Ep 60 - Scott Kidd (audio)
[00:00:00] Scott Kidd: I initially invested in a limited partnership in Ohio because I wanted to learn more about how the syndications work and eventually become a general partner for helping run the deal and fast forward, I'm still working on the boats right now. I'm 6 weeks on 6 weeks off. So I had to revise the way I'm doing things and focus on the things that I can do to make me a part of a team. My friend told me and it just takes, you just have to put in the reps and do the steps pretty well, and then you'll get there.
[00:01:11] Tim Little: Hello everyone. And welcome to the journey to multifamily millions. I'm your host founder and CEO of ZANA investments. Tim Little. And on today's show, we have with us Scott Kidd. Scott is the head of investor relations for Yachty Real Estate, a firm that helps professionals achieve their yachty lifestyle by investing passively in multifamily real estate. Scott has over 25 years of maritime experience, including new builds, refits, project management, and yacht management. After many years investing in the single family space, he transitioned to multifamily real estate four years ago, acting as both a limited partner and general partner. Scott, welcome to the show.
[00:01:50] Scott Kidd: Hey, how are you doing, Tim? Thanks for having me on and appreciate all your followers and listeners taking the time to have me on.
[00:01:59] Tim Little: yeah, it's great to have you. So I gave everyone a very high level overview of your background there. But on this show, we really like to get into the details of how you got started on your journey. So please take us back to the beginning and tell us how you got to where you are today.
[00:02:14] Scott Kidd: Okay. When I was on the yachts for a while, I did what a lot of people do: buy your first home as you're building your family. And then as my family got bigger, we bought another house, rented that one out. Bought and sold another house and, eventually, I started, thinking maybe I'll just buy a house every year and then keep going that way like a lot of people and started focusing on that. And then, I ran into a friend of a friend and he had told me that he bought and sold a 46 unit apartment in Houston, Texas and made an X amount of money in a couple of years. And he basically told me, I said, I asked him, I said, you can do that. I said, yeah, you can do that and he was talking to me and he said, yeah, I did it. And it's not as complicated as you might think. Then I started doing it. The research took me a while on the research side just to learn a lot about it because there's a big learning curve, I think, going from single family and it's more of a team sport. I started going to a lot of meetups and, had a little, had, got a little discouraged because a lot of the meetups were trying to sell you something at the end. Eventually I met up with some people that were like minded and eventually I started my own meetup group and through networking. I met, all my partners are all the deals that I've ever done and whether it be virtually during COVID or virtually now and, in person, and I've built the group up and just wanted to be open and have a place where everyone could come and, learn about, real estate and get together and, do deals or just solve problems that they needed. Cause that's, I think that's very important to me and, so eventually, I got involved with a couple of partners and we bought a, 13 unit in a joint venture in the Daytona, Florida area, and another one, an eight unit in West Palm Beach. And, we bought and sold the eight units in West Palm Beach. And I initially invested in a limited partnership, in Ohio because I wanted to learn more about how the syndications work and, eventually, become a general partner for helping run the deal. And, Fast forward, I was still working on the boats right now. I'm 6 weeks on 6 weeks off. So I had to revise the way I'm doing things and focus on the things that I can do to make me a part of a team. I focus mostly on the raising of the funds and things like that and asset management investor relations, because I can do that from anywhere. And that's where I can provide the most benefit to other people. I'm currently a general partner on a property in Charlotte, 65 units, and we're just signed on a 142 unit in Oklahoma, which I'm helping out on. That one took a bit of time, but, everybody in their own time, but, if I can do it, anybody can do the same thing. My friend told me and it just takes, you just have to put in the reps and do the steps pretty well, and then you'll get there.
[00:05:14] Tim Little: Yeah, no, that's awesome. You packed a lot into that story. There's a lot to unpack. Let's go back to when you transitioned from the single family side to the multifamily side. What was it that really prompted the transition? Was it just really seeing how much money that your buddy made off this 46 unit, or were there other factors at play there?
[00:05:37] Scott Kidd: It was, some of it was, I'm not going to lie. Some of it was the money, but the more, the more I got into it initially. You have the economies of scale and there's actually a lot less risk in it. Then a single family house if you lose. The 1 renter that you have, then you're scrambling to fill it again. And then you've probably lost all of your profits for that year. Whereas, if you have 50 100 units, if you lose 5, 4 or 5 people, and they move out and. You get more people, it still has enough cash flow to sustain itself. So it, that was the main thing that I liked was that we had. You have economies of scale and it's a team effort. Because being on the boats and stuff, everything's a team effort. If you don't have a good team, the boat's not going anywhere. Yeah,
[00:06:27] Tim Little: absolutely. And I think you, you raised something that, that I hit on all the time when it comes to the difference between the single family and multifamily side of things. And the way that I usually frame it is risk mitigation, right? So if you have a single family. Property. It's either 100% occupied or 0% occupied. You may cut that in half if you get a duplex and a third with a triplex, etc. But still, you just mitigate your risks so much by scaling up and making that property that much larger. And then, also I think, the risk of having something break and have it wiped out. All your profits for let alone that month, but maybe even the year if you have to replace a roof, if you hot water heater goes out anything like that, and especially if you have a property manager who's taking 10% off the top anyways, you're really in a precarious position from a cash flow, in profit perspective.
[00:07:34] Scott Kidd: Yes, that's definitely true. And that was, as I got more into it, that's what I really liked about it was that, you could, you also had with the team, everyone was putting in their best effort. And a good deal, you have a good team. So everyone's a putting in sweat equity, or, they're putting up their own funds, or they're, helping manage the deal or manage the asset or, everyone's it's a group effort, and everyone's, on the same page, everyone wants it to run efficiently and run well, so that we can all, do more and hopefully create a better lifestyle for yourself. If everyone is working accordingly, then you can take back a lot of your time.
[00:08:16] Tim Little: Yeah, absolutely. That synergy between partners is so important for making the deal work, which is very different from a lot of things on the single family side where it's just buying the property, doing whatever, multifamily, especially, large commercial multifamily is really not something that you can do on your own or it's very rare and it's hard to do successfully. I think another part of your journey that a lot of people will resonate with. Is that, taking a look once they discover a commercial multifamily and syndication in general, being intrigued by it and then feeling this steep learning curve, right? They start reading books, they start listening to podcasts like this one. They start going to meetups, but then they run into, depending on which of these, conferences they go to. Almost inevitably, they're going to get pitched, some kind of training program at the end, and sometimes that just leaves a bad taste in people's mouth. And that's not to say that there isn't value in these programs, because I think there can be. It's just you have to evaluate those programs to see if it's going to provide the value you expect. And if it's going to provide you what you need and if you have time to take advantage of it, right? So a lot of people who have full time jobs, they may not be able to take advantage of what these training programs have to offer, especially if they're out at sea for six weeks at a time. They really need to hone in if they're going to get that mentoring, that coaching on the program that works best for them. But I think you did something that's unique. And you pivoted and said, Hey, if I'm not finding what I like, then I'm going to create it myself. And you created a meetup group. Can you talk a little bit more about that and what that looks like now?
[00:10:03] Scott Kidd: Initially started because, there's a lot of people 1. Like I said, I was having a hard time finding people that align with my interests other than the salesy stuff. And I did eventually run into a few people that were, I ended up partnering with and they have their own meetups. And I said, there's a lot of people that I know that are on. On the boats that would like to have a place to come, or at least, people that we could, discuss real estate. And, a lot of people on the boats. All they live is on the boat. They don't have any expenses or anything like that. They have a lot of capital sitting there and they don't know what to do with it, especially the younger guys. And, I thought that maybe, maybe it would be good. For us to get together and just talk about what they can do with the because I didn't know that all these things were available, even though I work for a lot of real estate guys, we're independently wealthy, and 2nd, 3rd generation wealth. So I eventually started it and, it was about 2 years ago and, it's been really good because, a lot of people are now reaching out to, find out more and I'm able to do what I've always done best is just connect people and put people together and it's, that's how I add value to other people is just connecting people that, because a lot of times you don't know, especially if you're at sea, Hey, I'm having problems getting a mortgage or, commercial mortgage and call this guy or, come to the meetup. I'm sure there's somebody there that can help you. And, we're now doing and eventually collaborated with 2 other groups. So flow network and real estate Queens and Fort Lauderdale. We're also doing West Palm Beach and Stuart, Florida, they're so flowy network is also doing Miami, Tampa, Orlando, Aspen, Colorado and Phoenix, Arizona. So it's been really good. When I first initially started there were just a few people. And a couple of months ago, we had about 95 people there, and Fort Lauderdale. So it was a lot of fun. And the thing that made me feel good was that a lot of people came up to me afterwards and said, thank you because there's no one ever trying to sell us anything. We were able to collaborate with other people. And, if we ask you a question, you just tell us what you did, even if you failed at it or did well, you always give us an honest answer. So that made me feel really good that it was, is helping a lot of people get started or with their problems that they're
[00:12:30] Tim Little: having. Yeah, that's great. I think because it sounds like you really built a community. And, when you say that, 95 people were there, we get so in the habit of thinking and social media numbers that 95 doesn't sound like much at all. But when you're talking about live in-person events, like for a meetup, having 90 people is huge for a meetup. I've gone to meetups where it's five or five or 10 people sitting around talking about real estate. And that can be fine too, especially if you want that more intimate setting, where they hold it at a coffee shop or something like that. But no, it's awesome that you've been able to scale that and then build relationships with other groups cause I think there's a lot of benefit there. So I want to go back to one of the other things that you talked about, which was your JV deal. And, just for the audience. Why don't you explain to us what a JV or joint venture deal is, and how that's set
[00:13:25] Scott Kidd: up. The joint venture is basically yourself and one or two or however many other partners, where you all put your funds together and buy a property and you all take part in, in running it or have certain duties in there. You're not really with a syndication, you're raising capital in addition to doing that, but with a joint venture, you're all putting together more than likely the down payment or possibly all of the cash to buy the property. And with that particular one in, Daytona, it was, myself and three other partners.Actually the partner that, I met at her meetup group, she invited me in and asked me if I wanted to be involved and she and I got along great and, she invited a couple of other people in and we purchased that one about two and a half years ago. And we've redone. I'm just about all of the units except for one and the place is running great.We didn't knock on wood. We didn't have any major damage from the storm last year. That's been really good. I highly recommend networking and just going to meet up with some people, because you might meet your next partner or next person that you might be missing.
[00:15:15] Tim Little: I can't echo that enough. I've met most of the people that I've worked with at multifamily conferences or something like that. And, you just know when you click and then you try to do a deal together. And if it works out, then hopefully you do another one. I think joint venturing is something we don't talk about it as much, but it can be a good opportunity for folks to get involved with larger properties, especially if they've dabbled in the single family or small multifamily side of things, joint venturing can be a way to get into those larger properties and get, their hands dirty on how all of that works. And it would be a great experience for them as they move up into the future in the syndication space. I want to talk about your primary job, which is, being on the boats. I think people have this image of being on a yacht and everyone is just, wealthy walking around in bikinis, sipping champagne. And I don't know, maybe that's true. But, talk to us a little bit about your interaction with these high net worth individuals. And If they're aware of opportunities in, passive investing or if they're already doing it, or is it even something that, they're willing to listen to,
[00:16:31] Scott Kidd: it really varies between, the rest of them, but most of them do have a large part of their, wealth in real estate in 1 way or the other on whether they invest passively, or a lot of times they own a lot of these places outright, or that's part of their business, whatever they're in. But a lot of times they don't necessarily. Know that unless they're in real estate, they may not. Because most of their funds, a lot of times go back reinvesting in their businesses that they have, and if real estate is a part of their portfolio, they do go in, they do reinvest those funds back in. But as far as them investing with me, there's a couple of people in my network that are potential, but it's a long game with a lot of these guys because they usually have a guy or a family office. Which is their family, someone they have running all of their financials, their trusts and those types of things. So generally all those decisions go through them or they have someone that is their advisor or real estate advisor or trust advisor that usually makes, You know, 90% of the decision for them. So it can be a long game to get to that. But as far as the yachts, we do ship sip champagne from time to time. But generally, that's the guest, not us. Yeah, nothing
[00:17:58] Tim Little: wrong with that. And I guess, a lot of people may not have thought about that, right? They're like, Oh, all you gotta do is get in the room. With your net worth individuals and you got it made right? All of a sudden the money will rain down because they'll see this opportunity and recognize it and just throw money at you. But it's obviously a lot more complicated than in one of the obstacles you just mentioned, which is the fact that a lot of times they're not dealing with this themselves, right? Yes, just like a lot of things that we outsource. They pay someone else to handle those decisions so that they don't have to so that they can focus on whatever it is that has made them this much money in the first place, which makes a whole lot of sense. But again, I think it's just worth, noting because even I'm like, Oh, maybe I'll come visit you down there and I get
[00:18:48] Scott Kidd: things like that are more than welcome to. The thing is what a lot of people don't understand is that one these guys get people to approach them all the time with. All kinds of deals. Have I got something for you? And I work for them on the boats that I run. Sometimes they're 20, 30, 40 million boats for them and do refits, two, 3 million and stuff at a time. And they're okay because I have 20, 25 years of experience doing that. They're okay. Giving me the money for that. But if I go to them with a real estate deal. They're like, you're going to have to talk to Johnny or, that's my guy that makes that decision. They don't know me for that as yet. And plus I don't have 25 years of experience doing that. If I did have that, then there would be a different conversation. And the main thing is they get a lot of deal flow and all kinds of things, because people are coming at them all day, every day, you don't want to be one of many. You want to be the guy.
[00:19:45] Tim Little: No, you're exactly right. And that's the other piece of it is that people are pitching them all the time. And I'm sure their defenses are high. So the moment they feel like they're being pitched to, they're probably going to shut down, especially if it's coming from a source that they're not expecting it from, like you're their yacht guy and they trust you Their yacht in your hands with, tens of millions of dollars, but you're not their financial advisor guys. So why would they take financial advice from you? It's a challenge, I think.
[00:20:19] Scott Kidd: I would equate it, and I've said this to someone before, be like the Uber driver giving you real estate advice or something like that, something like that, it's two things that aren't necessarily going together, because I'm not known for that at this time, but if, eventually they'll find out, I would imagine.
[00:20:38] Tim Little: No, that's awesome. And like I said, I think that's really good. It's because it's just stuff that maybe we hadn't thought about. And so I guess the other piece that I wanted to hit on, when you talked about your story is a lot of people wonder, Hey, how do I get into these deals as a general partner, a GP as, as we call it. And they're like, I'm not sure anymore. You know what I can bring to the deal. Maybe they have some capital. Maybe they have some skills. They've underwritten a few deals. But I think the important point that you mentioned was. you figured out how to provide the most value to the other folks in the partnership. And for you, that was investor relations because you could maintain your job and still handle that responsibility, at the same time. And maybe that's something that the other partners didn't feel like dealing with. And so you brought immediate value to the table and, besides having the like you do, which is usually part of any partnership, you don't want to partner up with someone that's annoying or you wouldn't have a beer with right there, but, you have to find a way to provide value. And so I guess, as a question in terms of the value that you're providing, are you doing like the investor relations like monthly updates and stuff like that? Or what kind of work are you doing on that side? It
[00:22:05] Scott Kidd: depends on, it depends on the deal. If they have quarterly reports or monthly reports, open just for people who have questions and stuff like that. And, follow up as much as possible and as much as needed, a monthly update is good, quarterly just depends on also depends on the investor. They might not. They might not want to, some people are there like, hey, I want to learn about this because I want it's my money. And so, I want to know more about it. Because maybe I want to do this myself. So, anything else depends on the person, and it's getting back to you. Your statement where you're saying that, that you know where you provide value, that's also gonna depend on your skillset as well. Like , what are you good at? And what if you're really good at, underwriting or doing the numbers, if that's what you do in your actual job, or you're, maybe you're an accountant or something like that, you might be really good at seeing, building the story of the property. For the rest of the team through the numbers, and that might be what you're good at. Maybe that could be second nature. You could analyze the deal and, 10 minutes where other people might take them hours, so that's one way you could
[00:23:14] Tim Little: provide some value. Yeah, exactly. Look at your natural skill set, or what you do on your job. No, that makes a lot of sense. All right. So we covered a lot of ground there, but I do think we need to move on to the turbo round. All right. So I'm going to ask you three questions that I ask every guest that I have on the show. And I just asked you for a quick, honest answer. So the first question, what is one red flag every investor should look out for?
[00:23:47] Scott Kidd: The track record of the syndicator primary.
[00:23:52] Tim Little: Yeah. And talk about that a little more because I think the concern that a lot of new folks have is, hey, I don't have a track record. So what are my options? It's the, you must have three years of experience for this entry level job kind of situation. Yes.
[00:24:06] Scott Kidd: I would say, what I've done is align yourself with other people that have larger track records and provide value to them. What can you do to help them? And if someone doesn't have a huge track record and they're doing like a 100 million deal, maybe you want to take a pause and take a 2nd, look at that, just see where all that's coming from or how that all got all put together. Whereas if it's someone they have, someone on their team that has, has done multiple deals like that, then your level of comfort should go up a lot, cause they're going to have the backing and at least the advisory to where they can pull it
[00:24:43] Tim Little: off. Yeah, exactly. They're able to leverage the experience of that team. All right. What is a myth about this business that you would like to set straight? The main
[00:24:53] Scott Kidd: The myth that I keep going back and forth over is that, if you find a great deal, everything else will fall into place. I've been through that myself and I found a great deal and shopped it around to a lot of people and they're like, yeah, it's a great deal. And then there were crickets after that. I think you have to find the money first. If you have people that will invest with you, the deals will come to you. Because then you can vet the deals. I would say it goes that way. Find the money first.
[00:25:24] Tim Little: Yeah, absolutely. This is not one of those. If you build it, they will come into some kind of situations. All right. Finally, what does success look like to you?
[00:25:34] Scott Kidd: Success for me is, one, spending more time with my family and building my Real estate business enough to where I have the choice to where I can walk away from the boats if I like, or just go part time, which I'm part time now. But if, once everything falls into place, if I don't feel I need to go on the boats anymore, I can take that choice, take that step, but I still love the boats and I love real estate. So I'm probably going to do both until they tell me I can't. There
[00:26:05] Tim Little: you go. But having that time and financial freedom is certainly nice.
[00:26:11] Scott Kidd: Yeah, having the choice, where it's my choice. It's always better to walk away on your own terms.
[00:26:17] Tim Little: Absolutely. All right, Scott. Hey, this has been awesome. Please tell our guests how they can get a hold of you and if you have anything else that you'd like to share with them.
[00:26:25] Scott Kidd: To get a hold of me, you can find me at investwithscottkidd.com. And I'll link it to LinkedIn. I'm under my name, Scott Kidd. And, or just look up yachty real estate investors.
[00:26:36] Tim Little: All right. We'll definitely have all that information in the show notes, Scott. Again, thank you for coming on. And I look forward to continuing to see you do big things on your journey to multifamily millions. Thanks Tim.
