Brandon and Vikas interview Gino Barbaro, a multifaceted investor, business owner, author, and entrepreneur. Gino opens up about his personal background and how he found his way into the world of real estate investing. He candidly shares that his path was far from easy, recounting his initial struggles while working tirelessly in a restaurant with little financial reward.
Brandon Hall 0:00
Welcome to the hacking real estate podcast where we dive into the stories of seasoned hands on and tech savvy real estate investors. We will learn the strategies and tools they use to maximize returns and minimize hassle all while navigating the rapidly changing real estate market. I'm your co host Brandon Hall and managing partner of Hall CPA and I'm sitting alongside my co host Vikas Gupta, CEO of Azibo with our combined 15 years of experience in real estate investing and entrepreneurship. We're here to help you up your real estate game. Let's get hacking. Hey, everyone, we are back with another episode. Our guest today is Gino Barbaro. He's an investor, business owner, author and entrepreneur. As an entrepreneur, he's grown his real estate portfolio to over 2000 multifamily units and 250 million in assets under management. Gino and his partner Jake, friends of mine, are teaching others how to do the same through their Jake and Gino premier multifamily real estate education community. To date their students have closed on over 60,000 units, and $4 billion in deal volume. Gino is the best selling author of three books, Wheelbarrow Profits, The Honeybee and Family, Food and The Friars. He currently resides in St. Augustine, Florida, with his beautiful wife Julia and their six children. Gino, welcome to the show.
Gino Barbaro 1:52
Brandon, Vikas. Thanks for having me on. Let's have some fun today.
Brandon Hall 1:57
Let's have some fun. Well, why don't you kick us off just by giving us a short background. I know that your story is very cool. So how did you originally get into real estate investing?
Gino Barbaro 2:14
The story may be very cool, but it's also very painful for anyone who's an entrepreneur and it doesn't happen. It sounds sexy. $250 million in assets. 2000 units. Yeah, that may be the end product. But the beginning product was nothing like that. I'm just gonna be honest with everybody. It sucked at a restaurant for years. It was great until it wasn't great. You know, 2008 comes along and it's like, holy crap, I'm working my ass off. And I'm not making any money here. So I met Jake in 2009. He was the drug rep. He's running around GlaxoSmithKline. You know, the sunshine that comes in, they start changing all the laws and he's getting catering out of my restaurant. So that starts to blow up. And he says, You know what New York CEO would want to be as he leaves New York and 2011 goes to Knoxville, Tennessee. And that, to me, was a blessing in disguise because I was looking to invest in New York and I couldn't find deals in New York. So he moved down there. We decided to partner up on a whim because he knew nothing. I taught him everything. I can say that because he's not on the show. But truthfully, he had no idea what the hell he was doing at the beginning he had none, right. He was just a guy who was hungry. He was willing to work and he had great work ethic, great morals, we had we really aligned really well on values and their long term mindset. And it took us 18 months to find the first deal. It was very difficult. I mean, it's very similar to where we are right now in the market. Everyone's like, Oh, it's a scary recession. Well, back in 2011, and 12, the GDP sucked. rents were 300 bucks for one bedroom in Knoxville it was it was there was no capital raising debt was very hard to secure. And that's where we're going back to now. So I share that with everybody saying, you know, is it the right time, it's always the right time when you're ready. And I was fed up with my situation I wasn't making enough and I just wanted to secure some passive income Jake and I said, if we get 100 units, brother, we are free my friend 100 units. That's all we wanted. And, you know, by the third deal, you know, the year ends and buying our first deal. We are 200 units. So for us, it was just getting started getting to know each other. I had the mentorship experience, so I sort of knew how to underwrite deals and I'd made mistakes previous and that's how we got together in 2011 18 months later, we got our first deal.
Brandon Hall 4:52
So you owned a restaurant, did you end up selling it?
Gino Barbaro 4:57
Good question. You know that restaurant I opened in May 17 99, before I got out of college, and I remember driving up to the restaurant the first day, I was by myself in the car, and I was bawling. I was crying. I'm a young guy. And I'm saying to myself, What the hell did I just get myself into? I mean, like, all my friends are out in college, they're all got these great jobs. And I'm working in the kitchen in the restaurant. And honestly the first 10 years of it, I loved it. I loved the restaurant. So I was working with my father. I mean, I'd been working with him since I was eight years old, and he passed away in 2007. That's why like, quote, unquote, midlife crisis, I'm like, do I really like what I'm doing? Or did I really like the family aspect of the business and the first 10 or 15 years? were phenomenal. I mean, it was great. It was a growth market. People actually went out to enjoy food. I mean, it was just, it was just a great time, there wasn't as much competition, there was no GrubHub you're not calling Taco Bell up again, for dollars ordered. It was none of that kind of nonsense. And I truly loved the business the first 15 years, but then after that, the competition, not understanding how to scale the business, getting stuck in the restaurant, not being able to hire people. I had no core values, no culture. So I was like, Okay, I'm washing dishes. Why can I hire somebody? It's because I wasn't building a business. I was just building myself a pretty high paying job
Vikas Gupta 6:10
when he decided to then go into real estate. But did you consciously go in with the idea of, I'm going to build a business taking some of those lessons from the restaurant.
Gino Barbaro 6:20
You know, because when I started my first real deal for myself, I started in 2005. And I just jumped in and I warned people by just taking massive action. I wasn't educated. I lost $172,000. In that first deal. It was a mobile home park. And it was a syndication. I didn't know what it was. Papers weren't drawn up. Terrible partnership, but it was all on me because I didn't do due diligence. I didn't know about underwriting. I just had some money given to somebody and the deal went bad. And you know that one night I was out of the restaurant on a Friday night. I'll never forget it. It's snowing. In New York, I got about eight inches of snow. No one's around. I'm in the parking lot throwing salt. And we own the building. My mom owned the building. And she had three apartments upstairs. And I see one of the lights on in the bathroom in the apartment. And I'm like, I'm a sucker out here and not getting paid again this Friday. This week. I'm not getting paid because of the snow. Meanwhile, my mom's collecting rent from those three apartments up there. She's getting paid every single month. And that really stuck with me. I'm like, I'm just not in the right business. I'm actually she's home sleeping, getting paid. And I'm out here freezing my ass off throwing salt in the driveway and I'm not getting paid. I'm doing something wrong. So for me, that was just the lightbulb moment I said I need to start investing. And I know everyone says all you know millionaires were made by buying real estate. But I didn't understand the business potential of real estate. I think we all go into it thinking hey, we're gonna buy a few assets. We're gonna, you know, become landlords. But a Jake and Gino, we say we create multi family entrepreneurs, you get into multifamily, specifically because you want to scale up, to be able to hire property managers to be able to hire maintenance techs, you need to start out as the IMA guy Jake and I were the ultimate ima guys, I'm gonna do this, I'm gonna do that. I'm gonna do whatever I need to do to get 100 units. But once you get to 100 units, it's like, well, I need to grow out of that person, I need to start hiring. I think that's any business in the beginning. We all need to bootstrap in the beginning, really learn the processes and the systems and then start building them. But once you're at that point where you need to start growing, I think you need to get rid of the ego and say there's people out there that can do it at least as good as me, probably better. How do I get those people on the team? And I think when you look at real estate in its totality, that's why the single family space is very difficult because you're buying 123 10 They're all over the place. It's very difficult to scale a portfolio. I'm not saying it's not not doable. i We have students who have over 100 single family homes, I don't know why they'd want to do that. But they just got started doing that. But it's a very hard business to scale up. So I think what you're looking at real estate, look at it as a business where you can scale, but also, you're a property manager, but you're also the asset manager, you're managing that asset, you're managing the noi, and you're managing the cash flows of that business.
Brandon Hall 8:59
I like that take a lot. I don't think you hear that very often. But you're totally right. Most people buy rental real estate, at least at the beginning for financial freedom, right? That's the ultimate goal. I remember I used to ask this question to everybody on our sales calls when I was doing all the sales calls: why real estate , what's so great about real estate, why not invest in the stock market. And as always, I'm trying to create cash flow so that I can leave my job or at least decide if I want to show up. But I think that you're right, in what I've experienced in servicing clients that make a business out of it is you get huge leverage just just by using capital, you know, being able to finance properties, so you get huge leverage and you can make real businesses out of it's not just like buy a property and watch it cashflow for 300 bucks. I mean you can really do the same things that you would in any other business. You can create competitive advantages through the people that See on your team through your strategy of adding value, the different markets that you acquire and the different relationships you have. So it can really be a big business. So I really liked that take now, I would love to touch base or circle back to the deal, the first deal that you ever had. You said you lost $170,000 on deal number one, most people would have thrown in the towel. That's a big gut punch, right? Like what made you say, I'm going to try this again versus like, oh, real estate's a sham?
Gino Barbaro 10:30
Before I answer that question, that's a great question. I want to go back to what you just said about the business because I want to change people's paradigm about real estate. Everyone gets in it for cash flow. And I think cash flow is important. Cash flow will get you out of your job. Equity will keep you out of your job. Alright, that's truly important. What you need to do is you need to build equity, because once you get equity, you can repurpose the equity into the next property we talk about in our business, the conveyor belt, think of an imaginary conveyor belt in front of yourself. It's a five year conveyor belt, you want to stack as many assets as you can, because as you're stacking the assets, what you're doing is matriculating. So three years from now, that deal has been repositioned, it's got value, and you can either sell it, or you can refinance it and pull the equity out because you don't make money. When you buy real estate. That's a fallacy. You may make some money with the cash flow, but you truly make money when you exit real estate. And that's either a sale or refi. So let's understand the model. That's the business of real estate right there. That's building a business where you're buying assets, adding value and continuing to either hold them, pull the equity out or sell them and actually trade up to another asset. I know you're you're you want to say something brand new, you can jump in at any time, because I think that's important. I want to put that in front of people because I didn't understand that years ago. And that's what we teach our students because they think, Oh, I'm gonna make $100 per door. That's your thinking small right there. That's the meat. That's what Jake and I thought all we thought was yield. But there's so many other implications. You have tax benefits, you have principal pay down, you have appreciation, you have the ability to trade up. I mean, there's so many different benefits to it. But that that $170,000 loss, that's an important component for me to ponder as I get older, and this may sound crazy. I just wanted a Couples Retreat last week to Ireland. My wife went to a retreat with nine other Jake and Gino couples, and it was with Phil Mckernon, an amazing life coach. We dove into our past. And now that you hit me that question, I'm saying to myself, I think I was just pissed at my mom, because my mom told me don't invest that money, you're gonna lose the money if you invested. And I'm like, Man, I don't want to prove her right. I'm going to prove her wrong. I'm going to go out there and I'm going to buy that next deal. I want to make a ton of money. And the irony was when I met Jake, I didn't tell my mom that I invested with Jake until we had 200 units. I was afraid to tell her because I was afraid that she'd make these excuses and say, Hey, you're okay, risking you got six mouths to feed. What do you do? And let's stay small with the business. So for me, I think I had a lot to prove. I think I was sloppy. I think I didn't want to I didn't want to show her or anyone in my group that I'm a quitter. I said, I gotta figure this out. This guy Mike can do this. And he's making money every month I used to quit my part I used to call Missouri buddy Mike. He had a couple 100 units. This guy like, he looked like a moron. But I'm like, How could he do if he could do it? I can do it. And that's what really motivated and inspired me. They went away came, I got the mentorship I got the training and then after that I'm like, Okay, I need to do this, because I need to continue to build a wealth and when everyone's telling you, you've got six kids, you've got six weddings, you've got six colleges, you've got money retire, I knew I couldn't make it with the restaurant, that one stream of income. I knew that I needed to continue those other streams of income. But if it was for me the main reason was I just wanted to do something where there was impact and then fortunately for me getting into real estate and then actually creating a platform like Jake and Gino. We're tracking to expand on the impact. I mean, for me it was just awesome.
Vikas Gupta 13:55
That's a great story. And I think like to what Brandon was getting at and I think the story you just told us like getting getting beyond that first deal getting beyond that first, you know, gut punch of losing $170,000 And then it sounds like he took that and you're like alright, I need to go back to school so to speak. Really learn how real estate works and then do another deal with that knowledge that you learned.
Brandon Hall 14:21
Awesome. Gino, thanks so much for coming on today. We really appreciate it.
Vikas Gupta 14:24
Thanks Gino.
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