Getting Started in Multifamily Investing
Anthony Giuliani discusses his rapid growth in real estate investing, focusing on acquiring large multifamily investment properties with a long-term buy and hold strategy.
About Today’s Guest
Anthony Giuliani graduated from pharmacy school in 2017 from the University of Rhode Island and then completed 2 years of residency to become an ambulatory care pharmacist in Boston. He started his real estate journey at the beginning of 2020 and has accumulated 9 units so far. His focus is on purchasing large multifamily properties with a long-term buy and hold strategy. Anthony is passionate about real estate investing and is excited about what the future brings.
Summary
Anthony Giuliani joins Nate and David on this week’s episode to discuss getting started with multifamily real estate investing. He shares his personal pharmacy story, how he got started in real estate investing, and a mistake he made investing that ended up being one of his greatest successes to date.
One stand-out thing about Anthony’s story is how quickly he went from owning zero investment properties to managing nine rental units. After carefully considering his financial picture, Anthony chose to delay purchasing his dream home and invest in real estate. Anthony speaks about his interest in house hacking, the many benefits, and how it fits into his real estate plan. His mindset when it comes to real estate investing is that having multiple units or multifamily units creates a certain level of safety in the event of a renter vacancy. Why purchase one home and just one renter when you can buy a building with 3 or 4, or more, doors and reduce your probability of financial losses when there are tenant vacancies?
During the COVID-19 pandemic, Anthony chose to defer his mortgage payments. The mortgage deferment ended up a mistake when Anthony then had extreme difficulty getting a pre-approval or loan for his new real estate purchases. After speaking to numerous financial institutions, Anthony learned that he could get financing for commercial real estate and never looked back. Anthony continues to build his real estate portfolio of multifamily units using a long-term buy and hold strategy while the pandemic affords favorable rates and benefits for buyers.
Mentioned on the Show
- Join the YFP Real Estate Investing Facebook Group
- Bigger Pockets Podcast
- YFP 130: House Hacking Your Way to Financial Freedom
- The House Hacking Strategy: How to Use Your Home to Achieve Financial Freedom by Craig Curelop
- Peter Harris’ Commercial Real Estate Investing for Beginners Course
- Vertex42 Rental Property Cash Flow Analysis
- Zillow
- Dave Ramsey
- Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki
- The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Smart Buy & Hold Real Estate Investing by Brandon Turner
- The Book on Managing Rental Properties: A Proven System for Finding, Screening, and Managing Tenants with Fewer Headaches and Maximum Profits by Brandon Turner and Heather Turner
- Bigger Pockets Webinars
- Email Anthony Giuliani: [email protected]
- YFP Real Estate Investing
Episode Transcript
Nate Hedrick: Hey, David, how’s it going?
David Bright: Hey, good, thanks, man. How are you doing?
Nate Hedrick: I am great. I’m doing really well, we’ve had a great week here. We’re just about to leave on vacation for the first time in a long time. I feel like with vaccines rolling and orders being lifted, I am starting to feel a little normal, and it feels weird to feel normal.
David Bright: That’s super nice. Where are you guys going?
Nate Hedrick: We are headed off to Myrtle Beach for a little while, so hanging out with the fam, getting some sun. Should be really nice. But yeah, what’s going on with you?
David Bright: Very nice. No, it’s been good here. We’re hoping to gear up for something similar. We’re hoping to drive to Tennessee for vacation also.
Nate Hedrick: Very nice. Again, it’s weirdly starting to feel normal. I feel like I’m still having the impact on the rental side a little bit from COVID and the housing market obviously still from COVID, but it’s nice to start getting out there a little bit more.
David Bright: Yeah, it’s been weird to see kind of what COVID has done to the rental market as we come into the summer season here because we’ve been, it’s been obviously the roller coaster over the last year. And what we’re seeing now — and I don’t know if you’re seeing it in your market too — but we’re seeing higher rent rates lately when we’re either bringing new units on or when we’re doing kind of the natural tenant turnover, someone leaves, as we look at what market rate is for that unit, it’s been increases, which has been kind of surprising on a more positive side, on the landlord side. On a less positive side, on the landlord side, still some of those economic vacancy issues of tenants not paying and things like that.
Nate Hedrick: Yeah, I’ve had one actually that — one of our tenants has not been able to pay for, oh man, it’s probably been six months. They’ve been paying what they can here and there, but luckily the state has a great program for financial assistance for those, and so we’ve applied for that. And I saw two weeks ago, it was in process, which means I should be getting paid soon. But it’s good. It helps them out, like it makes sure that there’s not an eviction on this person’s history. I’ll actually get the full back rent and actually three months of future rent so that he can stay there and can hopefully get his feet back under him, and that tenant will be in good shape. So the programs are at least working in some capacity.
David Bright: Oh, very nice. And I think that plays into today’s episode as well where we’ve got a guest on that has many rental units and kind of has to deal with some of those issues. So why don’t you give us a little bit of an intro of who we have on today?
Nate Hedrick: Yeah, so today we’ve got Tony. Tony was somebody that we found on the Facebook page, actually. So right when we got the Facebook page going, the YFP Real Estate Investing Facebook group, Tony was in there. We kind of did like an intro post welcoming all of our new members right at the beginning. And he posted and said something about his story. And then he and I started connecting over Messenger. And his story was just incredible. I had to make sure that we brought him onto the show at some point. Basically — and I’ll let the podcast do the talking but just a brief, brief intro on this — he and his girlfriend were looking at purchasing their “forever home.” They were trying to save up a huge down payment and get this big house. And they started taking a look at their savings rate; they were saving about $3,000 a month toward that down payment. And they realized that if they bought this forever home, their savings rate was going to drop at least by half. It was going to cut in half just from buying that house. And if they had kids or if anybody had a job cut or if they bought a bigger house than they were expecting, all those things were basically going to drop their savings rate to nothing. And he said, “I don’t want to live paycheck-to-paycheck. I need to take a step back.” And as you’ll hear in this episode, he went off, he went and actually moved back into his parents’ in-law suite, which again, I know a lot of pharmacists two years out from school probably would not make that move, but instead of buying his forever home, he used that money he saved up and purchased his first rental property, a multifamily unit. And so it was a huge shift away from this idea of ‘I need to buy this house, I need to keep up with all the other people around me,’ to ‘I’m going to set myself up for financial success instead.’ And so I really liked this story. I think there’s a lot of pharmacists and a lot of individuals that I’ve spoken with that did not make this decision, right? They went off and they bought that forever home right off the bat. Now, they are living paycheck-to-paycheck and they can’t invest, they can’t make other moves because of that. And so Tony didn’t do that. He was kind of the exception that proves the rule. And I just thought that was a really, really cool story.
David Bright: One of the things I like about his story is having multiple units like that and focusing on cash flow really resonates with his why. And we talk a lot about your why behind your real estate investing. And in this case, if he wanted that monthly cash flow so that he didn’t feel like he was on a paycheck-to-paycheck standpoint, then he strategically bought multifamily buy and hold real estate that did create cash flow. And then going back to what we were talking about a minute ago with some of the COVID issues and some of those things, by having multiple units, that also creates a lot more safety because then if one tenant isn’t paying out of nine or two tenants aren’t paying out of the nine units that he has, then he’s still probably going to be OK, at least he’s not going backwards. If you only have one or two units and they’re both not paying, then you have to have reserves to cover that. So it’s an interesting kind of paradox in how sometimes having a few more units creates a little more safety.
Nate Hedrick: Don’t you call that the race to 10?
David Bright: Yes, yes, the race to 10 units where you can get that where if you have one vacant unit, you’re only dropping 10% of your net rents, yes.
Nate Hedrick: I love that. And the last thing I’ll mention is that stay tuned at the end because his tip about student loans, related to student loans, in the final infusion is fantastic. So definitely check that out. Hope you guys liked this episode and again, if anyone else is out there that has a story similar to this or wants to share a similar idea where it didn’t make that flip, I’d love to hear that kind of counterpoint at this point because I think this is something that we’re going to see from our audience going forward. So let’s take you to the interview.
Nate Hedrick: Hey, Anthony, welcome to the show.
Anthony Giuliani: Hey, guys. Thanks for having me on. I’m excited to be here today.
Nate Hedrick: Yeah, we’re excited to have you. We saw you on the YFP Facebook group, the YFP Real Estate Investing Facebook group, actually, and you shared a little bit about your story there. And I said, ‘Oh, that guy, I’ve got to make sure we’ve reached out to Anthony and see if we can get him on the show.’ And so we’re happy that you were able to come on.
Anthony Giuliani: Absolutely. I’m fired up to be here. I’ve been thinking about YFP for a long time, and I was like, I’ve got to reach out to Tim eventually and go on. And then you guys launched this new real estate portion, which is fantastic. I’m like, yeah, get me involved in this. I’ve got to jump on board.
Nate Hedrick: Good. Well, we’re glad to have you here. And you know, for those of you that might have not seen Anthony out in the chat or in the YFP Facebook group or if you haven’t joined the YFP Real Estate Investing Facebook group, make sure you do that. And so again, for those that have not met Anthony before or heard about his story, Anthony, maybe jump in and tell us a little bit about your pharmacy background.
Anthony Giuliani: Yeah, cool. So I graduated in 2017 from the University of Rhode Island — go Rams! And then I went on to complete my PGY1 at the Connecticut in VA in West Haven, later on, did a PGY2 at St. Francis Hospital in Hartford, Connecticut. And then I was lucky enough to join the team at Boston Medical Center as an ambulatory care pharmacist and absolutely love my current position, couldn’t be more happy where I’m at now. And financial independence is very important to me, but I’m not looking to quit my job anytime soon because I’m happy. It was a long journey, but I’m happy where I’m at now.
David Bright: No, that’s awesome. And I love running into pharmacists that we talk with on this podcast, in the Facebook group, all that, pharmacists that love being pharmacists. That’s just really encouraging. So with the pharmacy piece now, tell me a little bit about your why behind your involvement with real estate and kind of what you’ve been up to lately as far as your investing.
Anthony Giuliani: Definitely. So real estate is fairly new to me. I first got involved through one of my best friends, who was a wholesaler. I saw his great success early on without any formal education or training, so it was something always, always in the back of my mind, real estate. So it was after residency when I started my — what I like to call my big boy job down in Boston in July where I started thinking a little bit more about real estate, thinking a little bit more about my future. But I was still getting oriented to my new job, studying for the BCAPC. So it wasn’t until like October of 2019 where I started thinking, what’s my next move? Originally, I was like, I want to buy my four-bedroom forever home right outside of Boston and start kind of setting up my life there. And I was passively listening to Bigger Pockets at the time, recommended by one of my preceptors, actually, who graduated with Tim Church because I was talking about YFP and really weird coincidence.
Nate Hedrick: Small pharmacy world.
Anthony Giuliani: Classic. Classic pharmacy world. At the time, I lived in Boston with my girlfriend, right? And we’re doing pretty good. We’re saving about $3,000 a month. So I’m looking at this house, and I realize that if I bump this four-bedroom forever house and then I had kids, I was essentially — that $3,000 whittled down, I’m almost living paycheck-to-paycheck. And I was stunned. I was like, how can this happen? Like I just didn’t understand it. So then one of my friends called me, told me he’d bought a duplex, he was house hacking, he was telling me about that. I was like, such a good idea, but I just don’t see it as a good fit for me. I just don’t see myself doing it. And then I’m listening to YFP, I’m listening to Bigger Pockets, I’m on my way home on one day, I’m listening to when Craig Curelop came on YFP, and it was in that moment, in that drive home where I decided I was like, I’m getting into real estate investing. I’m not buying my forever home. I’m going to go buy a multifamily property to house hack. And I took a good look at myself in the mirror, and I realized that I saw at the time that I was too good to move into a multifamily home in a C-class area. I thought because I was a pharmacist that that was below me. And when I realized that, it made me even more fired up to do it because I was like, if you’re going to live your life with that mentality, afraid of what people may think and just living that terrible mindset, then you need to jump in head first right now because that is no way to live. So spent the next 2-3 months, read three books, listened to a ton of podcasts, two videos, and started looking at properties in January. By April, I had closed on a triplex and turn of events, I actually didn’t end up moving in and house hacking. But I did solve my rent problem. So I’m with my girlfriend Grace, we’re driving to our friend’s house in New York, a long car trip, and we’re looking at multifamilies at the time, market was hot, we couldn’t really get anything moving. Our lease was about to expire at our apartment, so we came up with the idea, we’re like, we don’t want to rush this. We want to get a good deal. So if our lease runs out, we’ll just move into my parents’ home, chill there for a few months, and then once we get our good deal, we’ll move out and we’ll house hack. Well, she turned and looked at me and said, “What if we just lived in your parents’ house?” And coming from her meant a lot because it was easy for me to say, “Yeah, I can go live at my parents’ house.” But her being comfortable enough to do it was really important. And the advantages here, I wasn’t moving into my old bedroom. They have a beautiful house with an in-law apartment downstairs, total separate unit. It just was an unbelievable opportunity, and I’m fortunate enough to have the best parents in the world where we get along extremely well. We’re more like friends than anything, like they love when I have people over. I throw like huge pool parties this summer, they get fired up when everyone’s there, they’re outside cooking for us and hanging out with us. So it’s just really good environment and I’m lucky enough to have the opportunity to live here and them to be so welcoming with me and Grace as well. So I ended up just moving into the in-law apartment and just leveraging that to just dive into real estate.
Nate Hedrick: There are so many amazing things to take away from that story. And again, this is exactly why I wanted to make sure to have you on the show because we have talked to so many pharmacists, and I’ve met with so many different pharmacists in the community that talk about how they feel like they’re living paycheck-to-paychecks. They bought that house. They didn’t have that epiphany moment that you’re talking about. They have that feeling of, I need to keep up the other pharmacists that I see buying these great big houses and having these big families. And a lot of them would look down on moving back in with your parents, right? That’s a hard thing to do. But you looked at it and said, ‘Look, I can either make this decision because it’s what I want or I can take a step back and I can make a decision that sets me up for financial independence down the road. And I think that’s huge, Anthony, because I know a lot of pharmacists that make that move, right? Most of them go, ‘Yeah, this is probably going to suck, but I’m going to buy the big house anyway, and I’ll figure the rest out later,’ right? So that’s, again, I think that story, that mission is just incredible. And I had to make sure we illustrated that.
David Bright: Yeah, one other thing that I’d like to throw in there is you mentioned the word house hack a couple times. For those that haven’t heard that term, can you explain what a house hack is and why that might be advantageous?
Anthony Giuliani: Absolutely. So a house hack is when you buy a multifamily property specifically — it has to be four units or less, and you move into one of the units and you rent out the others. So if you have a triplex, move into one, you rent out the other two. And the key and the biggest thing about house hacking is typically, if you’re buying a rental property like I did straight out, you have to put 25% down. In a house hack, if you’re living there, you can put as low as 3.5% down. So you can use a lot of leverage for an incredible investment. And you know, if you buy a triplex or even a four-unit, sometimes you can not only live for free but you cash flow at the end of it. And the cool thing about house hacking is — my man Craig Curelop, his book is amazing on it — but you only have to live there for a year. So you could technically house hack a place, live there for a year, four units — say you moved into a four-unit property, house hacked for a year, and moved out, now you have a four-unit cash flowing asset that you don’t even have to live there anymore. So it’s an incredible tool that you can use to maybe save you some rent or really get the real estate portfolio started if you don’t have a lot of capital to invest.
Nate Hedrick: Yeah, it’s one of those strategies that I constantly think about man, if only I had known that that was a thing when I was first buying a house, like I really think it would have been a path for me. But I just didn’t know it existed, I didn’t know it was an option. So Anthony, one of the things I want to make sure we touch on — and I think this is a bit unique — is that I think when a lot of folks are starting out, it feels easier to buy single-family to begin with. You know, you look at the investment market, you look at buying a home, and even though the loans are similar on a multifamily, the idea feels more “normal” to buy a single-family home. So tell me a little bit about why you chose multifamily, why it was a good fit for you guys, and how you got to that level of comfort with making that choice.
Anthony Giuliani: So single family, first off, doesn’t really work in the market that I’m in. There’s too many single emotional buyers that jack up the prices, so it doesn’t really cash flow that well in my market. And then scaling was always important to me as well. Like if I wanted to build a portfolio of 30 units, the idea of having 30 buildings at the time was daunting. And I kind of just thought about it, like why would you buy one building with one door when you can buy a building that has three doors and it’s under one roof. There’s one boiler, there’s one yard, and it’s all grouped together, just more efficient. And it’s also less risk, in my opinion. It’s like Grant Cardone has that famous story where he started with buying a single family home, and he was loving it, right? He’s cash flowing, he’s living the life. And then they moved out. And his vacancy is now at 100% because he only has one door. It’s kind of risk management as well. That’s kind of why I started in multi-family right away. The cash flow was better. But I kind of want to talk about the jump that I made within multi-family, how I went from residential to commercial. So residential is four units or less. And then commercial is considered five units or more. And I jumped from residential to commercial through a mistake that I made, and it was the best mistake I ever made in real estate. So I closed on my first triplex on April 15, almost a year ago, right after COVID had just started. So really scary time to close on a property. I didn’t know if they were going to be able to pay rent, I didn’t know — a lot of uncertainty, April 15, 2020. So everyone around me is telling me, my lawyer, everyone, defer your mortgage, put your mortgage in deferment. There’s a $2 trillion stimulus, that’s what it’s there for. Just belly up distress. I was like, alright, cool. Called my bank, they did it for me. It was great. So then fast forward to October of 2020, I’m ready to buy again, and I go see a property, I love it, I’m ready to make an offer, my agent writes it up, I send it in, I call my bank. I’m like, “Hey guys, just need a preapproval letter. That’s all. I’m making an offer.” They’re like, “Alright, no problem.” Calls me back two minutes later, they’re like, “Did you put your mortgage in deferment?” I was like, “Yeah.” They’re like, “We can’t give you a loan for like 6-12 months.” I was like, “What?” They’re like, “Yeah, we can’t give you a loan for at least 6-12 months.” I was like, “You’ve got to be kidding me.” Called up a bunch of other banks, they were like, “We can’t give you a loan for at least a year.” And it might not seem like a big deal, but it was for me at the time. It was killing my rhythm, it was killing my willingness to get in this game, get involved in this game. I was so excited. So I was like, I’m just going to call every bank in Rhode Island until someone gives me a loan. Someone’s got to five me some money. So I did that, and everyone told me the same thing: No, no, no, no, no. So it’s a Friday afternoon, I’m on the golf course, I get a call from a lender. And I’m at the point where I’m like, I don’t even feel like answering this and having them break my heart and tell me no. Like I’m just trying to golf, I just missed a birdie putt. Like, it’s tough. So he calls me, he’s like, “Hey, I got your message. I think I have a solution to your problem.” He’s like, “Why don’t you go commercial? For a commercial loan, they don’t really look at your personal finances. We don’t care that you put that mortgage in deferment.”
Nate Hedrick: Wow.
Anthony Giuliani: And at the time, I was so invested in real estate that I took like a whole 10-hour class by Peter Harris, unbelievable class that he has, totally free, the free book, it’s like 10 hours. Read all his content, so I was pretty comfortable with commercial. I had just figured I’d buy a couple more triplexes before I stepped up. But at this point, I was like, hey, why don’t we step up now. And I got involved — now, commercial you have to do all off-market deals. So I just started calling mortgage brokers in Rhode Island. I called one of — the biggest agent in Rhode Island, Kyle Sabooth, one of the biggest agents in the U.S. He makes like the top five or top 10 Forbes list every year. I called him, he called me back, he says, “Meet me at my office in two days.” I met him there, he’s like, “What do you want to do?” I was like, “I want to do x, y, and z.” He’s like, “Alright, I’m going to send you five deals tonight.” He was in the meeting with me, he called someone as we’re in the meeting, was like, “Send me all your deals.” Hangs up, was like, “I’m going to send you five deals tonight.” I look at all of them, I’m like, I want to view these two. We go see them three days later. I’m like, “Don’t like that one, love this one.” He’s like, “Alright, let’s put in an offer tonight.” I’m like, “I’m down.” Five days later, offer is accepted after some negotiations, and it’s under contract.
David Bright: That’s obviously a big jump to go from the kind of leapfrogging that single family, going to a triplex, and then going to a commercial multi-family. So can you tell us a little bit about how many units, what makes that different. I mean, you already talked about the four units as kind of the threshold of four or fewer is a typical residential mortgage, and five or more units in the same building requires a conventional mortgage. So how many units was this? And how did you start to analyze that deal and pick this one apart?
Anthony Giuliani: Sure. So this was a six-unit deal. And commercial is almost a little bit easier where the sales price is almost always based off of the numbers, the amount of rent it’s bringing in, the expenses. So you can usually get a profit and loss statement from the seller. I think I asked for it like 10 times, but I don’t think he ever gave it to me. I just took it upon myself to just run these numbers. He gave me the rents. That was the most important. What are the current total monthly rents? But I just kind of ran my numbers with a lot of due diligence to calculate all the other expenses out to realize it was a good, cash flowing deal, and then just jumped at the opportunity.
David Bright: OK. So one of the things that we see when we talk with different people on the podcast and see people in the Facebook group talking, everybody kind of works through that deal a little bit differently, how they think through the math, cash flow targets, or anything like that. So I’m curious if you could walk us through a deal in terms of how you think about that, what your goals are, metrics that make it a good deal, so that when you do walk that property, you can say, “I love this one. Let’s make an offer,” and you can be decisive right there on the spot.
Anthony Giuliani: The short answer to that is run the numbers. Running the numbers is the foundation of deal analysis, and it’s the most important skill you can have when you’re getting involved with real estate investing. And I’ll kind of go through with you to explain how I run the numbers and how really simple it is. So go on Google, type in “cash flow calculator Vertex” — I like to use the Vertex one. It’s an Excel spreadsheet. And just download that cash flow calculator. Nice spreadsheet that’s already there for you. Now, it’s really as simple as this, guys. Total monthly rent minus total monthly expenses. That leaves you with the cash flow. That’s our goal. We want to have a lot of cash flow. Typically, $100-300 per door per month. So you may be saying, “Alright, great, I know it’s a simple equation, but how do I figure out all those numbers?” Well, I can tell you every single number is either a phone call or a click away on the internet. So I’ll give you an example. Say we’re looking at buying a duplex. That is two units, it’s two beds, one bath. Well, first we need to find market rent. What’s it going to rent for? We go on Zillow, we look for two bed, one bath in the area, and we see what the listings are, and we get a general feel for what’s out there and what the numbers are. And you can tell whether it’s market or not. If there is one listed for $1,600, been listed for 45 days, it’s got 20 view, 0 contacts and 0 applications, which is information right on Zillow, that’s not market rent. That’s way above market rent. But if you see one for $1,200 that’s been up for 10 days, it’s got 1,000 views, 50 contacts, three applications, that’s market rent. Or maybe even a little bit below market rent. So that’s the most important — that’s your first number, market rent. Next, we do our expenses. So our expenses include our mortgage, that’s simple enough. We figure out what we’re going to pay for the property. We can estimate a pretty fair interest rate, especially if we’re pre-approved at the time, plug that into the calculator. Then we look at the taxes, all published online. Just put that in the calculator. Utilities, you can just find out what utilities you’re going to be paying for: electric, water, sewer, and you can make rough estimates just using some general search and knowledge. But if you want to take it a step further, just call up the Water Board. Call up the sewer company. Say, “How much was this bill at this property in the last year?” They’ll tell you that information. So there you go. You’ve got more precise information on utilities. Snow removal, lawn care, does it need that? Look up local contractors’ deals or anyone in the area, get those estimates as well. Very easy. Then you want to factor in repairs and maintenance, which I use 5% of my total monthly rent. And that’s really like a standard for real estate. So 5% of what you bring in total rent will go to repairs and maintenance. We have capital expenditures, that’s like when the water heater goes, when the boiler goes, the roof has to be replaced, things that happen like not all the time but occasionally will add up. I estimate those at 2.5-5% of total monthly rent. And then last but not least, management. Management is usually 8-10%. If you decide to self-manage, you obviously wouldn’t include that. But you know, all those numbers are there. And by running those numbers, checking on them 10 times, gives you the confidence to walk in there being like, I know what I’m getting involved with. I know it’s a good deal, and it really is the foundation of real estate investing. So I’d recommend anybody who’s trying to buy multi-family, analyze 50-100 deals a week. It used to take me 15 minutes to run one deal analysis. Now I can do it in like 30 seconds. Get that deal analysis muscle going. Get that skill up. Besides that, if the numbers work at that $100-300 cash flow of per door per month, two more things I look at. Is the area a decent area? We want to avoid war zones, D-class areas with incredibly high crime rates. We want to avoid those. And then just make sure the rental demand is decent. So make sure there’s demand for renters in that area, which usually isn’t an issue. Zillow will give you that information as well. Just saying don’t go buy in Detroit, Michigan, because the rental demand isn’t there. Maybe it is. I don’t know that market. But I don’t think it is.
Nate Hedrick: Sorry, Detroit pharmacist investors. No, that’s great. I mean, that flexing your deal analysis muscle, like that is a huge takeaway because I thought you know, when I first started out, it became so overwhelming, like I’d look at these properties, something would come on the market, and I would say, ‘I mean, maybe it’s a deal, I don’t know, let me spend some time looking at a thousand different things.’ And you can’t react quickly when something good comes along. So the time to do deal analysis is before you’re ready to buy, quite honestly. And then throughout that whole process, as soon as a good deal comes along, then all of a sudden you can jump on it. And so it sounds like that’s exactly what you were doing is you had done these analyses over and over and over and so when it came time to walk the property, rerun the numbers, you felt really confident because you’d done that so many different times.
Anthony Giuliani: It becomes an instinct.
Nate Hedrick: Yeah, you almost — it’s funny. So my wife and I do this like every morning because we have auto emails on our MLS listings that come up, and she does the same thing. She’ll get up in the morning and kind of do her morning routine. She’ll say, “Hey, did you see that one that popped up? I didn’t look at the pictures yet, but I think it’s a deal.” And like you say like, how would you possibly — but again, she’s done it so many times every single morning that we just know in our market when a deal comes along, we can see it come along like that. So that’s spot-on.
David Bright: You mentioned as you went through there the management, having a fee associated, but you don’t have to pay that fee if you manage yourself. So that leads to the question of, do you manage yourself? Or have you chosen to do that versus hire a property manager? And why?
Anthony Giuliani: Yeah. Great question. This is a great topic too. So my approach to this is I do manage all my nine units myself right now. And I plan to do so for at least three more years with the thought behind that is I want to continue to learn, gain the experience, and become good at it. That way when I have to hire a property manager, I already know what I’m doing, I can make sure they’re doing a good job, and I have that experience — I’m a boots-on-the-ground sort of learner. I want to go in, I want to make those mistakes, I want to learn the hard way and gain that management experience, put my dues in, and then eventually down the line hire the management out. But that being said, so that nine units right now I’m going to manage myself. Anything I purchase going forward will have management built into it because that nine units is enough to get my skills sharp. My goal for 2021 and 2022 is to buy a 10+-unit property completely on my own with management already built in. So then I’ll get that skill of hiring a manager, managing the manager, maybe even firing the manager if they’re not doing a good job.
Nate Hedrick: Hopefully not.
David Bright: Yeah, let’s hope not. Yeah.
Anthony Giuliani: Literally, yeah. You’ve got to do your screening. So and also I’m fairly young. So I’m 27. I’ve got a lot of free time, especially being in pharmacy school and residency, that it costs me like $700-800 a month to hire management. So that money savings also helps definitely fuel my real estate career even more. And like maybe if I had a family with kids and a ton of responsibilities, it would be like alright, like you’re going to stretch yourself too thin. But it’s like, if I don’t manage, you’re just going to watch more YouTube videos and be on like Instagram videos more often. So there’s nothing more constructive I would do with that time. But my ultimate goal is to hire out all the management because you want it as passive as possible. So once I’m able to buy that 10+-unit with management built into it, that’s going to be my next step. The step after that is I’m going to try and buy 10+ units through syndication of deals where I bring in investors, maybe close family and friends, with management built in. Because that just goes on the slope of being even more passive. So like right now, I’m using my own money and doing my own management. The next step, it’ll be like I’m using my own money but I’m not managing. And then the third step is like I’m not even using my own money, I’m not managing, I’m just using my knowledge to create this passive income. But I have to prove to myself that I can do it and then I’ll take other people’s money when I’m confident.
David Bright: So with the management piece — because I like how you’re focused on the passive side of things, and so I’m guessing that when you’re sitting there in the clinic, you’re not interrupting your patients to take a tenant call or something like that, right? So how do you make this work in a pharmacist world where tenants have problems at all hours. How do you manage that? And how make that passive enough?
Anthony Giuliani: Definitely. And just remember, all the horror stories you hear about being a landlord, a lot of them aren’t really true. They’ll say, “Oh, do you really want to have to fix a toilet at 2 a.m.?” Well that doesn’t really happen, and I don’t really mind like rolling over at 7 a.m., calling a plumber to go do it and taking 10 minutes out of my day if it’s going to pay me $1,000 a month. Anyway, getting back to your question, how to balance it, right? So any tenant issue usually isn’t super urgent. So I try to separate my pharmacy work from my real estate investing. All my real estate investing is on my own time, at night, on the weekends. And the key is you have to set up systems that allow it to be as passive as possible. You have to have plumbers that you know are going to do the work, a handyman, all this lined up because then, you know, like you said, say I do get a text from a tenant, it’s an emergency situation. Well, I can just make a three-minute phone call and take care of it rather than like, oh, I’ve got to find a plumber, and are they going to be able to get there? To have those connections, have that team built, is very important. But most of all, nothing is usually like super dire or urgent. And the cool thing about real estate is you kind of do it on your time, do it on your own hours. So you just kind of save that for when you’re not in clinic or anything like that.
Nate Hedrick: Yeah, that’s huge. Those systems really make this doable, and I think when you have that realization and you do that background work to make sure those systems are in place, it all of a sudden unlocks these possibilities that you didn’t realize were there.
David Bright: So one of the things you talked about there is having those people on call and having those contractors that you know, and certainly that takes time to build it up, so part of my question is how do you build up that Rolodex of good people that you can always talk to? And then the other side of that is for the pharmacist that is like totally overwhelmed by that concept of like having to build that out, like what are other strategies for someone to get started that doesn’t have that much time to invest?
Anthony Giuliani: So if you don’t have that too much time to invest and you don’t want to deal with the headaches, I’d definitely just try to hire management right away. Don’t try to self-manage if you don’t want to. If you think that’s going to be a major barrier, just learn about how to screen a manager and you don’t have to have the experience to be a good property manager manager, so don’t be afraid to hire a manager and take away all that extra work from your plate. In terms of finding good help and good contractors and stuff, Facebook is a great resource, like your local Rhode Island group. I found an insurance agent on Facebook that saved me like $2,500 or $3,000 within like two phone calls because I posted, I said, “Who knows — I’m getting crushed with insurance. Who can help me out here?” And they posted a name, I gave a phone call, and he really helped me. And look at reviews. You know, it’s like you’re buying something online. Look at those reviews of these people. Do they answer — my biggest thing is if somebody answers the phone, like a plumber, they answer the phone every single time I call them or a lot of the time I call them, they are on my good side. Like I just need someone to answer the phone, someone to help me. And try different people. I’ve gone through people before where I’m like, you know, they were nice, they were great, but they’re just not running business the way I want to run business. We’re kind of on different wavelengths. So I need someone — even if it maybe costs a little bit more money to go with this company, well, if they’re answering my questions all the time or they’re answering my calls all the time, they’re on time, they get the job done, and they do what they’re going to say, they do what they said they were going to do, that’s what’s most important to me, and the price has to be reasonable. But those are the things that are most important.
Nate Hedrick: Alright, I have to go back for a second because I keep thinking about it, and if I don’t ask, I’ll kick myself. Like you’ve scaled insanely fast, right? At least to my eye. You started looking at this in January of 2020, we’re sitting here recording this in April of 2021, so in — you bought that first property in April 2020, so you’re talking about a year and you go from nothing and like no interest in doing this, right, a vague interest, all the way up to nine units. So like I don’t know, can you just explain to me how you scaled so quick? I know we’ve talked some of the details, but like what made you feel comfortable doing that, going from zero to nine that quickly? I think it’s awesome.
Anthony Giuliani: Absolutely. Yeah, I love this question. I’ll kind of try to break it down into two different sections. I want to talk a little bit about budgeting and finances because that’s kind of what I really did to be able to build up so quickly. So investing in multi-family can require a lot of capital, right? Not always. You can have different strategies like the BRRRR method, you can flip, you can have partnerships, those more creative types of real estate. But when I was looking at it, I was like, I’m a pharmacist, fairly high-paid worker, I’d rather just really leverage my high salary and budget as best as I can and just use that to fuel my real estate investing where I just bring 25% down to the table and I buy the property on my own and I don’t have to do a tremendous amount of work to it, kind of the more simple way. Instead of working in real estate to generate that money, I was like, I’ll leverage my pharmacy career to fuel my real estate. Overall, the two main concepts that I followed over the past little bit of time since I graduated was cut your major expenses: housing, transportation, food, and shopping. Try your best to cut those expenses down. Next, increase your income. Pick up a side hustle. Work extra hours. Do something to get your shovel, your income shovel, a little bit bigger. I want to give you an example of the power a part-time job can really — the power it has. So think about the amount of money you spend each month, that you’re spending each month. That goes directly to your lifestyle. That dictates how luxurious your lifestyle is going to be. Anything left over, the savings that you put away each month to invest, that goes directly towards building wealth and achieving financial freedom. Say you’re a pharmacist. You’re making $110,000 a year, and you’re saving like $2,000 a month. Pretty good. You’re doing pretty good. Say you pick up some extra hours, maybe 5-10 hours a week, and you’re able to generate another $1,500 per month from that side job. It’s about another $20,000-25,000 a year. A lot of people would say, ‘You’re already making $110,000. Why are you going to go grind out another $20,000-25,000? It just doesn’t make sense.’ You’ve got to look at it this way. Instead of now saving $2,000 a month, you’re saving $3,500 a month. So you’re increasing your biggest wealth-building tool by 75%. Just remember, when you’re working part-time, everything gets added on the top. And that’s how you can really make a run at saving money and investing a lot. And you know, especially if you’re young, this game, real estate, grows exponentially. So if you’re able to start when you’re young and get the foundation running, you can really make some great progress down the line. Set your savings goal, work hard to adjust your lifestyle to meet that goal. But set a monthly savings goal, get there, adjust your lifestyle to get there. So I’ll kind of answer your question a little bit more directly now. So the way I did it was I followed everything I just talked about. It took me savings for three and a half years to buy those nine units. Now remember, two of those years I was a resident. And one of those years I was living in Boston. And for only six months out of those three and a half years was I living at home. So it’s not really like — I just want everyone to be clear that if I can do it, they can do it. Because I was a resident for two years and only six months living at home helped contribute to this.
Nate Hedrick: That’s great.
Anthony Giuliani: I didn’t really sacrifice too much of my lifestyle. I wasn’t Dave Ramsey, beans and rice, rice and beans, like sitting in my apartment with the lights off and no heat on in a sweatshirt. Like I was just budgeting, and I was smart about I wanted to go stay in a slopeside Airbnb in Killington to go skiing this weekend. Alright, I’m going to make my lunch for the next two weeks. Just sort of things like that, budgeting like that. That’s kind of how I did it. I worked a lot of part-time during residency. My work-life balance was like probably a 2.5 out of 10. So I was like, let’s just make it a 1.5 and have some money to show for it, you know? At least it stinks anyway. That was a big part of how I was able to scale up quickly. Another part, which is directly related, when I started looking into real estate in October and learning about it, what I did was I increased my financial IQ. I read “Rich Dad Poor Dad,” I learned about finance, I learned about everything related to investing. And I remember thinking to myself, oh man, I wish I had money to invest when it was 2008. That would have been so easy. Those people are so lucky they had money to invest, right? Then March hits, and the market crashes. And I’m looking at my computer, I’m like, ‘Hey man, don’t get cold feet now. This is a grand opportunity.’
Nate Hedrick: Thanks for this.
Anthony Giuliani: Yeah, yeah. I was like, this is a golden opportunity. So I took every dollar I had at the time, I just was closing on that property, so I didn’t have that much, but I was able to save up about $30,000, and I dumped it all into the market. And I was super risky. I bought on margin, I was just putting everything in there. I even called my parents up — and they’re super conservative — and I was like, “You guys have got to get into the market right now.” They’re like, “I don’t know, not too sure.” I’m like, “You have to get in now. This is prime opportunity. May never have this opportunity again in your life.” They’re like, “OK.” So they put in the same amount of money, took essentially the same positions, maybe actually a little bit worse positions than I did, and so I end up cashing in October. I bought in March for $30,000, I cashed out in October at $70,000, so I made $40,000 in that short amount of time.
Nate Hedrick: Wow.
Anthony Giuliani: And I knew I was leaving money on the table when I cashed out, but I was so fired up about buying my next property and getting back in the real estate game, I was like, I don’t care that I’m leaving money on the table, like, I just need to buy more properties. I need to do what my passion is, real estate. And you know, I definitely did leave a lot of potential money on the table because my parents, who took the positions as me if not a little worse, their account is about double what I cashed out in October.
Nate Hedrick: Wow.
Anthony Giuliani: That hurts a little bit, but at least I’m able to give my parents something back after being a financial liability forever, even still now in their house.
Nate Hedrick: That’s amazing.
David Bright: So one of the things you’ve mentioned in here is financial independence, and from your story as I’m sitting in Michigan, I can relate to the cold weather and things and not wanting to be sitting in a cold house just wearing a sweater with the heat off. Like I don’t want that either. So tell me about financial independence, how that looks to you, what that feels like and maybe why that’s a part of your puzzle here.
Anthony Giuliani: It’s a great question because it’s essentially the question of why are you doing this? What is all this for? And that’s really important to reflect on yourself, to answer before you start or at any time. It’s really important to know that answer. So financial independence, defined as when you have enough passive income to cover your monthly expenses, right, that’s at that point when you have enough passive income to cover your expenses, you don’t have to work anymore. You don’t have to trade time for money anymore, the concept of financial independence. Well, I love my job, I need some structure in my life as well, so I don’t want to quit my job. So my view is a little bit different. So for 25 years, I was broke. And — not broke because I had the privilege of growing up in a middle-class family and had a lot of support from my parents — but personally, I didn’t have any money. So it dictated everything I did throughout college and high school. ‘Do you want to go to the restaurant? Do you want to go to the movies?’ ‘Oh, I don’t know if I have enough money.’ ‘Do you want to go golfing this weekend?’ ‘How much is it? Can we go to this course? Can we just play nine holes?’ Money dictate everything that I did, and it was so frustrating. I just wanted to live free. Financial independence to me is being able to do whatever I want, when I want, without letting money ever stress me out for any reason. Now, that’s within reason. I’m not looking to drive my Ferrari to a yacht that I take to Dubai and then a jet back to California. That’s not the lifestyle I’m going for. I’m looking to be able to go out to eat whenever I want, nice restaurants, golf as much as I can, ski every weekend, maybe have a small ski condo up in the mountains, go on vacations multiple times a year, and be generous and not stress about money. Like this year, I just bought my girlfriend $1,000 worth of Christmas gifts. And I did that because the preceding five Christmases, I probably spent like a total of like $200. Like we would skip Christmas gifts because we’ve been together for so long, we’re like, ‘I’ve got everything I want. You’ve got everything you want. Why don’t we just — you know, we’re minimalists, we don’t have to do this.’ But it was finally like Christmas came around this year, I was like, you know what, I feel like just doing this. Like it’s going to feel good because I never had the opportunity and the ability to do it before. And it’s not a materialistic thing, it’s just having that freedom to say, ‘I just want to go do that. It’ll be fun.’
Nate Hedrick: So many people I think resonate with that idea of financial independence not being a ‘I quit my job and now I’m a hermit and I just have my money and I sit on the pile of money.’ Like you’re talking about what I think a lot of our listeners are interested in, which is it opens up your lifestyle to be what you want it to be without that stress. And that’s huge. So I think that’s awesome. And again, I think our audience is going to get a lot from both your energy, your inspiration is huge here, and just the education about how you actually walk through this process. I think that’s been extremely helpful. So really appreciate that. So I think now we’re at a good spot — I want to make sure we wrap things up with our final infusion questions. So these are the same three questions we ask all of our guests. And so we’ll start with the very first one, which is what is one tangible strategy that you use — and I think we talked a little bit about this — but one tangible strategy you use that makes sure that you’re investing does not distract from your pharmacy career?
Anthony Giuliani: So I would say it would be something that I think pharmacists are all inherently good at, and that’s time management. It’s all about structuring your time, structuring your day, to be able to get everything done. And it’s great because being a pharmacist, going to pharmacy school, doing residency, makes you a great time manager and allows you to balance so many things. You know, like I’ve said before, you have to keep them separate. You don’t want to let one of them overtake the other. And you know, having those time management skills of being able to separate the two and get everything done, that’s really where it kind of lies.
David Bright: That’s great. Next question is what’s one resource that has been helpful to you in your real estate, whether that’s a book, podcast, person, author, website, whatever that would be?
Anthony Giuliani: One resource. So it’s going to be too difficult for me to get to one, so I’m going to give a few. But they’re all so important that it’s worth giving more than one. So —
Nate Hedrick: It’s worth breaking our rules? Alright, fine.
Anthony Giuliani: Just a little bit. So Brandon Turner’s book on rental property investing, that’s unbelievable.
Nate Hedrick: Love that book.
Anthony Giuliani: So good. It’s like the Wikipedia, it’s like the foundation. Fantastic. Brandon Turner’s book on managing rental properties, that helps you become a landlord. It comes with like 20 amazing PDF and Word documents, all these different forms and contracts and stuff. I was sending them over on my first property, I’m like, ‘Look at these, they probably think I’m a professional. Little do they know I just started.’ And one thing I think is super important is — or super helpful — Bigger Pockets has a weekly webinar on analyzing deals where Brandon Turner or David Green, they sit down and they analyze a deal like over a webinar that you or I would buy, duplex, triplex, whatever. And they go through all the steps. If you want something super valuable, that might be my No. 1, like that webinar, because that gives you the confidence to see what they do firsthand and learn incredibly well. So those weekly webinars are fantastic. Can’t leave out my man Craig Curelop because he was the straw that broke the camel’s back. Without that book, I don’t know if I ever would have got started in real estate. It was the ignition to the flame. So shoutout to Craig on his book. Craig Curelop has a book on house hacking, sorry. His book on house hacking, if you’re thinking about house hacking, buy that book. I listened to it on tape. That’s fantastic.
Nate Hedrick: Great. We’ll make sure to link all those resources in the show notes. Thank you. And then our last question, what is one piece of advice you’d give a pharmacist that is contemplating a start in real estate investing?
Anthony Giuliani: I love this question because it’s something I think about all the time. I think we’re — pharmacists are perfect for real estate investing. So what I would say is you are without a doubt smart and resourceful enough to be successful in real estate investing. Pharmacists are great learners. If you were able to go through pharmacy school and learn oncology drugs, organic chemistry, medchem, then you are more than qualified to easily educate yourself enough to be successful in real estate investing and have an opportunity to change you entire financial trajectory, maybe even your future family’s financial trajectory. It’s like if an NFL player wanted to start playing basketball. It’s a completely different sport, right? But those years of dedication and focus to speed, coordination, athleticism, it’s going to be a major advantage compared to your average Joes, like if you were to go play basketball. So pharmacists are like the NFL players in this analogy. We’re the professional learners, we’re the critical thinkers. We already have this inherent advantage that we can use. Now, we also have an inherent disadvantage that I think we need to recognize. We’re not risk-takers. We’re afraid of taking risks. So work on what I say ramping up that risk management department in your brain. Get that rolling. Look at those risks dead in the eyes, analyze them, really dig deep and unpack them. Because once you look at them and you understand them, they’re not as scary as they seem to be. And I kind of just want to give an example about how you don’t have to get into real estate and buy 100 units. You can literally buy one or two properties and have it completely change your life and your financial plan. So I’ll give an example about the triplex that I bought, how it essentially allowed me to never pay for a college expense ever again. So let me kind of explain that. I’m ready to buy this triplex and it cost me $80,000 for the down payment. Now, I could either spend this $80,000 on the rental property or at the time, my student loan balance just happened to be about $80,000. So I’m thinking, hmmm, should I do the rental property or should I do my student loans? Both of them would result in me gaining an extra $1,000 a month, whether it’s the debt payoff through the student loans or the rental property through the cash flow. So I said, you know what, why not buy the rental property, cash flow $1,000 a month, have that pay off my student loans? That way, 10 years down the line, that $80,000, if I spent it on the student loans, it’s gone. Spending on a rental property that $80,000, it’s not only still there, but it’s doubled by then because of loan paydown and appreciation. So now it’s $150,000. I’m 27, probably maybe have kids like five years from now, who knows? Essentially if I were to have kids and they were to go to college, it’s going to be like 25 years from now. 25 years from now, that triplex is essentially going to be paid off, and it’s going to appreciate. And there’s going to be extra cash flow in there down the line too. I’m going to be able to pull away from that deal maybe $300,000-400,000 25-30 years from now. That’s going to pay for my kids’ college. Now I bought this triplex, I got my student loans paid off, I don’t even have to worry about saving for college anymore because it’s invested already. Obviously it’s not as black-and-white, right? You’re taking on risk, you have to manage the property, there is some silver lining, but just think about the amount of power and influence that could have. I like to say if you’re able to build up, work really hard over the next five years, you build up that $3,000 of passive income in real estate, that $3,000 will buy you a property in itself every two years. It’s exponential. Imagine what your picture would look like 10-15 years down the road if you just set that little basis. So I’ll leave you with kind of my last thought, and this was a thought that really almost inhibited me from getting into real estate investing. And I think it makes a lot of sense too, right? So I’m thinking to myself, it took me eight years, eight years, six school, two residency, of intense focus and dedication and about like $200,000, maybe more, to obtain my dream job of making a six-figure pharmacist salary. I was like, so you’re telling me that I can just read a couple books, listen to a couple podcasts about real estate and generate like a significant amount of income? I just wasn’t — I didn’t understand like if I were to do this real estate thing, I’ve got to put in the amount of work I just did in pharmacy comparably, I was like, that’s not going to make any sense. Luckily, I couldn’t have been more wrong. And I was right. All you did have to do is put in a couple months of self-education. Maybe it’s the equivalent of taking one class for a semester, the amount of energy I put into learning about real estate, maybe two classes. And I was able to set myself up to make a significant amount of money. So that was a thought that almost tripped me up, but that could not be a more wrong line of thinking.
Nate Hedrick: Anthony, that’s awesome stuff. And I think one thing that really resonated with me there is the do I pay off my student loans or do I throw it at this rental property? Because I’ve had that exact conversation. I’ve actually had that conversation with Tim Baker, I’ve had that conversation with my wife, we’ve made that decision, and we came to the same kind of conclusion that you did, right? It feels good, it might feel a lot better to throw that $80,000, like you said, at the loan right now. But does that set me up for the financial picture I’m planning for 10 years down the road or 20 or 30 years down the road? So that’s great advice, and again, if anybody didn’t key in on that, go back, re-listen to that because that’s a really great point. So really appreciate it, Anthony. I think this has been an awesome bit of advice for our audience, and if anyone’s interested, you know, where can they find you?
Anthony Giuliani: Absolutely. So I — as an ambulatory care pharmacist, I love teaching and I love mentoring, so I started a little mentoring service where I help people get into multi-family investing. I’ve helped four or five people now, just close friends and family with house hacking to buying property straight out and just to accelerate that learning process. So if you’re interested, you can email at rei — so real estate investor — [email protected]. I’d be happy to chat with you, talk to you, hear what your goals are and what your questions are and work together to get you into this game. And I’m sure you’ll be super happy with the result.
Nate Hedrick: That’s great. Excellent stuff. Anthony, really appreciate you coming on the show. I think, again, just a fantastic episode. And I’m really glad we had that initial chance to connect on the Your Financial Pharmacist Real Estate Investing Facebook page. It’s led to this great interview.
Anthony Giuliani: I appreciate you guys having me on. I mean, I think what you’re doing is absolutely fantastic. And I’m so excited that there is a real estate pharmacist podcast and group that we can all get together and spread this knowledge. It’s amazing. So thank you guys so much for having me on.
David Bright: Thanks so much.
Nate Hedrick: Absolutely.
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