Aug 24, 2022
In this episode we talked about:
Useful links:
Book “How the world works from the economic perspective”
https://www.instagram.com/jessefragale/
https://workingcapitalpodcast.com/
Transcription:
Jesse (0s): Welcome to the working capital real estate podcast. My name is Jesper galley. And on this show, we discuss all things real estate with investors and experts in a variety of industries that impact real estate. Whether you're looking at your first investment or raising your first fund, join me and let's build that portfolio one square foot at a time And more broadly, just the forecast or outlook on real estate for the next year or two. So if any of those topics are of interest, I think you're going to really enjoy the episode for those that want to reach out.
I've got a number of different messages and emails, just with questions as it relates to real estate, you can always send me a message. Jesse, at working capital podcast.com or you can just go to www dot, working capital podcast.com. So happy to discuss those. And I think the next episode we do have in the pipeline is kind of a deal analysis of a purchase that we did in Orlando, Florida. So anyway, so without further ado, enjoy the show.
Jonny (1m 1s): What's up guys, and welcome to another episode of the investor relations real estate podcast. I'm your host, Johnny Katani and I am joined today by Jesse for galley. Jesse is a commercial real estate broker and investor as an investor. Jesse specializes in multi-family acquisitions as a broker in both office leasing and investment sales transactions is also the host of working capital, the real estate podcast. Jesse, welcome to the show.
Jesse (1m 24s): Hey John, how's it going?
Jonny (1m 25s): Doing well, happy to have you you're up in Toronto, we were just talking offline, had a few Canadian guests, which is always a treat to get kind of a different perspective on the U S market from, from outside. Before we get into that, kind of give us the reader's digest version. You know what you're doing before this and, and how you got into real estate.
Jesse (1m 47s): Yeah, no problem. First of all, I want to say I didn't put the two and two together from Johnny Katani. That is an amazing name. He has like Jonathan Katani, Johnny Katani. Yeah, man. Well, first of all, I appreciate you having me on, I guess, you know, I give you, like you said, I'm just a condensed version of how I got into the industry. Like you mentioned before I work as an investor and, and a broker or commercial realtor up in Toronto, the way I initially got into the industry was I started investing in oh 7 0 8 when I was in my second year in college for first to second year.
And it was basically student rental properties. I was playing football at a school called Lauria Wilfrid Laurier university. It's a in Waterloo, it's kind of like our silicone light area where there's a lot of startups, a lot of tech. And I went to school at there and basically I was living with a couple of guys I played ball with and one of the, one of the friends of mine, his dad and him owned the property that we were renting out. It was kind of like that light bulb moment of, you know, I'm giving, I'm paying a buddy of mine and he owns the property and that's kind of the first foray saw into rental properties from a student rental perspective.
My father entrepreneurial guy, he's a, you know, him and his brothers had an automotive shop and he really good friend of the family. One of my dad's friends had a number of rental properties. I think something like 30, 30 something, single family rental properties. So I basically picked his brain at that time when I saw that my buddy was renting this place out and from there just started looking for, for properties. And at that time, you, you know, you have all the energy in the world, but you don't have the money. And I always, anytime I tell this story, you know, you hear online, people are like, I bought this, I bought that.
And you're like, yeah, you were 14 and you did this. But you know, the reality is people have to get the financing from somewhere. And I basically went to my dad with a business plan. I said, you know, this is how much it's going to make. This is a great property. He summarily dismissed that and said, you know, he's encouraging. But he said, absolutely not. So I, my parents were divorced. So first thing I did was go to my mom and be like, ma dad said no. So basically what I needed at that time, I had, it was a $250,000 asset.
And it was a five bedroom. I think it was a 10% down or tender. Yeah, I think it was 10% down at the time. And I had enough for half of it. And then what I needed was somebody to guarantee, to sign on a loan, to come, come up with the rest. And that's where I got the magic signature from my mom. And that's initially how I got into it. And then from there, you know, the rest is history to a certain extent. I started to acquire other properties, specifically student rental in that area. And then it got to the point where, you know, I had five or six student rentals finished university.
So came back to Toronto, tried to manage them at a distance hour and a half, but I always say anything over an hour, you might as well be in the next state or next province because you know, you're not going to go over there for a bunch of work if you're actively managing it. So from there, I sold a number of the properties and started acquiring properties in Toronto. And, you know, kind of takes us up to where I'm at today and how we've kind of moved into the multi-room space and, you know, happy to happy to jump into any of that.
Jonny (5m 15s): Awesome. I love it. That's a, that's a cool story. I love the dad said now.
Jesse (5m 21s): Yeah, that was, you know what, it's, it's funny though, too, because the next one I did, it was kind of a proof of concept, right? Because you can kind of go to whoever it is, does it, you know, if you have family friends, whatever way that you get in the door, or if you're at the point now where you're, you know, you have a number of properties, you still have the lenders that you're trying to satisfy. And once you have one, you have that proof of concept that you can actually show that other banks in my case, my father, but whoever it is, it's basically kind of showing that, you know, you had a plan, you executed it and completed it.
So yeah, it was a, it was a good learning lesson and yeah, that was kind of, that was the kind of start of it. And I always say like zero to one is really the tough part in anything you do and getting that first one realizing it's possible. And then, you know, rinse and repeat.
Jonny (6m 9s): Absolutely. Yeah. What do they call it? The art of the first deal or, or whatever it is, because it's just like, all of a sudden just goes, because typically you do have, you know, especially in your close network, especially now social media, you have people kind of watching and being like, oh, I wonder what's going to happen. And then you're successful. And they're like, Hey, I want to get in on this. So, but you got to do that first deal and kind of, and kind of prove that, that you can do it. So this was in Canada, did, did oh eight hit Canada, the way that it affected the U S in terms of housing,
Jesse (6m 41s): We were actually, we weathered it quite a bit better. A part of that is, you know, if you look at like the economic history of even the, the depression from the U S and Canada, basically the, the banking laws, at least as far as I know, and this is something that I've kind of been a nerd about for, for a long time. And part of it was branch banking. You know, we have branch banking in Canada, so we, our risks are diffused. So we kind of spread the risk over multiple different areas, but we have five major banks, but with multiple branches.
So if one bank, you know, one branch has, has an issue, the system, you don't have that systemic risk. That being said, we still had a recession. And it was still a very good opportunity for real estate and detrimental to, to businesses. And I think as, as you know, in the states, the real challenge at that time was credit dried up and you had, you know, companies on main street not able to get credit. So, you know, it's very interesting time now that we're kind of coming out of the last year or two w with a very different type of recession, but yeah, it'd be interesting to see how, how things unfold.
Jonny (7m 54s): Absolutely. Yeah. Okay. That's, that's good perspective. So you're a broker in an office space. Talk about what that has been like coming out of COVID. Are you, are you guys headed back to the office and that kind of stuff?
Jesse (8m 9s): Yeah, so I, I always tell like younger individuals now that, you know, you're seeing like the next crew of brokers come in the early twenties, mid twenties, I always tell them that office leasing or industrial leasing or multi-racial leasing to, to that extent. And retail is a great way to learn the business because at the end of the day, the value of all of our properties is predicated on a lease. That that's just the, kind of the easy version of understanding valuations, right? The covenant of the tenants. So for us, working with different companies is really, it's a treat because I can see various industries do my job and my job repeats.
So whether you're a tech startup in software, and then you're dealing with a law firm, so you see a lot of different type of companies, which is, you know, from my perspective, I think a lot of people in our industry are similar to me, or I'm similar to them in that, you know, I, I, if I did one thing every day, I'd probably lose it. And so the fact that there's this like creativity, I think investors understand that too. They like, you know, different projects to your question about how it's been impacted without a doubt office was impacted by COVID.
I think, you know, taking the four major food groups of real estate, industrial, multi Rez, retail, and office, you know, industrial, I think most people know it was on fire, continued to be on fire with COVID multi Raz, also very, very popular asset class retail. If it was grocery store anchored, if it was essential services, I always say, if there was like Mike's TaeKwonDo and Jenny's nails, those places didn't do as good, that kind of tertiary stuff. Long story short, you get to office office was in this kind of weird space because we're shut down in a lot of areas in north America and people are wondering what's going to happen and what they're going to do with their office.
I think now that we're, the dust is settled to a certain extent. The takeaways were that office is a important part of most businesses in terms of how they build culture, how they build their, their teams. I think leadership has acknowledged that, but also in the same breath, we acknowledge the fact that you can have hybrid work models without the business suffering. And you you've learned certain businesses is actually are really, the makeup of the business is really set up well for that type of that type of environment and some not so much.
So I'm very bullish on the office, obviously I'm biased, but we've seen huge upticks since the beginning of this year, 2022 to now versus last year. It's, you know, it's tremendous how many companies, even if it's just to come out and say, like, what's going on because leaders in, in these companies, they want to make sure that they're ahead of the curve.
Jonny (11m 0s): Yeah. It makes perfect sense. And there are certainly some businesses, like you mentioned, like collaborative businesses, like you think of like law firms, CPA firms, you know, certain businesses like, you know, tech doesn't really require you to be in the office. Certainly the collaboration piece of it is, you know, useful, but you can have a smaller office, you know, downsize, but there are certainly some business models that really do need that, that office space in order to, to be successful.
Jesse (11m 31s): Yeah.
Jonny (11m 32s): So have you seen a change in the, the target businesses you're going for in terms of leasing
Jesse (11m 40s): To a certain extent, like for us, we do, I'd say 30% of what we do on the brokerage side is listing work. So our clients are these larger landlords, well, private and larger. So pension funds, real estate investment trusts, and then private, and then the balance of that is tenant rep. So then, you know, we're dealing with companies and, you know, part of it in our world is where somebody is in their lease cycle, whether it's five, 10 year deals. And you find, you know, in terms of BD, if they're not already a client, it's about finding them in, you know, a good spot in their lease or being able to say like, okay, you're coming up to an expiry, you know, have you thought about it?
The one good, positive thing. I think for tenants in our market, we're very similar to LA and New York prior to COVID in that office, vacancy was like 2%, 2.7% ridiculously low to the point where tenants had no negotiating power where now we're starting to see a little bit more of a balanced market, but yeah, that's a, that's kinda what we're working on now. And then, you know, on my partners on the other side, you know, we're continuing, continuing to look for acquisitions on the investment side.
Jonny (12m 50s): Awesome. I love it. Yeah. That makes, that makes perfect sense, especially right, right. In the heart of the city like that. So you mentioned that you also invest in the U S what is your investment thesis for, for us investing and what is it like investing, you know, from, from Canada, essentially? Like what other red tape or hurdles that you have as a foreign investor, I guess, so to speak.
Jesse (13m 14s): Yeah. I was going to say, when I say invest in the U S I have bought my first property in the U S so I'm definitely not an authority, but it was, it was something that was kind of on my 20, 22, you know, new year's resolution, whatever you want to call it in that, you know, by, by an asset, in, in the states. And what happened was I had a buddy of mine that actually does residential real estate up here. And he basically had a sister company that works in, in Florida, and they do a bunch of condos, townhouses, single family homes in Orlando, Miami, some in Fort Lauderdale.
So basically got, got him to look at this one pre construction. It was a townhouse in Orlando. I was thinking of doing the short-term rental aspect of it in Miami. I decided to go with this. It seemed like a better investment. So in terms of the actual hurdles, I think it's important that when you're looking, if, whether you're in Canada, investing in the states where you're in the states, investing in Canada, I think what's important is that number one, the structure of, of how you invest.
So talking to a CPA, talking to a lawyer, it's a little bit of money and cash out first, really, if you want to get good advice, because any investor knows that basically any CPAs or lawyers AF they don't give free advice very often, and you want to get good advice. And I'll just give an example, a lot of Canadians, they listen to these late night infomercials about investing in the U S and they say, put it in an LLC. And, you know, that's the structure you should use. And we don't have that in Canada. We don't have an equivalent to the LLC. Well, we have something similar, but there's no LLC.
So there's no limited liability company. So what happens is Canadians go to the states, they put an investment in an LLC and the Canadian government says, Nope, that's a corporation. And now they're subject to double taxation. So just stuff like that, of understanding how to invest when you're buying properties down, there is one of the first steps. We have a number of very solid tax treaties between the U S and Canada. So one of the other piece to keep in mind is withholding tax so that when you're getting rental income acknowledge, or have to understand that the IRS will have a withholding tax, which can be ameliorated.
If you fill out the right forms and you can get it taxed on the net instead of gross, because any investor knows that if you're getting 30% tax on your gross income, like a lot of investors right after you depreciate it, there's no, there's no 30% of gross income. So it's little things like that. I think the, the other really big one is understanding the debt side of things. U S individual that's domiciled in the, in the states for tax is gonna have a hard time getting a mortgage in Canada and vice versa.
So for me, the IRS doesn't know me. They don't know they don't have an identity for, for me. So for me to get credit, I have to build credit in the UK. So was the first investment. The mortgage is going to come from Canada. And one of the things you can do to try to bridge the gap, and if you really want to start building credit in another country, is you, first of all, utilize a bank that does cross border, you know, that has locations in both the states and Canada. So for me, CIVC or TD north, that kind of thing where we can have both in Florida is great for that because a lot of Canadians live in Florida.
And then I think, lastly, sorry for the long-winded answer. I was, we were just talking about this in the office, but lastly, I think it's like understanding your strategy. So I mentioned that, you know, if you're in a certain place in Arkansas, maybe short-term rentals, isn't, isn't the way to go. If you're in Miami, okay. Understanding the, what type of strategy you want to actually employ. Is it Burr? Is it wholesaling and, and making sure that the geography, your pick is conducive to that. So, yeah, that's high level. What I I'd say there.
Jonny (17m 9s): Interesting. Okay. Wow. A lot of fascinating things that I'm learning for the first time. One I want to touch on is this LLC. So do you only have one structure that you're allowed to create and in Canada?
Jesse (17m 22s): No. So what happens again? Like, so our corporation there's one type of corporation. It would be most similar to your C corpse. I know you have escorts, NC corpse in the states, the limited liability company, you know, for any listeners that don't know him, I'm sure most do that. What you're trying to do is have a pass through, right? You have ownership of something, but it's a pass through entity. We do have that, but we do it in the GPLP structure, general partner, limited partner. So if you and I, for instance, we're the general partners and we went to buy something in the states and we had a number of different limited partners.
They would be like members in an LLC, if you use that context. Right? So I think member, you know, member and investors is the equivalent. It's just important to know that, you know, you start using a structure in a country that your country doesn't recognize there's implications for that. And a lot of times we're when you're in investing, you know, it's so good to get a tax lawyer, because if you talk to an accountant Mo you know, it's a blanket term, but I think it's, it's true. Most of the time accountants are trying to protect you from a tax perspective and lawyers are thinking liability.
So you might get a lawyer that says, don't put it in personal, in your personal name. You might have an account that says now the personal name, fine, just get, you know, more insurance or vice versa. So just getting the right information, I think is really helpful. And I actually had a, there's a, I think she's a flirting by, I think she's from Florida, but she worked up here. It's Lauren Colon. If you just type that in type in cross-border and Google, she's got a lot of good information. I ha if I had her on my podcast about if you're investing in Canada or if in you're investing in the states.
Jonny (19m 0s): Interesting. Okay, cool. Yeah. That makes perfect sense. You know, obviously the, the connections that we have, of course sharing a border, you know, there's a lot of things I would imagine that they want to make it as simple as possible to a certain extent. I know that there's this underlying thing that Canadians don't like Americans, Americans don't like Canadians, but I've never had any problems.
Jesse (19m 25s): And I love, I love Americans. Like a lot of my family when they immigrated, they are went in through Ellis island. So in New York and New Jersey, so I love the states. It was a blast being there over COVID to get away from the lockdowns here.
Jonny (19m 40s): So they let you leave. Huh?
Jesse (19m 42s): Yeah. Yeah. I got out of here, you know, in certain windows we went into harder lockdown semi-hard and yeah. So it was nice being able to travel. One last thing I would say, I forgot to mention is one of the best things you can do is find a partner in the states or in Canada, because then you can kind of do the real estate thing of, you know, if I'm going to be the operational guy or gal, and you're going to be the one that guarantees the debt, then all of a sudden, you know, if you're 50, 50 on a property and you go to a us bank, the banks like, okay, we don't really know this guy, but we know this person.
So, you know, it opens the door for a little bit more ease of transaction. And it's also great. You know, you make connections in a new city, in a new state.
Jonny (20m 26s): Absolutely. Yeah. I couldn't agree more. And, and while you were explaining it, I was kind of thinking in my head, I was like, okay, if I wanted to do this, I would probably just partner with someone who is already up there and gets it. And so that makes perfect sense. So along those lines, what is the market like, if there, do you guys have rent controls across everything? You know, what does that look like in terms of rental increases and different aspects of the business?
Jesse (20m 51s): Yeah. We have a, it is a, it's a shock for most people when they're investing in the states and then come to Canada because we have rent control, which, you know, the fancy term for rent control these days is rent stabilization. I did a podcast with, with this gentleman, Richard Epstein. Who's fantastic. He's like, he's a lawyer at NYU and kind of gave a history of rent control and rent stabilization is basically rent control with an allowable percentage. You're allowed to raise it every year.
And the percentages is very low. Like, it's kind of, I was going to say, it goes with inflation, but inflation is pretty high right now. It was like 1.8% last year. So yeah. So the other thing is what we have is rent decontrol. And it's a lot of like confusing terms. But what that means is that when somebody moves out, I can mark to market the rent. So if you're paying 500 and it's really worth a thousand, once you move out, I can charge you a thousand. But as you can imagine, just like in New York, what do people do? They don't leave. So you're really stuck.
And in Canada, it's not like, you know, like pictured Texas, you're, you're done you're, you're in Dallas, you're done your lease. Your landlord's like, I want you out. That's, you know, that's the breaks that landlord wants you at Canada. You cannot evict somebody. What happens at the end of the fixed rate? Sorry, a fixed term tenancy is that it reverts to a month to month and you can't kick somebody out with like two, there's only a few circumstances. If you're moving in personally, which you have to live there for at least the guidances a year, you can be fine, $25,000 if you're doing substantial renovations.
But even if you do that, you have to give the property back to them after the renovations. So what happens in our market is I'm going to call them incentives. People pay tenants to leave. And in Toronto, the going rate for buying tenants out, it can vary from anything from 15,000 to $50,000, basically, just to say, you know, can you leave and agree to sign this? And I, I don't know, one landlord that likes doing that. I don't. And obviously there is a meeting of the minds for two people to agree to that.
And there's a lot of people in the press here. That's a, you know, it's taken advantage of tenants. I disagree with that, but I'm a biased landlord. And I think when you hand somebody $25,000 and they accept it, you know, I get that there's a power imbalance, but that's kind of what happens in our market. But when I tell them my American friends, as I say, like that, it's not necessarily a bad thing with any challenge in a market is going to create some opportunities. So somebody that can, you know, have a protocol for this market, just like there are successful investors in, in Maryland, in New Jersey, Washington, where there are different versions of rent control.
So I think for us, it's just a matter of, yeah, it's a little bit more challenging in that sense. And I'll say this, this is where student rentals to me are very interesting because you don't have to force kids to leave. You know, after three years they're like, see you later. Like, it's very rare that you get somebody that's, you know, going to, going to school and then stays there. So you can mark the market, the rents every three years, you just have to deal with maybe a little bit more on the maintenance side.
Jonny (24m 3s): Interesting. Yeah. That's a very awesome perspective and a, a good kind of find there as well as, you know, anything like if you were close to a hospital, maybe like traveling nurses or something too, I'm not sure if traveling nursing is a thing in Canada.
Jesse (24m 16s): Well, that's, that's like, so the Orlando property that I bought was right beside the name escapes me, but it's a, it's a massive, it's a massive hospital. And it's kind of the same idea where you have nurses that if you have shorter term rentals, you can utilize that.
Jonny (24m 32s): Awesome. I love it. Yeah. So, and that was a really great point that you made where the opportunities are there. You just have to be willing to do that. So does that keep, I guess, like less, less investors, less people trying to get on deals because of these sort of hurdles that you have to deal with, or is it still a lot of people?
Jesse (24m 54s): The problem is like, yeah, we still have the Canada, like, like the states, I think in general, we are extremely supply constraint. Despite with people say like, oh, real estate prices. Like it's, it's not a supply issue. It is 100% of supply issue. We have the majority of the, of the multi-family rental stock in Canada is, is extremely old, like circus, seventies and, and older. So what we what's happened in our major cities, whether it's Vancouver, Ottawa, Montreal is the condo development market has basically picking up the slack for the multi Rez and multi and single family.
So what is created is you'll hear the term of shadow a shadow market, and it's basically condos like you and I owning a condo and renting the conduit rather than some developer building a large purpose-built development. And that is kind of the concern because investors, at least there's been legislation where 2016 or 2017, where there isn't rent control for buildings built after that. But I think a lot of investors there, they're weary of building a lot of these projects because they don't know if the government's going to say that you can or can't raise rent.
So bottom line is that we don't get enough of this type of property built. And I think the other piece is a regulatory environment. It's very similar to California where, you know, you can, you can fix the issue if you just loosen some of the regulations where you have the ability to kind of rezone this idea of nimbyism that, you know, you can't build in my area or banana. I don't know if you've heard that the new
Jonny (26m 28s): Ones, that one
Jesse (26m 29s): It's build absolutely nothing anywhere near anything.
Jonny (26m 35s): So
Jesse (26m 35s): It's like, you can't have it both ways if you're left of center politically and you're like, no, there's, we have to have all this regulation. Then you can't be that that's chewing kale in your town. And then, you know, a lower income individual wants to live in there. And you're like, ah, next town over, like, we need to democratize, I think to a certain extent where you can build and what you can build and all he had off my soap box right there.
Jonny (27m 0s): Thanks so much for coming to the Ted talk. I was just having this conversation about affordable housing here in the states and how the president Biden administration is trying to roll out all these things, but they're getting in their own way. They're like, yeah, we want to make more affordable housing, but it's going to take you two years probably before, you know, you can turn a property into affordable housing, you know, like, okay, well then why would I even do it?
Jesse (27m 27s): Yeah, yeah. You guys have a, you guys have some interesting things happening right now, even with energy. Like you, you know, you're a lot of these policies, even with the fed where like the top of the agenda is, is systemic risks for climate change. And it's like, you're talking to the fed. They're like inflation should be the thing that you're talking about with them. Like not to say that's not important, but it's like, you know, pick, pick your lane in terms of, in terms of who you're talking to. But you know, at the end of the day, I still think it's such a great country to invest in.
And whether you're in Canada or the states, we are spoiled in terms of the re the tax framework, as you know, most of your lists listeners will know that you guys, especially, and now I think you guys, do you still have the bonus depreciation that you can take on properties.
Jonny (28m 16s): Yeah. So, yeah, we'll have it for a while actually, but it's going to start going down by 20%. So this is the last year of a hundred percent next year is 80, 60, so on and so forth rumors that that could change for sure. But so you do not have that in Canada.
Jesse (28m 34s): We have a depreciation, but bonus not exactly like that. The other thing is, I think we can do it similarly, but for, you know, those that in the states you use cost segregation or cost sag, where you can kind of itemize your, your depreciation schedules. I think that's something that you have, and we don't don't quote me on that one, but I think the other main, one of the big, main differences with your market as opposed to ours is we don't have 10 31 exchanges. There is no such thing as that. So we are a very buyin hold type of market, not, not completely, but that is a large part of what happens.
Whereas, you know, if somebody told me, okay, you can buy a likened kind of asset, I roll it into this one. You know, we would probably have more velocity in our market, but for us, you know, clients say like, you know, well, if I sell this, I'm going to, I'm going to pay a bunch of taxes. It's like, well, yeah, yeah, you did make all that money though. So that's, but yeah, we don't have the ability to kind of, to roll things over into other properties.
Jonny (29m 35s): Interesting. Okay. Yeah. So definitely definitely some differences. There, there are certainly a lot of, and I've done episodes on this with lawyers and CPAs. We have a lot of incentives for real estate because ultimately you're dealing with, you know, a need an essential need for, for humans, which is, you know, a place to live. So, so yeah, it makes a lot of sense. Awesome. Well, as we wind up here, we've got five questions to ask all of my guests, it's the final five.
So we'll get to that. What's the best advice you've gotten from a mentor,
Jesse (30m 10s): The best advice that I've gotten from a mentor, I'm thinking of something recently that I've had. I, you know what I think for me, it's, it's cliche, but it's not having a limiting belief in terms of, of what you can do. And part of, one of my mentors, when I was younger, it basically said if there's something that you want to do, like go out and, and do that, do that thing that will kind of lead to that. So for, just give an example. When I bought my first property, I had no business buying properties, but the idea of calling a realtor saying, Hey, you know, here's a list of houses that I want to go see as 19 year old or 20 year old, and actually going in there and kind of experiencing that.
And I think it's been said before by a number of people, but once you do that process, it sounds kind of, you know, very abstract, but you're going in there, you're talking to somebody you're seeing space, you're immersing yourself in something that was only a possibility before and suddenly it's becoming a reality. And I think I've done that with other things in my life where if there was an opportunity to get into a certain area in real estate, it's like, just go to that event or go to that in that environment, link up with people that are doing what you want to do in that environment.
That's always been something for me that I've gotten value out of. And it's always scary at first, especially, you know, if you're the new person in that area, but really is about kind of getting in there and immersing yourself.
Jonny (31m 34s): Absolutely. Yeah. I couldn't agree more. And, and that's what holds people back so much is that starting kind of circling back to what we said, the art of the first deal it's so it's so intimidating, right. Because you know, someone's up on stage who has a billion dollars in assets and you're like, I could never have a billion dollars in assets, but then you break it down or even, you know, I've talked to those people and they're like, yeah, there was a day where I had zero. Right? Yeah. I started where you started and then you start to realize those kinds of things. You're like, okay, like, I can be that person too.
Yeah. I'm is there a lot of education available? Like is one thing I love here in the states is this is a sector where everybody tries to help everybody. Is it, is it the same up there as well?
Jesse (32m 17s): Yeah. I was just having this conversation with a friend of mine. I think this is, you know, I assume other industries are similar, but you know, working with a number of different companies that there's definitely different variations, but I found like real estate investors want to help out other real estate investors, especially when there's an age gap. I don't know if you've noticed, but when you have somebody that's like in their fifties, sixties, and they see a young kid in their twenties asking for help trying to add value to them, you know, don't just go and say, you know, help me with this and that. But there really is I think, a want to help that person because they see some of themselves in that person, if they've been an investor.
So yeah, a hundred percent, I think that it is, it is an area that, where I see a lot of that. And then the other thing too, is everybody likes their ego stroked a bit. So, you know, for them, it's kind of validation that they've done well in their career and they're kind of, you know, handing down knowledge to like the next, the next generation of investors.
Jonny (33m 16s): Awesome. Yeah. That's, that's a great perspective for sure of that. What is it about your career that makes you feel like you're fulfilling your why? Okay.
Jesse (33m 24s): It's definitely the relationships. It's the fact that I'm exposed to people that are smarter than me, stronger than me, better at, you know, certain aspects of the business than me and the ability to do that. I think it just makes you a better investor, probably a better person in general. And having those doors open to those different facets, I think is something that fulfills my, why, which is, you know, to constantly be trying to grow, whether that's a portfolio or you interpersonally, I think that's a big thing, developing the relationships and continuing to do that.
And who knows, maybe my next cool partner is going to be in Orlando. And you know, that's just another example of kind of expanding the, the network of people you have, but doing it in what I think is a meaningful way.
Jonny (34m 12s): Absolutely. Yeah. It's a, it's so true. How sort of the five people I surround myself with has changed and is more focused on, you know, we all have the same mindset, same goals. And then you know, that once that energy gets going, man, you just feeding off each other and it's really awesome. Favorite non real estate or investment related book.
Jesse (34m 37s): I would say a basic economics by Tom soul is probably, I mean, it's slightly related to pretty much everything, but that is one of my favorite books on just how the, how the world works from an economic perspective. Thomas, SOL's probably one of my favorite economists or economist historian in general. Yeah. That book is, yeah, it was a huge book for me that, that I got into when I was well, not too long ago, but yeah, that's a good one.
Jonny (35m 9s): Nice. Love it. If you could have any superpower, what would it be?
Jesse (35m 13s): Super power and visibility.
Jonny (35m 15s): Nice. There you go. Don't get that one too often. Slightly
Jesse (35m 19s): Creepy.
Jonny (35m 21s): Yeah. I mean, it depends how you use it for sure.
Jesse (35m 26s): It's like, what did they know that could have had them at 20 mill that could add them at 20 mil? And then you can just go in there, hear different real estate conversations when you're putting APS as in
Jonny (35m 36s): Like go listen on a seller and be, you know what, yeah. They're like, yeah. You know what? We would actually take a lower price, then all of a sudden you just come in. You're like, Hey, would you guys take it for this price?
Jesse (35m 46s): You know, I said, I should've said time travel. I'm such a Saifai fan. That, that seems like the better one, but that's what you do the fast five
Jonny (35m 53s): That's right. Final five. Awesome. And last one, what's the best way for people to get ahold of you and learn more?
Jesse (35m 60s): Yeah, sure. I mean, you can go to Instagram, Jessie for galley, F R a G a L E. You can pretty much type that into YouTube or Instagram. You can check things out there. If you're interested in the podcast, working capital podcast.com or working capital, the real estate podcasts, anywhere on Spotify or apple or wherever you watch your stuff we interview, you know, not dissimilar to you. We interview people that are investing in real estate, but also, you know, professionals that surround our, our industry.
So CPAs lawyers, et cetera.
Jonny (36m 34s): Awesome. I love it. Jesse. Thank you so much for all of your insight and perspective. I had a lot of fun,
Jesse (36m 40s): Johnny Katani thanks, man.
Jonny (36m 41s): Absolutely.
Jesse (36m 50s): Thank you so much for listening to working capital the real estate podcast. I'm your host, Jesse for galley. If you liked the episode, head on to iTunes and leave us a five star review and share on social media, it really helps us out. If you have any questions, feel free to reach out to me on Instagram, Jesse for galley, F R a G a L E, have a good one. Take care.