Navigating uncertain times and prospering with Greenlight Investment Group

Kyle Wallitner, co-founder and managing member of Greenlight Investment Group, is a GP on over 10mm in commercial real estate. Over the last few years Kyle has demonstrated a strong track record of profitable acquisitions and exits in the commercial residential real estate space.   As co-founder, Jeff Drasin has been crucial in the success of Greenlight's ability to effectively scale to over 200 units in 2 years. He has served in the Air Force and holds two Master's degrees, one in Psychology and another in Business Administration.   The Greenlight Investment Group offers the comprehensive capabilities and deep industry knowledge necessary to help simplify your commercial real estate investing career. In this episode, they will walk us through their turning point when they joined the real estate world, the asset from acquisition to exit, and how they ensure a safe and efficient investing commute for their investors.  Episode Links:  https://www.greenlightinvestmentgroup.com/    --- Transcript Before we jump into the episode, here's a quick disclaimer about our content. The Remote Real Estate Investor podcast is for informational purposes only, and is not intended as investment advice. The views, opinions and strategies of both the hosts and the guests are their own and should not be considered as guidance from Roofstock. Make sure to always run your own numbers, make your own independent decisions and seek investment advice from licensed professionals.    Michael:  What's going on everyone? Welcome to another episode of the Remote Real Estate Investor. I'm Michael Albaum and today with me, I have Jeff and Kyle from Greenlight Investment Group and they're going to be talking to us today about what it's like to scale in the pandemic, and then ultimately end up doing commercial multifamily syndications. So let's get into it.    Jeff, and Kyle with Greenlight investments, thanks so much for taking the time to hang out with me today. I really appreciate you both coming on.    Kyle:  Yeah definitely, appreciate it.    Jeff:  Thanks for having us, Michael it’s good to be here.    Michael:   Yeah, totally. So for anyone that might not be familiar with your guys's story, or what green light investments is, would love for you to just give us a quick background and bio about yourselves in the company?    Kyle:  Yeah, so Greenlight investments. We were right now a small scale investment group we were in small scale syndications, we focus on commercial multifamily 20 unit to 100 unit properties in the Kansas City, Missouri area.    Michael:  Love it and how did you guys get started? I mean, do you guys have real estate backgrounds yourselves or did you learn about the real estate investing business, like, yeah, I could do this…    Jeff:  Kyle actually had started, he had some rentals when we worked together at the airport, and I kind of was eavesdropping and I was like, I like what he's doing. And I already had an interest, didn't really know at the time that I had already owned my first rental I was living in it. But I ended up not living beneath my means not having to sell it when I bought my next house and that's kind of got the ball rolling.  And so Kyle, and I started sort of in earnest, I overheard them talking about it, and I was gonna take a loan out of my 401k to, you know, leverage it to get some kind of asset and so I thought cool, we'll split a four Plex. And I thought, man, we are rich, we just bought a four Plex. And we're always like, we're gonna make 10s of dollars a month. No, it was that it was just such a you know, it's just a very big, you know, triumphant thing. We didn't really, we didn't know how to we didn't know what we didn't know, which was kind of the fun that we were sort of naive. But it was it was a good time and I thought, well, seriously, we're gonna make $700 a month. But we forgot to factor in things like, I don't know, repairs and maintenance, those types of things…    Michael:  Yeah the little things.    Jeff:  Yeah, just, yeah, the minutiae. But, you know, we thought, well, you know, we're not really doing well. And in fact, we were losing money at seem to because we bought it for, I think it was 360 grand, and the Seattle area, which was a good deal and we put a lot of money and time into it. And I thought, well, I'm gonna pay myself back with the income, you know, but it wasn't dollar for dollar, I wasn't really thinking linearly, I was just thinking emotionally. So we really needed to go through that and ended up, you know, repaying ourselves eventually. But the money that we felt we were losing was really just going to change the property, we rehabbed it, we didn't really know we did a burr, essentially. And then we're like, well, we can sell it for 700 and we almost doubled our car, our price, we got the money back and I think that was when we, we, that propelled us to like, we can do better, we can get better return on equity, we don't have to be speculative and back betting on the, you know, the equity appreciation more on the cash flow, we can, you know, cash is king, and then if you can sort of get some appreciation that's gravy.    So I think that's what kind of got the ball rolling. We had some 10-31 stuff that we did, and we did some sort of interesting little small partnerships to kind of, you know, kind of sell off stuff that we had and move it to a better cost of market area and then after we kind of, we got, we did our own deals, we're like we've got the team assembled, we know what we're doing, we know why we're doing it and, you know, low and behold, kind of we became subject matter experts at it. And we're like this, why not rinse and repeat and so that's kind of how Greenlight was born.    Michael:  Oh, that's awesome, so you guys really cut your your own teeth with your own money, you had some proven results and said, hey, we can do this, we can do this like so let's bring along other people along the journey.    Kyle:  Yeah, because, you know, you adapt to what your surroundings are and I think you know, Kyle and I in our lives, you've been very sort of chameleon like you adapt to your surroundings so you can kind of do the best you can. And, you know, just having gone through that and I, you know, I think some people it's hard to quantify but real estate, it's hard to argue that is the best investment of any vehicle. It's hard to argue that if you were to make a logical argument…    Michael:  But yet people still do…   They still give a logical argument… It’s their favorite past time…    Kyle:  Yeah, but that's not a joke. And then sometimes, but also, on the other side of it, if everybody knows that you're not getting that same proportion of people who are actually investing in it, because they don't, there's a mystique to it, there's a machine that is sort of, you know, they can't get through, they don't know, they don't have the time to learn, maybe they don't retain information, maybe they learn differently. Maybe they don't, they're more of a visual learner. So but everybody kind of sees it and they don't really kind of like when you stop and you see something and you just take a look and just keep on walking by no one really stops or a lot of people don't stop. So we try to reach a reach out to those people that just want some education as well, in addition to you know, having, you know, some help along the way.    Michael:  I love it, I love it and so you guys and your personal side, refocusing on single family homes and small multifamily and before you made the leap into the commercial world…    Kyle:  Yeah, I mean, I had a small portfolio of single family and, you know, I had aspirations of leaving my nine to five job just like everybody else. So I started buying up single family homes, and I realized it's gonna take 100 years to get enough cash flow out here buying these up and that's kind of the time when Jeff jumped on board and we bought that four plex and, you know, for us at that time, that was a big multifamily deal and we had made it you know, we're gonna quit our jobs and work for ourselves and we realized that wasn't going to happen with a four plex.    So we got a mentor, we started reading up on out estate investing and took the plunge, you know, sold off some stuff took that pocket full of money into some more cash flowing assets, some things where we can control a little better with higher upside, and now we're on our way to, to leave in our work, leaving our jobs, I should say not to work, I mean, we're gonna probably work harder now that we're not gonna have our normal jobs, but it'll be you know, a passion, you know, more we feel value in what we're doing, instead of leaving work drained, you know, we feel uplifted and recharged kind of thing, which I think is that all…    Michael:  Totally, yeah, that seems really assigned to…    Jeff:  If you feel better when you're, you're not in at an assembly line. You know, I'm in love our job, especially in our traffic, but you're an assembly line, it's like, you make you know, you you make decisions at this point, you do these certain things, and you don't really get to use your imagination, you don't get to venture out you don't get to network or talk to people or, most importantly, don't have the control and Kyle said that I thought was a great point, I had listened to one of your previous podcasts, it was a good one. And, and he had mentioned something that he said control people don't, you know, money is not what people want, money is the tool to get what you want and ultimately you want control. And, and so if it if that's what people want and so I think people get lost in, you know, what is oh, I want to be rich, I want to be rich, no, you want to find happiness in your equating happiness with money, because that's what it takes you that's, you know, an instrument. So you have to be good with yourself, know what you want, know what your motivations are and then with that, you can set you know, proper, attainable goals. The thing is with people who don't understand that, that sort of dynamic, they want their acquitting money to control and they want them simultaneously in, in mutually exclusive and so it doesn't work that way and so when you when you can understand the concept of it, and just really leverage everything you have in you know, you don't have to have cash in your hand to have an asset, you know, and that's what I learned with my 401k or with a self-directed IRA, or, you know, or a HELOC or any, any type of thing, if you can learn to manage your life and leverage and then sort of, you know, assert control, you can sort of you, you write your own path, you know, you write your own story, and guess what people want and then that will give people the, you know, you're not trying to shoot for the moon because that's the people want a lottery ticket sometimes and that's not what real estate is. It's just a great investment vehicle.    Michael:  Yeah, that's such a good point you make Jeff about some people thinking, oh, I don't have cash in my hand, so I can't do this. There are all these other avenues and vehicles that you can look at that are maybe less traditional, that you should be thinking about. So I love that point, I love that point.    Jeff:  I, yeah, and I that's probably I'm sure for you guys as well. That's one of the most common questions I hear is where do you going to have the money to buy all these things? And I used to wonder the same thing, but I don't even think about that anymore. Because you're like you said you're extracting capital for things that were just like a rock just sitting there, they're valuable, like a house or something, but and then when you can start doing refinances, and you can create several profit centers off of one bundle of cash, you know, then you're, then those then later become leverageable and then it you've sort of starting that fire and you're just throwing a logs in. So, yeah, it's great opportunity, once you kind of, you know, put your finger on it.    Michael:  Love it, so guys, talk to us about what green light is doing now and when did you when did you start being like?    Jeff:  Okay, sure, green light now is So, you know, with growth, which is good thing you want to, you want to grow with your, you know, demand, you want to meet the demand and so, we, internally, so I'll tell you what we're doing sort of internally, and then from a global view, you know, we've put systems in place communication systems, eliminate the redundancies, increased efficiencies, to allow us to, you know, work together to find properties, and we can put, you know, tasks into buckets.    So we say, and everybody has their roles, and we have, you know, in is all about relationships, because then people can communicate well, and we can talk about what works best, but, you know, we'll deal with, you know, finding a property and we'll this is where we put the properties, everybody has public access to it within our group, and everybody can pick away at it, or throw bread at it, or say, I like this, or I don't like that, and comment on it, mark it up, add and subtract from the documents, you know…, so we kind of get this public viewing period, and then it will sort of that, that's kind of some of the processes we're working on and then we can kind of move it along in our sort of internal chain, and then it gets different levels of review, as we go, so we're working on those types of things.    We're also working for, you know, filling out roles to give more specialized attention, depending on as we get into more types of DR more, because we want to ultimately run several different types of deals, whether not necessarily concurrently, but close together to offer different, you know, opportunities and so we want to have, we don't want to be so underwater, that we can't keep up with, you know, meeting questions or being able to offer information or be available.  So that's other things that we're working on, and tailor that out modifying the website, which I had mentioned, in terms of, you know, sort of, once you close the hood, and what we're doing, what's the what roads looking like, we're really looking for, based on what we're hearing from what most people can get on board with to syndicate 40, between 40 and 130 unit buildings. You know, and, you know, pretty much you know, b minus c plus areas, not tight, not quality of build, but sort of overall, just because you've got if there's people are downgrading, you got the B and the B minuses are going to downgrade to the C plus, you got season's C minuses are always trying to get into c plus you've got mobility from both directions trying to get in upward and downward mobility.  So it's really it's a good if you're going to find a lane, that's a good one. That's, you know, pretty much markets, or you know, first well, in fluctuating economic conditions and there's a lot of benefits to, you know, tenants, that can help offset if they have any rental issues, not necessarily section eight type stuff but that not not not including that, but there's other, you know, opportunities and a lot of partnerships that we can make. So that's kind of what we're doing and then lastly, just eliminating costs, I think that allows us the best pass the best product on and they think the more volume you do, the better efficiencies you can find in you know, if you're getting better insurance rates or, you know, brought along products, you know, those types of things. So it really allows you to kind of rein things in on expenses, you can pass it on to investors.    Michael:  Love it, so before the show, we were just chatting about how quickly you've scaled and what you all have done. Talk to us about what that is look like and what scaling the pandemic in the pandemic has looked like for you all.    Kyle:  Yeah, we've scaled pretty quickly, as we mentioned before, we took some equity in our single family portfolio here, sold off some refinance some or whatever, and got this pocket full of money and we decided to scale out of state, which in itself was kind of a scary thing, we hadn't done that before. But we're going for it and then the pandemic hit, it's like, well, we're not gonna change our mind and just not buy anything. You know, I think life gets in the way sometimes and you need to learn to adapt and you push through and you trust yourself that whatever you're faced with, you'll figure it out, you know, so I think Jeff and I are both blessed with kind of a stand on the cliff side and leap off and trust that we're gonna find a way to make it work. You know, we're, we're very motivated and if we don't know something, we're gonna find out how to do it, or we're going to find somebody who does know how to do it and make it work.    So, I mean, we just jumped in, we bought our first one, I think, January 2020 and it was a pretty extensive rehab. It was like half vacant, it was basically in ruins and we made it work, you know, now we're looking to exit here pretty soon on that one and replace that capital into something, something a little different. So I think it's to answer the question, it's, you know, life gets in the way, and you just, you find a way to make it work and yeah, there was a pandemic, but that didn't stop us, you know, I think we wouldn't change anything and, you know, there's some stuff that happened, because of the pandemic, people not paying, or, you know, getting sick and having to move out or whatever, but you, you just at the end of the day, you figure it out. And I think he and I are both really good at just finding an answer.    Jeff:  I think, also, to piggyback on what Kyle said, I think the people's cold feet, and the pandemic really created opportunities that we were able to capitalize on, because, you know, like, you know, our 34 units that we got, we got a screaming deal, I think we got like $26,000 a door, or was it 36, either way, it's very low door and at the very last minute, we got him to give us $115,000 credit, to which we knew we can like put into, you know, some deferred items, or deferred maintenance.  So, it's like, you know, so now as we approach, you know, we can accelerate the exit process and a little bit, because you want to always evaluate what you have and what how your portfolio's performing and we want to, you know, find the right you know, strike the right balance, but it was like those types of opportunities. Same with the 20 units, we came in, we bought it, you know, lower cost per door, we able to get, because in because we got at a good price during the pandemic, we were able to get some good construction equity member, sorry, construction loan terms on it, leveraged against the property is like, cool, we could do that, it'd be refinanced it and we, we pulled out, we put like 360,000, or $380,000, out of it and so you can take opportunities, not misfortune of others, but there's opportunities that are gonna happen regardless, you know, pandemics hopefully don't happen again, but there's going to be there.    So you have to let your business model sort of dictate you want to eat, there has to be a place for your emotions, and to determine, you know, but ultimately, you know, it's, it's about the math, it's about the numbers and that's the best part about this, as you can really extrapolate, you know, what's happening, what's going to happen based on what's happened. Not so not so much in terms of always interest rates, you know, but in terms of, you know, the property performance and trends, and what's happening because people have to live, and that's a good, you know, you know, situation, as an investor, if you know, you can depend on that.    Kyle:  I think, Jeff and I, you know, you you have your business plan, and you go into something and you buy your house or your apartment or whatever, with this set goal in mind, it's okay to change along the way, you know, you don't have to just be so stubborn and this is what we said, we're gonna do, we're gonna do it, you have to be able to pivot and, you know, take what's coming at you and, you know, you know, spin, you know, I'm a basketball guy, you know, you got to pick and roll a little bit, you got to juke to the left, and whatever is happening, you have to be able to mold your plan and adapt to what's coming at you or you're probably going to sink or at least have a migraine the whole time of doing it. You need to be able to, to you have your overall goal and why you do things, but you have to be able to mold the day to day stuff and kind of figure it out a little bit on the way or it's just gonna be a pain in the ass the whole time.    Michael:  Yeah, right that's such a good point Kyle and kind of leads me into my next question. You got started in single family, and now you're doing multifamily syndication and it sounds like you've done pretty much everything in the middle. So what did you guys learn along that journey and how would you, you know, what advice do you give to people that are trying to do the same? Because I think so many folks get started with single family and then have the drive or the desire to end up in multifamily. So how did you get there?    Kyle:  Yeah, I think what I've learned from making the jump is that you really can do anything that you want to do if you truly want it or it's something you feel like you're meant to do, you can do it. There's gonna be a lot of people that say, oh, you know, I can't invest out of state or I could never do that or I can't, blah, blah, blah. I think that's all negative. You know, if there's something you want, you get one shot in this life, so you can do it. I think Jeff's much more of a numbers guy than me, I can learn the number stuff but you know, I'm not like a book smart guy you know, and here I am buying apartments with a buddy of mine and fun along the way, you know, I think you invest with us, it's, uh, you know, it's serious, and it's business and all that and we're here to make money, but we're also enjoying what we do and it's fun being on the greenlight team, you know, we're not, we're not in suits, I've got long hair, you know, it's, we're just normal guys doing the dream, we're chasing our dream and I think what I've learned out of everything is you can do anything that you want to do. I really believe that.    Michael:  So good.    Jeff:  Yeah, I would agree with Kyle. I mean, advice. I mean, sometimes with advice, you know, I caution, because the, I don't know what your goals are, you can really, everyone's goals are different, everybody's built differently, and what you expect and want for yourself and, you know, I always tell Kyle, I tell whoever, you know, I grew up in the foster care system, you know, I was, you know, homeless, right, you know, just at a high school, and getting a lot of trouble. And I had no role models, no direction, and it's like, I knew something was off and so, um, you know, I was able to sort of grab a hold of the reins, my life, they've been air traffic control for over 20 years, you know, I got a master's degree I, you know, I love real estate I, so part of it is, it's who you are, is going to determine what kind of advice or what you know, you could do with advice, or, you know, how you absorb it, not that anybody's better than anybody, but sometimes you're a visual or you learn things differently, your you see things through a different prism than somebody else.  So, I would say just always stay true to yourself and if, in terms of real estate, I mean, you just have to do the work, just like I always say, like, with a restaurant owner, you know, you have to, you can't just on the restaurant, you got to learn to pick up cigarette butts in the in the in the driveway, you got to do the dishes, and you have to not to see people and greet people and do the books and the cooking, you have to do everything and then once you do everything and you have a successful business, then you can sit back, and kind of, you know, kind of have everybody work, but it's like at the beginning, you got to cut your teeth, you got to put the work in and that doesn't always necessarily mean physically you can hire, you can do some research and hired out, you know, you don't have to do the work yourself.     But you have to put some kind of work into to because, you know, success is not a wave, it doesn't just take you away, oh my gosh, I got taken away by success, I'm so good, like, you know, you have to, you know, everybody's to know what everybody sees as success is different, in what, six, no one man's trash is another's treasure. So that's, you know, varies. But I would say, you know, you got to move and you got to roll with the punches, and you got to, you know, take control. That's ultimately what everybody wants in their life. So that's kind of what we're here to do.    Michael:  Totally. So, question for you both. We've had a lot of syndicators on the show recently in talking about passive investing. I'm curious to get your thoughts on, who are your best LPs? Who are your best investors? Are they the people that have cut their teeth, doing it themselves and said this isn't for me as a direct owner? Or is it the person that has never invested themselves because maybe they don't know, any different there was expecting in return?    Jeff:  My ideal investor would be somebody who understands or is willing to have an open mind no understands, really, because that makes it easy, if we're talking easy. They understand the benefits of real estate and the enormous potential. So they're already motivated, they just don't have the time energy or don't learn the right way to understand or just don't care to do it themselves. They want to have someone do it, or help them and they want someone to say here's money, I want you to invest and, and then they say give me my reports, tell me how much we made, you know, and then give me my money back and then we'll do it again. The next deal, that's the easiest, that's the easiest.    So if we're talking best that, you know, ultimately, we're not we're thinking of always the next deal, not the deal. So no one deal is important, more important than any relationship with any investor because, you know, we don't want to be there for just one deal. It's a it's a relationship, you know, start to finish in their investment career and so we want to grow with them and as their assets grow our strategies for them change, you know, and you know, everybody's different so.    Michael:  Kyle, who you know, what's, what's your ideal investor look like?    Kyle:  Yeah, for me, my ideal investor is just somebody who you know, they, they have they're not trying to you know, make a bunch of money they, my ideal investor would be someone who already has some money and they're trying to protect that money and they want to put it in a safe asset so they give you X amount of dollars you know, they're not leveraging their house and selling their cars and eating noodles and then giving you money you know, this is this is their extra money that they're placing with us to number one, not lose it and you know, make a decent return. They ask basic questions, we give them their report each month and, you know, we're around. That's what's cool about Greenlight is we're reachable, you know, we're not this humongous gargantuan company…    Michael:  Seven phone transfers,    Kyle:  Exactly. Like, we don't have like an automated phone system, you call you, you know, you might reach investor relations or asset management, and then we're the next level, you know, like, we're, we're attainable, you know, so not…    Jeff:  We're just knocking on the next cubicle anyway, they're like, hey, pick up my deal…    Kyle:  Yeah, yeah…    Jeff:  That’s funny…    Kyle:  Or it's us in a fake voice and then we just put the phone down for a second and then it's us again, you know, like, we're a mom and pop...    Jeff:  I know, and I'm, like, due to high call volume estimated wait time…    Kyle:  Is 7 minutes…  We'll send that report out each month, and make them a little bit of money and they ask a couple questions. And, you know, we go grab dinner, when we're in town, then you know, that kind of thing, not just not over analyzing what we're doing and trying to get into the day to day stuff. I mean, those guys should probably do it on their own, you know, like, if there's a reason we're the operators, and you're the LP, you know, what I mean?    Jeff:  And I would like an investor that I could be friends with and I don't know if I should always mix it. But you know, I've become friends with investors. You know, I, we develop relationships, we talk about, you know, things like our families, our goals, our lives, our histories. So you, you know, being afflicted with the human condition, you kind of you grow bond, and I'm not saying that I'm out to make friends. You know, I have friends and family, but I'm a people person. So I think, you know, ultimately, that would be another part of it, the, you know, another side of an emotion investor that you can relate to and with, because we're all people just trying to do the best we can. That's yeah...    Kyle:  And that's kind of Greenlight, I mean, it's different than the other ones, because we really are a family, you know, he nailed it, you know, we want to invest with people we like to be around, I would rather not buy a property with, you know, an asshole, then get it, you know what I mean? Like, I want, I want, it's a family, you know, Greenlight does, and we just…    Jeff:  …and we root for each other. Yeah, we root for each other and we work for each other. You know, because I think investors success means our success, and our success means that, you know, everybody's personally reached their goals, or is reaching their goals. So, really, it never hurts to be nice, it doesn't cost any money. It's the infinite return on investment and, you know, and so it's always you know, that's the kind of investors we like, as well…    Michael:  Yeah, well, you must not have any assholes in your family because you might have a different phrase ology if he did.    Kyle:  Yeah…  I think we all have our days, but overall, we do the best we can...    Michael:  It’s all we can do…  I love it, guys, I love it. This has been this has been a lot of fun, super informative. If people have additional questions want to learn from you all are interested in investing with Greenlight. How can they get in touch with you with the site with the company? Where should they go?    Kyle:  Yeah, so we have a website, https://www.greenlightinvestmentgroup.com/ , you can email us through that portal, or he and I both have emails, I'm available at: [email protected] , I'm not really on social media yet, I'm pretty bad at that. But I'll try to get after it and get a profile go on, so I can possibly be reached there but you have to email me to get that info ticket…    Jeff:  Yeah, I'm [email protected] and then of course, like Kyle said, or website, https://www.greenlightinvestmentgroup.com/ and then through there, you'll be able to be you can ask questions, you can reach out for initial information. We'll put some like checklists on or some just information like, hey, if you're getting started, what are some things you could think about or, and it doesn't have to necessarily , necessarily be with us, but just informational. Because a lot of times, you know, getting started is you know, it's a deep well, and you don't want to dip your foot in sometimes. So it's just good to get sort of armed with, you know, the best information you can. So that'd be the best way and then through there, you can do some messaging and things like that.    Michael:  Fantastic. Well, thank you both again, for coming on sharing your story and talking to us a little bit about syndication. Really appreciate it.    Jeff:  Yeah. Thanks for having us, Michael, appreciate it.    Michael:  You got it, guys, take care.    Kyle:  I really appreciate it.    Michael:  Talk to you soon.    Okay, everyone, that was our show a big thank you to Jeff and Kyle. Definitely go check out their Greenlight Investment Group website sounds like they are doing a lot of cool things. As always, if you liked the episode, please feel free to leave us a rating or review wherever it is in your episode, and we look forward to seeing you in the next one. Happy investing…