Learning About Real Estate Syndication with Multifamily Investor Kent Ritter

Kent Ritter: 0:00

I think it was a really great perspective that it gave me of actually being in the investor shoes right first,because I I was able to invest in intentionally invested with a bunch of different people in different geographies. I mean,one for diversification, but two I wanted, especially once I got it in my mind, like I this is what I want to do. I wanted to see how other people operated and I wanted to be able to take my life and leave what I did.And so

Announcer: 0:24

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Jason Muth: 0:48

Welcome to another episode of The Real Estate Law Podcast. I'm Jason Muth. We're here again with Attorney broker Rory Gill, NextHome Titletown Real Estate and UrbanVillage Legal in Boston. And we have an amazing guest we have Kent Ritter on and Kent is a former management consultant. He's a startup owner. He's a corporate executive turned full time real estate investor and operator.He's got a lot of stuff going on a bunch of syndicated deals. He is working, he's a big proponent of financial independence and,you know, working toward you know, keeping your time as valuable as it is and you know,moving away from W-2 jobs, I'd love to hear about what's going on how he's able to do that in his career, as I'm sure a lot of you that are listening are working toward that. And he's coming to us from Indianapolis,and we love people from Indiana.So we want to welcome him to the podcast. So Kent, welcome.

Kent Ritter: 1:40

Awesome. Well, they that was a great introduction.Thanks so much, Jason and Rory.Thanks you guys for having me on the show today.

Jason Muth: 1:48

We should welcome Rory Gill as well, I didn't welcome you, did I?

Rory Gill: 1:51

You skipped past me today. But that's okay, we're going to do is jump right into the theme, which is Kent

Jason Muth: 1:57

Well, Rory and I here all the time. So you know,but your home is now our home.

Kent Ritter: 2:01

You know I was going to say, we were talking about before the show, though,is that Midwestern hospitality I couldn't help it. I saw Rory sitting there. I just had to say hi.

Jason Muth: 2:09

We did say that beforehand. I mean, the the northeasterners I think we're a little jaded and get right to the point and the midwesterners different way unto yourself, and

Kent Ritter: 2:17

We got more time,you know.

Jason Muth: 2:18

Does everything take longer, or everyone just takes longer in the Midwest, or everyone just slows down a little bit?

Kent Ritter: 2:24

I spent a lot of time working in the northeast,so I can compare. I mean,definitely just the slower cadence and like rhythm of speech talking and think a little more the relationship side, way less straightforward,especially as you I found as you go, like North and the Midwest,you know, it's a lot of stuff happens behind the scenes. And so, you know..

Jason Muth: 2:43

Does it really?

Kent Ritter: 2:44

I think the the nice thing about being in the Northeast is usually you know,where you stand with people,

Jason Muth: 2:48

Rory that's come up before on this podcast, because we do talk to people across the country.

Rory Gill: 2:53

I guess there's an art to avoiding the judgment and the directness, but it's also mysterious to us. And you know,if somebody says, "bless your heart," up here we just assumed that it'd be nice, but that's not true everywhere.

Kent Ritter: 3:03

Yeah, that's the classic, classic southern "Yeah,get the hell out of here."

Jason Muth: 3:07

I gotta introduce that into my vernacular somehow.I should mention that Kent is also a podcast host unto himself. Kent has an amazing podcast called Ritter on Real Estate, which you could find across all the podcast platforms, you can find it on his website kentritter.com He has litany of amazing guests of all different types in the real estate world. Let's start there.Like what's it been like hosting your podcast? I mean, we can compare some notes.

Kent Ritter: 3:29

Yeah, it's been just an incredible experience.So we just.. well, I guess, you know, by the time this posts will be well past, but we just had our 100th episode, you know,and that was a cool milestone.And I just over the past two years, the amount that I've learned, is just incredible. I mean, the cool thing is right,is you get to talk to you, and I hope I fall in this category,you get to talk to like,successful, interesting people all the time. Right. And that's what I love about it is like, my network has grown so much. It's grown nationally, because everybody I talk to is a successful person in real estate in some way. And so it's been very impactful for my business.And it's been a lot of fun. And it's honestly just helped me to get out of my shell. And just be comfortable putting myself out there like that was, you know, I had it on my list of goals in2019 to start a podcast. And I didn't start it until April of2020. Because when COVID hit, I didn't have any excuses anymore.Sit around the house is like,well, I can't talk to anybody, I can't go anywhere. So I might as well start a podcast. But what the reason it took me so long is really just all my own limiting beliefs of you know, what do I have to say, who's gonna listen to me and you know, all that good stuff. And low and behold,you know, a couple years later,we average about 20,000downloads a month. And you know,it's the growth has been pretty incredible. And the feedback has been incredible. And so I think it taught me and this is what a mentor of mine told me when I was starting was like, It's not about there's already a million podcasts, like who's gonna listen, right? And it's like,you know, it's not about necessarily what you're saying.It's about how you say it and there's gonna be people that resonate with you that don't resonate with me and vice versa.And, and you may say something in a way that really hits home with somebody and changes their life, when I would have said it a different way, and they wouldn't have been impacted. And so that really, it was like,when I started think about it that way, that's really what got me off the fence to say like,yeah, you know, I can make an impact. I can get out there.Like you said, my, one of my huge passions is financial freedom, because I just, you know, too many of us tethered to jobs that we don't like, and there's different ways of doing it. And I thought I was a good read, I thought I was a savvy investor. You know, I was a finance major in college I with a focus on investments all as an active stock investor, but I had no idea about the world of real estate investing and how impactful that can be. So when I found out about and I started realizing the benefits of that I was like, Man, I gotta tell more people about this.

Jason Muth: 5:47

Yeah, you know, it sounds very similar as to why we started this, which we did start this one also in 2019. And we took a hiatus after we had our daughter, but we did eight episodes, and then we hit the wall of the oh my god, we have to deal with a newborn now. And they say, if you can make it past eight episodes, you know,like, you're more likely to succeed with a podcast. And we were right there at that precipice of success or failure.And then once we rebooted it,and you know, we, we've been reaching out to a lot of people like yourself and hearing from other people that want to be on the podcast, I think I have the same experience that you just shared, being able to talk to all these great experts across the country, you know, building a network of folks hearing from people - we hear from people all the time, I heard from a high school friend of mine yesterday talking about information that,you know, he was getting off the podcast, which, you know, is great, because we're impacting other people as well. We're not just talking to ourselves. And yeah, you just put it out there,you find an audience and, you know, hopefully it will stick around. And, you know, here we are, I mentioned you this is I don't know what number this is going to be, I think it's like56 or 57 for us pretty committed to it. And you know, we love hearing from people like yourself, doing things very different from what we do, you know, here in Boston, it helps us expand our network. I mean,Rory, you've had people, you know, come up to you and talk about the podcast, at least The Real Estate Law Podcast, and what's the feedback you've gotten about that?

Rory Gill: 7:05

It just kind of grabs people's attention. And it's Oh,it's amazing that, you know,people, you know, are listening to it. But I mean, it's kind of shaken all the assumptions that I've made. I mean, we've kind of taken our path toward investing.And, you know, we've done we started with basically small unit, short term rentals, but talking to people who are active in different spheres has really kind of made me think about what else can we do that's bigger,you know, it's give me the confidence that it can be done.Even though the what we've done has felt pretty ambitious, we can see that there is a lot more that can be done. And then we've had a lot of innovative ideas that would have escaped me. So my perspective has certainly brought in with in different regions of the country, but also different types of talks about industrial real estate. Today,we'll be talking about you know,larger syndications, just different strategies that really haven't been on my personal radar. And you know, I work in the business. So I feel like I should know all this stuff. But there are a lot of people out there who are finding creative ways to kind of break free of dependence on a job, and also just kind of find something that they're passionate about within the real estate space.

Kent Ritter: 8:03

Yeah, I think that's one of the cool things about real estate is like,there's a thousand different ways to do it. You can you can figure out your your own special mix of how to get it done.

Jason Muth: 8:13

And it's just not taught in colleges. Like it just isn't, I mean, it wasn't when I was in school, I don't think it what it is today to the level that a real student of the game can get it. Because I mean, a lot of college kids, they're smart people, but they're, you know, 18 19, 20, 21, 22 years old, you know, I think this little bit of life experience you have to see as a real estate investor. And I'm sure you've encountered this with some of the people you've spoken to on your podcast, you've probably been open to new opportunities as well that you weren't aware of, or you know, a new topic or a new way that you can invest in something just by hosting Ritter on Real Estate

Kent Ritter: 8:47

100% Because like I said, I do multifamily, right.So I focus on a pretty specific niche, like 50 to 200 unit properties within the Midwest where we can add some value to them. But I've had people on the show that like buy land, you know, flip land, or we just had a woman on who does short term rentals in vacation markets.Like that was really interesting, because I don't I don't know much at all about Airbnb, and how that works and or note portfolios, or, I mean,gosh, just everything.

Jason Muth: 9:15

Yeah, I think it's probably about picking a niche and specializing in it, you know, running down that road.And I really want to hear more about your 50 to 200 unit apartment complexes and whatnot.But can you take us back to just the why behind you're doing all this in the first place? You know, I read a little bit on your website as to what the motivation is. We talked a little bit about financial independence, but can you dig a little bit deeper into you know,what set you down this path?

Kent Ritter: 9:38

Yeah, I mean, what originally set me down this path was my family, a very personal goal or agenda, right. But here's how I started then as I got into it, it kind of broadened and become this larger thing. But really, it was about my family. It was about specifically my kids. So like yeah, on my website, I kind of tell the story where i i was a management consultant previously and as a management consultant,you're basically gone all the time. Like I would fly out Monday, fly back Thursday, be home Friday, Saturday, Sunday and head back out again. Right.And so that was fine. And I was single and you know, young and just having fun. But once I got married, and especially once I had our first child, and we have three now, you know, I just had this moment where I was sitting on the plane, and like it's still very vibrant. In my memory, I'm just sitting on the tarmac, like, you're getting ready to take off and Monday morning early, and I'm flying out and I'm just like, What am I doing, like, I got a wife and a new baby at home, and I'm flying across the country, I'm not gonna see him for like four days, like, this is not what I want to be doing. This is not the type of dad I want to be.It's not they type of husband I want to be. You know, I want to be around I want to be president, like, I want to be at all my kids' events, you know,like, what was cool, because now that I've gone down this path,so like, like, as the school year is ending, my kids had these like, like, presentations,you know, and things going on for their classes and like,like, you know, one was at 10o'clock, one was like, a one o'clock, like, most people couldn't just be like, Yeah, I'm gonna make it to all of them.And like, I've been able to go to everything. And I love that's exactly why I started out on this whole mission. That was about 2015. And then, from about2015, to 2019, I was really just investing with other people. So I was investing passively and other people's deals, right. And through that time, I really just learned the power of real estate and what it can do to your wealth, because I started having these deals, I invested in sell and seeing the money, come back and understand the tax benefits and all the good things of why we invest in real estate. And then I'm starting to talk to my friends at that time about you know, what do you invest in, you know, what do you guys do, and just nobody knew anything about it, right? I didn't know about it until 2015. And I've been investing, you know, pretty,like I said, I thought I was a pretty advanced investor. And so I really was like, wow, I gotta I gotta be telling more people about this, like, what if I could not just improve my situation, but all the people around me, and I think everybody around me situation would be improved if they had some real estate in their portfolio. And so, so that was really a catalyst for two things. One was starting the podcast just to kind of evangelize like, hey,the guys, there's a different way we need to know about this,like, it's not marketing to us,right, all the marketing is about your 401k and putting money in the stock market, and like stock markets, fine. 401ks I don't think really worked. I think we're finding that out now is that we have the first people now really starting to retire off that 401k. And we're finding that people just don't have money. But all that being said,going back to it to start the podcast to evangelize about it.And then to start Hudson Investing, which is the business I have now to actually help people get into those deals and facilitate those type of deals for people and being able to invest with somebody that knows what they're doing has the expertise, the infrastructure and all that. And so really, it was that mission of like, gosh,like if everybody can be doing what they loved and not tethered to jobs that they hate, wouldn't we all just be in a better world? And I know it's kind of an idealistic thing, but like God, what do we all just be a little happier if we got up every morning did what we loved.And I thought if I could make a little dent in that and start a business and have fun doing it,that was kind of the catalyst of starting Hudson Investing.

Jason Muth: 13:08

Those first couple of years from 15 to 19, that you said that you are investing other people's deals. So these are like syndicated deals where you were one of the investors,were you still working in your consulting job or your W-2 job at that time.

Kent Ritter: 13:21

I was, yeah. And so I had a little bit of a different path. Because in 2010,I started with some colleagues,we started our own consulting business. And so we grew that from 2010 to 2015. And then in2015, we at the end of the year,we sold that business. And so that's what gave me some capital. But you know, most people don't realize, like when you sell a business, like you don't just get to like walk away. They're not just like,here's a check, and like, okay,see ya! We had like a four year earnout period where we had to stay around to make sure that like the business actually produced income that the company bought, right, all the senior leadership can't just walk away.I was there. And so I was kind of doing it, but my my passion definitely wasn't in it. Because my passion was for building the business. You know, that was really my passion. But that was like 10 years, and at that point, I was kind of burnout honestly, with like the client service part of it, just beating my head against the wall trying to tell people to change and they're like, I don't want to change. But But I had a passion for building the business. I love that. So once we sold that,the passion kind of left. And so I was kind of going through the motions at the job still traveling a ton. That was really when I had that moment, because we had my my first daughter in February 2016. And that was really when I had that moment of like, you know, gotta figure out a way out of this like after that earnout is over like I do not want to keep doing this anymore. I had to find the path and through different ways networking, I just found real estate, I realized that was the path. And then just as I learned more, I just fell in love with it. And then you know, I'm not one to sit still. And so I decided like by management consulting experience, my previous business experience really related well into real estate investing and like running these larger scale projects, because that's what it's doing in management consulting is running like multimillion dollar projects.And so I decided that to launch your own business and start not just investing with others but doing it on my own.

Jason Muth: 14:59

I did that that grind also for much of my 20s,nine years.

Kent Ritter: 15:03

Yeah, you get it.

Jason Muth: 15:05

You do, yeah. Ages22 to 31. And I was looking for the pivot out, you know, saying how do I stop? And how do I do something where I could be a little more local, didn't get into real estate at the time, I just got to a local job in Boston. But yeah, it is. It is tough. It's a grind, especially with a family and young family.And I bet that, you know, if one of our listeners right now is,you know, that 30 something, you know, whippersnapper moving up in the consulting world, also in the back of their head, saying,How do I get out? It's that little kind of angel and devil you have in your head? Where are you like, what are you doing,you're trying to be upwardly mobile, but then you're like,This is just a lot. It's a lot of hotel nights. At least when you're in Indianapolis, you can kind of go in any direction, you know, and you're just a couple hour flight. If you're on the East Coast, you know, those West Coast flights back and forth,man, that's a lot.

Kent Ritter: 15:51

It was. I mean, I was in Chicago at the time. And but I spent two years flying back between Chicago and Seattle, and Chicago and San Francisco. And so it's like a four hour flights twice a week,all the time it wears on you and to those people that are in that position, like here's what I want to tell people because like, it's hard, because I mean,these companies are very adept at putting those golden handcuffs on, you know, you get tied up in a lot of things, and you have options, and you have all kinds of stuff. And it's it's really hard to walk away from but like, I've never been happier. I mean, I would 100%say figure out a way to do it.You can't trade stock options for happiness. And so I mean,it's definitely worth it. Even though everybody's gonna tell you you're crazy. I mean, I was leaving, like a high six figure job, right? I mean, my whole family told me I was nuts. So what are you doing? Why would you do this? This is stupid.Yeah, but you just, when you're an entrepreneur, you gotta realize like, it's a, there's not a lot of people that are that understand you or think the way that you do. And so you just, you can't listen, all that and my recommendation would be to find, find some groups of people that are like minded that can support you, because you're probably not going to find that in your family and your drinking buddies.

Jason Muth: 16:59

Yeah. Rory, do you have clients that are like that,that are kind of looking for their way out, or people you've encountered, you know, kind of out and about at networking groups and whatnot, it seems like a pretty standard type of person.

Rory Gill: 17:36

I mean, that's a pretty common theme I've had for people who either engage with us as clients or people who've been approached us looking to become an agent, because it's a, it's a change of pace that allows you to be busy, but define your own schedule, and to be a little bit local. So you know, if you're listening to us on that flight to Cleveland, early Monday morning, take some inspiration here, there's a way out, it's hard. But there are a lot of other people in this similar position to you. And a lot of people have found their, their way out and found their own path. Not easy, and it's not something that necessarily you want to do overnight. You want to leverage your your W-2 job into something that can you know, into this first investments and the network that you have in your existing position. Those are valuable assets that you have to leverage. So it's not about cutting ties with your past, but it's about leveraging what you've done to move on.

Kent Ritter: 18:20

That's a great point, those colleagues become some of your best first investors, if you are going into a field where you are looking for investors, those colleagues are some of your best first investors. And yeah, I mean,just just to the point of, you know, there's a lot of different ways to do it. But you can definitely make it happen. Yeah,but like from 16 to 19. I mean,the other thing I was doing was I was building up that passive income, so that I could weave like I definitely do not recommend just like cutting ties and not having not having a little bit of a safety net,right. Like, that's why I was investing so much well, with other people I was I was taking my money and putting it into these investments, so I could generate cash flow, so that I would have some cushion when I when I eventually left.

Jason Muth: 19:04

Yeah, one of the big points of the FIRE movement, you know, financial independence,retire early, is to have multiple sources of income, you know, and you just mentioned,that's what you're doing. You had some cash coming in during that period where you were part of the that four year, what do you call it the management period?

Kent Ritter: 19:21

Earn out.

Jason Muth: 19:22

Yeah. And you were having money coming in. So you get the confidence to actually kind of make that pivot away.Once that was done. Can you comment a bit about what you learned from being an investor in syndication deals, to then suddenly becoming the one raising the capital for your own deals?

Kent Ritter: 19:42

Yeah, I actually, I learned a ton and I think it was a really great perspective that it gave me of actually being in the investor shoes, right,first. I was able to invest in intentionally invested with a bunch of different people in different geographies. I mean,one for diversification, but two, I wanted, especially once I got it in my mind, like I this is what I want to do. I wanted to see how other people operated and I wanted to be able to take what I liked and leave what I did. And so a couple things really stuck out to me is you know, communication really matters. And you know, you're giving the minimum investment in our deals and in a lot of deals are the type that a lot of people that do what I do, it's typically about $50,000 So it's not a small amount of money. You know, and so if you're giving somebody 50,000, or $100,000, it doesn't feel very good if you don't hear from him for like six months, and you're just like,you're like, What is going on?Like, did they did they take off? Are they still around, you know, what's going on with my money. And so and I had that happen a couple of times, we just like, couldn't get ahold of the sponsor, and didn't make me feel very good. And so I said,you know, when I start mine,like, I don't want to do that.And so for example, like, we send out monthly updates on all of our properties, just here's what's going on, you know,here's some key metrics, just like a one pager. But just so people know, we're there, we didn't take off, we're still working, you know, and let them just have have an understanding of what's going on. So I think communication is paramount. And I just think like, beyond that,like anything that you can do to make it easier for the investors, you know, just to try to, like there's there's a lot of friction in the process,because it's definitely not,it's gotten more sophisticated.We have investor portals now where people can go in and they can log in and create an account. But that those are a lot of those are just a couple years old, it's definitely not as easy as going on like your Charles Schwab account online and making a stock investment.So any way that we could reduce friction in that process are things that I was trying to focus on. But yeah, I mean,communication was a huge one.The other one was, you know, I was involved in a deal. The second investment I ever made,where the guy actually committed fraud, and we, the investors, we lost our money. And so it really taught me a lot about, you know,it's kind of shame on me,because because I really didn't do my homework, I didn't really know what homework needed to be done at that point, right. And I didn't look into the sponsor,and I didn't really vet him. And so it really taught me a lot about, you know, the importance of the sponsor, that the sponsor plays and the importance of just being you know, I think transparent and helping people build trust, helping that trust connection come I don't know how to say that. But like, like just being transparent and being open, and so that people can build that trust, because it's a big leap, right to make that first investment. And I've seen firsthand how it can go wrong.So I think the importance of the sponsor, and having a good sponsor, and having a sponsor that has integrity, and and has financial means and has a good track record, right, those things are all critical and, and things that I did not look at at all on that deal. The other I've been involved in a deal that had a capital call, meaning like,they had to go back to the investors and ask for more money because something came up and they didn't have enough money to fund it. And like that doesn't feel very good. either. You're kind of in your mind that like my throwing good money after bad here, like what's going on,right? So never want to have that happen. And like knock on wood, we haven't. But I think the reason we haven't is because I've been through that experience. And I'm hypersensitive to it. And so I try to just load extra cash into our deals in different reserves,basically different rainy day funds. So like if whatever construction projects we're doing, I'm throwing 10% on top of that, in case things go high,we're front loading a few months of working capital, right, we're putting in, like interest rates have been going up and net,well, not up and down, up, up,right. And so we've started putting just even an interest rate carries into our deals,which is just extra cash, as rates go up so that we can, you know, stabilize cash flow,right, and things like that. So just we try to be really conservative and put a lot of different cash in our deals and a lot of different ways. There's a lot of buckets we can pull from in a rainy day when we need them. We never have to go back to the investors and say, Hey,guys, we need more money. Those are some of them.

Jason Muth: 23:47

How many investors do you typically have in any of your, in your current deals?

Unknown: 23:52

Yeah, it all just depends on the deal size, what I can tell you is the average investment amount is right about$70,000. Our minimum is 50. So we have like a lot of people coming in at 50. And then we have people come in, you know,100, 150, 200 a few people will come in above that. But it just just depends on how big the deal is and how much money we need.

Jason Muth: 24:11

Yeah, I'm just kind of trying to pull some questions out, you know, because a lot of people probably listen saying,you know, I hear so much about,you know, wholesale deals and syndication. And you know, being part of these investments, I don't really know where to start. So they're probably the same questions everyone else asks, What do you think is an average amount of time that somebody's going to have their money in one of your deals or a deal of this nature?Yeah. We've done a couple of these ourselves, like

Unknown: 24:30

So I tell people, like you should only invest money where we were investors in them and you know, I think we learned that you aren't going to need the next five years. Right. So so most of our deals, all of actually all of our deals have a couple things along the way.You definitely touched upon sold before five years, but I just try to tell people like we communication. I can think of one of the deals that we did always underwrite them in kind of a three year, what's a three year hold look like? And then what does a five year hold look like? And so the five year numbers are always lower than the three year because we usually have, you know, a big bump at the beginning. And then we're pretty conservative with our, our, like, organic growth,so we'll grow rents, you know,3% or so over time. Yeah, the answer is I tell people, you need to have money that you're not gonna need for the next five years.with good communication and one with not as good communication.I did something unrelated to real estate, where there was a Facebook group of investors afterward and the whole thing went sour and it became ugly on there, you know. So you can imagine the perils of social media. And when you empower a group of 100 people, a couple100 people or so who put some money into something, and then when it goes under, they all get angry.

Kent Ritter: 25:43

Yeah, I'd imagine.

Jason Muth: 25:46

Yeah, you know, I'm thinking back. And there's definitely a couple things that I would do a little differently.If I were to go into a deal like this myself, again. One thing that I think we would do a little differently was the kind of the source of the funds. So I think that we invested and we were pulling money out and carrying interest on the money because it's coming out of like a HELOC or something. Yeah, and I don't know, if I factored into my calculations, you know, the interest I'd be carrying for the duration. Do you think that your investors are looking at it with that level of sophistication?Like are they do they have this money sitting on the side that it's earning .01% interest rate in a savings account? That's why they're investing with you? Are they pulling money out of a HELOC or a cash out refi?Parking it with you like where do you think the source is coming from?

Kent Ritter: 26:31

I think a lot of people are pulling it out just in conversations I have a lot of you are pulling it out of savings accounts out of CDs,annuities, things that, you know, maybe they thought were going to were going to be good.But I think a lot of people were just parking their cash. And they didn't really know, again,they didn't know about this option, right? And they're like,well, I don't have any more money in the stock market don't really know where else to put it. And so I think a lot of people are coming out of those types of accounts, we have a lot of people that invest through their IRAs, their self-directed IRAs, you know, as another primary source. But you know,and I don't know the source of everyone's funds, but I don't know if people have invested with a HELOC or not, I think that you definitely have to factor in those interest rates.Yeah.

Jason Muth: 27:14

But just by bringing all those up, you know, that if you're listening to this, you know, think about all the different ways that you can tap into capital, if you want to invest in a deal like this. I know Rory is about to say something

Rory Gill: 27:25

I mean, this is a conversation who talks to different people with different investing strategies, there is a kind of a big gap between kind of active investments, the person who wants to go out there and swing a hammer and actually build a property themselves to kind of feel that appreciation,the cash flows resulting from that, versus the passive investor who would be getting involved with syndication. And I think they're pretty self-evident as to where you are. But I wonder if you ever have experience with people who are excited to partner with you,and then actually are looking to have more of an active role and feel like you've not been communicated with or is a different path if somebody is going to go in and be a passive investor?

Kent Ritter: 28:05

So yes, I think that that does happen, right? I mean, I was I was in that position, right? When I was, I mean, toward the end of my passive investing, you know, I was doing it because I was wanting to learn how the active guys do it. I try to be upfront with people, I let people know,like, hey, you know, I'm investing with you. But like, I also want to learn from you. You know, some people were like,cool. Others were like, No, not for me. And so I think if you're, if you if that is the angle that you're approaching it with, I think just be upfront with a sponsor, and like, let them know, because, you know, I think what, I'm just gonna be completely honest, I there's an honest moment where I think what sponsors do sponsors like we hate are like, the people that come in with, with 100 questions and want to invest $25,000, you know. And it's like, you spend so much time, and that's, it's like, I get it, because everybody has to start somewhere. And I'm happy, I'm grateful for every investor. But I think you just have to, as an investor, be mindful of kind of where you fit in the broader ecosystem, because that's gonna be a turnoff to people that are running the deals, if you're a monopoly. If you're a very small amount of money, but monopolizing a majority of their time. 100%, you should ask questions. I just think be thoughtful about it. Like I just had a couple of times where I think people just downloaded lists off the internet of like,all the questions to ask and literally showed up and been like, I have 40 questions that I need to ask you. Like, okay,well, I have a half hour, let's try to get through as many as we can, you know, but I think very much as a great way to see if it is something that you might want to do and talk to the sponsor and understand the amount of work. What I try to tell people is like, unless you really love it, because I have a lot of people I talk to they meet me on LinkedIn or wherever and they say, Hey, can I just pick your brain about being a syndicator?And I say, look, unless you really love the process, like the juice isn't worth the squeeze, like you can get great returns being a passive investor. Yes, you get better returns if you're actually running the deal. But it's not worth it to me unless you really like it because it's also like,you gotta judge risk, too,right? There's a lot of risk and taking on other people's money and doing these projects. So I tell people it'slike look,especially if they have another business or some actually was just having a conversation with a guy last night, who has another business, he said, You know, I've been thinking about being active, but after talking with you, I think I might just invest with you. And that allowed me to focus on my other business and like, yeah,absolutely right. Like you should focus on your highest and best use and if you've another business Wherever you can actively create cash flow,right, and then you can take that money and funnel that money into passive investments, which are also given you, like 15, 20,25% returns, that you're just you're just multiplying at that point, right? That's exactly what you should be doing. You shouldn't be trying to figure out how to now start investing in real estate to like, double down and build your core business.

Jason Muth: 30:46

I was gonna say, 8%returns, you're saying 15-20?Like, you gotta get me a link?How do I how do I invest? That's awesome. No, but that is the ultimate, I mean, think about it, if somebody's got a, you know, a million, million and a half dollars to park, and they can make 8% on that money every year and sit back and go on vacation and work out. Like who wouldn't do that. Right? If you can cover your living expenses,with your investments in the most ultimate passive thing. I think people get well, I mean,your example of the $25,000Investor with the long list of questions like in my world, I in a sales environment, like, you know, my full time job. And it's always the smaller clients that have the most questions, and they require the most help. A call this week, where, you know,we're presenting an idea, and then we find out like the monthly budget's about like,$1,000 incremental, and I'm like, Okay, this really isn't all that much. And it's just a lot, you know, it's another 45minute call, you have to go back and find this out from this other person, and then you have to go set everything up and say that it's just a lot of work,right, for the smaller clients.But you know, they ask a lot of questions, maybe it's because it's the only 25k they have to invest, which if it is, maybe this isn't the avenue, you know,for them.

Kent Ritter: 31:52

Right. And I think that's where people need to be upfront, too, because a lot of our deals, you have to be an accredited investor to invest.And there's certain criteria you have to meet, I've definitely had a few people, like you go down the path, and then it's time to fill out the paperwork.And it's like, it's like,because you actually have to prove your accredited, like, you have to, you can't just tell me and believe it, then we get there. And they're like, Oh,actually, you know, it's like,okay, well, you know, just be honest, upfront, right? There's nothing wrong, like, everybody's gotta get started somewhere. And like, actually, I think those people are taking that 25 grand,and investing in a smart real estate deal like that, that's a great way to go, you just got to make sure you're in the right type of deal. And I think my whole point is, like, I'm not trying to say we don't want to answer the questions, cuz I do,it's just like, the respect just has to go both ways, I think you just have to recognize kind of where you are in the ecosystem.Yeah, and make sure that

Jason Muth: 32:39

I totally get it.It's tough, though, because a lot of times, like you're meeting these people, probably at like real estate meetups or online, and you know, you're sharing your beer with them,after you gave a speech, or you heard somebody else talk, or you're all just there to, you know, hear somebody else talk about their deal. And, you know,you're just you guys are guide a woman talking, they're right there in front of you, right,you know, so, you know, you become collegial a little bit.And then next thing, you know,you know, becomes a long list of questions, and nobody knows how much money everyone has at those meetups, you know, you can be showing nothing, you can be showing up with, you know, $5million to invest.

Kent Ritter: 33:11

And that's why I try to, I try to focus on education in other ways to like,like, that's what the podcast is about, right? So I want to my goal is to educate people as much as I can, so that when they're when they're showing up,they're ready to invest, right,because what will happen with a lot of people is, you know,these investments fill up pretty quickly. And so like, if you're,if you're not educating yourself ahead of time, then you might miss the boat, you know, on the opportunity, I mean, happens all the time. And, and I hate to see that, but it's always a first come first serve thing, you know, and it's just, so maybe that's like, the right lesson to the listeners is take the time to educate yourself ahead of time, if you want to be a passive investor, you know,understand how the process works. Like even on my website,kentritter.com. Here's the plug,I even have like, for new investors, like, here's terminology, here's how it works. It's frequently asked questions like trying to front load that so that people can come in and be educated. And,and feel confident in what they're doing.

Rory Gill: 34:10

We talked a lot about, you know, the benefits to the investors that you know,work with you and the value you create for them. But I don't want to let our time go by without talking about it on the other end.I know on your website, you talk about kind of

Kent Ritter: 34:19

Sure.the social impact that your your work has in providing affordable good housing to, you know, to a large number of people. And I think it's critically important right now, because you can't go anywhere without hearing a story about just how tight the housing inventory is in this country. So I don't know if you wanted to bring up that part of the work that you do, and the impact that you have, on the community outside of the investor class,Yeah, no, I love this aspect of it, because that's one of my favorite parts about real estate is just the tangible nature of it, where you can see something, and you can you can see where it's at, and you can improve it and you can like, touch and feel it right,you can see the change. So the type of properties that we buy,are typically built in the 80s and 90s. You know, so there's somewhere for 30-40 years old at this point. Buying from a lot of, you know, I'd say less sophisticated owners who just haven't really for maybe, maybe just because they they're poor management or are often just undercapitalized, you know, and they just can't keep up with the needs of the property. And so a lot of properties we buy have a ton of deferred maintenance, you know, They have a laundry list of things that need to be done for the tenants work orders and different things. And the properties are just outdated.You know, some of them are, they don't have proper lighting, you know, in the parking lot for safety, things like that. So when we come in, I mean, those are things that we come in, and we're able to infuse capital,and do all these projects and really improve the property,make them safer, make them you know, modern, make them clean,and just really, I think,improve the lives for the residents. And so like people have gotten into, like social impacts of investing in things.And I really think like, that's what we've kind of always been doing on the multifamily side. I mean, like, do we make a profit?Yes, of course we do. Because that's how we fund our deals, we have to give a decent return to our investors. But it can really be a win-win, because I think we really do improve the living conditions for many of our residents, you know, especially on some of the some of the older properties we buy, like we're acquiring a property right now.And it's built 1945. And like we walked the property, and there's literally active leaks where there's water coming out of the pipes, like in the basement. I mean, it's just not like termites, I mean, there's lots of issues that we're going to solve on that property. We're fixing all that stuff. And so I think it's going to improve the lives of the residents. And so I really liked that aspect of it.I think that, especially in the Midwest, where a lot of the product was built in the 60s,70s, 80s. And it is older product. It needs that capital infusion to come in and really fix them up. Otherwise, the buildings are kind of falling down around people.

Jason Muth: 36:58

Yeah. And multifamily investing is probably going to be one of the ways that we get out of this housing crunch that we're in right now. You know, that's,it's a vicious cycle. There's no homes for sale, there's nowhere for people to live, people don't want to sell what they have,because there's nowhere to go and prices keep going up and rentals keep going up. And so you're part of the solution.You're part of the solution there Kent, which is good.

Kent Ritter: 37:18

You know, we're doing our little bit here and then even trying to build new working with, you know,municipalities to actually build new apartments as well. It takes a special skill set. It's not easy to do, and you get a lot of demonstraters that don't want multifamily in their backyard,you know, but I agree with you.I think it is the the only way that we create enough affordable housing to get everybody a place to live. I mean, the studies I see are like somewhere between like nine lately, like nine to11 million homes short in the US. That's tragic.

Jason Muth: 37:49

Yeah. Especially for the cohort of people who are in their prime home buying years and family building years right now that want somewhere to live.Yeah, just know where to go.This has been really good.You've had you've given a lot of good insight that we haven't heard on this podcast. I'm sure that like you think this all day every day, and you probably talk on your own podcast Ritter on Real Estate about these types of topics, but

Kent Ritter: 38:11

I just bother my wife about it. And now she says real estate I think she

Jason Muth: 38:16

Does she have dinner with you with headphones on you know?

Kent Ritter: 38:22

She does. Yeah, she just has a recording. She just presses it's like, Ah, yes,honey. Yeah. You're doing great,great job. Ah, uh

Jason Muth: 38:29

See, I love it. So when Rory and I have dinner like sports, so we're both talking about this stuff. Right. But like, I think he hates the list of questions I have for him every single time that we sit down, because they're always about like, you know, all these different projects. I am that$25,000 you know, flip to 40questions person that he despises.

Rory Gill: 38:46

Well, it's my job to answer questions all day. And then I go home to answer more.

Jason Muth: 38:52

Questions. When we get to our final three questions, then we could tell everybody how to reach out to Kent, our first one is if you can get onstage for half hour and talk about any subject in the world with zero preparation.What would that be?

Kent Ritter: 39:04

That's hard. So here's mine, I want to add,because I've been thinking about this a lot personally lately is I would speak to I think parents, particularly fathers,like because I got three small kids they are six, five, and three. I'm just seeing how fast they're growing. And I just see,I tried to be really intentional about spending time with them.And like soaking it all in because I know it goes fast. And you look around and like you go to the park with the kids. You see so many people just on their phones have no idea what's going on and don't know where their kids are like all this of like,I think my message would be like, we got to wake up a little bit and like pay attention and like be present with our kids.Because literally every person I need that's older than me is like, oh, it goes fast. You know, it goes fast. And so just if I can really get people to pay attention to that, like while they're in the moment and not regret it, you know, 10-15years later, that's what I would like to focus on.

Jason Muth: 40:00

That's awesome. But I mean, like now you're that guy when you see like, you know, the people pushing their 10 month old on the swing. You're like,oh, it's gonna go really fast.

Kent Ritter: 40:06

Yeah, yeah, it goes fast!

Jason Muth: 40:08

Yeah, it does. I mean, our daughter - she just turned three. And now the photos on Facebook that reminded me of when we first brought her home and you know, my mother held her for the first time it was like,wow, that was three years ago.And I remember.

Kent Ritter: 40:21

I mean, you're in such a grind that you know, it's like it's like the days are long. Long the years are short.

Jason Muth: 40:26

Oh, man, I say that.And being present, you know, I'm glad that you said that because be present. You know, I see the same thing. I'm guilty of it sometimes also, but you know the parent.

Kent Ritter: 40:37

We are there,right? All are.

Jason Muth: 40:39

Yeah, it's tough not to be, but being present and the kids notice it too. They really do. You know, I've actually,I've been caught multiple times by Cecily, our daughter, where she's like, grabbing my phone away from me. Or she's like, she

Kent Ritter: 40:52

Me too. It's like,I'm not perfect by any means.knows You know, I mean, it's just like something that I have just been so focused on lately, because like, I'm just seeing, like, I think what's really happening?It's like, my oldest is graduating kindergarten, she's going into first grade and like,Oh, my God, I have a grade school kid now. Like, they're,they're going to be moving out.

Jason Muth: 41:50

Yeah, yeah. When do they stop talking to you? You know, tick tock, tick tock.Right.

Rory Gill: 41:53

Yeah, right.

Jason Muth: 41:54

Our second question,tell us something that happened early in your life or career that is impacting the way that

Kent Ritter: 41:59

That's a really good one, I would say, I've had you're working today.some pretty big events. One,though, that I think specifically impacts my, my work isn't necessarily a huge thing.But I, when I was first a management consultant, and like,first year out of school, you know, I was, I've always been pretty successful, you know,throughout my college career and all this and had been recognized and things and got the job. And I'm just like, heads down, I think I'm doing I'm doing great work. And then like six months in my I get like a performance evaluation. And it was pretty bad. Like, it wasn't what I expected at all. And I thought I was doing a great job. I'm like,delivering on everything. What it really taught me was the importance of of communication,which you've hit on the theme,right communication, but also just like, self promotion and marketing. Like, nobody's gonna promote you better than you can yourself, I think, whether you're what no matter what your job you're in, you got to make sure people know the things you're doing the good stuff you're doing. Because basically,it was kind of like we talked about communication earlier, we don't hear from somebody, like I just wasn't focused on giving updates, really, I was just doing the work, I wasn't focused on telling people about what I was doing. And there was this impression that I really wasn't doing anything, because that's what happens when you don't,when people don't hear from you,their minds go to a negative place, they Oh, nothing's happening, and blah, blah. And so it just really taught me I was really good at getting people promoted later in my career. And I would coach them on how to communicate and self promote and how to do it tactfully. And, and I pride myself in that and be able to get people promoted. And it was all really just based on that.It was just about, you know, you can be doing the best job in the world, but nobody knows about it, then it doesn't matter. And so just just make sure that, you know, just make sure you're advocating for yourself, I guess is the point.

Jason Muth: 43:49

It's the fine line,right? Rory, I mean, like we're trying not to be too self promoting. And I think that's why we try to highlight people on this podcast and not us.

Rory Gill: 43:58

But assembling these people is really the value that we're adding also for the podcast, too. So I'll yeah,we'll take it

Jason Muth: 44:04

Super difficult to promote yourself with the microphone off. I'll add to this also, like we're going through diversity training right now at work. There was a topic came up about introverts and extroverts and encouraging managers to try to give as much floor to introverts as well, because the extroverts can take over a sales floor, they can take over a meeting. And an introvert might feel like they don't want to contribute, when they might have great ideas to contribute, but you have to give them a floor to be able to contribute. And I'm sure that you probably work with people that are both introverted and extroverted, both of you do you know and it's important to kind from them both.

Kent Ritter: 44:39

100% and you may not believe this, but I'm a natural introvert. By like after this, I'm gonna go sit in a dark room and recharge, but, but no,but I really had to learn to be more extroverted, and I'm passionate about what I do. I love talking about this stuff.So it's easy, but like, I think that's really what I was. I was one of those introverts, you know, and I wasn't self promoting in that way. And I had to really learn that skill set.

Jason Muth: 45:02

Yeah, the podcasting is a great way to do that though. And like I would have never guessed that, Kent. Just from this conversation and from what I've seen online, you know,I mean, like you host Are you hosting meetups in Indianapolis?

Kent Ritter: 45:14

Yeah, I host a meetup every month? Yeah.

Jason Muth: 45:17

I mean, like, you know, introverts don't do podcasts, video podcasts appear in other people's podcasts, you know, host meetups, and if you are one which you just said that you are then you're doing a good job and forcing yourself to do the things you know that are external

Kent Ritter: 45:30

Yeah, you know, I look at introvert and extrovert as like energy flow, like because my wife is the extrovert of like all extroverts, like she she always wants the spotlight.And I love her for that and that's why we get along because I give it to her right and but like she could be in the spotlight all day and it actually just adds to her energy and just feeds her right? For me like if I go and I speak on stage, like I don't want to talk to anybody else for like three hours. You know, I want to go I want to go like hang out in my room right after that. It's like I really do it kind of drains energy and I have to like recharge That's kind of how I look at it. Introvert extrovert is like, are you getting energy?Or is it taking energy from you?

Jason Muth: 46:10

Yeah, that's so powerful. Our final question for you tell us something that you're listening to or watching or reading these days could be anything in the world.

Kent Ritter: 46:17

Yeah, well, I've warned you guys before this,like I'm not definitely not the hippest person in the world at this point with my three small kids like yeah, I watch a lot of like you said, like CocoMelon. I would say my wife and I, we just finished watching Ozark, which is, has been one of our favorite shows. And we don't, we don't watch a ton of TV. So we when we find one that we really get into, like, that's kind of a treat for us. So that's our that's mine.

Jason Muth: 46:41

Rory watched that. I think I watched it but I fell asleep.

Rory Gill: 46:44

It's that's how it started. But I've watched some of it but if I ever circled back to I'll have a few seasons to catch up on so no spoilers,please. I'll circle back to that. 2027 or some time, and it'll be great. Because all the episodes have already been waiting for me there.

Jason Muth: 46:56

Yeah. But man, it's it's tough. You got three kids.I get it. You know, there's no TV time for you. CocoMelon has been on our household for a long time now.

Kent Ritter: 47:04

Yeah, my guilty pleasure is because I'm a big football fan. I like the NFL.And so like if, you know, I try to like watch Colts games on Sunday. But I usually get through about a quarter before I have all three kids yelling at me to change the channel. So the kids control the TV around here.That's for sure.

Jason Muth: 47:21

You listen to the Pat McAfee show?

Kent Ritter: 47:24

I do. Yeah.

Jason Muth: 47:25

You do? Yeah, he's quite a character.

Kent Ritter: 47:27

He's great. Yeah,yes, he is. He's quite celebrity here in town.

Jason Muth: 47:30

Yeah. Yeah. I mean,I didn't know anything about him until his show came out. And he's an announcer for WWE now as well. Then I kind of dug in and I'm like, Oh, now I get why they brought this guy on. I mean,like, you know, is a personality driven kicker for the Colts.Exactly. So Ritter on Real Estate. That's your Instagram handle. That's also the podcast name. Your website is your name.Right, Kentritter.com. That's right. So tell us how can people get a hold of you? Lead forms there? LinkedIn? Like what do you prefer?

Kent Ritter: 47:58

Yeah, I mean, the website is the best way. That's where the home base and yeah,you can go the website, you can see deals deals that we have going on, you can get the blog,the podcast, and you can there's a form to contact me, there's kind of a general if you want to contact me or there's a sign up to be an investor. So and then I would say you know, to all those newer investors or people that want to invest, like go there,go to our new investor section,check out the terminology, check out the FAQs, like just understanding the language will get you so far in understanding these deals.

Jason Muth: 48:30

That's great. Well,thanks for providing the resource and all the great information on on this episode of the podcast. We really appreciate it. Rory, where can people find you?

Rory Gill: 48:39

People can come take a look for me at NextHome Titletown. That's nexthometitletown.com or UrbanVillage Legal,urbanvillagelegal.com.

Jason Muth: 48:46

Awesome. So Kent,Rory. Thank you both for being on the podcast. We really appreciate it. We'll put all those links in the show notes also can't so people can easily find their way to your website.If you've made it this far. If you could please subscribe or like this podcast, we'd really appreciate it. We also love good reviews. So if you want to get one I can help you write it if you'd like but we read all the comments. And if you have any questions, you know, feel free to reach out to us. You can get to me directly.Jason@nexthometitletown.com And that's it. That's another episode of The Real Estate Law Podcast. Thank you Kent. Thank you, Rory. Thank you for listening. Really appreciate it.Have a good one. Bye.

Announcer: 49:22

This has been The Real Estate Law Podcast because real estate is more than just pretty pictures. And law goes well beyond the paperwork and courtroom arguments. were powered by NextHome Titletown,Greater Boston's progressive real estate brokerage. More at nexthometitletown.com. And UrbanVillage Legal,Massachusetts real estate Council serving savvy property owners, lenders and investors more at urbanvillagelegal.com.Today's conversation was not legal advice, but we hope you found it entertaining and informative. Discover more at realestatelawpodcast.com. Thank you for listening.