A Podcast | AJ Shepard
Pete Neubig: [00:00:05] All right. Welcome back, everybody, to the podcast or Norman radio show and have me our VP extraordinaire, RJ Shepard out of Portland. Rj, thanks so much for being here today, buddy.
AJ Shepard: [00:00:17] Pete Thanks for having me on the show.
Pete Neubig: [00:00:19] So, RJ, I know the last time I saw you speak was at a is at a a non-normal event and you were talking about syndication. But let's talk a little bit more before we talk about that, because I think that's really interesting topic that a lot of people want to know about. Tell me about your journey. So you started a property management firm and you really wanted to work with a lot of investors. So how did you get into the property management deal and just kind of talk take us through that journey.
AJ Shepard: [00:00:43] Sure. I mean, it really starts out with my dad. He was in real estate, so we kind of had some upbringing in real estate. My brother and I started purchasing properties, fixing them up, refinancing them and then moving it into another property. I mean, if you're familiar with BiggerPockets, it's the BR method. So we, we, we acquired a several properties enough that we were like, Oh man, you know, we probably could use some extra income. So we started the property management company and then also along with that, our construction company. And all along the while we kept buying properties. We've bought multiple properties every year and that's one of the ways that we add to our property management portfolio is by by purchasing properties. And so you.
Pete Neubig: [00:01:33] Came in from the investor side versus the real estate side. Yeah. On this. So you talked about a little bit about bigger pockets. So, um, so can you tell us a little bit about what bigger pockets is and is there any value of a property manager to be part of Bigger Pockets?
AJ Shepard: [00:01:48] Oh, absolutely. Bigger Pockets is a social network for real estate investors and real estate professionals getting on there and answering questions in the forums of real estate investors that maybe don't have a lot of experience. We'll kind of give you rapport as a person and a brand. So being active on there is super beneficial. Um, we've actually find a lot of investors from bigger pockets and we've found property management clients and it's just a good network to continue to do. But you know, it takes time answering questions. You know, you kind of get the same ones over and over again and it's just about being consistent. So figuring out a process to to really be consistent with it. Um, typically I have a remote professional scour the forums and pick a question and answer it and then approve the message and then have them do it for me. So that helps out a lot.
Pete Neubig: [00:02:44] Oh, nice. A little a little look behind the curtain there, right? Well, yeah, I mean, think about it, right? Your property management firm, what's our target client? One of our number one target clients is investors. Investors live in bigger pockets. And, you know, answering questions makes you the authority figure. And so, yeah, there's a lot of potential, um, potential clients there to fish in that pond. So big fan of that. So tell me, RJ, what are some of the things that like that you have done to attract investors? Like how does how does Uptown, your property management firm there in Portland, attract investors? What are some of the things that you're doing to find investors in to, you know, to manage their properties?
AJ Shepard: [00:03:26] Yeah, I mean, there's there's a lot of different marketing aspects, right? Like, uh, Google ads for one, making sure that we have lots of good reviews. Um, one of the things that we learned is CRM, which is a, um, customer review management system that's helped out. If you ever see my signature, there's like a thumbs up, thumbs down. I think it's great for us. Um, and it really helps with if you get a bad review, it comes in internally as opposed to out in public. So definitely managing the reviews and getting up in the top of Google helps with the organic search. Um, you know, introducing ourselves. We've done local like marketing, like a tip or BNI, um, you know, participating in community events. Like there's, there's a plethora of ways and it's not that one is like the best, but they all work a little bit and it all builds on, on itself to like the more, the more that you can figure out how to do, um, the better off that you're going to be. And granted, there's only 24 hours in a day, so figuring out a process to have that delegated so that somebody does it for you is going to be the best.
Pete Neubig: [00:04:46] Did you create a like an investor club or like start doing some investor workshops in your in your area before you started doing the syndication? Yeah.
AJ Shepard: [00:04:55] Yeah. So we my brother and I run a podcast. It's called Westside Investors Network. Um, you know, we're located on the West Coast. We are also located on the west side of Portland. Um, and so we provide education to investors on syndication through that podcast. We did at one time have like a meetup where we were doing it monthly. Um, we've discontinued that, but that was another way to meet like local investors typically, like there'll be other what is it like? Northwest Real Estate Investors Association. It's a aria is another great way to like find local investors in your market. Um, we've attended those events. There's another one that's local here that probably isn't everywhere. It's called Investor Lab. I know the guy that runs that. We're pretty good friends, which is fun, but yeah, like running a group and providing education is another great marketing tactic to bring people into the fold into your brand.
Pete Neubig: [00:05:58] Yeah, my feeling is anytime you can be the guy with the microphone or on on the stage, you are the expert, right? People come to you. So I think you and your brother have done an amazing job. I know your your podcast is is you know, you know, we'll talk a little bit about that. But I know a lot of people listen to that. Right. And I like the fact that it's area specific. I got a good buddy of mine, Mark Ainley. He does one for Chicago. And like he is like, if you're going to invest in Chicago, like he's the guy now, he's yeah.
AJ Shepard: [00:06:28] You got to listen to him because he's the expert, right?
Pete Neubig: [00:06:30] He's the expert. Uh, so I believe if there's anything you can do in your, in your market to make you the expert, you're going to attract investors. And yeah, there's going to be a bunch that just use your knowledge and then they go do their own thing. But there's going to be a bunch that use your knowledge and then hire you, right? They either hire to help them find a place or they hire you to manage the to manage the place. So yeah.
AJ Shepard: [00:06:52] And I think a lot of people have like this kind of daunting, like, oh, starting a podcast that's so hard and like all this sort of stuff. And yeah, you know, the first couple episodes, it's going to be tough. You're going to stumble your way through. But you know.
Pete Neubig: [00:07:05] Two years later, if you're doing a normal podcast, you stumble your way through.
AJ Shepard: [00:07:08] But something like that, right? But I mean, yeah, it's it's hard to set up, but you know, I come back to like systems and processes, right? Like the more that you can create a system and a process like our podcast, my brother and I literally just show up for the meeting. Otherwise we've got it systematized where we've got, you know, another remote professional helping us do all of it, including all the social media sharing, you know, getting the guest speakers set up, all that sort of stuff and all that.
Pete Neubig: [00:07:37] Yeah. You like the you like the Dr. Oz of property management, right? Dr. Oz, You know, he's famously in one of his books. He talks about like when he does surgery, he goes in, everything is done. He just goes, does the surgery and he leaves and he does his show. He goes there, everything is done. He just goes does the show and he's gone. And so, yeah.
AJ Shepard: [00:07:53] I mean, like that sort of concept. Kind of. Was that? Guess the systems and processes, concepts like just spreads over the your entire company. Yeah. Figuring out how to I'm very much like, how can I delegate this or how can I set it up so that someone else can do it? And yeah, it's a lot of work up front, but in the end, if you can set it up so that someone else can do it, you can free up your time and then come talk on radio.
Pete Neubig: [00:08:23] I think the main thing here, though, is, is the you can become the expert in your market just by, you know, creating the podcast or creating some video content and putting the YouTube channel like, you know, really, really give a lot of information to many of us want to just promote ourselves. And it's not about promoting, right? It's about educating. And if you can educate, then you will get the business. There was one guy and he's going to kill me because I forgot his name. I think he was out in California, you know, he actually did. Aj He actually did a, uh, he did a class on how to manage properties for like for, for investors that was self managing. And I'm like, Well, why would you do that? You teach them how to manage. And he's like, Well, Pete, here's what happens, right? I get ten, 15 people to show up to the class. It's a couple hundred bucks. That's not that's not the moneymaker, because by the end of the class, he goes, I get a five of them to tell me they want me to manage their properties.
AJ Shepard: [00:09:21] Well, they come and learn how much work it is and they're like, Man, I don't want to do that.
Pete Neubig: [00:09:26] I got to learn about what I got to do this. I got to do that. Yeah. So I thought that was interesting. So if you listen to this, that's another way, like just literally create a a course and then go to your local real estate investment clubs and promote the course on how to how to manage your property or, or, or, or connect with those real estate groups and offer to give them the course for free and teach the course. And then you become the expert in front of a bunch of investors. So just just another way. So let's, let's kind of fast forward this thing. Um, I was, I was just amazed at this whole syndication thing. I've done this really, really small when I bought some apartment complexes. But tell us what made you come to to to build the syndication? How did you do it? And, you know, I know you offer a class on it, so I'd love you to plug that as well. But but talk a little bit about what syndication is and then kind of step through on on how how you ended up coming to this, you know, building this this, this. Sure.
AJ Shepard: [00:10:24] So for those of you that aren't familiar with syndication, we essentially put together a company to pool investors money together to buy a larger asset. We're specifically in like multifamily. We try to take C class and turn it into B class through construction and property management. You know, a lot of the properties that we like a couple years ago we bought properties that still had paper leases and all of you listening and be like, What? But they do exist out there, right? And so there's there's ways to improve technology and improve the property. And when you add value to something, you significantly increase the value. So, um, but yeah, so essentially every asset that we purchase with syndication is its own LLC. We raise funds for it.
Pete Neubig: [00:11:14] So now the funds you're raising for it, or is it typically the down payment and the and all the construction has to go there? Or is it just a down payment and you fund the construction from the rents? Like what is what's the normal what your, what's your normal business model?
AJ Shepard: [00:11:29] Yeah. So we definitely have a capital budget. So we determine that before we, you know, kind of during the due diligence period of a contract, we'll determine, okay, what actually needs to be done. Like do the rules need to be done, do the siding, you know, how many units do we need to turn in order to fund the rest of like the unit turns with the rents. So we'll put together that budget and we will raise that money. So we find a property first.
Pete Neubig: [00:11:55] Or do you raise the money first?
AJ Shepard: [00:11:56] We find the property first. So typically with like commercial, um, purchases, it's usually like a 60 to 90 day purchase and then we'll write in to 30 day extensions and we will have like some escrow money go hard. So, you know, we're probably paying $50,000 for each 30 day extension.
Pete Neubig: [00:12:19] Okay? Now, as you get as you do this and you become more and more successful with each purchase s, my guess is you're starting to have more and more people want to give you money. Um, and so all of a sudden now the deal becomes the issue, not the money we're in. The very beginning, you, you were probably able to find the deal and then the money became what was the challenge? At what point does that flip?
AJ Shepard: [00:12:41] Um, you know, that's that's kind of a tough question. Like, I think with any business, there's always like a bottleneck, right? So if you're like, trying to grow, it's at one point it's the deals. At the next point it's the money. And then like as you get bigger and bigger, it kind of goes back and forth is what I would say. We definitely have repeat investors. You know, we we started doing syndication like in 2020 and we've got I mean, currently we've got our first two up for sale, which is awesome. The first one, our investors are looking at making a 30 to 40% per year return on their money.
Pete Neubig: [00:13:20] Wow, That's pretty solid.
AJ Shepard: [00:13:21] And the second one, they're kind of looking at like a 17 to 20% per year on their money. So those were smaller. And when we first started out, we actually picked a deal that we could have just bought ourselves. So we were kind of the backstop of like, Oh, if we can't raise the money, we can't do it. And what we found was, is that raising the money was actually not that hard. And that was when we were like, okay, let's, let's keep going. And so we the first one, we started out with a nine unit and then we went to a 12 unit and then a 20 unit and then a 30, you know, then a 25 unit and then a 30 unit. And then recently we just bought a 47 unit for 10.5 million and we raised $5 million for it. So when you.
Pete Neubig: [00:14:07] Look at these properties, are you already looking at like what the exit strategy is? So like, hey, you're going to invest this money in this deal, we're going to do X, Y and Z, and then in three years, five, six, seven, whatever years, we're going to go ahead and and sell. Is that is that something that's pretty standard.
AJ Shepard: [00:14:22] So when we when we look at a property, we've got you know, you want to compare apples to apples, right? So we've got a pro forma that we fill out for every property.
Pete Neubig: [00:14:30] So tell everybody what a pro forma is if you don't mind forma is.
AJ Shepard: [00:14:35] Essentially adding up.
Pete Neubig: [00:14:37] All.
AJ Shepard: [00:14:37] The costs, all the budgets adding up like what the rents are going to be and forecasting out like how is this asset going to perform? And so there's some big assumptions in there. You know, if you're familiar with commercial real estate, like a lot of brokers, look at cap rate. So, you know, in the past year we've seen interest rates just skyrocket. So cap rates in turn have like gone up. And when a cap rate goes up, the asset value goes down. So we try to always in our pro forma, be very conservative. So we we usually budget rental increases at like 3%. You know, costs increase at 2%. And then we always have like if we buy at a cap rate, we always add a point to that cap rate. So like in this case right now in the Portland market, like cap rates a year ago are about four and a half, maybe five, and now they're looking at like five and a half, six. So we've kind of underwritten like some. Leniency in there, some some fluff so that, you know, when we're looking at a deal, we know that we're going to make money. We're not going to lose. I mean, the last thing you want to do is lose investors money.
Pete Neubig: [00:15:46] So what are you looking at? Like, how long are you going to hold this thing? Like it's not open ended, Right. Like you say, this is a five year deal and you get your money back like or you like like thinking like, I'm going to refinance at this and we're going to hold this long term. Like what? What is what is your main strategy? It seems like it's a it's a buy rehab, get rents up, increase NOI and sell. But is is that right or is that is there other strategies depending on the on the asset that you're buying?
AJ Shepard: [00:16:14] Yeah, I mean, it depends on the deal. The latest one that we did, we we bought with a Freddie Mac loan and like the plan is to refinance it in two years and then sell it in seven. So typically the, you know, there's a five year term on that second loan that we're going to get. So but I mean, it's just like kind of what makes sense for the asset. Like we try to model all of our deals at a five year hold and sell. And that way our investors, when they're looking at our documents, can like compare apples to apples. So they're not seeing like a ton of different stuff, but like we're looking to maximize the profit. Like honestly, as the, you know, person that manages the asset, we get paid on performance. So the larger the profit that we can make for the investors, the larger profit that goes in our pocket. So we are very much incentivized to, you know, keep the time period down as small as possible and keep the the increase in the property value and the profit as high as possible.
Pete Neubig: [00:17:15] You typically do distributions and if so, is it monthly, quarterly, yearly, and then, you know, typically work?
AJ Shepard: [00:17:22] Yeah. So we typically do quarterly distributions, you know, in the deals there's, there's a waterfall and that goes with like how the syndicator or you know, us, we get paid and typically we do like a 7% preferred return. So we'll pay investors 7% before we take any fees. And so like as an investor, they're looking to like, okay, I'm getting 7% before these guys even get paid. Like I'm at least going to get that. Um, and, and then like we have a hurdle so we a lot of private placements is what these are called the regulated under the SEC and we have there's an exemption that we use it's called 506 B that says that, um, you know, we're, we're not, we're not having investors invest that maybe not aren't accredited but they're definitely known to us. So there's a couple exemptions with the SEC that allows syndicators to to do these sort of deals. But yeah, so we do quarterly distributions. We're paying that that 7%. Usually it starts day one. We have actually invested with another guy and he does monthly and I'm like, That's pretty cool. You know, kind of like property management clients. It's like, you know, all right, I'm getting a check in the bank every month and then, like, it kind of reminds them. So we've we're kind of toying with the idea of moving the monthly, um, you know, with technology the way it is and ACH payments like it's super easy to like press that button, whereas, you know, five, ten, 15 years ago, they're cutting checks and sending checks and it's maybe a bigger lift. So we are toying with that idea. Haven't haven't done it yet. But it's it's something on possibly.
Pete Neubig: [00:19:04] On a on a typical syndication. Um what um when you guys get investors how much are they getting a ownership are they like I'll give you an example. Like when I was, when I was buying apartment complexes here in Houston, I'd go get money and I would give basically 80% of the deal and I, as the lead partner, would put no money in, but I put the sweat equity in and I'd get 20% of the deal. Is that something is it similar like that in syndications or or is it like, do you guys own a percentage of the of the deal without putting money in for for finding it and putting it all together? Like how does that work?
AJ Shepard: [00:19:41] I mean, we invest in all of our deals so we have some portion typically. So the way the syndication is set up, it's very similar to probably what you did. But there's there's two, two parts. There's the general partner and then the limited partner. And so the general partner is like the manager, which is like us as a syndicator. And then the limited partner is investors, which we call LPs. Um, the, there's two different class shares in the LLC and my brother and I own, you know, all of the shares. And then the LP or the investor shares is just split equally to the amount of money that we raise. So if we're raising $1 million and an investor puts in $100,000 and they've got 10% equity and it's a straight split that way, um, again, we're only paid off the profits. So typically we have a split after a hurdle. So like I said before, there's that preferred return. So any, any return after the preferred return, we're going to, as the syndicator, take 20% off. And then if we hit the hurdle, then we actually bump it up to 50%.
Pete Neubig: [00:20:51] And then how does it work on the sale? Same. Same way.
AJ Shepard: [00:20:55] Yeah, that's it's. It's the exact same way. So all the returns and distributions are added up collectively and to give like an overall return. So, you know, first we return the investors initial capital back and then we start looking at the profits and then we say, okay, 7% was this much over this time. And then, you know, then after that, we take 20% of the money. And then once we the investor makes a certain hurdle, you know, our hurdle is ranging somewhere between 15 and 20% per year or IRR. Internal rate of return is IRR, and that is a calculation that's time bound. So that's why, you know, it's hard. It's a it's it's a way to like kind of compare to the stock market is what I want to say is like, you know, all the stocks are like, oh, that made eight, 10% per year. Um, you know, and with real estate deals, it's, it's a little bit tough to say, oh, I made 100% on my money in five years. Well that's more like a 15, 16% return per year. Got it. So an IRR kind of allows you to compare apples to apples a little bit better.
Pete Neubig: [00:22:08] So if I am if I'm listening to this and I'm like, Man, I want to invest in a syndicate, I want to start one, but I might want to invest in one, what are some of the things that you should be looking for if you're going to invest in somebody who has a syndication?
AJ Shepard: [00:22:23] Oh, boy. Uh, educate yourself. Know who you're investing with. Brian Burke runs Praxis Capital. They're like one of the really big players. He wrote a book. It's called The Hands Off Investor. And that book goes through Mean like it's literally like 2 or 300 pages of like how to vet a sponsor, how to look at deals. So if you are interested, I would definitely say educate yourself. Um, there's a lot of people out there that are just doing capital raising. So they're raising capital and then putting themselves kind of in with another. So like if we had a capital raiser, they could bring us $1 million on a, you know, $5 million deal and we'd cut them a piece of the pie or something like that. They have to play an active role according to rules and whatnot, but you kind of create some task for them to do to be a part of that general partnership. So, you know, there's a lot of there's a lot of people out there saying that they're syndicators, but they're only raising money and then putting it with someone else. Um, and there's a, there's a newer website out there, uh, some guys I met at a conference. It's called Tradfest. Um, where they will it's like a tribe capital like tribe. You kind of. Yeah, Tribe. Tribe Vest. Got it. And so, like, mean as a property manager, say, you've got 20, 30 investors and you want to raise $500,000 and put it with a deal, you would sign them all up on tribe vest and then take that 500 check to a sponsor and say, Hey, cut me some better rates because I'm bringing you a lot of money at the same time. And then you can make some money off the arbitrage. You know, if they pay an 8% preferred return and you pay your investors a 7%, then there's some ways to make some money that way, too. If someone's interested in raising money for another sponsor.
Pete Neubig: [00:24:24] Now, if I'm listening to this as a property manager, I'm like, Man, I got all these investors. They're always asking me, you know, for deals. And there's some there's some stuff I can do here. I think I got I think I got something I can do. I can, you know, get some money or whatever. What would be like, you know, what are some of the options? Like syndication is one. But I mean, you're talking about SEC and you're talking about attorneys and all that stuff. It seems like a lot of work is there is like that the only way or is there other ways that you can think of where we just get a bunch of money and go buy some houses together? Or is a syndication really the the way to to do this?
AJ Shepard: [00:25:01] Um. Yeah. Mean it just depends on how many investors you want to get together. Like if you're getting two three guys together, like just forming an LLC is like the best way. But if you're looking at getting like 30, 40 people, you know, having a syndication model I think is probably the better bet. It just with so many people, it makes it tough. So, I mean, raising $5 million, like don't we You know, we probably had 30 or 40 different people in that deal. Got it. So it's just like, how big do you want to go and what do you want to do? And you know, more so I would say like find out what you want to do and then figure out how to get there.
Pete Neubig: [00:25:48] Now, you speak a lot about this. You know, I've seen you speak, I think, twice now on syndications. Yeah. If somebody's listening to this, though, and they're like, Man, I want to either a, I want to I want to get into some syndications with with you or B, I'd like to start my own deal. Um, and I want you. I want AJ, I want you to help me out. Uh, where do they go? Where do they go to to to get help from. From you.
AJ Shepard: [00:26:14] I mean, my my information is everywhere, so just hit me up. Happy to help as much as I can. You know, if you can find me on LinkedIn. West Side Investors Network is our podcast. You know, if you're looking for a way to, you know, make money in syndication or raising money, educating yourself is like the first.
Pete Neubig: [00:26:35] Do you are you maybe I'm maybe I'm misinformed. But I thought you had a course that you teach. Are you not teaching? Okay.
AJ Shepard: [00:26:41] Yeah, we we we have a coaching program. And the program takes, you know, real estate professionals that want to get to the next level.
Pete Neubig: [00:26:50] And what's the website for that?
AJ Shepard: [00:26:52] Uh, it's just uptown syndication.com. And then under the coaching program.
Pete Neubig: [00:26:57] Uptown syndication.com coaching program.
AJ Shepard: [00:26:59] Okay. Yeah. And we've, we've had a few people go through it and you know they're working on still getting their first deal. So we've we've kind of Yeah but it's it's it's been good you don't have.
Pete Neubig: [00:27:10] To buy apartment complex with it right. You can go buy a package of. Yeah.
AJ Shepard: [00:27:14] Syndication is the method so you can do there's guys that are doing you know I went to a conference, this was the best ever conference by Joe Fairless And there's Guy, I know him, industrial complexes, there's people doing self storage, there's people doing mobile homes, there's this, there's these guys, they're called it's like Happy Camper and they're buying like lake, like, like lake retreat places. And so it's like a bunch of camp sites. And then they're like renting out these camp sites, like improving the technology at those places. Like, you know, it's probably some a lot.
Pete Neubig: [00:27:51] Of mom and pop industry, a lot of.
AJ Shepard: [00:27:53] Mom and pops that have done it for 40 years and they're looking to retire. And these guys are like, hey, we can put in, you know, they have like paddleboard rentals and they just put up a cage and like people put their credit card in and like rent out the paddleboards like, you know, all these like, new ways to do stuff. And, you know, the old mom and pops of like, well, those businesses run fine for 40 years. Like, you know, they're not looking to make changes and make improvements. Um, so it's, I think, you know, with any asset like trying to make some improvements and add value is, is really how you can leverage making a lot more money.
Pete Neubig: [00:28:30] Is there any question I didn't ask that I should have asked about syndications or investing that. That you can think of?
AJ Shepard: [00:28:40] Uh, yeah, I don't think so. I mean, it's, uh, it's a great tool, you know, BiggerPockets talks about, like, you know, getting tools in your tool belt, you know? Um.
Pete Neubig: [00:28:52] Are you surprised as much as I am, about how many property management company owners don't own real estate?
AJ Shepard: [00:28:58] Oh, I'm. I'm absolutely surprised. Like, using your own services is it's eye opening because, like, you're on the other side now and you're like, Oh, man, this sucks. And like, you empathize with the owners a lot more, which is great. But like on the, on the flip side like the property mean. I know I'm talking to a bunch of property managers here, but wealth is created through the assets. It's not created through the property management company. And it's great to run a great property management company. But if you're really looking to create wealth and make a difference like owning the property and participating in that upside is absolutely incredible. You know what's funny, man?
Pete Neubig: [00:29:40] What's funny is when I owned Empire and I started, I actually bought a whole I owned a bunch of real estate before I started Empire. And then I ran Empire and running a property management firm. Especially in the very beginning. It's chaos, man. It's like. It's like you're just trying to just keep yourself above water, you know what? Seven years before I started, before I bought another piece of property. I, you know, so I guess what I'm trying to tell you is don't do what I did. Like, there was so many deals that came across my desk that I'm like, I'm just too busy. I'm too busy. You know, don't use it as an excuse because as property managers, we get we probably get some of the best deals across our desk from.
AJ Shepard: [00:30:16] Absolutely. Like the property manager is the first one to look at them like, you know, and.
Pete Neubig: [00:30:20] You have the history and you have the history of the property.
AJ Shepard: [00:30:23] Help like you. You can provide that solution and it can be a win win deal for everyone. Yeah.
Pete Neubig: [00:30:28] So I'm going to pivot here. I got a.
AJ Shepard: [00:30:30] Question for you. Did you make money on those houses you purchased?
Pete Neubig: [00:30:34] I still have. I still own a bunch of them. So yeah, they, uh, so since 2020, all my houses have increased in value. Where? In Houston? That doesn't happen very often. We're pretty flat for the most part. But I'll just give you, I just did a deal in 2020. I bought four houses from an investor out in California. He owned four houses in Houston, didn't want them anymore, and I bought them for like 550. Um, and the day I got him appraised, the day I bought them, they got appraised for 650 today. They probably worth over 850 all those houses. Yeah. So, so yeah it's, it's well built now ask me now ask me do they cash flow for you. The answer is no, they don't. Freaking cash flow. There's always something going on. I got to pay the management firm but.
AJ Shepard: [00:31:21] You know, when you go to sell that's going to be a significant cash flow or increase.
Pete Neubig: [00:31:25] Because not just the appreciation, but the principal pay down. Yeah, they've been rented for for the last, you.
AJ Shepard: [00:31:32] Know, and you get to defer some taxes right now too, because of all the depreciation that goes along with it. Like you know the it's it's those four ways to make money in real estate is, you know, tax depreciation, cash flow appreciation and then.
Pete Neubig: [00:31:46] Depreciation and principal pay down. I think there's another there's a fifth way everybody forgets about the principal pay down. But at the end of the day, these renters are paying your principal and interest for you. It's I call it forced savings.
AJ Shepard: [00:31:59] That's what we say, too. It's a forced savings account.
Pete Neubig: [00:32:01] Yeah, it's a forced savings account. So I'm going to flip the script here a little bit because you are an MVP. You've been in RVP for a long time now. I think this is is this your third term or second?
AJ Shepard: [00:32:12] This is my fourth year, Fourth year.
Pete Neubig: [00:32:15] So the end of second term because the two year terms. Well.
AJ Shepard: [00:32:19] I started out as a one year term in the Atlantic region and then had a two year term in the Pacific region. Okay, I'm finishing up a one year term in the Pacific and this is be my last year because there's only four years that you can be VP.
Pete Neubig: [00:32:35] Interesting. Okay. Did not know that. So. All right. So tell me, you know, I always like to ask people especially that are on the that are on the the national board and you and I serve together. So that's why I know you do quite some time. I think my last year was your first year. So but tell me, what's your why why did you give back? Because on the board you don't get many perks. And you have as an VP, got to travel a lot and you have to and you got to work. So what was your why do you give why do you continuously give back to to.
AJ Shepard: [00:33:06] Uh, there's a lot of reasons, You know, Nahum has helped. When we found Nahum back in, like, 2014, 2015. Like, it was incredible for our property management business. Like that wealth of knowledge and those connections and networking. And, you know, honestly, I've developed, like, lifelong relationships through serving. You just get to be closer to a lot of different people and all over the nation with a bunch of different perspectives. Um, and yeah, it might be a little self-serving, but I feel that I've like had a lot of development and growth and personal skills like being on the national board teaches you leadership teaches you how to delegate better. You have to manage your time better. Like there's a lot of lot of benefit to it. And honestly, like, I like helping people out. Um, you know, we've, we've been super successful and there's no reason that everyone can't be super successful.
Pete Neubig: [00:34:01] Amen to that, brother. All right. Listen, we're going to take a quick break and then the lightning round. That's our sound effects for, by the way. Okay. Don't have sound effects. That's it. So we'll be right back. And then we're going to put RJ through the Lightning Round. We'll be right back, everybody. All right. Welcome back, everybody. And we got RJ Shepard on the hot seat on a lightning round. Rj. Are you ready?
AJ Shepard: [00:34:24] All right. Try not to stump me.
Pete Neubig: [00:34:25] Okay, Now, these are simple. What software do you use?
AJ Shepard: [00:34:29] Uh, sorry. You kind of cut out there. Sorry. Okay. What software?
Pete Neubig: [00:34:33] Yeah. What property manager software do you use?
AJ Shepard: [00:34:35] We use AppFolio.
Pete Neubig: [00:34:36] Appfolio. What is your current organizational structure for your property manager Business?
AJ Shepard: [00:34:41] We are departmental structure.
Pete Neubig: [00:34:44] Just curious, how many units do you guys?
AJ Shepard: [00:34:47] We're about a thousand units. Okay, so.
Pete Neubig: [00:34:49] Yeah, that makes sense. Departmental. Um, do I know you answer this, but do you use virtual assistants?
AJ Shepard: [00:34:55] We have a virtual assistants in in mass. Think we have about 12 or 13 that work for us? Not all in the property management business. Like have one dedicated to syndication. Both my brother and I have just personal assistants that kind of help us out with anything and everything.
Pete Neubig: [00:35:15] I may have to ask you when we get off, I may have to ask you more about that. What is one piece of advice you'd give someone just starting out in the business?
AJ Shepard: [00:35:25] Honestly hire employees and figure out how to delegate quicker and get your time back.
Pete Neubig: [00:35:30] Love it. Does Pineapple belong on pizza?
AJ Shepard: [00:35:32] Absolutely. It's so sweet and good and then salty against the pizza. Yes.
Pete Neubig: [00:35:37] And we were friends. What was your first job?
AJ Shepard: [00:35:44] Uh, my first job. My first job was probably in college. Well, actually, it was in high school. I was a phone person that called people to get surveys for an opinion research corporation. Interesting. So, yeah, that was probably, like, my first real job. I also like caddied for golf in a tournament, like when I was like 10 or 11, but that was only for like a week every year. But it was super fun.
Pete Neubig: [00:36:15] I'm sure it was. Uh, what is, what book are you currently reading or what is one that's impacted your business or life?
AJ Shepard: [00:36:24] Uh, I'm currently reading, um, Believe It's Leadership by Timothy McGraw. I don't know the author, but I'm still working my way through it. It's a slog. It's like 11 hours, uh, on audiobook. Uh, a book that. And we still use it. Never lose a customer again. Like, if you haven't read that, great for, you know, setting up processes and systems and labeling stuff and actually talking about stuff and getting more human touches, um, has been really good. Uh, yeah. I'm going to go with those off the top.
Pete Neubig: [00:37:01] Which Disney character do you most associate with Donald Duck? Love it. Uh, what is one what is a one challenge you're currently facing in your business?
AJ Shepard: [00:37:14] I mean, I think this is a challenge that like, doesn't ever go away, but it's people, you know, we're always constantly hiring, you know, and also just finding those people. And apparently wages are going up. So there's a lot of movement around. And, you know, when people go some other place, we've got to backfill the position. And so, yeah, just finding the right people.
Pete Neubig: [00:37:37] Last one. What do you prefer? Dogs or cats?
AJ Shepard: [00:37:40] Dogs.
Pete Neubig: [00:37:41] Dog guy. All right, man, you're officially out of the lightning round.
AJ Shepard: [00:37:46] I made it.
Pete Neubig: [00:37:47] All right. If someone wants to get in touch with you, what's the best way to get in touch with you?
AJ Shepard: [00:37:52] Uh, yeah. My information is all over. Linkedin is great. Westside Investors Network is great. Uptown syndication. Um, any any one of those? If you want, just you can email me at uptown p m.com and yeah look forward and if you want.
Pete Neubig: [00:38:10] To join them please go to RPM. Org. If you're not if you're not a member, why not go join and or call them at (800) 782-3452. And if you want to get your time back and your life back, like RJ says, hire some remote team members. Go to VPM Solutions.com and select from over now 28,000 profiles looking to work in the property management and housing industry. Rj Thanks so much for being here today, buddy. We'll see you next time.
AJ Shepard: [00:38:41] Yeah, thanks for having me.
A Podcast | Syndication Simplified: Unlocking Real Estate Opportunities
In this episode we call "Syndication Simplified: Unlocking Real Estate Opportunities," NARPM®️ Radio host Pete Neubig interviews AJ Shepard, MPM®️ RMP®️, co-owner of Uptown Properties, CRMC®️. Discover the power of real estate syndication and how it simplifies the process of unlocking unparalleled investment opportunities. AJ shares valuable tips and strategies to attract investors, making it easier than ever for property managers to grow their businesses and maximize returns. Whether you're new to syndication or a seasoned pro, this episode will inspire you to take your property management venture to new heights.
AJ Shepard is the co-owner of Uptown Properties in Portland and also a licensed contractor in Oregon. We have been in the business since 2010 and pride ourselves as leaders in our local real estate market and the property management community. Finding his passion in real estate and construction management has created an avenue for the company to help provide all services necessary to its clients. Knowing the trade and the ability to manage many allows for streamlined maintenance of the investor’s property at a reduced cost.
Volunteering at ULI, and FRESH to give back to the Real Estate Community. An active member of NARPM and recipient of the Darryl Kazen Scholarship, current Regional Vice President of the Pacific Division, and recipient of RMP and MPM designation.
AJ is also the co-host of the Westside Investors Network podcast (WIN). WIN strives to bring knowledge and education to real estate professionals seeking to gain more freedom in their life. The hosts AJ and Chris Shepard are committed to sharing the wealth of knowledge that they have gained throughout the years, to allow others the opportunity to learn and grow in their investing.