Creating Wealth, Freedom, and Ultimate Fulfillment with Nizan Mosery

[0:00] Welcome to the REI Agent, a holistic approach to life through real estate. I’m Matias, an agent and investor. And I’m Erica, a licensed therapist. Join us as we interview guests that also strive to live bold and fulfilled lives through business and real estate investing. Tune in every week for interviews with real estate agents and investors. Ready to level up? Let’s do it.

[0:24] Welcome back to the REI Agent. This is your ever smiling, mostly smiling, sometimes smiling and friendly and hopefully enjoyable to listen to host, Matias Kleimer. Today on the show, we have Nitsan Mosary. Nitsan is a multifamily syndicator. And I try to, you know, help guide the conversation to make sure that people, you know, if they listen to it from start to end, would have hopefully a good understanding of kind of how the whole business model works. Because it’s a little bit, can be a little bit complicating and daunting at first if you’re not familiar familiar with it. So again, that was the goal. I think that, you know, getting an introduction to this type of world is incredibly powerful if you are a real estate professional because of all the benefits that we get into in the show.

[1:15] Now, we get into some complicated things. This is, you know, considered not a risk-free investment, this space. So, you know, it’s I’m selling it. I’m not receiving any financial benefit here. You know, I’m selling the idea, I should say. Because I do think that it can be a really powerful investment platform, especially for real estate professionals. However, you definitely need to do your own due diligence. You need to vet your operators. Nitsan seems like he knows a lot about the space. And I haven’t asked him about his track record. I haven’t looked at that personally. But that’s a conversation I’m sure he’d love to have with anybody who’s interested. And then, you know, you also need to double check things like the tax stuff that we talk about in this episode.

[2:03] Like, you know, we are not CPAs. We’re not securities attorneys. There are things that you need to, you know, do due diligence on. Typically, you don’t need to have the securities attorney review any kind of PPMs. That’s like the documents that go over the whole deal.

[2:22] But it’s a good idea maybe to have an attorney review the documents and just kind of make sure that things seem like they’re on the up and up. But yeah, definitely starting to understand how the business works is probably step one to making a good decision in investing in one of these in the future. And after that, you know, if you did your due diligence right, if you got the right deal and the right operators, it can be an amazing thing. And we kind of outline why that is and the power of things like cap rate, forced appreciation, bonus depreciation and cash flow. So I’m going to keep this intro short. I want to get you right to Nitsan because he’s got a lot of knowledge in this episode. Again, if this is, if it gets a little bit heady, I do try to bring things back to help make it tangible, make it understand, use some real life examples, use some real numbers to try to make it so that it’s understood.

[3:23] And I hope that this helps give you an intro to that this wonderful world of syndications and that hopefully that sparks your curiosity that you want to continue to learn more about it. And yeah, if you appreciate this content, again, please definitely share it, hit subscribe and, you know, follow us for more. So without further ado, here’s Nitsan.

[3:49] Welcome back to the REI agent. We are here with Nitsan. Moserim, Nitsan, thank you for joining us. Yeah, my pleasure. Thank you, Mathias. Thanks for standing in front of the wall for us. If you can’t see, Nitsan is in front of the brick wall and we made the joke about being all we are is another brick in the wall. Love me some pink fluid. But before we go down to music rabbit hole, why don’t you explain to us a little bit about what you do in the real estate space and then we can get into how you got started. Yeah, sure. So right now, I’m an owner operator of multifamily and student housing properties on the institutional side. So anything from 50 units up to 200, 300 units and greater, we acquire through what’s called the syndication model where we go out and we raise capital from private investors.

[4:43] So it’s a private offering, basically. When I moved to Florida in 2009, I got licensed as a real estate agent. And then I got my broker’s license as well. I started fixing and flipping houses and wholesaling. And I realized quickly that that was going away very quick. So I wanted to figure out what else could I do to generate passive income for myself. And that’s how I got into the multifamily and student housing world. Well, you’re perfect for the show. That’s brilliant.

[5:15] So when you got started in real estate, you were just simply wanting to be a sales agent. What kind of got you into that space to begin with? Yeah, so I’ve been involved in real estate a lot longer than when I moved to Florida. I got started when I was a little kid in New York, working in the family business, doing all the dirty jobs, cleaning the toilets, knocking down walls, fixing elevators. When I knew nothing about elevators, things like that. Were your parents landlords or what was the- Yeah. So I’m first generation American. When my parents came over, my father started working at what we call today like a dollar store, basically. And at one point, the owner asked him if he wanted to buy the store.

[5:59] And he bought the store. And then a few years down the road, the owner of the building that the store was in, in Manhattan, asked him if he wanted to buy the building, partner up with the janitor, with the maintenance person. And he said, okay. And that was kind of the start of it. And that’s how I grew up in it. And then my brother and I, we went and we expanded that. We bought several other buildings in Manhattan and turned them from either sweatshops and residential units to commercial loft units. Okay. So in 2009, I’d moved back to the States. I left New York in 1997. I was 27 years old at the time. And I left. I went traveling around the world, ended up back in Israel. And then from Israel, moved to Florida in 2009. And we were shopping for homes.

[6:53] And at that time, you know, is the pick of the litter. It was 2008, 2009. The world was on fire. The US economy was at the bottom. And we were, I’m from New York. I’d been out of the country for about 15 years, ended up in Florida, didn’t know anybody, didn’t know the market in Florida, didn’t know the neighborhood. So we looked from Miami all the way up to Jupiter, you know, on the East coast of Florida. And we met with a lot of real estate agents. And what I found was that a lot of the real estate agents were just glorified door openers, door, you know, door men or door women. We were going into, I was following agents and they were making U-turns and U-turns. And then we would meet in front of the house and go, yeah, I’ve never been here before. I’ve never seen the property. We’d walk into a house and they go, wow, look, this is so nice. Oh, I didn’t realize it was so nice. So I didn’t realize it was so bad.

[7:47] I didn’t realize it was so bad. And I realized that, that these agents really didn’t know their product. They were just, you know, glorified door, door openers. And I said to my wife, I said, you know, if, if, if this is, if these people are making money doing this, imagine if we put 10% more effort into it, what could we do? So then I went and I became a real estate, a licensed agent and started working. I was selling the homes that I was flipping myself. And I was doing my own open houses and, and doing my own marketing and whatnot. And then I went and I got licensed as a broker and opened up my own brokerage company, had a couple of agents under me. But I realized very quickly, that’s not what I wanted to do. That was not the core business that I wanted to be in because I was still working. I was, I was managing all these agents. I had to manage the, the office and what was going on. And, and it was, it was, it was more of a headache than anything else. And, and then I started moving into the, and while I was doing that, I was also moving into the multifamily space, you know, buying duplexes in four units. And I realized that

[8:51] the bigger properties, it took me the same time to buy a duplex as it was a 50 unit property. So I said, wait a minute, why don’t I just go out and buy the bigger ones? And I, I found a mentor who was teaching me and taught me how to find the right markets and how to talk to the brokers and, and how to analyze the properties. So I kind of, that was my progression into the multifamily and student housing world. Yeah. Okay. So how many years were you in like the residential sales world with the brokerage as a solo agent? Was that a few years, five years? Yeah, it was a few years. It wasn’t, it wasn’t a long time. I still have my license. I’m still licensed, you know, friends and family that need help, or if somebody is looking for something specific, I help them out. But it was, it was like, you know, I would say about two, three years, you know, solid into it and working at it. Yeah, I think like, it’s easier to see that, you know, what you’re building, your business, what you’re building is really, it’s transactional, you know, when you’re a real estate agent. And, and if you are actively in the

[10:01] investor space as well, I can see how the natural progression would be like, well, every time, I mean, I don’t know if you did, if you held any of your flips, but, you know, like the burr method, where if you, if you flip a house, get all your capital back and keep it as a rental, you know, every time you do that, you’re, you’re, you’re seeing that, like that building block, like you’re not going to maybe kill it and be able to go retire on the beach right after that first one. But that, you know, that adds to your passive income that adds to your net worth. And, you can see why it can get addicting. And then, yeah, like you said, like it’s essentially the same job, it’s a lot bigger. It does get complicated. You get into the syndications and all that kind of stuff. But yeah, so okay, so you got into the multifamily space, started taking down bigger ones, and then you said at the beginning that you were into developments of student housing, right?

[10:53] Well, we, we acquire a pre-existing student, multifamily, multifamily, we’re doing C plus to B minus the class of properties in B neighborhoods, the student housing, we’re looking for class A with, with as many amenities as, as they can, you know, I, I mean, I, I went to college at Pace University in downtown Manhattan, and, you know, the dorm rooms that we were, we were four guys in a little 10 by 10 room and all your, all your food and plates and everything were in a, in a, a milk crate. And the kitchen was like a prison kitchen, it was all stainless steel, there was nothing there, it was white, white bricks on the walls. And today it’s just, you know, every kid has their own room and their own bathroom, granite countertops and, you know, the amenities and so forth. It’s a different world we live in.

[11:44] Yeah, it’s interesting how that has, I guess, like the demand got so much that everybody thought they had to go to college, everybody thinks they need to go to college, and I don’t know if that’s changing at all, but then to attract the students to keep coming there, you know, you’re having to, yeah, do all this crazy stuff. And it is, it is very different from what I was when I went to college as well. Absolutely. I also went to a small, small university, but yeah, I mean, so syndications are such an awesome thing. Maybe we should start off, I think of one way to get into this space and talk about this space a little bit more so people can understand, because it can sometimes sound to be too good to be true if you don’t really understand, like, how is it possible that I can, I can invest with you and you’re going to have enough of a return or whatever, to be able to make what you’re promising actually come to fruition. So maybe it’s helpful to start kind of boiling down the nuts and bolts behind it all, in the sense of, like, how you can increase the value of property with, with cap rates. Are you, are you doing,

[12:55] I’m assuming you’re trying to overall do value add, are you selling multifamily then after the fact, or are you keeping them as rentals? What are you, what are you doing? Great question. And we were just talking about this with some coaching clients last night. So when we look at properties, we want to go into a market that’s what we call emerging. That’s got strong job growth happening in the market. People are moving into that market for, for different reasons. You know, there’s, there’s job growth, cost of living is low. You know, there’s, there’s, you know, people can work from home. So they’re looking for a, to kind of get out of the city lifestyle a little bit and move, you know, into the bedroom communities, into, into quieter places. So the first thing we’ll do is we’ll research markets, right? We’ll, we’ll even go on uhaul.com and, you know, check one way destinations, see where people are moving. What, where, where is Amazon opening up a plant? Where’s Target moving? Where’s Walmart opening up, right? Where’s there a Home Depot, Starbucks? So we look for, you know, certain criteria so that we know that this market is, is starting to, you know,

[14:02] bubble, right? It’s starting to move. The local government, you know, the, the city council members, the mayor and whatnot, they understand that job growth is a key factor to moving and, and, and, you know, moving the city in the right direction. So we look for those specific markets that are also landlord friendly, right? Because we are taking, like you said, where we’re taking people’s money and we’re investing it. So we have a fiduciary responsibility to make sure that we can protect their, their money by having an asset that we can, you know, evict people when we need to put in good people, you know, better paying residents and so forth. So those are the criteria of the markets that we look in. And we’re looking, like I said, job growth is the holy grail.

[14:47] Family creation, how many families are moving in? What amenities does the city have for families and so forth? And once we find that, then we look to see, okay, what’s the best neighborhood? Where, where’s, where’s the, what neighborhoods are gentrifying? And there’s many different ways that you can go about finding that information. So once we have that, then we’ll reach out to the brokers and we’ll build those relationships and tell them, listen, you know, this is who we are, this is what we’re looking for. Send us what you got. So we’re looking for, for two types of value plays, right? One, the first value plays obviously the, the interior and exterior renovations, right? So for example, we’re looking at a 200 and something unit property on the, in Little Rock, Arkansas, on the west side of Little Rock. And they’re all classic units, meaning that the property was built in 2002, but they’ve never upgraded the, the interior. So they still got the four Micah countertops, you know, the linoleum kind of, you know, old looking floors, the regular, faucets, old cabinets. So we’ll go in there, we’ll paint the cabinets, put nice handles on it,

[15:57] black appliances, put new, you know, nice, you know, luxury vinyl plank flooring inside and really make the interior look nice, right? Subway tile backsplash, things of that nature. We’ll go out the exterior, paint, do some landscaping, add amenities such as dog park. If there’s a high family concentration of kids and whatnot, we’ll put in playgrounds, we’ll put in barbecue pits, some little pergolas and whatnot. And if there’s room in the units, we’ll also put washer dryer hookups if they don’t exist already. That’s an added bonus, right? So those, those are the, the renovation value add, right? And obviously we’ll go in there and we’ll do our numbers and say, okay, and I’m just making this up right now. So we’ll have to put in $10,000 per unit, but we’re going to raise rents $150 per unit. Oh, okay. That’s, that’s a decent return, you know? So 10 grand and you’re putting in 50, 150. So that’s 1800, you know, per year and so forth and so on. So, okay. That’s, that’s a good number. And then we’ll push the, we’ll push the rents to market. The other value play is what we call management inefficiencies.

[17:10] So when we go into a property and we’ll see, oh, there’s a huge delinquency. There’s a lot of delinquency. There’s a lot of bad debt. There’s, you know, tenants that aren’t paying and so forth and whatnot. We’ll go in there and we’ll fix that. That’s another value play, right? You know, we’ll bring in a good management team. They’ll take care, instead of doing maintenance jobs, where the issues already happened, we’ll do a lot of preventative maintenance, go in there and take care of the issues before they happen. So the residents are happy. So they’ll pay on time. Well, we’ll bring in better qualifying residents so that they can pay and they can pay the uptick. So when we do our financial analysis beforehand, we’ll say, okay, this is what we’re looking to pay out to our investors, which is usually anywhere. And it’s a range between six to eight percent from the cashflow from the holding period. And we’ll hold the property anywhere between three to seven years in that range. And then we’ll go to sell it. Now there’s two exit strategies. One is it’ll be a refi where maybe we’ll refinance in five years, pull the

[18:17] investor’s capital out. And then, you know, maybe if there’s enough, we’ll give them some money on top of that as well. And then we’ll hold it for a lot longer. Now they have no skin in the game or very little skin. So their returns have even gone up higher. Or we’ll look to sell the property in year five or something of that in that range. Excuse me. And then we’ll we’ll give them back their capital. We’ll pay off the expenses, the mortgage, whatever vendors we have to pay. And then we’ll split the profits between the investors and myself and my team. And that’s how we were able to calculate the returns based on that. And we go in with a very conservative mindset. Right. Very, very conservative. We know we’re not going to push rents within the first 12 months on all the units going up. We know it’s going to take time. We know that, OK, if our competitors are charging fifteen hundred, we’ll underwrite to thirteen hundred, thirteen fifty. And then if we can push it to that fifteen hundred, that’s even more icing. So that we look really good in front of our investors because we were conservative, but yet we were able to hit

[19:28] our target. Now look what we can do and we can push up. Yeah, I love it. And and I guess one of the from what you just said, just to help people understand kind of the power of this all, you had said that raising rent by one hundred fifty bucks at a two hundred unit place. So we got one hundred fifty dollars times two hundred times twelve for the year. Right. That’s three hundred sixty thousand dollars a year, which sounds great. Right. But now what kind of cap rate are you usually in? Let’s let’s let’s look, you know, conservatively at a six cap. We’ll say six cap here. So so three hundred sixty thousand dollars is great. But that now has increased the property by six million or added six million of value into it. And so this is where you are. You start understanding how, you know, you can get this kind of the game just changes.

[20:28] It’s just a completely different game than if you are simply flipping a house. I mean, you’re kind of flipping a multifamily property, right? I mean, that’s kind of what you’re doing. It’s just a little bit more intricate. And when you play the cap rate game, then you can kind of see where the benefit is, where it’s a win for everybody, where the investors can be pretty passive with the trusted operators and a good deal. They can be very passive and not have to worry about their capital. Get some of a return along the way and then maybe have a big capital event like you just like, you know, if you sell it and you can see where that hundred fifty a unit doesn’t seem unrealistic to raise rent by. Right. That’s not that unheard of. But how that makes a huge impact when you get into that scale. Right. Now, let’s let’s let’s let’s even be a little bit more conservative because, you know, maybe some of your listeners are going hundred fifty bucks. Oh, that sounds a little less. That sounds crazy. People are going to leave. You know, your occupancy is going to drop. Why not? What if we just raise it fifty bucks? A third of that. So

[21:25] instead of raising the value of the property by six million, we just raised it by two million. And when you’re raising fifty bucks, you don’t have to do any renovations. You’re just pushing that rent. Right. Because people aren’t going to leave because when you if you have a good property manager, when they’re when they’re when they’re increasing the rent, you know, they can walk the the resident by, you know, through the process to go, listen, you’re going to want to leave. You’re probably not going to get your security deposit back because, you know, the walls and this and that. So you lose your security deposit. Yeah. Then you’re going to have to pack everything and then you’re going to have to move and then you’re going to have to find another place, which you’re probably going to pay more than a fifty dollar increase. So you’re going to the cost of moving is going to be more than the fifty dollar a month increase and you’re better off staying here. And you know what, Mr. and Mrs. Resident, if you do stay for that fifty bucks, we’ll bring in some new lights and new fans and maybe even put some backsplash in your unit. How

[22:19] does that sound? Yeah, no, it’s that’s such a good point. Yeah, I think, you know, there’s a certain amount of turnover that can be expected when you when you’re going to tighten up the, you know, the management. But obviously, retention is huge. And I’m in a situation now where I definitely have a unit that is yeah, it’s basically like I don’t want them to leave because if I’m going to have to spend a good amount renovating the property and they’re going to definitely lose all their security deposit because of it. But that’s just part of the game. You know, OK, so we just outlined how like, you know, the bare bones of how this structure works, like how the syndications work, where the money is generated, how you can add this value and examples of it. That’s all great. Now, now talk to me about the tax benefits, because, again, if you are a real estate professional, if you’re a realtor, you are able to take advantage of some of the tax benefits that others may not. And so let’s say paint a picture of a multimillion dollar producer that’s earning a high income. A, they’re probably going to be a credit investor, which we could probably describe

[23:36] what that is as well. And B, they probably don’t have time or want to deal with the headaches of managing property and getting their own rentals. But the tax pit is huge, especially right now, because we’re back to the hundred percent. So explain that a little bit. Yeah, no, sure. Absolutely. So that’s great. So, yeah, so let’s start off by, OK, so when we’re doing a syndication, we have two classes of investors. We have the LPs, which are the limited partners, which are the investors that invest their capital. And it’s a done-for-you investment, right? You invest the capital, we take care of everything else. So why are they called limited partners? Because they have a limited say in the day-to-day. They’re not involved in the day-to-day running of the property. And there’s a limited liability, meaning if, God forbid, that property goes south, for whatever reason, and the bank takes the property, there’s a foreclosure, whatnot, the LPs, the limited partners, are not affected. It’s us, the other asset class, the GPs, the general partners, right? We’re the people signing on the loan. We’re guaranteeing

[24:47] the loan. We’re the ones that they’re going to go after, OK? We’re the ones that are in charge of the asset management, the daily workings of the property, making the decisions of what goes on. And so those are the two. Now, the LPs can be broken down to sophisticated or accredited investors, according to the Securities and Exchange Commission’s definition. There’s no real definition of a sophisticated investor. It’s just someone who’s not accredited. So let’s talk about what accredited means, right? Accredited is you’re making $200,000 a year by yourself or combined with your spouse or your partner of $300,000, OK? Or it’s not and, but it’s or. Or you have a million dollars worth of net worth excluding your primary residence, OK? So sometimes you say, well, you know what? I don’t have a million dollars net worth, but I’ve got a duplex. I got some stocks. I got crypto. I’ve got this. I got my own business. You’re then a sophisticated investor, right? So now, so now you invest your capital. And on the day of closing, what we do is we as the GP will engage a cost segregation company.

[25:56] Cost segregation is an engineering company. Basically, they’ll send out their engineers and they’ll create this engineering report called the cost segregation report. And basically, we all know what straight line depreciation is. Yeah, you know, you buy a property, a duplex, whatever it is, and you give and your CPA will just do a straight line depreciation, taking the entire project and depreciating it over 29 years. However, you have different components that make up the property, the AC systems, the electrical, the flooring, whatever windows. And just as an example, let’s say the AC can you can depreciate that entire thing over five years. Why would you depreciate it over 29 years? And that loss is minimal. We’ll take so that report then takes all these components and then we give it to our CPA. And when our CPA does the tax returns for the property, they’ll take that depreciation schedule from the cost segregation report, and they’ll consolidate the depreciation in year one. What that means is that you can take a huge write off based on your passive income, based on the depreciation. And that’s why when we get

[27:08] towards the end of the year, we’ll reach out to our investors go who needs depreciation. If you need a big schedule of depreciation, invest in multifamily or in our student housing projects, and then we’ll be able to give you the depreciation, the write off on your K-1. And you take your K-1, you give it to your CPA, and they will just write off that depreciation in your year. Now, if you don’t need depreciation this year, let’s say you have enough, guess what? You can roll it over to next year and the following year. So you get that tax benefit. And what you said, that bonus depreciation is back to a hundred percent and it’s not going anywhere anymore. And what we also do is I have an opportunity zone fund. If you sell a property or if you sell a business and you have a huge profit, you’re going to get hit with huge capital gains, but you don’t want to deal with the 1031 with the timing of it because it stresses people out. I got to find something in 45 days. And usually that other property is not a good property, but they don’t want to lose. They don’t want to pay that huge capital gain. So they’ll go into

[28:17] that property and they’ll buy it and then they’ll be stuck with it for God knows, a minimum of two years before you can sell it and it’s a headache. But now you can invest with us in our opportunity zone fund. And then we go out and buy multifamily or other businesses in opportunity zones. And now your capital gains is wiped out, but now you’re also making cashflow and it’s a done for you thing. So like you said, these high end, these realtors and brokers who are out there and they’re making bank, they’re out there. They don’t have time because if you’re out there talking to clients and taking listing agreements and making listings, you don’t have time to go out there and research, research the market, research the neighborhood, talk to brokers, build relationships.

[29:02] My underwriters, they spend eight hours alone underwriting just from the rent roll before they even get to the financials. Eight hours just on the rent roll because that’s where the money is. So you don’t have time to do all of that. So what you do is you find someone like me who’s already has a success track record. We go out there, we’ll show you what we’re investing in, what we’re acquiring. You wire us the funds, you get all the documentation, you get everything. You get into a portal that we have and now you can see exactly how that investment is growing. And I call it the golden trifecta. You get cashflow, passive cashflow, you get appreciation just like we talked about when we’re pushing the appreciation, and then you get the depreciation on your schedule K1. So you’re hitting every single point while you’re out there making your money, building your business, doing what you want, and we’re taking care of your money and putting it into assets that are in an appreciating market that have a huge value play. Yeah. Yeah. And it’s obviously we understand real estate as realtors. So it’s investing in what you know somewhat. And it makes a ton of sense.

[30:17] And I guess I wanted to clarify one thing as well, because I think if you’re not a real estate, I’m not a CPA. So let’s first of all clarify this, talk to your CPA about if this applies to you. But my understanding is that if you are not a real estate professional, if you’re not a realtor or like a professional investor, landlord, that kind of person, that you can take the depreciation off of your passive income. And then if you are a real estate professional, that you can take that whole depreciation. So in other words, you could reduce your earned income from commissions by this what we’re talking about. And then to paint another picture, I have an anecdotal deal that I was involved with, I invested in that gave me, I invested $50,000 into this deal. And it gave me $66,000 of tax right off the first year. The second year gave me, I think 13,000, so significantly less, which is going to be expected. And that was part of the plan. So you know, I might eventually get to that $100,000 of tax write offs for that initial $50,000 investment, which is great. Meanwhile, it’s earning me, you know, between probably seven

[31:33] and 10% interest paid out quarterly on that investment. So like, why am I investing in stocks?

[31:43] Exactly, you know, stocks, crypto, all these things, they don’t they don’t have all of these benefits, right? When you’re making money, right? And not only that, but you know, you’re buying Coca Cola stock, you know, you can’t go to the Coca Cola main office and walk in and go, Hey, guys, I’m here, I’d like to take a tour of the property. They’re gonna who are you? Right? But here, you know, our investors, you know, they’ll email me, Hey, listen, I’m driving by Atlanta, Georgia. I’d like to stop by the property. Yeah, okay, great. What day time? Okay, go see john, he’s the property manager, I’ll let john know, and he’ll take you on a tour of the property. So you can go, you can feel it, you can touch it, you can kiss it, you can hug it, you can it’s a physical being, right? And, and, and, you know, I joke, but it’s true, I pay my CPA more than I pay in taxes because of all this depreciation. You know, it’s a beautiful thing. It’s a beautiful thing. Yeah, and to add to like the differences in the classes, like, so I know what we described, if it’s the first time you’re hearing about a syndication structure, and all the ins and outs of

[32:49] like, you know, doing this, you know, value add kind of investing, it may sound fairly complicated. It’s, it is more complicated than, you know, you know, basic flip, for example, but it is also much more simple than trying to understand the business models and the businesses of the 500 companies are invested in the index 500. So it’s, it is something that you can, yeah, much more easily understand. And, yeah, it’s a it’s a it’s a great product for sure.

[33:21] And if I may just add, the beautiful thing is that it’s not affected by global economy, it’s local in nature, you know, invested in the stock market and S&P 500 or whatever, and, you know, talks between Ukraine and Russia heat up again, I don’t know, I’m just making things up right now, right? Oh, the stock market gets affected by it, right? You know, or the the the the jobs report came out, oh, stock market just dipped out, right? Here, it’s it’s local in nature, right? And the beautiful thing about it also is that, you know, with single family homes, and as realtors and brokers, we know the value of a single family property is based on the neighbors and what they sell their houses for. And if you have one or two neighbors that had to sell and fire sailed their homes at a discount, guess what the value of your property went down as well.

[34:15] Here in multifamily, it’s a business, right? So in business, you have EBITDA, right? Earnings before income, tax, depreciation, blah, blah, blah, and all that stuff, right? Here we have NOI, Net Operating Income, right? So Net Operating Income is your gross income that’s coming in minus your operating expenses, and that’s your net operating income. And then you divide that by the market cap rate. And that’s how you get your purchase price. So you want to push you want to push the value of the property up, increase rent, decrease your expenses. And now you just you just moved the value of the property up by doing that. It’s not based on what your competitor sold their property for. Right. Yeah, 100%. And you were I had I had another point now I’m blanking, I wanted to get into the recapture element as well. If people were concerned about that. Oh, I know what I was gonna say there was before we go there, I was just going to add the fact that so like, you know, it’s traditional job, you’re going to get your you know, your tax benefits from 401k retirement plan, that kind of thing. And I kind of talk about syndications could be

[35:29] considered like almost like a you know, realtors 401k or real estate professionals 401k because you get the tax benefits of it, that you know, you get tax benefits by investing that way. But the beauty of it is, is that it’s all stuff that you realize now, like you realize the tax benefits now, but you also realize the the gains now it’s like you can, you could live off of that income right now, you don’t have to wait till you’re 65. But I want to transition over to Yeah, what if the the recapture so so this depreciation, it doesn’t just, you know, magically, there’s kind of a cloud hanging over your head with it, right? I mean, describe that. And what people should be aware of it if if the right the right plan for them to Right. Yeah. Okay. Now, again, you know, just just to make it clear, I’m not a CPA. I didn’t study accounting. This is just from experience in the business. And, and, you know, dealing with this for for many, many years. So there is that 100% bonus depreciation. But then when and the reason why, let me start off like this, we’ll do depreciation on properties that we hold longer

[36:34] than three years, because then you’re really maximizing the depreciation because of the recapture tax, right? So, you know, the IRS says, Okay, we’re going to give you depreciation, but we got to we got to capture something at some point back from you, right? Just because we can’t just give it to you and not make money on it. So you get your depreciation in year one, and you put it against your taxes. But when we sell, there is this thing called recapture. Now, there’s a formula on how to work it, ask your CPA to really dive deep and explain to you what is the what’s the equation and how it works. Because when we do sell a property, we have to pay some of that depreciation back to the government, we’re not paying all of it. So you still have that depreciation, right? taken effect. But in your final K one, there’s going to be that recapture tax.

[37:32] All right, so just and a lot of investors, you know, when we sell a property, and we give their final K one, they actually do come to me and email me say, Hey, you know, I, what is this line here that that I have to pay or, you know, that that I’m getting, you know, there’s a plus rather than a negative on my K one, that’s the recapture tax, the longer you hold, and this is, and this is just from my understanding, remember, I’m not a CPA, talk to your CPA. But the longer you hold the property, the less recapture tax you will pay. And that’s why we like to hold properties longer than three years. And that’s why when you’re flipping a property, you it’s not worth doing cost segregation, because it costs money for the report, then the depreciation, and then you’re not holding it long enough, you’re not holding, you know, a flip, you don’t want to hold it more than six months, right? Or, you know, you start the holding costs are too much. But then that recapture tax, so you’re not really saving much. So it is for properties that were holding, you know, three years or more, that you can really benefit that recapture tax. So definitely,

[38:38] definitely look at it still makes it worthwhile to do the bonus, the cost segregation, the bonus depreciation, you are saving money on taxes, you are putting it against your depreciation. But there is that recapture tax that you got to take into effect as well that you got to really understand how that works. So talk to your CPA. And if your CPA has never heard of a recapture, doesn’t understand bonus depreciation, find one that does. Because not not all CPAs are built the same. Yeah, yeah. And this is maybe more niche than your, you know, average salaried positions, taxes. But so I guess also another point there is that even if there is recapture taxes coming back to the government at some point, would you rather, you know, would you rather hold on to $100,000 and let that work for you now, versus letting the government hold on to the $100,000 later, you know, I mean, even if it’s just one for one, like if you have three, five years where you can let that money work for you, you can, you know, reinvest it into other syndications, etc. I mean, wouldn’t you rather do that, then? Yeah, just hold it. So no, absolutely. And you know, when

[39:52] you’re flipping houses, when you’re wholesaling, even when you’re getting commissioned, you’re, you’re paying taxes at the highest tax level, right? Because that’s active. That’s now, a lot of times, you know, people get into the flipping and wholesaling, they don’t realize that their CPA just clicked the box, checked the box and made them a dealer, right? Now you’re paying the highest tax levels. So this depreciation really works in your favor to help offset that. And if you do have a 401 self-directed Roth, any type of retirement account, if you have life insurance, that you can pull money out from your life insurance, you can take you can pull that money out from your retirement account, your life insurance, you can invest it in multifamily, take the cash flow, put it back into those accounts, right? If it’s a self if it’s a retirement account, you can aggressively grow your retirement account, not just a little whatever they’re giving you from your company, but now you can aggressively grow it until you’re 65.

[40:56] And if you have money in the life insurance policy, you can pull against it. And then the money that you’re getting from the multifamily, the cash flow pays, you put that back into your life insurance policy and you make that grow. So there’s a lot of ways to benefit from multifamily investing. Yeah, and you can diversify your portfolio. So I mean, you know, I talked about, I invest in the index 500, I invest in Russell 3000. So like I have, I have money in these businesses that I don’t fully, I don’t understand them. I don’t read their documents and everything like that, like maybe Warren Buffett would. But you know, I can see also the benefit of, you know, if I have X amount in stocks here, I could then maybe diversify a little bit with somebody else, with, you know, multifamily. And then on top of that, you know, if you are in a market, like let’s say you are in New York, New York is not going to be as tenant friendly. Imagine this isn’t one of your target demographics of where you bought based on our earlier conversation, but you know, you could then invest in an area that is more tenant friendly or is a different market

[42:05] that would balance out your portfolio. Like if you have some stuff where you work and live, if you have some, you know, smaller single family, whatever, you can then diversify your portfolio of real estate in different markets as well without having to become a personal expert in those markets. Correct. Correct. You know, we’re in a market right now where it’s set to double within the next 20 years. And one of the cities in the MSA, the Metropolitan Statistical Area that we’re looking in, one of the cities is discussing now putting a moratorium on single family construction. They want to halt single family because so many people are moving in and these developers are building single family communities. The thing about it, you’ve got, and I’m just making it up now, 10 acres and you’re putting 30 houses on 10 acres.

[42:50] That’s a lot of acreage to take just for 30 homes, right? Right. But if you take an acre or two, you can build a 200 unit apartment complex. Right. Your density grows by doing that. So that’s the type of market that we want to look at, that we’re heavily bullish on and we’re in that market where, you know, we’re talking to all the brokers. I know that market by like the back of my hand. I love it. I have a vacation home over there. And, you know, so these are the types of markets that we’re going into. Markets that are buzzing there. They’re building there. They’re growing. You know, it’s incredible. Sure. Well, we should wrap things up here. I wanted to ask you if you have any golden nuggets you’d like to share with our listeners. Yeah. So, you know, if you’re a realtor or a broker and you want to start investing in multifamily, find yourself, someone like myself, doesn’t have to be me, that you trust, that you like, that you trust, that has a good track record, do your due diligence on them. Right. You’re out there building your business. You’re hustling. You’re making your commissions. Take, you know, if

[44:05] you’re a solid realtor or broker and you’ve got deal flow and you’re closing after closing after closing, take a commission from a closing. Put it into a multifamily. Let it start earning you money. Take one and do that. See what happens. See how it feels. Right. And understand that this is the true path to wealth. Because while you’re out there hustling, there’s a joke right in the realtor community. When does a realtor retire? When they’re dead. Yeah. Right. Because you’re commission based. So if you’re not out there hustling and you’re not making a commission, you’re not making money. After this, I’m going out on the boat. I got my team. I got people sitting there talking to the tenants, underwriting for me, talking, doing all these things. I can now go out and do what I want, when I want, with who I want for as long as I want because I’ve built that business. Now you as a realtor or broker, you don’t have to do what I do. Right. You just take your hard earned money, invest it with us and let us take care of it for you. Right. You know, that’s, that’s, that’s, I would say the, the, the big gold nugget, right. And then the golden trifecta,

[45:16] always look for that golden trifecta, cashflow, appreciation and depreciation. Right. That’s, that’s the name. That’s the name of the game. Let your money work for you. Yeah, absolutely. What about a book, either a fundamental book you think everybody should read or one that you personally are enjoying now? So, you know, there’s the, there’s the, there’s the old time classic thing can grow rich, right. But, you know, I’ll leave that. But there’s, there’s another book that I find, you know, especially for realtors and whatnot, if you’re getting into the realtors world and whatnot, or if you’re getting into the syndication world and you’re networking and whatnot, how to win friends and influence people. That’s the Bible. It’s one of the Bibles. On top of that, there’s the 12 week year by Brian Moran. He talks about taking your year goal in your business and bringing it down to 90 days. And his whole philosophy is think about it. If you’re going on vacation, and you’re leaving in two weeks, let’s say, for example, what they found is that people that have a vacation coming up, right, that only have

[46:27] that their time is not theirs, for example, right, you work a job and whatnot, you only have two weeks of vacation time, you as an employee, or even as a realtor, whatnot, you’re going, I got to get, I got to get this stuff done before I get on that plane, bus, train, boat, whatever it is, because I am not missing that day. I’m not missing my vacation. And they noticed that people get more done in those last two weeks than they did in the entire quarter that they were working. Why? Because they’re, they’re fired up, they’re motivated, they, they’ll work 18 hour days, just to make sure that they get on that plane to go on vacation. So imagine if you worked with that same fervor and that same fire for 90 days on your 12 month goal, where do you think you’ll be at the end of the year if you did that 90 days? How far of it? Now, let’s say you didn’t hit your goal in 90 days, you’re 12. Let’s say it took you six months. So now you’re hitting two year goals in one year. Yeah, right. It’s all about the mindset. It’s all about understanding how to do that. And then there’s another book where I have it right here. It’s called Flip the Script by

[47:36] Oren Klaff. And he has another one called the profit first I want to I think it is. Okay. Yep. Yeah. Yeah. And phenomenal books, talks about how to present how to talk even when you’re a realtor, you’re a broker, how to present how to talk to people, what are the steps of the presentation that you need, how to grasp people’s attention within the first couple of seconds. And as a realtor or broker, when you’re talking to people, and you want to sell a house, you’re, you know, or you’re at a listing presentation, what better way to really grab people and to learn how to get them on your side of the table within minutes. Okay, really, really incredible. Great. Thank you for the library. I’m sure you have many more. So where would be a good place for people to follow you or to learn more about the investments you’re working on? Sure. I’m on all social media platforms from LinkedIn, Facebook, Instagram, TikTok, Twitter, X, sorry.

[48:44] Yeah, you can find me as Nitsan Mosri. You can find me as the traveling investor as well. I’m there. You can, if people want to email me, it’s my first name, N-I-Z-A-N at MTN. It’s the abbreviation for Mountain MTN Investment Group dot com. That’s my email. My website is MTN Investment Group dot com. I have a coaching program. So if you want to learn how to, how to do that, I’d like to give you listeners a freebie. It’s my due diligence checklist that I created from my years of doing due diligence. So you can go to a multifamily Inc. That’s multifamilyinc.com forward slash checklist, or you can, you can text me checklist to 561-212-7247. Send me a text checklist and I’ll forward you the checklist and you can have my in-depth checklist. So when you’re going out there and you already have that, you don’t have to think about creating one yourself. Well, perfect. Well, thanks so much Nitsan. It’s been great having you on. It’s been a fun conversation that hopefully if people weren’t as familiar about syndications and the multifamily space that they are a lot more enlightened now. So I appreciate your wisdom. I appreciate you having me on the show. Thank you so much.

[50:19] Intended for entertainment purposes only.