Best Practices for Successful Syndications with Ben Leybovich

For this episode, I welcome Ben Leybovich. Ben is an author, business owner, real estate investor, popular podcast host, and featured writer on the BiggerPockets Blog. He was professionally trained as a classical violinist but a diagnosis of Multiple Sclerosis (MS) in college spelled the end of his dream of becoming a professional musician. Today, he is managing partner of WhiteHaven Capital, a private equity investment firm specializing in the acquisition and repositioning of underperforming multifamily assets in high-growth markets. In the past 7 years, he has managed to assemble a $1.5M personal real estate portfolio with 28 doors, generating over $165K of annual rent revenue with an annual cash flow of around $40K.

We start today’s episode with Ben’s background story. Around 2013, Ben grew his portfolio in Ohio and he got to a place where he realized that he could continue doing what he was doing and be somewhat successful, achieve financial independence, and a passive cash flow. But, he reached what he refers to as an inflection point. He wasn’t growing, he wasn't getting smarter or better. He realized that he needed to raise capital, he needed to attract equity, he needed to buy big deals, syndicate big deals. But he didn't want to do that in the Midwest, because he understood the Midwest very well and knew that it wasn’t a growth market. So, he decided to move to Phoenix with his family. He bought a house there and rented it out on Airbnb, but his plan was always to syndicate.

We then moved on to discussing how Ben got the knowledge he needed to tackle syndication. He shares with us that he was always blessed with people in his life who would, not necessarily give him all the answers, but shine the light on the important stuff to point him in the right direction to figure things out. This was true before he bought his first duplex and this was also true before he bought his first 100 unit community.

Ben then goes on to share his strategy for syndicating a building, how to navigate this dynamic area and all the challenges that come with it. His strategy is all about doing more, not less, and he explains how this acts as his safety trigger. If you spend less money and ten other people spend less money when there's a downturn, you are racing everybody to the bottom and you have exactly the same product that everybody else has. There's no daylight between the product you're offering to the marketplace and the product everybody else is offering to the marketplace. So, you are taking on a lot of risks, but you are also reaping a lot of rewards for it.

We discuss Ben’s strategy for finding potential syndication properties in Phoenix. These types of deals are extraordinarily hard to come by and most of it comes to Ben off-market through brokers. He also shares what are some of the things that he looks for in a deal that a broker brings to him, to determine whether or not it's something he is interested in pursuing and moving to the next step. These include location, vintage, type of mechanical setup, unit mix, and unit size.

We then move on to the topic of financing these multimillion-dollar deals. Here, Ben explains that it is all done through private placements and through private networks, without advertisement. Ben has been in the real estate business for some time, and he is a known commodity, and he got there by realizing that the best way to be known is to be helpful. This is the reason why he wrote his book, created his course, and started his podcast; he wanted to create content that is real, actionable, and helpful.

Lastly, Ben shares why he doesn’t care how the COVID pandemic will affect his business in the next 18-24 months. There are few reasons for this - first, all of his projects are capitalized; second, he is prepared to hold for a decade if he needs to; and third, if times are good, he is selling and making a bunch of money and if times are bad, he is buying at a discount and making a bunch of money. He explains that his business operates on both defense and offense and what that actually means in the real estate world.

Don’t miss this episode of the Just Start Real Estate Podcast that is filled with honest, real, and actionable content from syndicator, Ben Leybovich!

Notable Quotes:

“In a man’s life, there comes a point, and if you look at successful people this happens several times, let's call them an inflection point, where you look at yourself in the mirror and you realize that the cup that was you yesterday, that's overflowing now. There's nothing more that is going in that cup, and now it's spilling over, And you may not know exactly what you are today but you do know that you're not the same thing you were yesterday.”

Ben Leybovich

“For me, it was just all about education, it's all about feeling that the intellectual worth is taking the next step and the next step and the next step because the money always follows.”

Ben Leybovich

“We just sit there and we look at the marketplace, and we look at the asset, and we ask the question: Who can we pair this with, what kind of buyer profile, buyer avatar, will be interested in this. And every month, we go through his exercise.”

Ben Leybovich

“We underwrite everything presuming we have to stay in for ten years, but we're happy to get out in a year and a half if the right opportunity presents itself.”

Ben Leybovich

“Most people think it's safer to spend less money because the less you spend, the less you can lose. Yeah, but if you spend less money and ten other people spend less money, then when there's a downturn, you are racing everybody to the bottom and you have exactly the same sh*t that everybody else has.”

Ben Leybovich

“At every stage in the property cycle, it's a slightly different buyer profile that's interested in it.”

Ben Leybovich

“You're prepared to stay there for a long time if need be if you can't find an exit. But in order to find the exit, you need to be looking for that and you got to position the property for that and that's what we do. That's my job.”

Ben Leybovich

“Don't try to be anonymous in this industry. Don't think that you can operate under a rock and never talk about anything.”

Mike Simmons

“Somewhere down the line, I realized that being helpful is the best way to be known.”

Ben Leybovich

“If I want to know something, I bet you there's a bunch of people who want to know the same thing, about the same stuff, for the same reasons that I want to know about it.”

Ben Leybovich

“The whole premise that underlines everything in entrepreneurship is that you are filling a knowledge gap for someone. The more people you fill that knowledge gap for, the more pay off you're going to see in the end.”