As an immigrant from Denmark 23 years ago, Jens had no prior real estate investing knowledge. Yet, in only four years he has managed to acquire 82 units and has been growing his business ever since. Having lived all over the United States, Jens held many successful corporate positions yet, when the Dot.Com bubble burst in 2008, he knew he had to do a little rethinking of what he envisioned for his long term wealth. That vision included investing in multifamily real estate. Eager to learn more, Jens started educating himself on any type of book, podcast, or article he could find to learn more about the craft of investing in real estate. Once he began putting this knowledge into action, he found to have great success and is looking forward to his future continuing to invest in multifamily units.
In this episode of Multifamily Real Estate Investments with Don and Eden, Jens details his start into real estate, his marketing methods for finding deals, and his advice for how to jump into the commercial real estate world. More specifically, he also shares the types of units he buys and what types of deals he looks for.
Highlights:
- Jens’ Beginnings in Real Estate
- Marketing Strategy for Finding Sellers
- Why Jens choose to invest in Multifamily units
- Current Projects
How to Connect with Jens
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TRANSCRIPTION
Hey guys. My guest today is Jens Nielsen and he’s a real estate investor who came to this country from Denmark 23 years ago without any knowledge or any experience. Now he’s in control of 82 units and all that happened in the past four years. So, let’s hear more about it.
Welcome to the Real Estate Investing podcast with Don and Eden where we cover all aspects of real estate investing with special attention to multi-family apartment buildings and off-market strategies.
Hello! How are you doing today? I’m doing great. Don, how are you? I’m doing just fine. I’m glad to have you on the show today. Tell us a little bit about your day. What do you typically do?
How does your routine look? Well, I get up early in the morning like 5:00 and spend some time setting the tone for the day. Do a little bit of yoga and meditation, some readings, some journaling just kind of a miracle warning start, set the tone for the day and make sure I know what my goals are and make sure I start with purpose not just roll out of bed and run to run out of the door. So that’s kind of how I start every day.
Yeah, I talk to a lot of people and then I notice a lot of growth and investors they do that- they wake up early in the morning even though we don’t have to do that. But we do it. So a lot of people start their day with reading and personally I always say it on the show- I like doing a lot of reading. So what are you reading typically when you wake up in the morning? Something either a business book or something inspirational.
I’m reading a book it’s older but it’s ‘How to Network with the Wealthy’ something I can’t remember the exact title but just how do you provide value to investors or partners and so forth. So that’s interesting. It’s an interesting concept, adding value to the people you’re connected versus taking from them.
Ok. So first of all, that’s a very interesting book and you can be sure that after the show I’m going to ask for that headline and we’re going to add that to the podcast. We’re always trying to give people recommendations. And so there’s that and also kind of for our audience. Could you tell us a little bit about your real estate career? How did you get started and what are you currently working on?
Yeah. And maybe it’s a step back and man just like you I have a little bit of an accent maybe mine is slightly less pronounced because I’ve been in the US for Twenty three years now. I was born and raised in Denmark and at a young age moved to London, England in my early 20s and then on to the United States in 1996. So it’s a couple of days ago.
I worked in the I.T. telecommunications field and you may find it interesting, I started out working for the subsidiary an Israeli company back in the days back in Maryland. So I was kind of thing and then move west first to New Mexico and now to the Southwest to Colorado. I’ve always been kind of an employee, working for somebody else, getting a good education, saving for your 401K and hopefully retire one day. And I realized I’m just going in circles, I’m pushing this rock up the hill and every time that stock market turns it rolls back down runs me over to 2,000 when the dot.com bubble burst in 2008. These swings it’s like I got to find a different way to secure my future. So that was kind of the impetus to rethink what I was doing. So three or four years to go outside of the real estate is kind of the path I want to take and started connecting with people I knew in and around here that was doing that and started just asking lots of questions reading books listening to podcasts and everything kind of how I got started.
Ok, so how old were you when you started four years ago. I was in my early 40s.
So later I wanted to but as Jack Canfield says ‘it’s never too late to start right now.’ I guess I had quite the right mindset until a few years ago when I started thinking about being my success was based on what I could do as an entrepreneur versus relying on an employee to keep a job.
Yeah. So sometimes in a show, we have people here that are in their 30s, 20s even and you talk to people that are in their 50s and 60s and that’s the beauty of this business is that it doesn’t matter how old you are. Right. But it’s just about the mindset sometimes you get that mindset when you’re 40 years old and sometimes you get that mindset when you’re 20. But at the end of the day, you need to have that mindset if you want to be successful as a real estate investor. So tell me how many units do you own or in control right now at the moment?
So we have eighty-two units that we’re in direct control of, some of them we own just right. Me and my wife and some of them we have a few partners on and it goes it’s all multifamily very quickly decided that multifamily was the path I wanted to take a couple of reasons first of all where I live. It’s super expensive to buy any. Buying a house and try to rent that out the numbers would not make sense. And so I had to go out of state, decided to move out of state. I needed to look at multifamily just so I have a scale to start. So sometimes a couple of small quadplexes in Albuquerque, New Mexico is the place I started because that’s the closest bigger city to where I’m at. I am in Colorado. Denver is like seven hours away, so I’ll pass that distance, so I used to live there so I knew it. So I started burying a searched for some for places and 11 units and then I scaled up and bought a 38. But it was a little bit beyond my means so I partnered with that property man on that deal plus a couple of friends to do a joint venture. So that was getting close a year and a half since you bought that one so that was kind of a bigger one. That started then it went to some other one and we have a small home part and 16 units. That kind of rounds out our personal portfolio.
Ok so let me see if I get this right? You started by buying two fourplexes so two quads and these are classified as residential. Theoretically, one to four is residential than for four and above is considered commercial and then let me try to think about it this way. So you bought that kind of real estate and then you had that desire and hunger for owning or being in control of more units which is what made you go after the bigger apartment buildings. Am I right?
Yes, correct. Yeah. So yeah there’s two first where they were residential so I got you to know 30 years fixed loans and so that was it was quite nice. And then yeah I decided to go better because at the same time as I was investing with my taxable funds if you will. I also started putting money into syndication through my self directed IRA. I set up a self-directed IRA a rolled over some money from another IRA I had and bought into various syndications and funds and stuff because I wanted to go. I realized the value of the real estate doesn’t grow quickly but you can go wealthy all the time. So yes I really lost trust in the structure of the stock market, to be honest. I know you can make a lot of money and have no control over the next downturn. So that was why I felt like no status it’s a more stable asset especially multi-family.
Yeah definitely understandable. So you bought eleven units and then you bought 16 units. Now tell us a little bit about how you got in touch with that broker or the people that sold you these units so how did you even learn about them?
Yes, so the eleven, the quads…the 11 units and 38 they were all broker listed properties. And I’ve been working with one specific broker in Albuquerque because he’s actually also my partner. He knows the market is very real strict and he owns a lot of investment real estate as well. So he’s been kind of my mentor through this process that’s been quite useful and I still feel like he’s been treating me well, so I’m going to continue to work through him. I can but I was about a 16 unit yes close and that may this I actually found through direct mail and I think that’s something you probably have an interest to him and definitely the wholesaling and so forth. So, that was in the single-family it’s a lot about volume and no letters and different strategies that I haven’t really done.
So me and my wife kind of did a little bit of it when you’re the more hands-on approach. We just started like finding apartment units, size, and area that you’re interested in. Something that we felt we could take down by ourselves and we send out letters: Dear John, we saw the apartment building that wanted you to remain if you’re looking to sell let us know with high handwriting and below. And so we looked somewhat personalized sent out several hundred letters and one-day last fall I got a call from this gentleman who said ‘hey it’s had a letter for a while I wasn’t ready to sell and I’m ready to sell.’ So okay cool. And then went through a long process of negotiating and I learned a lot around that people get very emotional around selling stuff so you spend some time going back and forth with them. No, I wanted to sell the terms and the price and everything else and all those interesting processes for sure.
Yeah. So I want to ask you a few questions about doing direct mail. So when you do that. First of all, what are some tips you can give for somebody that’s trying to get a hold on properties using direct mail so you’re essentially cutting the broker? So you become the broker. You’re doing your own marketing and you’re getting to sellers and you’re talking to sellers yourself and then these sellers they don’t have to pay any commissions to the broker. So it’s a win-win for them and their broker is not collecting the highest and best offer for their property rights. So how big of a deal like how great of a deal could you get if you’re doing the marketing yourself. What is the advantage actually? Is there a big advantage you could actually find better deals if you do it yourself?
Yeah, I think you can definitely find better deals, that was my experience. You can get out there and get people that are motivated but not motivated enough to go through the whole process and a lot of them don’t want to contact a broker and take those pictures and everything listed and go through that whole process. So if you catch people when they are motivated definitely it’s a good strategy. I think it has to be kind of mom and pop owned property. You can’t get the 200 unit apartment building despite the kind of big heart direct mail to but 20, 30, 40 doors as you can. You can have some success there. Know I think you have to be you have to make your mail kind of personal. So it’s not just a random postcard that says ‘Sell me your apartment building.’ Be specific. Figure it out and if you can get information about how long they own the property and other things. So I have known him for a while meaning they have some equity and it tends to tap into that.
Ok. So let’s talk about that. So how did you make the list of, you said you sent letters to 100 owners? Right. So how did you make the list and how did you figure out whether they have equity and how long they’ve owned it?
So New Mexico is a non-disclosure state and it’s a little bit hard to find all the information. So what we did, we actually went on like apartments.com and said ‘ok what are two different apartment complexes here that had units for rent? Start writing them down such as address would have 20 units and we’ll figure out who what the average small is and then go back to the assessor’s office look up the owner. So we were like we definitely did send letters to people that just bought the properties that we were interested in selling. We also found sued lock just people at and some 10, 20, 30 years. Right. So that was the process this is an interesting process. I don’t know about it you have done something similar but it kind of works for us.
Yeah, I’ve done similar things. So how many batches have you sent? If you just sent one batch?
So we got into a process of we would send like 50 letters at a time and say retarget let’s say 16 to twenty-five units we’ll send that one next month. Twenty-five or 50 and so forth. They would roll back as to be done maybe two or three months later we can go back and do it again. So just to get out there and to get out in front of them because I think distance does and statistics around they may not react until the first letter or something. So you have to be consistent. It’s time-consuming and I must say we’ve actually just because of all the other things that are going on we stopped doing it again because we’ve kind of this change of strategy a little bit of what we used to buy and how we want to partner with people. So it was something that really happened a lot last year not so much this year anymore.
Ok, so the last question about that subject. When you actually got in touch with the seller and you got a deal. What were the details of that deal? Was it actually better than what a broker could give you?
Yeah. So it was a 16 unit building in Albuquerque’s 61 bedrooms and kind of a nicer area around the university. So I think it’s attractive to students and millennials and so forth and we end up paying seven hundred and forty thousand dollars. I believe that’s actually his numbers, there’s probably like around eight or nine caps and something even that management there so there are some expenses I have to add to it. But his rents were also 50 to 75 dollars below market. So there’s the upside right there. Yeah. And initially, he had gotten like a broker opinion on it, I think the broker was over 800. So that’s why we were able to I save six percent we are able to negotiate a price that was significantly lower than what he listed with a broker.
Ok. And what did you do with that property? Well, what kind of value adds to put on it? Yes.
So we just closed it in May. And I had underwritten it for like six hundred dollars per door, that was where I thought the market could do. And we’ve gotten two units that mean slow because they don’t have too many vacancies. We have two units of your renovated and rents out at six or nine so we’re exceeding very quickly too, so who may even be too low. Jut put a new roof because it’s flat roofs in that part of the country, so make sure there aren’t any problems there. You put your Final Four planking in some kind of gray walls. Fixing up not like light value-added interior kitchens with six of the bathrooms. So looks nice but not like brand new. Yeah. And then we got to repaint the exterior because it’s a little bit tired. That’s the next project. So yeah it’s going really well. It’s encouraging to see we’re able to rent out the latest units in like three days to my property.
Yeah. So I know you bought your first three deals these two quads and then the other building they live in units. I know you bought them in C-class areas and then you moved on to buy a few other properties in a B class area. So I want to ask you about buying properties in C class where you’re dealing with bad tenants or was it actually good?
I learned some because I was before I really started getting trained and educated and a lot of it I learned I learned a lot around what area to buy and what not to buy-in. And while the numbers may look really good on paper in reality if you have a lot of turnovers internally it’s the most expensive thing or delinquents. Yeah, and there is some I may start off maybe exiting somebody’s property because their property increased in value and they’re not I don’t. In retrospect, I wouldn’t have bought them again just because they’re not an area that’s really what I’m interested in anymore. That’s a learning experience and it hasn’t been bad. And it also hasn’t quite been what I expected. So I’m definitely moving up to a better property and better areas because that’s more expensive but in the long run.
So another thing that I wanted to talk to you about was the fact that you and I are both immigrants and I’m sure everybody that’s hearing this with our is very noticeable accents. So I want to ask you, I was just on this show and I was asked about the immigrant mindset and what is it about us that makes us different? So I want to return the favor and I want to ask an immigrant on my show. What is the difference? What do you think makes us different is our mindset?
Yeah I think we came to a country, where there is a new language is a new culture and we pretty much have to figure out how to survive and how to thrive, how to be successful. I took the employee route for a long time. And I had some really good jobs and make good money that way but I always like I’m not tied to a specific area I can always move around. I know that I can land at my feet. Just that idea of moving many thousand miles away from home. That’s scary, right? You just kind of adapt to it. I’m sure you get the same type of experience right.
Yeah. For me what my answer was that I did not have any distractions when I came here. So I have no friends & no family. So I was focusing entirely on work. So that was one major thing. Then the other thing was that as an immigrant, you move from your homeland to a different country and you’re making a big sacrifice. All these people that you know and care about -you want to know that if you sacrifice this much then you want to be successful. Right. So I guess that’s what I had my experience and the things that I went through. So why would you say you’re your best advice for other investors whether new or veteran?
Oh yeah just get a couple of things and get educated right. Make sure you understand what you’re getting yourself into that could be through reading and listening to podcasts becoming part of the mentorship, coaching or something like that. I mean there are all kinds of resources out there. Definitely, also network like there’s no tomorrow or do a lot of reaching out. I think that’s a better word it just connects with people in your community go to meetups and everything else because that’s really it is a relationship-based business. We can’t do it in isolation and that’s been my major thing. I’ve gone to conferences. I’ve just been out there and connecting with a bunch of people. That’s really part of my continuous success. The more people, the more chances you have- them helping you, you help them or some sort of business arrangement.
Yes, definitely that’s great advice. So what would you say are your plans for the future?
So I must admit I still have a full-time job. So my goal is to exit that. I’m really moving into work on some occasions working with the sponsors that buy larger apartment complexes throughout the country. Through my network, I help raise money on those deals, done two deals this year and I’m working on the third one right now. I think by the year another one so I’ll be on with a thousand units. Eight hundred to thousand units that I’ve helped raise money on, that’s something I really enjoy. And I think it suits me well with my current network that I feel so. And then probably start syndicating my own deals on so I can exit my nine site job.
If you can raise money then you can definitely syndicate your own deals. Yeah, that’s right. Yeah. Ok. So what are the best ways to connect with you? Oh yeah.
So my website is opendoorscapital.com and one of the things I like to give back and the way I do that is by offering free 20 minute calls to anyone that’s interested. Schedule a call to just chat about real estate or anything else, I’m into the outdoors, cycling, skiing and all that. So sometimes we talk about that.
Wonderful. Ok. So yes I want to thank you for coming to the show today. We really appreciate it. And I hope you’re gonna be as successful as you are right now and even a lot more. And thank you. Thank you for being here. I appreciate it. Thanks, Don. I appreciate the time. OK. So you have a great rest of your day. You too. Bye-bye.
So first of all as promised the name of the book we discussed at the beginning is ‘Networking with the Affluent’ by Thomas Stanley. I personally haven’t read that book but I’m going to order it right now and actually give it a try. And the other thing I want to talk about is notice how every guest in the show always says that it’s so important to educate yourself and keep educating yourself in real estate. If it’s reading books or if it’s listening to podcasts or anything of that nature because that’s really the way to succeed in this business is to acquire knowledge. And if you’re not doing that then you’re probably going to stay behind. And if you are doing this then you’re probably going to get ahead and that is what I recommend for everybody that’s going to be my first advice to if somebody asked me what is my best advice. I would say the same thing I would say just get knowledge. It’s free. It’s out there. It’s some of it it’s free some of it is cheap like ordering books. You can do a book every week. If you go on audible and you just buy a book for 10 bucks and you get a lifetime study of a very smart person for just ten dollars. So I think it’s worth it. And you keep doing that and I hope you guys enjoyed the episode and have a great rest of your day.
Thanks for listening to the real estate investing podcast with Don and Eden. Stay tuned for more episodes. Till next time.
