the most part, they like what they’re doing. But they might be 45 years old or 40 years old. They’re like, “You know what? Enough of the full-time job.” They don’t see this in the future, and they want to start something on the side.

 

You are doing that, a living example of that. So, a couple of questions there. You got out of college. I’m assuming you had a bunch of investments at that point. Or you scaled after you got it?

 

Shane Brooks

Yeah, I really scaled after. I acquired, actually, only two properties while in college. Basically, house hacked through. Really, only two properties there. I got on to — right out of college — the company I currently work. I got right under them with on school. Then I transferred actually to Houston about two years after I was with them being out of Durango, Colorado.

 

So, a lot of my focus was W2. I’ve always wanted to go into the engineering side of things, and this fits really well. So, my focus was always growing that W2 career, but I knew that I wanted to also build those side streams, kind of reduces risk. I’ve always had a passion for real estate as a whole. But, really, the growth started when I realized scalability in single families and small multis was not really there at the speed that I was looking for. Also, the amount of time that it took to handle some of those transactions is the same amount of time you can handle 50 to 100 and plus unit complexes.

 

So, it really scaled that way. I wouldn’t take anything back, because there’s a lot of learning curves that I went through there. Doing that opened doors to get into the position that I’m at now. Real growth, at least in the portfolio that I’ve grown, it has been in the past two to three years.

 

Pancham Gupta

Got it. So, how do you manage a full-time job and having a side business? It’s very, very hard. For someone who’s thinking about it, what would you say to them?

 

Shane Brooks

So, I think, for me, the pandemic actually played almost a promising role into that. With that, some of the working from home, we’re back into the office in my normal position, anyways. But the kick started. It gave me that additional time that I needed. So, I was able to not have to be in traffic, lunch breaks, dinner breaks, things like that. I was able to more maximize my time in each day, rather than waste it in areas that weren’t productive.

 

I think the biggest thing that I did, even after the pandemic side, was really just time management. I was looking into where was I utilizing my time and even just a simple strategy. Go through a week and document how much time you’re spending on different activities. Have a tracker. There are some apps on your phone that you can do that with, and just allocate where all your time is going. You realize pretty quickly that 50% of the time that you think you’re busy, you’re not actually busy. Or you might just be busy with work but not productive work. So, I really did that analysis and prioritized different tasks.

 

So, I made sure to do the high-priority tasks or tasks that I didn’t want to — the ones that were harder, I got those done first. Because then after that, you feel productive. You can utilize that momentum to knock out a lot of other tasks during your day. So, the time management piece, just allocating where your time is best served, helped me be able to do both the W2 path and then really expand the real estate path as well.

 

Pancham Gupta

So, you did use some app? What app was that, if I can ask?

 

Shane Brooks

Yeah, I don’t have it off the top of my head. I’ll pull it up so you can put it in the show notes.

 

Pancham Gupta

Okay. So, you did do this exercise. I remember, actually, listening to Darren Hardy a long time back where he actually did — I don’t know if you know Darren Hardy. He talks about this quite a bit — writing down exactly where you’re spending time. Then figuring out where you’re spending time, where there’s no ROI on your time on that. Then killing those tasks, and then doing the high ROI items.

 

He figured out that, as a real estate agent or when he was getting into it, his main job was to make calls and doing deals. He figured out during the day, the actual time that he was spending on that was probably a fraction of the day. So, he killed all the time. He used to have a stopwatch on his neck to actually start when he was doing certain things and stop. Then he will write it down how much time he’s actually spending. Four years or three years, something like that, he became the top agent in the whole county or something. So, it’s crazy.

 

Shane Brooks

I think, especially, with a lot of your listeners, too, when you’re in these kinds of positions where it’s something that you’ve maybe been doing for a while, you get — maybe not lackluster, but you get busy. You don’t realize maybe where all your time is going until you actually take the time to start tracking things.

 

Just like budgeting, instead of budgeting money, it’s budgeting your time, I think being able to take a break. Because a lot of us just get caught up in life and work and all these different aspects that we don’t take a few minutes for ourselves and say, “Hey, what is it that I truly want? How do I need to get there? Where’s my time being allocated?” Then that little pause doesn’t have to take a long time, but it can really help get you on the right trajectory that you want.

 

Pancham Gupta

Got it. Yeah, exactly. So, let’s switch gears and talk about the future. Again, if you don’t want to talk about this, that’s totally fine. Do you plan on doing full-time syndications and quit your job at some point? If so, what is it that you’re waiting for? Is there a certain goal that you’re trying to hit? What is that metric that will tell you whether to do this full time or not, if you do want to do it?

 

Shane Brooks

I think, in my perspective, it’s probably a little different overall. I really see a path where I can run both full time, and be successful in both. I love both sides of the business in terms of my W2 and the real estate syndication realm. There are a lot of similarities in our company on both ends. So, we’re both typically your private equity back raising funds for new projects, construction. You stabilize an asset, and then sell. So, that’s the same process we do in the midstream space that I do in the real estate syndication.

 

Just seeing those similarities, the things that I’m passionate about and really love to do, I’m able to do both of those and maintain that at a high level. For me, they really play off of each other. One for taxes, expenses. There’s a lot of synergies that one can cover versus the other. Being able to bridge both of those as long as possible is really my intent and my goal.

 

I have the time freedom available already. So, I think that allows me to take a little more risk from that end. But, for me, it’s not something I’m wanting to get out of. It’s really to dive in deeper on both and go down both lanes at the same time.

 

Pancham Gupta

Wow. That’s pretty awesome. I would be curious. I would want to bring you back in two years, and see how you’re doing on that and see how that goes for you. So, let me ask you this in your business. Now let’s switch gears. So, what are you up to now? What kind of buildings are you looking at and what markets?

 

Shane Brooks

So, we’re really focused on a handful of markets. I had to say a typical buyer’s box. So, we focus mainly in Tulsa, Oklahoma, Little Rock, Arkansas, and pretty much most secondary or main markets in Texas. Those are our normal areas. We typically look in our — I want to say our buyer’s box. We’re going to be kind of type vintages. Our range is really about 25 to 125 units your value-add. Really, your typical value-add.

 

So, we want it to be your B minus areas. But maybe it has mismanagement. There hasn’t been a lot of upgrades in the future, or in the past. Some of those that we can capture on is really our bread and butter in the past, and really what we’re focusing on in the future.

 

We have a lot of big goals. I think it’s important to set large goals, but then also follow those up with smaller, more achievable goals. But moving forward, we intend to double our current portfolio the next year.

 

Pancham Gupta

And how big is your current portfolio?

 

Shane Brooks

Right now, we’ve got 350 units. Coming next month, we’ll have six deals. In the last year, closing on our end ranging between those three markets. Our intent is, even though that is decent growth, we want to have it as a controlled rate. So, we don’t want to scale above our means.

 

So, we’re trying to do it in a progressive rate that we are controlled, but then also being aggressive to get good properties. We look at a lot probably 200 deals that we analyze and go through before we get one accepted. So, it’s not like we’re picking and choosing just anything. It really has to fit our metrics. Currently, right now, we’ve got about 34 million under management and about 350 units.

 

Pancham Gupta

Got it. So, what’s your take on the market right now? What are you seeing in the market? We are recording this in end of October 2022 where rates have gone up, inflation is still high. There is war in Ukraine. Midterm elections is coming up. The stock market has gone down year to date more than 20%. So, a lot of stuff happening right outside in the outside world. What are you seeing in the market? Are you guys still buying?

 

Shane Brooks

Yeah, so, we’re definitely buying, but we are very patient. I think, right now, there hasn’t been a full reconciliation between expectations and what the market is garnishing right now. We are seeing a lot of loan assumptions coming to the table. But we’re very active trying to purchase right, because we do see a lot of positives in the future. Now we’ve switched up our buying. We’re looking at lighter value-adds or at least delay value-adds, hedged against any material or supply chain issues. Then also getting into a little more favorable markets that we see in the future.

 

For us, right now, we definitely are still buying. If we can buy right at these current interest rates, we think in the long-term perspective, there’s going to be some adjustments down the road that we can capitalize and not be over leveraged. Yes, still buying. But we’re very conservative on the type of deals that we are trying to approach at this time.

 

Pancham Gupta

Are you seeing a good deal flow?

 

Shane Brooks

The deal flow is consistent. I would say it’s not the greatest you’re seeing right now. At least, coming through on our end, it’s still some high expectations or maybe lower quality assets that are trying to would have been marketed next year but are coming on early before. Maybe upgrades, or things are done that should have been done. So, I think there’s a handful of really a couple items. There’s a lot of debt that’s coming through over the past few years with a lot of these bridge products that have come in, and operators that did not write to 7% on refinances, and stabilizations are in hot water.

 

So, we’re seeing a lot of products that maybe they weren’t capitalized right. So, they’re really trying to get out, or owners trying to jump on the train right now before next year when they really would have been ready to get on the market.

 

Pancham Gupta

Good. Sounds good. So, let me ask you this one question that I ask sometimes. Do you have a morning routine that you follow? If so, what is it? Do you think that attributes to your success?

 

Shane Brooks

So, I’d say two different answers now. Prior to earlier this month, I definitely had a routine. I would pretty consistently get up about 4:50 every morning, and get into the office fairly early. One, beach traffic allows me to get ahead of a lot of things during my day.

 

But yeah, my morning routine would be wake up early, get everything ready for the day, walk my dogs, and then head out to get a few things done — either the real estate or the engineering position. That was my normal routine. Nothing special or fancy, but it was consistent. Earlier this month, we did have my daughter. She’s thrown a wrench into the typical morning routine. So, not a lot of sleep. It doesn’t really make me want to get up at 4:50 anymore.

 

Pancham Gupta

Yeah, I can imagine. You can’t just get enough sleep that’s good enough for now. Congrats, by the way, on your daughter. Cool. So, we’ll be back after this short message to move on to the second part of the show.

 

(break)

 

Do you ever feel overwhelmed by the thought that you have no time after work and find no time to learn about investing? Do you feel left behind that you are not putting your money to work for you? Do you want to create passive income, but you do not know where to start? If so, I have good news for you. I have created an investor club which I call the Gold Collar Investor Club for Accredited Investors. I will be putting together investing opportunities exclusively for this group. These are the opportunities where I have done my part of the due diligence for you and will be investing my own money alongside you.

 

If you are interested, please sign up on thegoldcollarinvestor.com/club. I repeat, thegoldcollarinvestor.com/club. I will reach out to schedule a 30-minute phone conversation to discuss your investing goals once you sign up. This can be a good opportunity to diversify and take some chips off the hands of Wall Street to produce some cash flow. In case you are wondering what is an accredited investor, accredited investor is someone who has earned more than $200,000 as filing single or more than $300,000 filing jointly for the last two years. Another way to qualify as an accredited investor is if your total net worth is more than $1 million, excluding your personal home. It includes your stocks, 401Ks, IRAs, cars, et cetera—just not the equity in your personal home. If this is you, I would highly encourage you to sign up.

 

(interview)

 

Pancham Gupta

Shane, let’s move to the second part of the show. I call this Taking the Leap Round. I ask these four questions to every guest on my show. My first question for you is, when was the first time you invested outside of Wall Street? Was it when you bought that condo, that house hack property?

 

Shane Brooks

Yeah, that’d be the first time. So, that was 2012. That would be really the first time, but it wasn’t in anticipation to get out of Wall Street. I would say I was definitely in that same mold of max out your 401Ks, max out your IRAs, all the typical retirement vehicles that you can think of. So, I was in that realm for quite a while until I really started educating myself — going to conferences, listening to podcasts like yourself, reading books, really, just overall getting educated about the real estate space even more.

 

A few years ago, really, before starting our syndication is when that light bulb went off. I purposely started investing out of Wall Street. So, I started lowering my contributions to those IRAs, those 401Ks and started putting them into real estate assets that I had that control of month to month. Let’s say, it was early on the first property. But intentionally, I’d say early ’19 was when I would do it on purpose.

 

Pancham Gupta

Got it. My second question then is, did you have any fears in college, or were you young and no fear guy when you bought that first property?

 

Shane Brooks

Yeah, I think I didn’t know what I didn’t know. So, I don’t know if I had any of the fear there in general. But I’ve always been a numbers person. I could pretty easily tell that the campus housing that I was seeing was much more expensive than what I could get into a hard asset with.

 

So, no fear at that first point. But, again, you don’t know what you don’t know. I think that almost helped propel me a little more. Because it just blinders on to any fear that would normally come in that realm.

 

Pancham Gupta

Right. So, did you get someone’s help to help you with the loan and stuff for that property, given that you were so new, with no credit or income at the time?

 

Shane Brooks

It was very minimal. Actually, what I did was, going through school — I put myself through school. With all of the grants and scholarships, I utilized a lot of those funds and any school funds that I had ready for that down payment. Then also, what I did was, I went in with my brother. My brother, and I combined everything that we had to get that first loan on that property. That’s how I started.

 

We were both able to pair enough to get to that level. I was working as an engineering intern for another midstream company at the time. Those pieces helped. So, it was just enough to get that threshold to get that first property. But it definitely was a challenge. I think we scraped everything that we could to try to get that one completed.

 

Pancham Gupta

Got it. Okay. All right. Cool. My third question for you is, can you share with us one investment that did not go as expected?

 

Shane Brooks

Yes, I think almost all operators have some property that’s been a headache or a hassle. So, we’ve had a shared one. It was a smaller, six-unit portfolio package in Lubbock, Texas. We purchased it for a really good cost basis. But it seems that we just had a lot of management issues. A lot of things popped up here and there that we didn’t do full due diligence on. But we ended up actually having to cut managers about three different times. We wanted to find the right fit to really get someone that even cared about the property itself, to turn it around.

 

So, we’ve yet or since sold that property. I think the biggest issue that we had was to the due diligence level, and management — really honing in and interviewing them properly. It created a lot of headaches for us with that certain property in Lubbock.

 

Pancham Gupta

Right. You do and you learn with these mistakes, right? So, that’s the thing.

 

Shane Brooks

Yeah, and luckily, we were able to scrape our teeth on and learn a lot of those lessons from a smaller property. But I think there are some things that you just have to get your feet wet with and hands-on experience, because that goes a long way. You can read books and have that virtual experience, or some people to help guideline that way. But I think, to a point, there’s no mistake or misplacing some of that real-time applications to learn from.

 

Pancham Gupta

Yeah, exactly. Cool, man. My last question for you is, what is one piece of advice would you give to people who are thinking of investing in Main Street that is outside of Wall Street?

 

Shane Brooks

Well, one piece of advice. I would say, there are a couple of items. But the one I would say to investing out of the Wall Street on the Main Street is really just look at what your goals and aspirations are, and run the trap of what you need to be able to do in order to make those happen. I think if you run that exercise, you realize that you are a little more trapped. You don’t have access to funds as quickly as you may want to, if you have pivots in your life.

 

Really, just look at those and see the opportunity that outside of Wall Street can provide. Not just in real estate. Obviously, I’m very biased there because I have a lot of passion there. But there are a lot of alternative investment strategies that allow you to not be stuck in that circle or that rat race, the long-term retire when you’re old. That strategy does for Wall Street. So, I would say just look into yourself and do some of those strategies to figure out how do you get to your goals in the timeframe that you want, and build a plan from there.

 

Pancham Gupta

Got it. Cool, man. Thanks, Shane, for that advice and your time. How can people connect with you if they want to reach out, find out more about you and your story, and what you’re up to?

 

Shane Brooks

I appreciate you asking that. So, you can always reach me. We’re happy to help in any way or answering any questions, even just in general or talking about real estate in general. My email is shane@wildoakcapital.com. Our website is a wildoakcapital.com as well.

 

Like yourself, we do run a podcast. We call them The Real Estate Mindset. So, we focus a lot on mindset, and we really believe that that’s a strong driver for success and to get you in position to make those. So, any of those avenues, you’re more than welcome to find us on and reach out to.

 

Pancham Gupta

Cool, man. Thanks for your time.

 

Shane Brooks

I appreciate it, Pancham.

 

Pancham Gupta

Thank you for joining today and listening to Shane’s story. If you have questions, do not hesitate to reach out to me at p@thegoldcollarinvestor.com. That’s p—as in Paul—@thegoldcollarinvestor.com. This is Pancham signing off. Until next time. Take care.

 

(outro)

 

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook @thegoldcollarinvestor. The information on this podcast are opinions. As always, please consult your own financial team before investing.

Copy of EP #18 - 2 Guests

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