Leveraging Partnerships for Passive Investing
Mason Goodman and Senate Eskridge share about their real estate investing partnership, how limited partnerships, general partnerships, and syndication deals work, and how busy pharmacists can get involved in real estate through passive investing opportunities.
About Today’s Guests
Senate Eskridge
Senate Eskridge is an avid real estate investor who currently owns a managed portfolio of single and multi-family homes numbering over 300 units across the country. Senate has over 5 years of experience in real estate investing. He has more than 20 years of experience in business development, management, and sales. He hosts a real estate investors group in his hometown, bringing investors together to network and learn from each other. Driven by self-development, Senate has completed numerous courses, including Dale Carnegie leadership training.
Mason Goodman, PharmD
Mason Goodman has been a pharmacist for 3 years and got into real estate to supplement his w-2 income. He currently plays an active role in eight short-term rentals with his partners and a passive role by providing private capital in multi-family deals. It’s still early in his journey but enjoys the process of networking and teamwork that’s involved with real estate.
Summary
Nate and David often hear from listeners that they are interested in real estate investing, but don’t have the time, investing seems too complicated, or that they would be more interested in a passive opportunity. This week, they tackle this objection by discussing partnerships and syndication deals with real estate investor Senate Eskridge and pharmacist turned real estate investor Mason Goodman.
Senate and Mason describe various types of partnerships, particularly limited partnerships, general partnerships, and how each works in a syndication real estate deal. Mason shares his start in real estate and explains that he is actively involved in s number of short-term rental investment properties but wanted to grow his investment portfolio without contributing additional time as a busy pharmacist. A limited partnership seemed to be the answer, allowing Mason to contribute capital to a syndication deal and reap benefits from his investment without dedicating additional time and energy to the project. Similarly, a partnership of this nature seems ideal for Senate, who possesses a passion for real estate and providing value for others while taking down massive real estate deals. This symbiotic relationship provides value to all parties involved. Mason and Senate agree that with excellent communication and understanding of risk, a partnership of this nature can be an option for pharmacists and other professionals who have the capital but not the time to contribute to taking the lead on real estate deals.
Mentioned on the Show
- YFP Real Estate Investing 024: Investing in Apartment Buildings
- YFP Real Estate Investing 021: Setting Your Mindset for Success with Ketan Patel
- Join the YFP Real Estate Investing Facebook Group
- BiggerPockets
- BiggerPockets Real Estate Rookie Podcast
- The Lifetime CashFlow Through Real Estate Podcast
- WheelBarrow Profits Podcast
- Passive Investing Made Simple: How to Create Wealth and Passive Income Through Apartment Syndications by Anthony Vicino and Dan Krueger
- Connect with Mason Goodman on Facebook
- SenateEskridge.com
- Email Senate Eskridge: [email protected]
- Connect with Senate Eskridge on Facebook
- Follow Senate Eskridge on Instagram: @senateeskridge
- Connect with Senate Eskridge on LinkedIn
- Connect with Senate Eskridge on BiggerPockets
- YFP Real Estate Investing
Episode Transcript
Nate Hedrick: Hey, David, how’s it going?
David Bright: Hey, good, thanks. How about you, man?
Nate Hedrick: Good, man. It’s been a good week. I know both of us have been talking a little bit about tenant turnover this week. You actually mentioned on the last episode I think, right, that you had a tenant that moved out without warning. What’s going on with that?
David Bright: Yeah, we did. This was a little bit of an odd one, but kind of the first time we’ve been through this. It was really nice to have a property manager kind of guide us on what to do. What the property manager essentially said was that this was a property that we had bought with inherited tenants. And they had a lease that was under market rent. I didn’t realize quite how under market — I knew it was a little bit under, but the property manager said that we should get in there, we should clean it up, spend maybe $1,000 or $2,000 on new paint, that kind of stuff, but then they wanted to increase the rent almost $400 a month and repost it. So at the end of the day, I think it was another reminder for me about how important that team is to have a property manager that can do that assessment, can manage that situation, can get someone in there to do all the painting and do all the work. And so hopefully it’ll just be a few weeks and we’ll have the one back on the market and ready to go at a much higher rent rate.
Nate Hedrick: Yeah, that’s great. And did you go after that tenant for the lost rent or just said, look, we’re going to turn this over anyway and the market is so available, it’s just not worth the effort?
David Bright: Yeah, this one, because they moved out so quickly after we owned it, I’d have to look into that. We haven’t got that far yet into what’s worth it or not. But I don’t know that they’d even owe us all that much rent because of how little time there was.
Nate Hedrick: Gotcha. Especially if they were a month-to-month or something like that.
David Bright: Right, right. But I know you’ve got a tenant turnover situation yourself that’s a little more than just a few weeks.
Nate Hedrick: Yeah, we’ve been dealing with an interesting eviction recently. We have a property that we acquired with an inherited tenant as well. We knew they were not paying, we knew it was going to be a bit of an issue. But unfortunately, they’ve just been difficult basically to work with, not very communicative, which is really the problem, right? If we can communicate with someone, we can work together. But if they’re not going to communicate, there’s not much other options we have. So again, in this case, got to lean on my property manager, and they were working through the eviction of that tenant. Unfortunately, the courts are pretty backed up with all of the eviction moratorium stuff and back-and-forth. In this case, it’s not even that the tenant is not paying, it’s that we need the property back to rehab it and get into a safe living condition from where we bought it. And again, they’re not giving us access, things like that. So I am told we have a court date coming up very soon, which is good. Hopefully get that person out and get them into a safer living environment, and then we can get the property fixed up. So it’ll be nice. But it’s just been pretty drawn out. I think we bought that property in May or June and it’s still occupied here in October. So we’ll get it sorted eventually.
David Bright: Yeah, and I know that stories like this tend to freak people out in some cases. Like I tend to hear people interpret this as one of two ways. Either Option A is they hear a tenant turnover eviction story and they’re like, ‘Oh, I could never do this. Real estate is so not for me. There is no possible way.’ Or people say that with the right team handling things, I could do this. And I think that one of the lessons that we took from today’s recording is that value in teams, finding people that are just like, you know what, this is just a lot and I don’t know if I want to learn all this and do all this, but I want to invest in real estate. But I don’t know about all of this. And other people that have gotten deep into the weeds and have done really amazing things and they’re looking for partners to come along and bring some financial support with that.
Nate Hedrick: Yeah, I think that’s super important because not everyone wants to do all the stuff that we talk about all the time. You’ve got pharmacists or investors that want to be more passive, and that’s actually exactly who we have on the show today. So Berta and Mason — Mason Goodman is a pharmacist that looked at real estate and said, ‘That is absolutely a part of my portfolio that I want to have. I want to diversify into real estate. But I don’t want to be the one that goes out and looks at a property or swings a hammer or talks to tenants or even deals with a property manager that much.’ And so he actually connected with a local real estate investor association — definitely recommend checking those out for your own local market — and he connected with an individual named Senate. And Senate is a real estate syndicator, investor, multi-family real estate investor that looks at these bigger properties. And so he was able to work together to find some deals that Mason could be a limited partner in. And we talk on the show what that actually looks like, but it basically means that you can be a much more passive investor than traditionally where you’re not actually doing any of the property management work, you’re not finding the deals, you’re simply providing capital to an investor who goes out and does all that stuff. And then you’re getting a return on your investment similar to buying a stock or buying a share in a company.
David Bright: Yeah, and I definitely don’t want to undersell what Mason’s done because he’s also done a lot with short-term rentals and other things, but this is one way that he was able to diversify and be a part of other real estate investments without it taking a ton of his time because he essentially brings money to the deal and other people do the legwork. So it was just a really cool picture towards the end of how that win-win situation can be built. And not to undersell Senate either. He had — like I love being able to pick the brain of someone like that who’s been around the block in multiple market cycles and all those kind of things because there’s at one point towards the end where I asked Senate a tougher question about where he thought the market was going and what does that mean for some of these real estate investments as we’re looking fall 2021, the market has risen like crazy. Like what’s next? What’s coming next? And I loved his answer. It wasn’t this like arrogant, ‘I know it all,’ crystal ball kind of answer but a very honest unknown. So stick around to the end. He has a great answer to that question.
Nate Hedrick: Yeah. Love that. You know, one of the things we don’t mention in the show that we realized after we recorded it and something I think I want to bring up is that if you are interested in a syndication relationship — and we’ve talked about these a couple of times now on the show. We had Savannah on, we had Ketan on, and now we’re talking to Mason and to Senate. We realized that in most syndication relationships, this is not something where you can buy in with just a couple of thousand dollars. In most cases, even if it’s being done as a non-accredited investor, which is something we can absolutely get into on another longer show, but even as a non-accredited investor, you’re still looking at a minimum of about $25,000 to maybe $50,000 of investment. So you know, we talked through a lot of the things that make this more passive and easier to get into. One of the kind of limits or one of the downsides is that usually, you have to have a little bit more capital up front than I think some people might realize. So take that into account as we’re talking through things today. Those minimums are usually in place for most syndication deals.
David Bright: Yeah, and just to emphasize, that’s for the syndication kind of relationships. If you’re looking to just get together with a few friends and flip a house together or something like that, that could be a totally different story. There’s not necessarily the same amount of limits and minimums and things like that when you’re just getting a few people together and kind of designing your own partnership structure. But a syndication is a whole other animal where you’re pooling investors and buying very large assets.
Nate Hedrick: Perfect. Well, I hope you guys enjoy the show, and we’ll take you to the interview.
Nate Hedrick: Hey, Mason, Senate, welcome to the show.
Mason Goodman: Thanks for having us, Nate.
Senate Eskridge: Yeah, excited to be here.
Nate Hedrick: Yeah, we — Mason, I saw your post on Facebook, and we knew we had to reach out and just get some more information, learn more about what you guys are up to. And you got us connected with Senate, so we’re excited to have you both here. You know, with that in mind, why don’t we just jump right in. Senate, maybe you can start us off, tell us a little bit about yourself. And then Mason, you can jump in right after and tell us a little bit about your story and what got you here today.
Senate Eskridge: Thanks, Nate. I appreciate that. I’m excited to explain that. So I’ve been working in financial services for almost 15 years now. I started out helping people do investments and in stocks and mutual funds, things of that nature. I quickly found out that I was much more drawn to real estate investments. And as I’m sure you know, helping people invest in stocks and bonds doesn’t mix well with helping them invest in real estate. So I stopped doing that and dove headfirst into real estate. I started out in the single-family space. And got up to the point where I had 14 single-family homes, a mixture of duplexes, triplexes, things of that nature. And it just didn’t quite mesh with my goals. It was taking a lot of time, and I wasn’t going to be able to get my passive cash flow goal as fast as I wanted. And then I discovered apartment complexes and fell in love and been doing that now for quite a while.
Nate Hedrick: That’s awesome. And Mason, what about you? Maybe give us your pharmacy story and again, how you maybe got connected initially with Senate and then what brings you on the show today.
Mason Goodman: I graduated from Idaho State University in 2018. I did a PGY1 at a local 200-bed hospital here in Twin Falls, Idaho. And currently working for an independent pharmacy. And then as far as getting started in real estate, I mean, I was working the W2 job and I just felt like, you know, I needed to do something else as far as whether it be a side hustle or something passive. I just felt like I had to move forward something financially to retire a little bit early, you know, just striving for that FIRE movement, you know? I kind of connected with Senate and three other partners and kind of just picked their brains, networked. And a year and a half later, here we are doing this 18-unit and hopefully future deals together. So some good stuff.
Nate Hedrick: That’s great. And you know, we hear a lot — we talk a lot with pharmacists that are actually going out and doing the work, right? They’re the ones that are finding the properties, they’re buying it, they’re rehabbing it, they’re renting it. But you looked at it and said, ‘Look, I want this to be more passive. I don’t want to jump in, learn all this stuff top to bottom. I want to learn enough to be dangerous, and then I want to go out and find a partner who is the expert.’ And so that’s what we kind of want to dive into is talk a little bit about what that partnership looks like, what a syndication deal is. But I guess to get us kind of started, why did you feel like that was the better fit for you? You know, where everyone else is reading “Bigger Pockets” and listening to podcasts and saying, ‘I’m going to go do it myself,’ you said, ‘I’m going to go passive.’ So talk to us about that thought process and how you got there.
Mason Goodman: As pharmacists, we make pretty good income. And I just knew I didn’t have time to analyze the deals, look at properties, deal with contractors, all that stuff. I knew my strengths and weaknesses from the very beginning. And I, you know, talking to these guys, I told them, ‘Look, I have capital, liquid capital, that I can disperse at any time. Is there — can we get into a partnership? Can we do something together just to kind of bring our strengths and weaknesses together and do these deals?’ Because I just honestly didn’t have the time nor desire to do any of that stuff because I like spending time with my wife and my corgis. So I just knew what I wanted at that point in time. I just didn’t want to be as involved like a lot of other people. It is very time-intensive.
David Bright: You know, and Senate, can you talk us through kind of the other side of that? So I know you’re doing a lot of the hustle on this, right? Like right before we started recording, you talked about how you had a nine-hour day of going through a huge apartment complex and getting deep into the weeds here. So can you tell us kind of the other side of that story, why you love being active and working with people that love being more passive?
Senate Eskridge: You know, I’ve always been somebody that likes to be productive. And you know, a lot of people talk about being busy. And I’ve always focused on rather than being busy and having a bunch of busywork, I want to take a day and when I’m done with it, look and say, ‘I did that,’ right? ‘I accomplished something.’ And so I just enjoy accomplishing something throughout every single day. And in doing that, I found that I can add a lot of value to people that are busy doing other things in their lives. So because I can take nine hours going through apartments today, looking through every nook and cranny, trying to figure out what the problems are, where the cracks are, what the upside is, and where the value is, I can now take that and give that to somebody like Mason and give that value to him. I’ve always believed in the go-giver concept. You know? And the more you give, right, the more you get. And so I want — I just enjoy doing those types of things. And I’ve done that my entire life. And just found a way to give value to them.
David Bright: No, that’s great. It seems like a great match too, that the two of you have found each other in that partnership arrangement. It seems like it really creates that win-win for the goals that you both have. So from that then, I know there’s a lot of different ways to structure a partnership in real estate where you could put something together. I don’t know if you could talk for a minute about maybe different ways that you’ve seen that done where either just a couple people work together or maybe more of — I know we’ve talked on recent shows about the syndication model where many people come together. So what have you seen? And kind of can you give us an overview of what that looks like?
Senate Eskridge: Yeah, so there’s a lot of different ways to do this. So you alluded to one earlier about people going out and doing things on their own, maybe as a sole proprietor or a single person doing all of the work on a deal. That obviously takes a lot of time and resources because you have to do everything from find the property to analyze the property, actually take it through due diligence and purchase it. And then if it’s a flip, right, you actually maybe even have to swing a hammer. Then you have things, which is what they call a partnership or a joint venture, where there’s 2-3 people, something like that. They kind of divide that work. Maybe one finds the deal, another one finances the deal, they sign on a loan, go to the bank, whatever that looks like. And then on the backside, somebody that’s also doing the construction work. So you’re dividing up that work amongst a small group of people. And then there’s also what they call a syndication. And what a syndication is, specifically in real estate, is where a larger group of people get together and they take down a deal that is maybe too big for two or three people to do on their own. Inside of a syndication, you typically have two different types of partners. You have what they call a general partner or another term for it is an operator or a managing partner. These are the people that are doing all that work that we talked about earlier, finding the property, putting together all of the due diligence, maybe putting out the earnest money, walking the property, finding the deal, taking it to the bank, whatever you need to do to make it and put a deal together. These guys are putting a lot of blood, sweat, and tears into these properties. Literally sometimes. And they’re taking on a lot of risk. And then they have what they call a limited partner, which these guys are typically just putting in some money, maybe a little bit of work here and there, but really not a whole lot. They’re a lot more passive. These guys usually, we look to them for the funding to bring the deal together. And then they just get to sit back and get a return on that money that they put in. One of the nicest pieces of being a limited partner, that term is really important because they’re also limited on the risk typically, right? Being a limited partner, the risk is really limited to the amount of capital you put into the deal. Those general partners are taking on all the other risks.
David Bright: OK. I think that’s very helpful, and I think that that further clarifies this win-win of Mason is looking for the limited time investment so that he can spend time doing other things that he enjoy. You don’t mind putting in the time, the blood, sweat, and tears and everything there, and you find joy in that. So that really works. So then Mason, when you’re looking for investment opportunities like this where you can be a passive investor, you probably just Googled around and found Senate and five minutes later, you just wired him like $100,000 and then it was done, right? Like I’m sure that wasn’t the case. But like what kind of due diligence did you do? Or how did you even find Senate and then know that you were comfortable giving this guy that you barely knew a big chunk of money to go buy a building somewhere?
Mason Goodman: Yeah, so like I said, we met at a local real estate meetup. And Senate was there and same with my — some other individuals. And we kind of just kept going every — I think it was the first Thursday of every month or whatnot. And typically, it was just us who showed up until recently when Senate kind of took over the whole meetup group. And now there’s a lot more individuals who go. But that’s besides the point because he’s a good guy and good at what he does. But it took a lot of meetings with Senate to make me feel comfortable doing this. I think one of the best things to have in an operator who does deals like this is just availability and there to answer questions. You know, Senate will respond if he doesn’t have time, he’ll tell you when he’ll make time at a later date and kind of reschedule. We met several times for lunch. He was available via Zoom or phone calls. I mean, he was just available to answer any questions, any concerns, you know, that comfortability aspect and relationship that we kind of had together. And then it also helps that we all know each other as far as partners are concerned with my other partners on our short-term rentals. So we’re all kind of just buddies into this, I mean, professional and outside of thing. So like I said, that relationship just grew together as a whole. And we know our roles and every position here. But I mean, it’s not like I was like, ‘Oh, Senate, I like you. Here’s a good chunk of money. Do something with it.’ That wasn’t my feeling at all. There was a lot of due diligence and comfort there, you know. Trust, I should say.
Nate Hedrick: That’s super important. I feel like those — that networking, those conversations, like that’s how you create that. Like you said, you didn’t just Google around and pick the top hit, right? This is a lot of time spent speaking with those individuals, talking with them, reading how their philosophies work, getting to understand them. That’s how you build a true partnership, which I really like. So then I guess the flip side of that is Senate, you know, how do you build the credibility as a syndicator, right? It sounds like you’ve got a lot of experience there. Is that where it all generates from? Or do you think that there are other things that you’ve done that have started to build that ability as an operator to allow people like Mason to look at you and say, ‘Yeah, this is a guy that I can trust and this is somebody I want to work with.’
Senate Eskridge: You know, credibility — there’s a lot of ways to build credibility. Obviously, the experience that I have is something that really helps me in that process. I also believe that networking is something that I’m really good at and getting exposure and just getting out there and meeting people, that really helps. The No. 1 thing, obviously, is to make people money, right? You make a few people money, the word gets around that you’ve done some good things. And so more people will want to come in and help as well. But I focused on, again, back to that go-giver concept, I want to deliver as much value as I possibly can. So I work on writing articles and creating content and finding what it is that I can give to people to help better their situation. With Mason, for example, I asked him a ton of questions when we first started getting to know each other. What is it that you’re looking for? And I tried to find that way that I could add value to him. And again, the more you give, the more you get.
Nate Hedrick: Love that. Love that.
David Bright: So I know that that is kind of how you’ve worked in larger partnerships. Is there anything that’s different when you’re working on a smaller project where you’re just working with one person? Are there different ways that you look for partners when it’s just two people coming together versus a larger group?
Senate Eskridge: Yeah. So the most important thing I think when you’re looking at a partnership, no matter the size, is to know your role. And make sure that the people you’re working with have a complementary skill set. Now, I say complementary, not the same. Right? So David, you’re a little different than Nate, right? I can already tell that. And Nate, you’re a little different than David. If you were the exact same personality, you wouldn’t need both of you. You know? So there’s so many sayings I can think of, but if everyone around you has told you yes all the time, why do you need them? So when I have just one person I’m going to deal with, I’ve made sure that they can do something that I can’t do or simply don’t want to do. So figure out what it is that you’re good at, what you want to do, and focus on those things.
Nate Hedrick: So I think one of the things that would help me too and I think might help our listeners is understanding this process from each of your perspectives. So if I’m Mason, right, and I’m interested in buying a deal, let me start with you Senate, maybe walk us through what it’s like from your perspective to put one of these deals together or to evaluate it. And it doesn’t have to be in all the gory details, right, That four hours you spend walking properties today, but kind of the basics of what it looks like from the beginning to acquiring that deal and then how and where those partners, those limited partners, might dive into that. And then once we get through that, you know, Mason, I’m going to turn it over to you and kind of ask the same thing to see what it’s looked like from your side. I think that would help our audience out.
Senate Eskridge: Well, evaluating a deal is very important. And I think as a limited partner, you need to know how to evaluate a deal as well. But I think more important than evaluating a deal as a limited partner is to learn how to evaluate the operator, right, and evaluate the person that you’re working with. Because unfortunately, sometimes when a deal comes together, they move really, really fast. And yes, of course you need to know what questions to ask, but you also need to make sure that you’re trusting the person that’s coming to you. So I would actually recommend that you spend most of your time up front vetting the operator, learning what it is that they do and how they run their deals, what their past has been like, to see if your skill sets align. Because the way the process works from an operator’s perspective, they start off looking for deals by going off-market, maybe cold-calling owners, and calling up literally hundreds of owners of properties saying, ‘Hey, I’m an investor. I work with a team of other investors. I’d love to buy your property.’ At the same time, they’re calling every real estate agent, every broker in the area. It’s a ton of time on the phone and sending emails and texts, all that type of stuff, just to get one deal in their pipeline. And then once they get the deal in their pipeline, now they have to start the due diligence. You know? And that could be doing research on the internet for countless hours, looking at a property, running through spreadsheets, doing detailed financial analysis. I spent five hours the other day just looking at tax records and past transactions on properties, things like that. And like I told you, today earlier, I spent nine hours going through 81 units today. You know, it’s a lot of due diligence and a lot of research. And then once you get your final number together to what you can offer on a property, that’s when I think the real work starts. You put in an offer or in our industry, they call it an LOI or a Letter of Intent. Basically, its, ‘Hey, I want to buy your property. And here are my terms and my price.’ The seller accepts that, and now all the due diligence goes through everything from inspections, detailed walkthrough of every unit, actual putting pro formas together, bank loans, talking to bankers, just a ton of stuff that all of these people, these operators, have to do ahead of time. Then by the time it comes to advertising the deal to other investors, people like Mason or yourself or your listeners, the time gets to be pretty short because the operator has already done of this stuff ahead of time. And now, the closing time is coming. And so they’re going to do a few things. They’re going to put out a deal package or a flyer, basically, for lack of a better term, that says, ‘Hey, I’ve got this opportunity. Here’s where it’s at. Here’s maybe a picture or two. Come to this presentation,’ right? Whether that’s a one-on-one or maybe a dinner presentation or a Zoom call or something like that. And by the time that is done at the end, that operator is going to ask for a soft commitment. Now, that soft commitment, you don’t actually have to wire money at the end of that. But he’s going to say, ‘Hey, Nate, are you interested in this? And if so, how much money are you looking to put in?’ Right?
Nate Hedrick: Yep.
Senate Eskridge: It’s important for me to know because your friend David over here, you know, he just told me he’s going to put in $100,000, right? And if you give me a soft commitment, then you get to do your due diligence. You get the investment packet, right, or the contracts or what we call a PPM or a Private Placement Memorandum, basically this is all of the details and everything you’re going to get when you give somebody money. Once you’ve had a chance to review that, then you can wire in some money. But here’s the thing: The wire, they’re first-come, first-served. And if Mason has put his money in and David’s put his money in, and I don’t have any more room for Nate, we’re going to talk about the next deal, buddy.
Nate Hedrick: Yeah.
Senate Eskridge: You know? So the point is yes, you can do as much due diligence as you want, and I highly encourage you to ask every question and make sure you understand the deal to the point where you’re comfortable. But it would be a lot easier if you’ve already done your due diligence on the sponsor ahead of time, the operator who’s actually going to be running the deal, what they’ve done in the past, what is their reputation. That way when they come to you and they give you an offer, you can move a lot quicker.
Nate Hedrick: That makes a ton of sense. I love that. And Mason, it sounds like that’s what you’ve done, right? So walk us through then from your perspective what that looked like on the other side when you did your first deal.
Mason Goodman: It was super fast. Senate comes up to me, ‘Hey, I’ve got something for you.’ And essentially then the next day, he’s getting a check from me. It was — yeah, the deal was, it was quick. But I mean, Senate was easy to work with through the whole terms. I mean, I asked for the operating agreement before it was all done, just so I could look through it and see some of the terms and conditions and things like that associated with it. But I mean, I told Senate basically from the very beginning when we first met, I mean, my role in this whole real estate investment journey is basically just providing some private capital at that point. Like he said, he interviews the individual to kind of see — he likes to understand where they’re coming from, what their experience is, and what they want where he can add value. And I mean, he was valuable just finding the place, property, because of all the work he did. And I’m just doing the money aspect or passive investing aspect. But essentially, like I said, we met several times to discuss my role, my risks associated with it, payouts, things like that — estimated payouts, I should say — because there’s a lot of variables involved. And really, I wanted to know the risks associated with that because as pharmacists, you know, we’re pretty risk-averse and we kind of like to know every nook and cranny that could go wrong, worst case scenario that could go wrong. He walked me through that situation so I knew worst case scenario what would happen at that point. But yeah, I mean, it just kind of went — gave him the check and the rest is history. I honestly almost forgot about it.
Nate Hedrick: Yeah.
Mason Goodman: He keeps us updated. Every month, we get meeting minutes that I just received the other day. So I kind of reviewed all that. And he keeps his investors, you know, shares a Google file with all of us of all kinds of interesting stuff. So he keeps us on board. The more information, the better I think is kind of his philosophy.
Nate Hedrick: I love that. So you can actually follow up along the way. It’s not like you just send a check and occasionally a deposit shows up in your account. Like you can be involved as much as you want to be with that information if you’ve got a good operator. That’s awesome.
Mason Goodman: Exactly. He lets you know, he’s like, ‘Just realize this is a value-add property, so the payouts aren’t going to be immediate by any means.’ And he set those terms and expectations right up front, you know. And some investors kind of, you know, may feel like, ‘Oh, I need to see something now.’ But I knew what I was getting into. And he laid that out, which was very comforting at that point.
Nate Hedrick: That’s great.
David Bright: Yeah, a lot of partnerships that I hear about like this are more in that value-add space where someone’s looking to buy a property and then make some improvements. I know in the single-family space, people that flip houses can often do that pretty quickly. I mean, we’re talking weeks or months. But I’m sure it takes a little bit longer to flip an 81-unit apartment complex if that’s the play. So one of the things that I wanted to unpack for a minute here if we could, could you talk about how long these partnerships generally last? Are they one-year, two-year, five-year, 10-year? Are there opportunities to say, ‘You know what, I need my money back. Can I jump out early?’ Like how does that all work in a syndication or partnership like this?
Senate Eskridge: That’s a very important thing to understand before you get into a deal because these are typically very illiquid partnerships. In other words, getting out of them is not very easy. Can it be done? That depends. I would say the most common timeframe for a deal like we’re talking about is between 4-7 years. I’ve seen them as low as 2 or 3, and I’ve seen them last as long as 10 years on the advertised. But I actually know a couple of deals that they don’t plan on ever selling. Now, they’ll probably do a refinance or something like that to get some of the capital back. You know, imagine if you could buy or put some money into an investment and then three years or so, get all of your money back but still own the property forever, right? Of course, not everyone can do that. And it’s awesome when it can happen. But a lot of people try to do that. So the short answer is typically around that 5-year mark, right, that 2, 3, to 7, somewhere in that range, sometimes longer, sometimes shorter. The actual getting out early, that can be really challenging. Obviously you need to read your contract beforehand to tell you exactly what it is. But the most common way that I’ve seen that set up is if you want to get out early, you can go to the general partner or the operator and ask them to buy you out. Now, if they have the ability to do that, they probably will. If they can’t, then you can go to the other lended partners in the deal and ask them to buy you out. If they have that opportunity or that ability, then they probably will as well because if it’s a good enough deal for them to be in, they’re probably going to want more. Right? Now, if both of those people pass on the deal, you can go and try to sell your — for lack of a better term, let’s call it shares, right — your portion of the deal to someone on the outside. But that person would always have to be approved by the general partner. Right? So if Mason wanted to sell his share to you, right, I’d have to approve him before you could come in — approve you before you could come into the deal.
David Bright: I think that’s a super important thing to know. And I agree that this is a relatively illiquid investment. It’s more of a business partnership, and you can’t just like go on the app and sell your shares, you know, like you can with other things, you know? So that’s really important to know. Second piece about it being a five-year-ish term, I think at any point in any real estate market cycle, there’s always someone saying that the sky is falling, we’re going to see a crash tomorrow, it’s going to be terrible. And so how do you work through that when you’re doing your financials, when you’re five hours deep into Excel and you’re trying to predict where this property is going to be in five years? How are you kind of filtering through that right now, knowing just this wild ride market that we’re in?
Senate Eskridge: I’ve always believed that if you can hold real estate long enough, it’s going to go up. So I’ve always made sure that every time I looked at a deal, I had at least two, preferably three exit strategies. And one of those exit strategies could be to hold it. Right? Hold it through a crash. Because in real estate, if the market crashes when you own real estate, as long as you can make the payment, right, you just wait for it to come back up on the other side. You know, if you look at real estate over the course of time, it’s gone up, it’s gone down. You know, it’s had some peaks, it’s had some valleys. But over the course of time, it will come back. That’s just the way it typically works. As long as you maintain the building and you know, you don’t have — you’re not in a city where there’s only one industry and that industry goes bankrupt, so as long as you’re in the right areas and you have the right assets, eventually, that product will come back. So that was a really long answer to say, make sure you’ve got at least two, preferably three strategies of what to do on the other side.
David Bright: And that is so important. That — like that, I think that tidbit right there I think applies to whether it’s a single-family house you’re looking at, whether it’s a duplex down the street, whether it’s an 81-unit apartment complex, multiple exit strategies, especially for a safety-oriented, risk-averse pharmacist, multiple exit strategies and having enough cash flow to pay the monthly payments with the property so that you don’t have to feed the investment if it goes sour, like those are just really great tips.
Nate Hedrick: Yeah, I love it. And I guess one of the things that I’m, like I’m thinking about as we talk through this, obviously Mason is a good example of someone that wants to stay that limited partner. Do you have people that you work with, Senate, that are — I don’t know — like a halfway between that where they are limited because they don’t have the experience and the knowledge but they want to start gaining that? Is that a great way for someone to get that knowledge, become an operator? Or how did you jump in to like learn that stuff up front?
Senate Eskridge: Well, that’s two different questions.
Nate Hedrick: Right.
Senate Eskridge: Let’s start with the first one about somebody that’s limited and wanting to learn more. I would say, again, that goes back to knowing that operator. Because I’m actually a limited partner in a couple of deals as well. And I can tell you, one of those people is totally transparent and encourages me to ask as many questions as I possibly can and wants me to learn from them. And it’s almost — it’s almost like a mentorship, almost. Like I paid to invest with him and he became a mentor. Another one that I invested with, it’s like pulling teeth to get anything outside of the monthly investor report. He doesn’t want to talk to me, right? So that goes right back to that person. Right? So if you want to learn from somebody, make sure that you’ve got that ahead of time and that they are somebody that’s willing to take the time to teach you and personally, I’m willing to do that. I’ve got a couple of people that are invested with me that I want to open the entire thing to and teach them and actually bring them in as partners and they’re helping me now find the next deal. So I have somebody literally making phone calls with me and finding the next apartment for me to go look at. And so I’m teaching them what to say and how to do it. They’re going to get a piece of the deal on the next one for sweat equity.
Nate Hedrick: Love it.
Senate Eskridge: So it goes back to that sponsor. Your other question, just make sure I heard it right was about me and how I started learning.
Nate Hedrick: Sure.
Senate Eskridge: Obviously, my first thing that I did was I went and bought a house. I just bought it. Just did it. You know? And just pulled the trigger and then went after it. That was a small deal, you know, a $100,000 house. End of the day, if you lose that, it’s not like you’re going to go bankrupt. And that’s important because all of that that came before I started looking at these other deals and all the $1.5 million apartment complex or the $9 million that I was looking at today. I didn’t jump right into that. I started off small. I’ve read countless books, like I have behind me, about real estate and investments and sales and purchasing and negotiating. But the No. 1 thing that accelerated me into success was I joined a mentorship program. I actually hired a coach, I hired somebody that specializes in multi-family apartments. And I paid a ton of money and traveled to see these people all the time and get on coaching calls regularly with these people. And I invest my time, energy, and effort into my own learning because I believe that investing in yourself is the best investment you can ever make.
Nate Hedrick: Great story. Great answer to both those questions. I think that’s — it shows that there are multiple ways to do it but that there are a couple of really good ways to do it. And if you’re interested in that, there’s a path to follow there. You just have to take it. That’s great.
Senate Eskridge: Absolutely.
David Bright: So Mason, with that, kind of coming full circle back around, we’ve talked about how you love this win-win because you are the passive side of this and it lets you be a pharmacist and not be distracted from your career as a pharmacist because you’ve found someone like Senate who has made this investments, learned all these things, and is out there doing great work in the real estate side. So as you’re seeing this and as you’re watching this play out, I’m just curious, is this driving you to want to learn more and want to do more and want to become Senate at some point in your life? Or is this like, you know what, I just appreciate what’s going on here and I’m happy to invest and I just love what I’m doing and I don’t need to be that expert?
Mason Goodman: I love what’s Senate’s doing. It’s a lot of work. It’s a lot of time and energy, and I wish my body could do what he does. But I just don’t have that mental capacity, I feel like, you know, working from 9-6, I’m drained for those eight hours, you know. I’m learning a lot on the way. I mean, I’m doing the short-term rental stuff. That’s really what I’m interested in with my other partners. Then I have the passive stuff with Senate. So I’m kind of getting the best of both worlds right now. But you know, everything I’ve read on as far as real estate is concerned is find something, get really good at it, and then go to the next step. You know, don’t be good at a little bit of everything throughout real estate because it’s such a big world out there. And like Senate said, he started small and then now look at him now being an operator and finding all these deals and bringing together all these investors. I’m happy with the short-term rental stuff, which is a very active investment for me, very active income in comparison to this passive income and then my W2 job. So I’m busy doing the other stuff. And as far as what Senate, I don’t think I could mentally do that. It’s just not me, not my personality. I don’t mind giving him money and have him do all the work. It just makes me money, like he says. But I’m happy doing that active role in the short-term rental space. And it’s very fulfilling for that and then also being a pharmacist. So I hope that answers your question.
Nate Hedrick: Yeah, no, I think that’s spot-on. I mean, you’re looking for your niche and you’re following what you find to be something you’re passionate about. I think there’s no wrong answer to that question that David asked. I think that’s great.
Mason Goodman: Yeah.
Nate Hedrick: Well, guys, I want to flip over to our final infusion questions. These are three questions we ask every guest on this show. So Mason, I’ll ask you to kind of respond first and then we’ll get Senate’s take on each one of these three questions. So the first one is really just time management, right? What’s one tangible strategy that you use to make sure that your investing works hand-in-hand with your career as a pharmacist? I know, Senate, that doesn’t quite apply to you, but we’ll get kind of your hot take on how you’ve stopped working in the business and work on the business instead.
Mason Goodman: I think the strategy you have to use here as pharmacists, you know, I think we’re really capable of working as a team. And they always say real estate is a team experience. You can’t do it alone. That’s just all there is to it. They always say, ‘Focus on building your team.’ And I have to say to Senate, you’re part of my team. And the other partners too, it’s just like we’re all in the same mindset. We’re all trying to accomplish the same thing. We’re not trying to be better than anyone else. We’re growing together. And you know, it’s just like in healthcare, we all work as a team whether you see it or not. It’s basically anything you do in life, you have to work together to accomplish a bigger goal at that point. And I think our training is just really good for working together, collaborating, and just learning from each other. The sooner you realize that, I feel like the further you’re going to go at that point. Once you realize you can’t do this by yourself, like I knew I couldn’t do any of this by myself, you just get more comfortable and you just kind of go.
Senate Eskridge: Can I just say what Mason said?
Nate Hedrick: Absolutely.
Senate Eskridge: I would take that one step further and just shorten that down and I would say, know your role and know what you’re good at and hone in on that exact thing and do that. And then outsource everything else because you can’t do it all. You have to have good people in your corner and let them do their job so you can do yours.
Nate Hedrick: Love it.
David Bright: So second question is what’s one resource that’s been most helpful to you in your real estate journey, whether that’s a book, podcast, person, author, website, whatever that would be? We’ll go Mason and then Senate.
Mason Goodman: Yeah. I listen to a lot of podcasts. I mean, the YFP Real Estate podcast, I listen to that. But I really got into the Bigger Pockets Rookie podcast. They really hone down on the basics and then it just kind of grew. And as my knowledge kind of grew, I transitioned away from that to more of a podcast called Lifetime Cash Flow. That one really opened up my eyes. It had a lot of stuff in there that I really enjoyed and absolutely really liked. And then don’t go me wrong, your podcast is great too.
Nate Hedrick: Thanks for the shameless plug, I appreciate it.
Mason Goodman: You guys are No. 1.
Senate Eskridge: That’s great. I actually want to give two answers, if you don’t mind.
Nate Hedrick: Sure.
David Bright: Please do.
Senate Eskridge: The thing that helped me the most is that mentorship that I talked to you about, right, joining into it. And I found that actually through their podcast. It’s called the Wheelbarrow Profits podcast. It’s all about what they consider the three legs of real estate investing, and I’ve learned so much from Jake and Gino, the people who put that podcast on. It’s an amazing resource. However, I don’t know that that resource is the best for your audience, right? Obviously they can go learn from it. And there’s a ton of information in there, and it is well worth it. But I think to add some value to them, I think one resource that they should check out is an amazing book — I actually just finished reading it. It’s called “Passive Investing Made Simple.” It’s by Anthony Vicino and Dan Krueger. Amazing book. There’s a ton of information in this thing. It’s 285 pages of pure gold when it comes to real estate investing and real estate syndication.
Nate Hedrick: Nice. We’ll make sure to put those in the show notes for everybody. Those are awesome resources and ones that have not been mentioned on the show before, so appreciate that. So then our third and final question is what’s one piece of advice that you’d give to a pharmacist that’s contemplating a start in real estate investing?
Mason Goodman: I think this has kind of just been said over and over again. You’ve just got to do it. You’ve got to — it sounds so cliche, but it’s beyond true — you’ve got to just talk to people. The more you talk to people and kind of pick their brains, you will eventually realize what you want to do, and you will do it. And so that’s where I found my little opening was just partnering up because I knew I couldn’t do everything with the deals because of time, contractors, whatever the case is, meeting with real estate agents. I was overwhelmed, stressed, I’m sure like many other pharmacists in this situation. It’s just going to those local meetups and just kind of picking and choosing what kind of questions you need to ask, where you find your role, do you think you can do that? There’s so many variables involved, but all I’ll say is you’ve just got to do it. You’ve got to hone down. If you truly want it, you’ll find a way.
Senate Eskridge: Can I give a shameless plug?
Nate Hedrick: Absolutely.
Senate Eskridge: Call me.
Mason Goodman: There you go. Call Senate.
Nate Hedrick: We’re not against that. I think that’s great. That’s a great piece of advice to get started.
Senate Eskridge: You know, I’d love to help them. And even if that’s not actually investing in one of my deals or working with me directly, I enjoy helping people, like I’ve said over and over here again. And I’d be happy to jump on a Zoom call or a phone call or something and just talk through what it is that they want to do and what their goals and what their strategies are and point them in the right direction. And maybe that is something I can do, and maybe that’s a resource, a podcast, a blog, or talk to them about how to get the wife on board, you know, whatever, right? Or the husband, even, right, because sometimes the husbands are the hard ones to get on board. But I’d be happy to help any way I can. So call Senate.
David Bright: I just love watching the two of you, and it’s a bummer that we don’t have this on YouTube for everyone to see because I just love watching the two of you, like the back and forth of this win-win that you’ve created of one person that just really enjoys being passive, and there’s nothing wrong with that, and one person that enjoys being active, and there’s nothing wrong with that either, and how that just came together and formed what just looks like a really great partnership. The whole time, I just keep thinking of that, ‘If you want to go fast, go alone. If you want to go far, go together,’ quote that we’ve heard so many times. This is just — it’s just really cool to see the two of you working together. So with that, our last question of the episode is where can people find you? How can they connect with you if they want to learn more?
Mason Goodman: Yeah, I’m not very active on Instagram, to be honest. You can find me at Mason Goodman on Facebook. And yeah, that’s about — that’s about it for me.
Senate Eskridge: You know, I’m pretty easy to find. I have SenateEskridge.com. They can email me, [email protected]. I’m on Facebook. I’m not very good on Instagram, but I am on there. Send me a message on there. It might take me a while to get back to you. I’m also active on LinkedIn and Bigger Pockets. I’m all over Bigger Pockets. I answer questions as often as I can on there. Pretty accessible. Email is probably your best bet.
Nate Hedrick: Perfect. We’ll make sure to put all that in the show notes, guys. I sincerely appreciate both of you being on. This has been a really great conversation, really great intel for our audience. And I’m excited to see where you guys go next. I think this is just the start of what you guys have been up to. I know Senate, you’ve been rolling for a while on this, but Mason, I can just see this growing. So really cool stuff, guys.
Mason Goodman: Appreciate it, guys.
Senate Eskridge: Thank you.
David Bright: Thanks so much.
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