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Ep 8: Real Estate – How The Wassermans Do What They Do

 
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Gelena: The partnership was going to dissolve and you guys were just not going to do real estate anymore.

Keith Wasserman: Yeah. Because he was in big credit card debt and we weren’t making much money the first few years. He was really ready to get a J-O-B, a job.

Shaan Puri: You almost couldn’t even spell job. You were like, “I don’t even know what this is. It’s a G-O-B.”

Gelena: J-O-B-

Keith Wasserman: I’ve never had a job in my life.

Shaan Puri: Yep, that’s my friend, Keith Wasserman. And if you can’t tell, I think it’s been little while since he had a job. Keith and his wife, Gelena are into real estate. And I’ve been excited to do a real estate episode for a while. Real Estate intrigues me because instead of going to a desk and working a job and getting a salary, people who are on real estate have properties out there that are working for them. And that’s true wealth to me, when your assets earn your money, pay you in cashflow every single month. And so I wanted to find out how they got started in real estate, how they make money in real estate, and the difference between their two models because they’re very different.

Shaan Puri: They are a husband and wife duo, which is really cool, but they actually do very different things. Gelena started off as a broker on the commercial real estate side. She was one of the few young female brokers doing commercial real estate in California. And she since transitioned to doing her own real estate development projects where she buys a building and fits it out to serve the purpose that she’s looking for. Her company Skya is really interesting. So she talks a little bit about that. And Keith talks about his company Gelt.

Shaan Puri: What Keith does is different. Keith has what we call a syndicator, where he raises money from investors, and he buys buildings that he thinks he can add value to, increase the rents or cash flows, and then sell it after some holding period of maybe five or seven years. They got started back in ’08 right after the real estate crash and owned at that time, zero dollars of assets and knew nothing about real estate. And if we fast forward just about 10 years, together they’ve purchased over a billion dollars of real estate assets and done phenomenally well. So I’m really glad that they flew up from LA to do this interview, and I hope you liked it. But as always, you guys will let me know. Just feel free to leave a review. I read every single review. And so that’s the best way to send me feedback. All right, time for the episode. Are we good to go?

Keith Wasserman: Yeah, whenever.

Gelena: He says we’re ready.

Shaan Puri: We’re ready. Okay, great. We got a full house today. So we have Gelena and Keith Wasserman. This is the real estate episode. I’ve been looking forward to doing a real estate episode for a while, mostly because my strategy is just, if I’m interested in it, I just assume all the listeners will be interested in it, and I’m interested in real estate. So we’ve had a lot of tech people. We’ve got some cool other people coming on like poker pros and people who have made a million bucks in all different kinds of ways. But real estate, I think is probably the most common consistent way.

Shaan Puri: Real estate is the sort of game of the rich and so I’m excited to have you guys on to break down what you do, how you do it, how others could do it, that sort of thing. So why don’t you guys give me each just sort of a 30 second intro on each of you. Gelena, we’re going to start with you because so far over breakfast before this podcast, I realized that Gelena is the one I go to for the good stories. So why don’t we start with you. Give a quick little intro.

Gelena: A quick intro is I started in office sales and leasing doing brokerage and I was a tenant rep broker and I transitioned into buying single family spec homes, building them ground up and renovating them and selling them. From there I transitioned into purchasing land in Los Angeles, mainly urban infill locations and building ground up apartment buildings as well as purchasing older existing non-rent control apartment buildings and extensively renovating them from top to bottom.

Shaan Puri: All right. Keith, how about you?

Keith Wasserman: Yeah.

Shaan Puri: Beat that.

Keith Wasserman: I sort of tricked Gelena here to into coming.

Gelena: You really did.

Keith Wasserman: She’s the big boss but… It was her birthday yesterday. I said we’re going to San Francisco for 24 hours. And we slept her in here into the podcast room and… But she is my rock and we really feed off each other. I started in December of 2008. This was the depths of the recession. My cousin, Damien, came to me with the opportunity to buy a four unit building in a city called Bakersfield, California. I said, “Where the hell is Bakersfield?” It’s around two hours north of Los Angeles. He drove me out there and I’m like, “Are we really going to do this?” And he said, “Yeah, this is ground zero where real estate prices tanked and we could buy this one little building for $150,000. It previously sold for $500,000, I could get an FHA loan only two and a half percent down, live in one of the units rent out the rest, and literally learn the local market.”

Keith Wasserman: Just got started and plunged in headfirst with one little building and two and a half percent down, we borrowed $5,000 from a friend, we got a cash advance of $10,000 on our credit card, which we used for the renovations. And literally that’s what got us into business December of 2008.

Shaan Puri: And when you started were you trying to get into real estate? Your cousin says, “Hey, check this out.” At that time was your plan to get into real estate and this was just a good opening? Were you trying to do something else altogether?

Keith Wasserman: Yeah, it’s good question Shaan. I’ve always been very entrepreneurial. I’ve never had a job for anyone. I’ve always worked for myself. I always told myself I’d rather work for myself and do something very small and grow it over time than work for someone else and literally-

Shaan Puri: And why is that? You just don’t like being told what to do or is it pride? Why didn’t you want to have a job?

Keith Wasserman: I think I just don’t like being told what to do. I like motivating others and empowering others. At 15 years old, I went to downtown LA and purchased 100 of these leather jackets that were $10 a piece. They were Perry Ellis, retailed for $300. You asked how can I buy them so cheap? They were irregulars. They had little tiny blemishes. And I learned the importance of making money on the buy. And one of my mentors was like, “Don’t be afraid to negotiate.” They were asking maybe $50 apiece and I paid them all cash. I borrowed $1,000 from my dad and I bought these jackets for $10 apiece and then I went and sold them out of the trunk of my car to all the teachers, the janitors, the parents of the students, this was in high school and sold them for around $100 apiece. So I made around 10 grand and-

Shaan Puri: I love it. So you said something in there that I want to touch on. You said, “I learned to make money on the buy.” I’ve heard other people in real estate say this. I’ve never heard people not in real estate say this. So explain what it means to make money on the buy.

Keith Wasserman: Yeah, you make money on your buy. You find value where others don’t see value. When people were fearful and were losing their real estate and dumping real estate, that’s when we got in and started the business. You want to look for either distress or something that’s the values off. We bought that first fourplex, our mortgage payment was $700, and each unit rented for 695. So you have two units rented, you’re cash flowing positively. Three or four, your cash flowing like a pig. It was sort of like a no brainer and now-

Shaan Puri: So you knew that going in? You were able to look at it when you were buying and say the mortgage is X, the rent is going to be Y, I’ll make money today without doing anything special on this.

Keith Wasserman: Yeah. Just like we were discussing when you bought a defunct website for pennies on the dollar, you saw it had a big user base, you saw you had a different idea for it. You made money on the buy, buying it cheaply, adding value and reselling and that’s what we do in real estate. We look for value where other people don’t see either through renovation, buying something that’s mismanaged, managing it better or building from the ground up and creating something that people really want and need.

Shaan Puri: And so for me, make money on the buy is counterintuitive because I typically think okay, I’m going to buy it for whatever the price is. And I just try to think, “What am I going to sell this for?” And that’s kind of dangerous because I’m forecasting, I’m guessing. I focus on making money on the sale because that’s typically when you make money, is when you sell it. But what you’re saying is that you want to go in and know that when you’re buying it, you’re buying such an opportunity or you’re buying it on the cheap, you’re buying something that other people aren’t seeing, so you’re so confident at your buy price that this thing is going to make money. You’re not guessing about a future potential sale someday down the road. Is that the best way to think about it?

Keith Wasserman: Totally correct. So after Bakersfield, we bought 350 units in Bakersfield. 2009-10, we moved into Phoenix and Phoenix was decimated. Really blood was in the street. They had 100,000 people leave when they passed that immigration bill. Phoenix was the epicenter for the housing boom and subsequent bust and we always knew in our hearts Phoenix would rebuild. I didn’t know it’d be that quickly. But it was the fifth largest city in the United States. It was very affordable for people to live, and we came in there also when people were fleeing the other way. At breakfast, we were talking, my wife here Gelena, literally we got into Phoenix 2010 and we walked into the broker’s offices, and no one was there. It was ghost town. And-

Shaan Puri: Gelena, you remember this?

Gelena: Yes.

Shaan Puri: What was the vibe like from your point of view?

Gelena: Well, when we actually toured the first property that Gelt bought in Phoenix, the broker who was touring us was incredibly rude. We were very young. We were how old? 23-24. He was asking us questions like, “Where’s your money coming from? Do you even have any money? And what do you guys own?” He thought we were a joke. A bunch of 20-something-year-old kids walking in, touring this fairly large building and that got Keith’s blood boiling. So he was determined to buy that building and that particular broker actually had no sales for that year. The market was dead and it was really, really hard to make a living in real estate and that broker actually came out to be a long, trusted friend and actually investor of Gelt’s.

Shaan Puri: So you sort of had a revenge buy, and turned it around. Turned the relationship around with that guy.

Keith Wasserman: Look, I’ve learned in life it’s all about your reputation. You want to treat people honestly and fairly. Did all the brokers in Phoenix during that 2008-09 had a really hard time. They weren’t making sales and we had one of our best buys when we went in there in 2010, and we bought a 415 unit apartment community on the main drag on Camelback Road right by the Biltmore Hotel. We paid $16 million for it. And that was a big buy for us. We had to raise five and a half million dollars of equity. The previous biggest raise for us was maybe half that size, maybe two and a half million. And literally we had to close on it with our personal lines of credit. We had to borrow money from friends. It took us six more months to actually raise the money after we closed the deal to pay off the people we borrowed the money from.

Keith Wasserman: But looking back, that was one of our best deals. We probably invested around a million dollars into the property in renovations. And we sold it a few years later for 27 million. And then there’s an old adage, in real estate you never want to sell actually. If you don’t have to sell, the best thing to do is over time just refinance, be able to pull out all your money and it’s like a slot machine, it just keeps paying off. So if you have a piece of property in a good location that’s improving, and you take good care of it, you never want to sell because over time, one of my biggest mentors said time and inflation are real estates best friends. And literally that same building resold for $45 million a few years later.

Gelena: This is true. Keith actually told me that he would divorce me if I sold one of the Skya’s buildings that had tremendous upside after we completed the renovations after two years. He definitely preaches what he says.

Keith Wasserman: It’s very tempting to be able to sell a building and make a big pop but in the long run, it’s like a good stock. I had Netflix in 2002-2003, all my bar mitzvah money in there and I sold it when I doubled or tripled. Now it’s going up 100 fold. So I’d say if you believe in something, it’s a good company, a good piece of real estate, a good friend or it’s a relationship, you want to hold it. Hold on to it for dear life and let it ride.

Shaan Puri: I love it. I want to start with the basics, because I’ll just put my hand up and say, “Okay, I’m a real estate owner.” But I own my own condo, which I actually don’t consider to really be a real estate investor, right? Because I’m not cash flowing out of this. I buy a place because sort of the emotional draw of owning your own home and really maintaining it and that sort of thing. But I’m interested in real estate. We just sold our company, I’d love to get in the real estate game, and I don’t know how. And I think there’s a lot of people who are on the fence. Not on the fence in terms of their decision-making, they kind of know “Yeah, I want to do this.” They just don’t know the exact pathway in.

Shaan Puri: And so we’re going to talk about a couple different ways that people can get in. One is through investing in other people’s projects. And the other way is doing your own projects. And you’re on both sides of it. You do your projects, plus you have investors. So let’s break it down into really, really simple terms. There’s an amazing subreddit, which is like a little community called ELI5, which is explained like I’m five. So somebody will go post something like the recession. The game is everybody else is trying to explain as simply as they can like they’re explaining it to a five-year-old. What is that thing?

Shaan Puri: And so we’re going to play ELI5. We’re going to have you guys explain in very, very simple terms, how the game works. So let’s first take it from the point of view of I’m an investor, I have 100 bucks, and I want to work with Gelt. I say, “Wow, you guys are amazing. You guys have a billion dollars in property under management. You’ve been doing this for 10 plus years. I’d like to put my money into you guys, because I think that that will mean that I will make more money in the future.” So let’s walk through it. I give you 100 bucks. Do I just give it to you blindly or do you come to me with a property?

Keith Wasserman: Real estate is a very illiquid asset class. It’s not like a stock where you just click a button and sell it and get your money out, which is why I actually like it. And you don’t see the fluctuations every minute, every hour, every day. I check my stock portfolio too much just because it’s a habit and people act on emotion if they see something going off down. Real estate, I like the illiquid nature of it. It’s sort of like you’re more stuck into it. So we tell our investors, only invest money that is just sitting in an investment that you don’t need to tap and you have no plans to tap it.

Shaan Puri: All right, ladies and gentlemen, if you want to make your first million, you got to be open to feedback. Our sponsor Monday.com is back to help you reach your goals with another weekly dose of the Monday.com motivation. Okay, here’s the thing about feedback. You want to ditch the compliment sandwiches. When it comes to feedback, make it honest. The best big ideas benefit from constructive conversations. So you got to think it through, talk it out or type it up. Visit monday.com/pod/million to get 10% off and hear how they’re fully transparent platform can help you exchange ideas, increase workflow, manage workloads, and get one step closer to making that money.

Shaan Puri: That’s right Monday.com that’s who we use to organize the pod. It is an awesome platform just to put a project together share ideas, and like I said, get feedback very, very quickly. All right back to the show. So my $100 should be a hundred dollars that I’m not trying to use for groceries the next week.

Keith Wasserman: Correct.

Shaan Puri: So let’s say I got my hundred bucks. I don’t need it. I’d like to put my money to work for me, I want my money to go earn me some money. So I give you the hundred bucks, what’s the expectation on that hundred bucks? Is it that I’m going to get 200 bucks out of it? What is a normal return for somebody who puts $100 into a project of yours?

Keith Wasserman: Yes. So when we’re underwriting our deals, we try to find properties that throw off at least in the range of six to 8% cash-on-cash return meaning, I think in 100,000, so if you put in the $100,000-

Shaan Puri: No, no, no. Explain like I’m five. I’m five years old, I don’t even know what $100,000 is.

Keith Wasserman: Okay, so hundred dollars you get back six to $8 per year, and that’s in cash flow. And the beautiful thing about that cash flow is there’s a phantom expense that you’re not actually spending called depreciation that you could write off. So it’s as if you were spending it and so that cash flow, you’re not going to be paying taxes on it for many, many years because of the depreciation. And we do something called, this is not for the five-year-old, but accelerated depreciation. So it sort of front loads that depreciation. But basically if you’re earning income from your job, you’re going to be paying Uncle Sam, if you’re earning income from a cash flowing property, most of it if not all of it in the beginning years is sheltered and you’re not going to be paying taxes on that. So six to $8 on your a hundred. Back to your question on the investor-

Gelena: The five-year-old ran away probably.

Keith Wasserman: The five-year-old ran away.

Shaan Puri: So you guys have two kids, right?

Gelena: I’m going to break it down real quick.

Shaan Puri: Thank you.

Gelena: Joe gives me $100 but before he gives me $100, Joe hears about a property that I’m buying in Phoenix and let’s say it costs a million dollars. And I say, “Joe I’m buying this property for a million dollars, I’m going to put another $500,000 into this property and with that 500,000 we are going to renovate the property meaning we’re going to put a new kitchen cabinets, new paint and do a whole package. And if you give me this $100, we’re going to put it in with the other investors for a total equity raise of let’s say 200,000. And once we complete the renovations, the property is going to give you a cash-on-cash return, meaning your hundred dollars is going to earn you $6-8 every year, and that $6-8 is going to be distributed to you every quarter.

Gelena: So every three months throughout the year. And every three months throughout the year, you’re also going to receive newsletters that will tell you what it is that we’re doing with the property. If we hit our returns, what the pro forma looks like with where the cash flows are today, what the operating expenses are of the property meaning the cost of the property management company, anyone that we hire, utilities, any capital expenses we need to pay. So let’s say for example, the roof is now all of a sudden needs replacement. So we’ll do that. And so you just sit back and you collect a check.”

Shaan Puri: Collect the check.

Gelena: That’s it.

Shaan Puri: I love it. And we didn’t mention our fourth member of the booth today of the podcast, which is I think one of your investors also, guest number one of my podcast, Sully’s here. So is this true? Can you just verify? Are you getting a check every quarter for these investments?

Sully: Yeah, absolutely. I love it. I put in a little bit more than $100. But I love getting $6-8 every year on the property that I’ve invested in.

Shaan Puri: And you told me because when I sold the company, I was like, “What should I do with my money?” And you were like you have all these options, but your favorite one was real estate. You said you and your family kind of had a bunch of duplexes in Florida. You’re like, “This is one of the best investments I ever made.” Talk about how you’ve invest in real estate. What do you think about?

Sully: So in 2008, you guys invested in Bakersfield and Phoenix. Those are some of the places that were hit hardest by the financial collapse of the system. My parents were living in Florida in this county called Lee County, home to Fort Myers and that was actually the fastest growing county in Florida during the entire real estate boom, and so therefore it was the hardest hit. In San Francisco where we’re filming this, it costs about $1000-1500 per square foot to buy a piece of real estate. In Florida at the time in 2008, it would cost $30-$40 per square foot to buy a piece of property. So what they would do is, my parents would go and buy a property for $60,000, rent it the next week for $600. And over time, what’s happened is that property is worth $250,000. And just like you were saying time and inflation are real estate’s best friend, now that property rents for $1500 or $1600 dollars.

Sully: So all of the money that was put into the property has been paid back four or five times. And every month, my parents owned about 90 properties, single family homes and duplexes in Florida, so they’ll generate about 150 to $200,000 of just rent every month. And since they’d never took a loan on the property, all of that just gets paid to them every month. That’s really friendly from a tax perspective. So when you sold the company Shaan, I recommended you invest in real estate because I think that’s the best way to get rich slowly. And the most reliable way without getting lucky to get rich is real estate.

Shaan Puri: I like it. I like the way you said that to get rich slowly which is not usually advertised. The name of the podcast is My First Million and I think we kind of get the general idea of how you made your first million, which is you started buying property. You started with the fourplex and went up from there but I want to know about the time. So he said get rich slowly, how long from the day you started doing real estate? When did you get to the point where you were a millionaire? You had a million bucks from doing this. How many months, years? How long did it take?

Keith Wasserman: Definitely slowly. The first year we bought 15 of these little fourplexes with a few family friends. We didn’t start making bigger money until we started generating larger acquisition fees and asset management fees and when we started dealing with bigger properties. The fourplexes were just a great way to cut our teeth and really learn the business I’d say. When we started buying the bigger properties, all the acquisition fees we made, we actually reinvested in the property. So we even went even slower. We didn’t actually put it in our pocket, which is good because that property went up tremendously in value.

Keith Wasserman: So our acquisition fee doubled or tripled over the years, and that became a lot more. I’d say the first three, four years, it just took a lot of time and energy. My personal burn rate was pretty low. I was living at home for the first few years. I’d say once we started buying the larger properties, and once we started selling them, then I hit that million dollar mark.

Shaan Puri: So that might have been five years?

Keith Wasserman: Five, yeah.

Shaan Puri: Seven years?

Keith Wasserman: Maybe five. We bought our first bigger property a full year later, but we didn’t start selling them for at least three years. So I’d say maybe four or five years it took.

Shaan Puri: And Gelena, were you guys together during this whole time or when did you guys meet?

Gelena: So Keith and I met right as the market had tanked. It was in 2008.

Shaan Puri: And tell the story because you were telling me this right before we started and it was pretty funny. How did you guys meet?

Gelena: Cold-calling, believe it or not. I was a tenant rep broker and I had a client and they were looking for, it was a physical therapy tenant, they were looking for a ground floor space they could put a pool in. And Keith’s family owns a property in Tarzana and it’s an office retail property. I cold-called his father who literally would not take my calls, but I was persistent. So when he finally picked up he goes, “What do you want?” And I told him I have this client and he goes, “How old are you?” I got asked that a lot. As a female in commercial real estate, there weren’t too many of us. So I told him I’m 23. He goes, “Oh, I have a son. He’s 24. He’s buying properties in Bakersfield.” I was pretty much, “Who cares? Can I see the builder or not?” So I get to the property, and Keith apparently is there. His father had asked him to show the building which was very unusual because Keith had no involvement in the family real estate.

Shaan Puri: So he was matchmaking for sure?

Gelena: Yeah, definitely.

Keith Wasserman: 100%.

Gelena: And he’s still looking for his commission fee by the way.

Shaan Puri: Had you just not had a girlfriend in a while? Why was dad so into this?

Keith Wasserman: I think he liked what he heard. Ambitious girl, not many women in real estate, about the same age and a real persistent hungry hustler. I think he said, “Why not give it a try?” He never even saw her-

Shaan Puri: He didn’t tell you at the time.

Keith Wasserman: Oh, no, absolutely not.

Shaan Puri: Go show this property.

Keith Wasserman: He said, “Yeah, he could do me a favor?” My dad’s my role model, and we worked together and he said, “Could you do me a favor? Open the space for this and this person on this date?” And I said, “Yeah.” And when Glenda walked up, I said, “Are you with the real estate broker?” She said, “I am the real estate broker. You’re looking at it, the broker.”

Shaan Puri: Okay. So take it from there. So you guys meet.

Gelena: Yeah. And Keith was really inquisitive. He was a lot to handle, so he started asking, “What do you do? What do your parents do? Where’d you go to school? Do you have a boyfriend?” And I was like, “Jesus. Back off dude. I just want to see the building.” I was pre-touring the space for my client and he then asked me if I wanted to go to yogurt and it was three o’clock in the afternoon and white yogurt and ice cream because the tenant that was in the property at the time was a yogurt tenant. And I said “No, I have to get back to work.” And really honestly wanted nothing to do with him, and that was how we met. That was 2008.

Shaan Puri: Okay, well, now we got to know how did he turn it around?

Keith Wasserman: Persistence.

Gelena: Oh, persistent. In real estate, you have to be persistent, and Keith was definitely persistent when it came to trying to chase me down. And so he’d call me every Friday and I was now engaged with his family to try to do this deal, and so I couldn’t exactly write him off. I was trying to keep it respectful and professional. And so he showed up, I was out with my girlfriends at Palomino, and he showed up with his friends that one night and our friends hit it off and we started hanging out. We became really close friends, and Keith and I were friends for nine months before we actually started dating. So I just gave in.

Shaan Puri: All right, I love it. Persistence pays. Okay, great. So you were describing how long it took to sort of get that breakthrough of making your first million bucks. But you liked playing the game. Why do you guys like real estate? Because you won’t do something for five years sort of waiting for that payday if you don’t enjoy it and believe that this is going to work. What do you guys like about it?

Gelena: Keith didn’t mention the hardships though. So going back to that real quick, Keith had just purchased a home. I was doing office sales and leasing. I was making money. I finally started making some significant money. I was waiting tables at night at one point because the market had tanked and it was just very difficult to make a living. And I was paying the mortgage and actually Keith was not making any money. He had the fourplexes but they weren’t exactly profitable. In fact, I think he mentioned he sold them at a loss.

Keith Wasserman: One of them. Yeah. We sold one for a loss of 30 grand and we actually reached into our pocket and made that one investor whole, so we could continue to say we’ve never lost an investor any money, which is pretty cool.

Gelena: And I remember I made my first big big sale. It was an office building on Wilshire Boulevard. I think I made a commission. It was like six figures. That money never hit my account, it went into Keith’s to pay off his line of credit. And so I want the listeners to know it may appear from a distance that you make a million dollars and it’s an overnight success and… It really isn’t. There is a really long trajectory of just doing the same thing over and over and over again every day until you finally get to where you want to be.

Shaan Puri: Do you remember what sort of the low point felt like? I think-

Gelena: Yes.

Shaan Puri: On Sully’s episode, he talked about he’d gotten at the end of the road, raised a bunch of money tried something, had to lay off people, tried to raise money again, couldn’t do it, took out his personal money, they finally ship the… This is my favorite part of the podcast. He goes… He didn’t even wait to see what happened he just sort of knew this is not going to work. So he just left work early, went home watched Netflix, ate a bunch of ice cream, went to sleep and was just mentally preparing himself like, “Okay, this chapter of my life is over. I need to move on. This thing totally failed.” I loved hearing that, what the low point felt like. Do you remember any stories about that?

Gelena: Yeah. Keith, why don’t you mentioned of how Damien, your partner basically was ready to walk away and quit and the partnership was going to dissolve and you guys were just not going to do real estate anymore?

Keith Wasserman: Yeah. Because he was in big credit card debt and literally, we weren’t making much money the first few years. So he was really ready to get a J-O-B, a job.

Shaan Puri: You almost couldn’t spell job. You were like, “I don’t even know what this is. It’s a G-O-B.”

Gelena: J-O-B-

Keith Wasserman: I’ve never never had a job in my life, and my director of accounting was telling me about hiring and she’s like, “Yeah. When you fill in your… What do you call it? Application.” I’m like, “I’ve never filled a job application.” I’ve never had a job. I’ve always done my own thing but…

Gelena: Then Keith came home feeling really defeated and he said, “I don’t know what I’m going to do and Damien’s, he’s ready to quit and he’s ready to leave and he’s not making any money.” And these guys are now in their early 30s. Damien’s a little bit older, he’s in mid 30s. And they restructured.

Keith Wasserman: Yep. So basically, when we started doing our deals, we had a different deal structure where every dollar of cashflow went to the investors, we did not as a company, Gelt did not split in that. And one of my mentors is like, “What are you doing? You’re going to be really cash poor, but real estate rich. You got to have some money to live off of.” One of the best things we did is we have something called a preferred rate of return, and generally it’s seven percent. So the first seven percent of cashflow from the property goes to the investor, anything above that we split 50-50.

Keith Wasserman: So if the property throws off, let’s say nine percent cashflow, the investor gets that first seven, and we split that next two percent one point each. So that starts really, really adding up for these large apartment communities that we’re buying and as we buy more and more of them, and it really aligns our interest better with our investors because real estate’s a longterm game to play and hold on to real estate longterm. And this way we’re inline to hold it longterm and not sell when we have a big gain in equity because we weren’t really seeing any money when the property went up in value tremendously and the incomes went up tremendously. We weren’t really seeing any of that.

Keith Wasserman: So we anything above a certain preferred return, we split with investors and its really helped us start bringing in significant cashflow.

Shaan Puri: And you’re saying at the beginning you didn’t have it set up like that?

Keith Wasserman: At the beginning we didn’t have it set up that yet that way. We had a-

Shaan Puri: And that was because you just didn’t know didn’t know or?

Keith Wasserman: Didn’t know, yeah. I didn’t even know there was a real estate syndication. That’s what we do, real estate syndication. I didn’t know that was really a business. I thought just individuals bought little properties here and there and owned them and sold them and… I didn’t really understand it until I read my mentor’s book. It’s called the Principles of Real Estate Syndication. Sam freshman’s been a longterm partner and friend and mentor and it really opened my eyes to there’s a real business of being in the real estate business rather than just being an investment broker or doing investments on the side which people can do. They can have a job and then invest slowly in business. But this is our full-time businesses, owning and operating these buildings.

Shaan Puri: When you syndicate you’re saying you find a building, great, you go to Phoenix, you go to Bakersfield, you go to one of these markets that you believe in, you say “This is a great property. We think it’s a good buy. We think we can renovate it. We think that we can raise the rent and this will be a good project over time.” And you go to investors and you say, “Hey, would you like to invest in this real estate project? I’ll do the work. You put in the cash, and then I’ll go from there.” Who did you go to initially? Just give us a sense of how many investors are in the syndication pool right now?

Keith Wasserman: Yeah. So I’ll start from the beginning. That first deal, we got an FHA loan, owner occupied, so you only have put two and a half percent down. It was only five grand and we didn’t even have that. So we borrowed that from a friend. The second building-

Shaan Puri: What’s FHA stands for?

Keith Wasserman: Federal Housing Authority, I believe. It’s if your first time home buyer, as long as you you live, it could be from a one to four unit place. It doesn’t have to be a single family home, it could be up to a fourplex-

Shaan Puri: And this still exists? Somebody could go do today where they put two percent down and down and buy a fourplex?

Keith Wasserman: I think it’s something like three and a half maybe, but definitely… I don’t know if you could do it in certain markets like here in San Francisco or LA. It has been certain price points. I think it caps out a certain dollar amount, but definitely that’s one program-

Shaan Puri: And how did you find out about that?

Keith Wasserman: Just google. I read about it. Someone told me, why don’t you get an FHA loan. You don’t need 25% down and-

Shaan Puri: And you’re like, “Yeah, cool.” And then Google later. “What the heck is FHA?”

Keith Wasserman: Yeah. And literally the second building we bought-

Shaan Puri: So the first building, no investors. You just did the FHA yourself?

Keith Wasserman: Yeah. Second building, I put my savings from my other business $35,000 down as the down payment. Third building, my dad put the 30 to $40,000, down for the third building. And then what we did is we sold 49% of the LLC that owned those three little fourplexes to one of my dad’s previous lawyers that used to work for him and was calling him and asking him about… He lived in Israel and he saw the real estate market was crashing in the US and he wanted to deploy I think $200,000, which was huge for us at the time. So we sold 49% of that entity. We marked it up because we brought these fourplexes that were boarded up and forlorn and forgotten, and we made them into cash flowing assets, and we marked that up and then we used that 200 grand to buy as the down payment for another three or four buildings.

Shaan Puri: When I go into like projects like this, or when… I’ve looked a couple of duplexes or fourplexes, the one thing that I always think about is I don’t know how to do a renovation, I’m not a contractor, I don’t want to get ripped off. I’m assuming there’s more people out there who are also similarly scared. Were you guys scared about this? Gelena, you’re a developer actually that’s your kind of full-time thing now, so how did you figure out how to do that?

Gelena: You know what? I literally just did it. And we talked about earlier, I bought my first single family home in West Toluca Lake. I purchased it for $400,000. The seller who sold it to me carried 100,000 meaning he gave me a loan, and I got a loan for another 300,000. So essentially, I went into the property with zero of my own money in. I had no idea what I was doing. I didn’t even know how to put a nail, use a hammer, put in the nail, change a light bulb nothing.

Gelena: I partnered with a general contractor that I had met for a client of mine that was using him to run to an industrial complex in Burbank. And what I did was I partnered with him, but and this is very critical, I did not let him touch a penny of the money. Because most GCs, especially the smaller scale ones are unable to manage a business and manage money. And so I paid all the subcontractors direct, which was critical because 12 months later he filed bankruptcy and had he touched the money, I would have been in big trouble.

Gelena: But I relied on him a lot, and everything that could go wrong went wrong. So we purchased this home in West Toluca Lake. It had immense termite damage which we did not know when we originally bought it because we hadn’t opened up the walls. And so we ended up having to take it down to the sticks. And I was scared-

Shaan Puri: This is my nightmare. My nightmare is I buy this property, the contractor goes bankrupt 12 months later, and by the way, the property has termites and we have to rebuild it.

Gelena: Basically, that’s exactly what happened. But luckily, timing was on my side, and so the longer it took the property value went up, and I was scared every single night of that project. It was all my own money. We had no investors. Keith and I did that together. I don’t even think we were married. We were maybe engaged and the property ended up getting completed. It ended up in the LA Times as home of the week. How? I don’t know. It sold for 1.4 million. I think we netted 100k on that project over maybe 12 months. And that’s essentially how I did it. Keith had Google, I had a general contractor that I partnered with that was very difficult to work with, but by golly, we did it.

Shaan Puri: So knowing what you know now… I’m going to ask both of you questions. I’m going to ask you a question of knowing what you know now, if you’re going into a project and you don’t have that contractor experience, you just did it, what advice would you have for the next sort of 24-year-old version of you who’s like, “I’m going to get my first property, try to do a renovation and add value.” Knowing what you know today, what advice would you give as far as the renovation component?

Gelena: You will never know everything that you need to know in order to do any project. Whether that’s real estate or something else. And really, honestly, the only advice I could say is do it. You will learn from doing it. Whatever hurdles you come across, you will figure them out. And if you can’t, then perhaps maybe real estate is not the business for you to be in.

Shaan Puri: Right. And then on your end, I’d say you started with a fourplex and it seems like the money is really made in the much bigger properties.

Keith Wasserman: Yeah.

Shaan Puri: So if somebody was getting started today, they don’t have a ton of resources the way you did, right? It sounded like you did three fourplexes, probably for a total cash in of 75 grand or something. You said 30 grand in one and 30 grand in the other and the other one you put two percent down, so not much money. So if somebody was in the same boat where they don’t have a ton of resources, would you recommend also starting with something like a fourplex or a single family home or would you recommend just finding a way to get to a bigger property?

Keith Wasserman: It depends. Do you want to make real estate your career or you want to do something else. So if you want to make real estate your career, yes, start small and grow. We started with a little fourplexes, then we bought a 10 unit, then a 20 unit and now we’re buying 400 unit complexes. So I’d say if you want it to be career, you start small and grow it over time or or you go work for a real estate company so you could learn that way. There’s a lot of different paths. You can work in brokerage, that’s a great way to learn and make money at the same time.

Keith Wasserman: We have around 700 accredited investors from all walks of life, people that own their own businesses, people that are retired, people that are younger, older, as long as you’re accredited, and they work and make their money and then every deal we have they plow a few bucks into it. Over time they have enough assets with us where if they didn’t want to work, they don’t have to be because there’s enough cashflow coming from all those properties. I’d even talk about when you refinance the building, and that’s tax deferred money you get. You’re not paying taxes on that. And when you sell a building, you can do a 1031 Exchange, and essentially roll all that money to another building without paying taxes.

Keith Wasserman: So definitely over time you’re going to build wealth in real estate. Do you want to do it as a business like myself, or do it as like one of our 700 investors that they’re doing other ways to make money and this is just one of the assets in their portfolio? They might own stocks, they might own some bonds and mutual funds and-

Gelena: Give them the example of our friends who put in 25k.

Keith Wasserman: Yeah. Our stated minimum is $100,000. However, if someone wants to get started with 50,000 and that’s more comfortable, fine, if someone’s younger, and as long as they’re accredited, 25,000 even. And yeah, Gelena, one of our friends came in with 25,000 on a building we bought, we paid 25 million for it in Salt Lake City around 220 units four years ago, we raised maybe around 6 million of equity. We sold it recently for $40 million. It was a huge windfall. They doubled or tripled their money, but along the way, they were making around 10% annual cash-on-cash or more.

Keith Wasserman: That was a big windfall for someone like themselves, but they got a taste of real estate and… I’d even talk about every month you’re paying down your mortgage, so you’re building up equity that way. So over the long run, you’re going to make money through the building appreciating, you’re going to make money through paying down your mortgage slowly month by month, you’re going to make money through the cashflow appreciating. And the beautiful thing about real estate is there’s enough of it for everyone. It’s not like a winner takes all in the Uber and Lyft world where maybe there’s one or two guys that defeated the whole market. There’s enough real estate for everyone.

Shaan Puri: I come from the startup world, and I almost feel like I got to take one chip out of my brain and put a different chip in if I wanted to do real estate because in real estate or the stock market, I think Warren Buffett’s rule is rule number one of investing, don’t lose money. In startups it’s the opposite. It’s rule number one, expect to lose on nine out of 10 investments or 28 out of 30 investments, you’re not going to make money, but on those ones you do you get this huge return. So I literally think I would have to rewire my brain to fully understand the real estate game and play both games at once.

Keith Wasserman: So I’m interesting. I played both games. I think I might be missing chips in my brain or something. Because I play the angel investing side. I started doing angel investing, small checks into the people we knew and then they started telling me about other people and so forth. Angel investing is just another asset class where we started a small fund, we put together four and a half million bucks. We had this 700 investors that just didn’t have access to these kind of investments.

Keith Wasserman: So we brought on a partner who’s based here in the Bay Area who works with entrepreneurs and other people in the ecosystem, and we were the main LP. We put in around 33% of that equity, my partners and I. And it’s just another nice alternative asset class. And yeah, we’ve made 20 investments and knock on wood, none of them are to zero yet, but we’re expecting a bunch of them to go to zero and a few of them to maybe make even money, a few of them to make 2-5X and God willing, we have one or two that make 100 to 1000X and we have at least three that are on the right path. So it’s just another alternative investment.

Keith Wasserman: Real estate is a great, safe longterm play to make good cash flow, and you have all those things I said, whereas on the companies side, you’re investing in companies really early. You just need one or two to really hit to make up for all the failure. So totally different kind of system for sure. Yeah.

Shaan Puri: When you go through your real estate projects and you’re looking for multifamily units, my understanding is that a lot of people are sort of in this multifamily game now, has it changed since when you started 10 years ago? Is it super saturated now? Do you think that now it’s time to go look at some alternative assets or do you still think multifamily is the way to go?

Keith Wasserman: Tremendously. We had very little competition when we got started. People were running for the exits and that’s when we got started and the way we get deals now is all relationship. Broker relationships, seller relationships. A lot of smaller deals maybe you could buy principal to principal or off-market but these large 200 unit and up complexes are all widely marketed and literally, you either got to bid the highest or have the relationship with the broker and the seller to really get awarded the deal, but we’re definitely being way more picky nowadays than we were when we got started.

Gelena: To give you guys some perspective, there were 46 offers, 46 offers on a 92 apartment building that Skya bought in Pasadena. 46.

Shaan Puri: And how much was a building? What did you pay for it?

Gelena: 23.5 million. I got awarded a deal by the same seller that was only 26 units across the street and I was told I got it and then all of a sudden over the week something changed. There was another buyer that was in contract with the seller, and they said that they were going to pull the deal from them if they didn’t give them the deal. So anyways, I spent $10,000 doing my due diligence and now all of a sudden that money was gone because the building was no longer mine. So I wrote the seller a thank you card with some Gelt chocolates that we mailed over to them and it worked out for the better because then we ended up getting the 92 unit apartment building instead of the 26 unit one.

Shaan Puri: And so how did you end up being the highest bidder for that 92 apartment or 92 unit deal?

Gelena: That’s a great question. It’s about seeing value where others do not. And so when we looked at the apartment building, the floor plates were really odd. It was occupied by a college. And they had three bedroom, one bath floor plates. That’s not very rentable. So we looked at the layouts, and we realized, okay, if we did some reconfiguration, we changed all the three bedrooms to be two bedrooms, one bath on one side and one bedroom, one bath on the other side, we would yield a higher rent for those units. And they also had units that were tiny. I’m talking about 100 square feet. Micro. Really small.

Gelena: And most of the people that walk through the building didn’t see value in those units. Whereas I looked at it and thought this is great. Can I get more of these? I furnished them through Resource Furniture, who it’s modular furniture company that specializes in micro units. And those are some of our best seller. We have a waiting list for those units. And then the other key to that was, I’ve done big renovations like this before. I knew the building had tremendous problems. And so I knew what my numbers were really well. And then in addition to that, I do this little trick and maybe I shouldn’t share this but I will, where I will post on craigslist with a picture that looks a little bit different of the interior units to see what the feedback is in terms of how many calls can I field-

Shaan Puri: You’re A/B testing the design that you should have for the apartment using Craigslist images. Wow.

Gelena: Precise. And I talked to those tenants and I say, “Hey, would you pay this amount? Is this too high? Is this not…” And they’ll tell you, which is incredible. And so I know where my market rates will be-

Shaan Puri: So you are A/B test pricing as well using Craigslist and asking people questions, “Will you pay this? Will you pay that?”

Gelena: Yes. Exactly. Not only do I know my costs on the renovation side, I also know what the market will bear. And it’s not just based on lease comps, which is important to do as well, but it’s actually talking to your renters and knowing what it is that they want.

Shaan Puri: Amazing. So I wanted to ask a couple of questions about the Gelt playbook. So the way I often think about businesses is there’s sort of a playbook that you develop over time, and that playbook is sort of a repeatable model that you can use to compound the value of your business over time. Talk a little bit about the Gelt playbook. And let’s do it in a lot of different pieces. So let’s first just talk about acquisition. How do you find properties to buy? What geographies do you look in? Do you avoid markets like San Francisco, New York, LA? What sort of cap rates? What year of construction? What level of value add? Talk a lot about those pieces.

Keith Wasserman: Yeah. So if you look at our portfolio, recently we’ve been buying a lot in Salt Lake City, Seattle, Reno, Portland. We stay Colorado and West. Denver is our biggest market. We started buying there maybe three or four years ago. It’s been booming, we’ve been seeing double digit rent growth every year. It’s finally slowing down a little bit, because they’ve been building a tremendous amount. I would love to buy it in the Bay Area. It’s just I can’t generate any real cash-on-cash return and our investors love getting that mailbox money, that cashflow, those quarterly distributions. If I bought in the Bay Area here, I’d have to buy something with little to no cashflow immediately. That being said, areas like the Bay Area or LA where there’s big supply constraints over time generally have done better because it’s supply constrained either geographically or because of housing policy.

Keith Wasserman: However a lot of businesses are leaving these kind of areas because people really can’t afford to live here and especially the people at service, the jobs, how are they going to afford? They’re paying 50 to 60% of their income for rent. We typically like markets people are maybe spending 20 to 25% of their income on rents. Like San Antonio is been booming, it’s the eighth largest city in the US. It’s not sexy like Austin or Dallas, but definitely we see some great opportunity to buy there.

Shaan Puri: So, you avoid major cities where properties don’t cashflow, you look at sort of secondary cities where the properties are going to cashflow. What about your construction, replacement costs?

Keith Wasserman: Generally, we’re buying ’70s through ’90s built buildings. I typically like those buildings. They’re lower density, they’re larger units and they’re older, so they need renovation and to take better care of them. That being said, we’ve made a lot of equity gain on a lot of these buildings, and some of them are sort of like money pits and we did budget a good amount of money but maybe, there’s issues with… Buildings are like people, they break down over time.

Shaan Puri: For you guys now, what’s the typical deal size? How much equity do you guys raise? How many investors does that come from? What’s the average check size?

Keith Wasserman: I’ll give you the last deal we bought, was $63 million in Denver. It was around 400 units. We raised around $25 million of equity from around 200 investors. So you could say the average investor put in around $100,000, but we had a whole bunch that were 50,000, some 25,000s. Then we have some larger ones that put in a quarter million up to a million dollars. So I always tell our investors put a little bit, whatever a little bit means to you. A a little bit to be 25,000, it could be a million dollars. It depends on who the person is. And put a little bit into a lot of deals, because you never know which ones are going to actually perform better than others.

Shaan Puri: And Gelena, do you see yourselves doing this for 20 more years or 40 more years? Is this the game or is this kind of get in, get rich, get out?

Gelena: No. I love real estate. I love what I do. I think Keith does as well, although Keith has a lot of other passions and interest such as investing in early seed startup companies. But no, the game plan is on the Skya side, at least one to two properties every year on the acquisitions, buy and hold and create tremendous value. And I’m particularly also interested in creating housing that looks a little bit different than what the traditional model is today.

Shaan Puri: Talk a little bit about that. What do you mean?

Gelena: So in the Skya side, what I’m noticing is the renters that we have are freelancers. They’re not grounded in any particular company. They travel, they move around, they could work from home one day, from somewhere else another day. And I think that’s going to impact what kind of living we’re providing. So flexibility is key. And so we’re trying to provide that in the Skya-built projects. Shorter term rentals, micro units, furnished units.

Shaan Puri: Is there working space too because they’re working from home or freelancing?

Gelena: Yes, great question. So in the Skya 92 unit ground up apartment that we’re doing in East Hollywood, there will be a fairly large WeWork space, and there will also be a coffee shop on the ground floor. And people want design-centric apartments. They don’t want to live in vanilla shell, ugly kitchen cabinets. They want to feel like it’s their home. And so that’s what we’re essentially providing. It will not look like any typical apartment building. Skya projects almost look like a hotel, and have the amenities and services of a hotel, and we still are able to keep our pricing slightly above what the traditional apartment unit runs for.

Shaan Puri: Got you. And so with this, let’s say this trend, I’ve also seen Airbnb get into the apartment game, WeWork in the apartment game, is this something that you are a part of? Like, you’re like, “Yeah, let’s partner with these companies.” Is this something you compete with them or you just think they’re a joke? How do you think about Airbnb and WeWork getting into the game of building these multi-unit buildings?

Gelena: I think the more the merrier. I think the more options that renters have, even better and it will force developers such as myself to think more creatively and provide housing that is perhaps maybe more affordable or at least if not affordable, flexible. So to answer your question on the Skya side, I’m actually doing partnerships and collaborations where I’m in talks with Coleman on a property right now for co-living. I’m in talks with Sondra, right now on another project in Hollywood. I’ve been talking with Starcity and UrbanStay. So various other companies who are providing this, you’re going to see more and more partnerships like that and Skya’s definitely interested in those partnerships.

Shaan Puri: And what’s it been like for you as a female in a pretty male-dominated industry? What have you experienced and then what would you advise for the next female who’s coming behind you?

Gelena: So I’ll tell you guys a story. When I purchased my first multifamily land that I was going to build multifamily there, it was a little nine unit apartment building, no one wanted to talk to me about a loan there. I couldn’t get anyone to return my calls. Finally, I found one lender and I happen to have been pregnant at the time. And I was really scared to disclose that information because I was afraid that people would think I wouldn’t work anymore, and what does that mean for their investment and to the lender and so forth.

Gelena: And so the lender that was giving me the loan says, “Look, you have the loan, but can we talk about the elephant in the room?” I said, “What elephant?” And he goes, “Well, I heard you’re pregnant. Who’s going to take care of the child?” “What do you mean? Wolves are going to take care of it. What do you…” “Who do you think is going to take…” I’m like, “I have it handled. I have help.” But it was a really awkward conversation, and it’s certainly not a question that Keith gets asked, but I do. We did the loan, and that particular lender ended up lending on a $14 million acquisition that we did and another land deal that we did and $20 million property that we bought. So the relationship withstood the question, but I get asked that a lot. And if you ask me the balance question, I will kill you.

Shaan Puri: I wont ask you the balance question. I don’t even believe in balance.

Gelena: Good.

Shaan Puri: But my question is more like, how did you handle it when you sort of get these questions? Do you react? Do you sort of call out how inappropriate the question is or do you just sort of spin it or handle it with grace in a different way?

Gelena: I think I kind of make fun of it a little bit. But in truth, I don’t have time to react to it. I have to keep going, I have to keep moving forward. I don’t have time to get angry over it. It is what it is. Hopefully, in the time that we exist in today, you’re starting to see a movement of… We’re going down a different path in terms of equality and providing the same pay to both men and female. I never really had time to get angry over that. It never really bothered me, but I am liking the transition that I’m seeing. I’m okay with it.

Gelena: At the end of the day, my head is down. I’m focused on what it is that I’m doing and I’m going to keep going and if there’s roadblocks in the way, whether they be questions such as can we talk about the elephant in the room or doubting me because now I’m starting a family and am I going to be able to maintain everything that I’m doing, I’m happy to answer the questions. It’s hard. Having a family and working full-time, it’s really hard. when we had our first child, I had her on a Wednesday and I went back to work Monday.

Shaan Puri: Wow. So I’m expecting our first child in September-

Gelena: Congrats.

Shaan Puri: I feel like I’ll be hitting you up for tips on how to manage.

Gelena: Night nurse. Night nurse.

Shaan Puri: Okay, night nurse. Okay, so if I’m somebody who’s listening to this, and I’m feeling pretty inspired by this, what would you… You mentioned a book, give us a couple of resources that people can start using to educate them. Because I know in this, we threw a lot of terms out there, there isn’t really time to sort of break them all down. What’s a good starting point for somebody to start dipping their toes in the water?

Keith Wasserman: Yeah. I learn a lot via Twitter actually. I follow people that are in the real estate business, or I’m interested in technology in the technology business. I learn how they think-

Shaan Puri: You’re super active on Twitter.

Keith Wasserman: Yeah. I love it. I’ve met so many amazing people on Twitter and it’s led for me to make some amazing investments and get some amazing investors. It’s just a great way to meet people and talk with people in today’s age. I’m a real big advocate of that.

Shaan Puri: What’s your Twitter handle?

Keith Wasserman: It’s Keith_Wasserman. Just search my name Keith Wasserman and you can follow me on Twitter. I’m very active on Instagram, also just search Keith Wasserman on Facebook also. I’m a big believer in social media and really showing what we’re up to and just spreading the message. I’d say on the real estate front, definitely my mentor’s book, Principles of Real Estate Syndication was a great one. I’ve read a ton of other real estate books and there’s tons of information out there, you can feel free to message me, [email protected] You can email me. I’m always trying to help out younger people and people that are trying to get into the business.

Shaan Puri: Yeah. Who should be reaching out and I guess this is your opportunity to sort of plug anything that you’re working on or interested in, what’s a way that they can stay engaged with you guys besides that?

Gelena: I think if we want to help people, I’m not opposed to people sending us a deal and saying, “Look, here’s a deal, we want to do it. What do you think? Here’s our business plan for this.” We get approached oftentimes like “Hey, how do we break into real estate?” And that’s a rather bland question. I could give you a million different answers on that. But if you have a specific project, and you need help on the underwriting, or you need help on where do I go to raise money for this or what lenders do I talk to? I think that’s a better start if you’re really serious about getting into real estate.

Shaan Puri: You’ve done some of the work. You’re on your way.

Gelena: Right. And I think to answer your question, I don’t tweet, but I think meeting as many people as you possibly can who are in real estate is very helpful. So I would suggest joining Urban Land Institute, ULI, they have a Young Leaders Group. They also have a over 35 and older group, and it’s great. You’ll meet a ton of people that way who are in real estate doing different things in real estate. And I was very active when I first started and it was super helpful.

Shaan Puri: Love it.

Keith Wasserman: Yeah, that’s great advice Gelena. I get specific questions. I think the best thing yeah, if you’re looking at an opportunity and ask specific questions is definitely the best thing and the-

Shaan Puri: Tell everyone about the charity that you guys have and what that does in case people want to get involved.

Keith Wasserman: Yeah, yeah. So we started a 501(c)(3) called Resident Relief Foundation, and we help renters that are at risk of being evicted due to financial crisis. We’ve helped around 70 individuals and families that were unable to make the rent and the average grant has been around 1.6 months. I thought we were going to have to help people a lot longer, but people are very resilient and the most common thing is being a job loss, but we’ve helped a lot of people that are on different social security and different programs that had a temporary lapse in their payment that we had to bridge the gap for that.

Keith Wasserman: Due to fair housing, these large management companies, they have to treat everyone the same. They can’t say “Oh, this person gets to string their rent along and be a little late and this person…” They have to treat everyone the same. We come in and we work with management companies, we literally… Whoever they target that’s been a responsible renter for at least nine months, no previous evictions, maybe only I think one late payment we’ll accept now, could apply to our program and it’s been funded by ourselves. We fund 100% of all the overhead and we raise money from the outside. So different brokers we do business with, different investors of ours, anyone that wants to give back in the ethos of the real estate and apartment business because without renters, we wouldn’t even have a business.

Keith Wasserman: So we’re really doing a lot of homelessness prevention here. Around a third of our residents didn’t have any other place to go, they would have been on the streets. We need to really focus on the homelessness issue with a multi-pronged approach. We’re just one aspect of it. Obviously building more housing, obviously the mental health issue, but definitely the prevention piece is what we’re trying to tackle and it’s a real startup. With the grassroots, we’ve helped 70 families, hopefully next year it’ll be 170 families and eventually we want to get government money involved in addition to large family foundations and show that we have a heart for renters and we’ve kept this many people in their homes.

Keith Wasserman: It’s a win-win-win scenario. It’s a win for the landlord, because they get to keep a responsible resident that eventually goes back to paying rent in a timely manner. They don’t have to worry about turn cost on the unit, renovating the unit. They don’t have to worry about eviction costs. It’s a win obviously for society. You get to keep someone off the streets. It’s a win for the resident because you really… It’s a support system for the person. We provide financial literacy through a partner. We provide…

Keith Wasserman: My sister’s a PhD in psychology, so she’s worked with a lot of the different vets that have applied to the program. She works with veterans in her day job. We have a lot of volunteers that are part of this program, and we’re trying to really expand that. So that’s definitely something I’m passionate about.

Shaan Puri: Awesome. Well, Keith, Gelena, I appreciate you guys coming in. I appreciate you flying up to San Francisco for the podcast. It’s been amazing.

Gelena: Thank you for having us.

Shaan Puri: Yeah, thank you guys.

Keith Wasserman: Yeah, thanks for having us. And it’s a pleasure.

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