Updated: Mar 20
Sound NJ multifamily real estate investment deals take between three and six months to structure. Peoples Capital Group evaluates ~400 apartment buildings a month. The properties with the highest rates of returns have access to NYC, and they're located in up-and-coming downtown areas, like Newark and Paterson, New Jersey.
Aaron Fragnito: All right ladies and gentlemen, welcome back to the Passive Cash Flow Podcast. This is Aaron Fragnito your hosts, co-owner of Peoples Capital Group. This is episode number six called 3 Vetted Investments For Passive Investors. We are going to break right into it here today. We're going to go over three hot new investments that Seth Martinez and I have just vetted. We'll look at 400 properties to buy one, and we're going to talk about three properties we've found recently. One we've been working on a while that is fully funded. Another two that we're just opening up to investors now, so very exciting time for Peoples Capital Group. Let's break into how we found these buildings. What type of buildings they are. How we're going to structure them with our passive investors and how we're going to reposition them and exit our investors over time for awesome returns.
We have three buildings right now. It's costs us tons and tons in direct mail marketing. It generally costs about $20,000 in direct mail marketing and advertising to find a good deal, so here we are now with three deals. We've been investing in a lot this year. One deal is closing very soon. We actually just fully funded it. When we find these good deals, we have so many investors lined up ready to go to put them right to work. We do work on a first-come-first-served basis so the investors that are longest in queue will get served first because they've been waiting the most for a deal. Sometimes it's hard to find a deal. It might take us six months to find a good deal. Although, we do try to close on a piece of real estate every three to six months, but life isn't perfect like that. Sometimes it takes you six months to find a good one and then all of a sudden, you're closing on three at one time. That's part of the syndication business, so we're constantly juggling opportunities and investors capital and relationships with high-net-worth individuals and looking to put their capital to work effectively and quickly.
We also have to really vet a ton of opportunities and really cherry-pick the best one so you have to be patient on our end. Our investors have to be patient as well. Let's explain these deals how we found them, and how we're going to structure them with investors. The first one is an 11 unit property in Paterson New Jersey. We see a lot of opportunities there. Paterson is one of the last remaining cities where you can get a great investment opportunity. You can make some really good cash on cash returns. We've done very well on Newark through the years. Newark is still a place we invest. Inner-city areas like Paterson and Newark are areas that you can commute into Manhattan in less than an hour but you can also get a one-bedroom apartment for $1,050. Where if you can go to Jersey City or Morristown which are comfortable cities that also get you into Manhattan in about an hour. The rents going to be two to three times more and the real estate will be three to four times more. You're really paying a premium to get into those areas. Now, you do have to pick and choose where you buy in inner-city areas because there's some areas that are riddled with crime. There's other areas that are very up-and-coming, very good areas. A lot of times, the downtown areas, the areas around the train station. That's where we try to focus on where there's a lot of activity going on. Positive changes happening in the community. That's where inner-city has changed the most generally is right around the downtown area. We're buying buildings right in downtown Paterson right now, two of them actually.
One we just fully funded was an 11 unit opportunity, a storefront and then 10 apartments. A very nice opportunity. Classic worn out landlord. Rents are about 25% below market value. He's been tired of managing the real estate for about 30 years now. Always managed to himself, so never really cracked the code on how to work with a management company properly. We own our own management company of course, which is our secret weapon to reposition these properties. He is motivated to sell the building to us. We got the building for a great price. We put together a lot of investors on this one. We actually have about 8 to 10 investors on this one, all investing between $30,000-$80,000 so generally, there's not that many investors in such a small pool of about a $400,000 raise but this one just happens to pan out that way.
Maybe that's a testament to us reaching out to all the types of individuals. Again, you don't have to be a millionaire to invest in Peoples Capital Group. You can be and we do work with plenty of millionaires, but you don't have to be. We make real estate accessible. If you go to peoplescapitalgroup.com, you can see our website there. You can sign up for our events. You can read up on more information. Check out other episodes of our podcast. We have webinars three times a month. We have events in our office twice a month. You can go to our meetup group on meetup.com which is called New Jersey Real Estate Network. We also have a RIAmeetup.com New jersey real estate network. We have over 3,300 members in that. That will highlight our events in the office and it'll highlight our webinars and things like that. If you want to learn more about what we're doing here, check out our website and check out our meetup group there. Our website is peoplescapitalgroup.com.
Let's talk about the second opportunity we have here. We're also buying actually we're buying an office building. An office building down the street from us. We're going to be moving our business over there. This is still falling in a place, but right now it's looking like we're going to be buying this office building and for a very good price, below market value. It's been sitting on the market for years. I've been driving by it my whole life. It's a very beautiful, prestigious office building. We're going to lease-up personally about 25% of the building for our business, our management company and Seth Martinez and I also have our own offices and we'll also have a nice area for our events. We'll have 20 people come in for our events twice a month. We need to have a big space for that. Which unfortunately isn't cheap but we do that here in the office but we max out at about 15 to 16 people here in the office. It gets pretty tight so we're actually moving to a bigger space. That's a great news for Peoples Capital Group. We're building our business.We're building a new bigger office space now. We're going to own the building. There's also about six other offices on our floor. The rest of the building is fully rented, but our space is on the first floor. We're going to take up about half of that first floor.
What we're going to do for the second half of the first floor is we're going to rent out the offices as individual office spaces like WeWork or they do differently unless of course, they're going out of business, but Regis something like that. You could rent an actual specific small office space. We'll include the Wi-Fi. There's a kitchen. There's a bathroom. There's a conference room they can use for an extra fee. They'll be able to rent the space faster that way. There's more demand for a 10 by 12 office space for $500 a month. Where you can have all the amenities included then there is for six or seven offices necessarily $4,000 a month. It's hard to find that $4,000 tenant. It'll sit on the market much longer. Your days on market for office space is slower, but this building is a great opportunity. It's right down the street from us and really a good opportunity for us to build our brand, get it, buy a nice office building at a great price. By leasing out those other offices that are vacant individually and getting $500 bucks an office, now, I'm going to get much better rent role in the building over time than I would by leasing out a larger office space to a larger company because these days, the demand tends to be for smaller space, for small businesses, a single accountant, an attorney, whatever, a realtor broker office something like that, a home inspector, whatever it's not real estate-related. That's the plan for that building. Really great returns on all of these buildings.
Then we're also buying a third building here. Which we really haven't even opened up to investors yet. Although, I did speak with some verbally, and there's already a ton of interest in it. We might fund this one very quickly. It's a beautiful three million dollar building in downtown Paterson. Actually, we're paying a little more than that but it appraised much higher. This building is something that was built about 10 years ago. A nice building. It's a 25 units and this building is right near the train station. It's a great location that can get you into Manhattan in less than 60 minutes. There's a ton of development in downtown Paterson right now. I am a big proprietor of Paterson. That's not just because I'm buying two pieces of real estate there. We've done well in Paterson for years. We've done very well in inner-city areas. I am all about the inner-city areas. I know a lot of investors like to stay in areas where they feel very safe at all hours of the night and everything like that. To be honest, you're not really driving by your real estate at two in the morning anyway. I don't buy in terrible areas but we do try to focus on inner-city areas where you get better ROI, better return on investment. This 25 unit building here, downtown, right near the train station, beautifully done, totally renovated in just less than 10 years ago. We're actually going to do something called the escalating returns for larger investments on this so this is very cool. This is something we're branching out and beginning with our larger syndications right now. Basically, the more you invest, the stronger your return will be. We do have a minimum investment amount of $30,000 because we make real estate accessible. Some of our investors are our contractors who self-directed his IRA or different realtors we worked with that had a big closing in $30,000 saved up from a big closing and they can invest. By doing a $30,000 minimum investment, we used to be a $50,000. We've lowered it because we want to work with more people. The more people you work with, the more they'll tell their friends about how incredible Peoples Capital Group is. That's how you build a real estate investment company over time. By casting a wide network with integrity and executing on your projections.
By lowering our minimum investment out, we connect with more investors and open up the pool to more investors. However, it does make it harder to raise larger amounts of capital. We have an escalating scale here and depending on how much you invest your return will grow and be a better ROI. The deficit isn't that large but between 30 to 50 and then 50 to 100 and 100 to 250 and 250 to 500 and 500 plus. There's an incentive for our investors to put in a larger amount of capital. A lot of large syndications do this escalating scale of returns. This is a very interesting opportunity where if you can invest a larger amount of money, you can start making returns that are really just out of the park. That is something that we are working on with our investors on this new 25 unit building. It's something that we've seen a lot of syndication companies do. They've had a lot of success with it. We are eager to offer this opportunity to our investors at escalating returns. Some of our investors in our network do have millions of dollars to put to work, but there's no incentive for them to make larger investments necessarily in the properties. Other investors have maybe 100,000 to put to work but again, the incentive isn't there. We have created an incentive now, we've given away more of the pie, so that our investors can make better returns on these bigger properties. The bigger the property, the better. The bigger the property, the safer it is. The more tenants you have paying in to your pocket every day through paying rent, the safer the building is. We try to focus on larger properties. Right now really anything less than 10 units, we're not interested in buying. Sometimes you do six to 10, but really we focus on 10 units or larger.
We are closing on these three properties over the next 30, 60, 90 days. Our investors have an opportunity to invest in the 30 day period, a 60 day period or a 90 day period, depending on of course, what their needs are. That's great for our investors too, because if you go and you talk to another competing syndicator, with Peoples Capital Group here, they might tell you, we have a building, but it's not going to close for six months, or we just closed on a building and we do one a year because syndications are big and complicated and they're hard to find. You have to pull together a lot of capital. A lot of times you'll be talking to a syndicator and you'll need to just be in touch with him for six to 12 months to actually put your money to work. People's Capital Group, we're aggressive. We're doing a ton of marketing, $20,000 of marketing a month so we find deals. There's a lot of inventory in New Jersey. Most of the deals we look at are bad but we cherry-pick those great, amazing deals and bring them to our passive investors, they move because they're good deals and we've executed a ton of due diligence, we bring them a nice investment opportunity on a pretty platter and they're able to make a decision quickly and effectively on what to do with their capital.
By bringing the service to investors, by focusing on larger buildings, inner city areas, where you get better cash on cash returns, up-and-coming areas where you see a lot of hype, a lot of energy. I know Steven Spielberg's now recording a West Side Story in Paterson, New Jersey, that's very cool. That's putting Hollywood into Paterson, that's a step forward. Patterson's really trying to be a more of a reputable city on the map. It's had a lot of struggles with their mayors going to jail. It's pretty much constant there and their politicians just being wicked, dirty politicians. What a surprise.
Basically, that that doesn't pan out well for the city over time, but there's a lot more than their stealing mayors. Paterson has a ton of opportunity. The people there are great, the politicians might be terrible, but Paterson itself is a great city with a lot of opportunity, and there's a train station that gets you into Manhattan in less than an hour. If you're working in Manhattan which that's a huge demographic, then you're looking around for renting a one bedroom or two bedroom and not breaking the bank not paying, a two bedroom in Hoboken is $2,500. It's crazy to $3,000 pay a nice on the unit is, where you can go to Newark or Paterson and go in a nice downtown area where it's still safe, and there are stores and there are shopping, there's tons of stuff to do. It's not like a desolate city, it's a fun hustling and bustling city. You're going to pay two thirds to half of what you're paying in neighboring cities that are more prestigious and have higher home values, but by knowing where to buy in inner city areas, knowing these markets like the back of your hand, you can do very well with inner city syndications and that's what we focus on here at People's Capital Group.
Again, if you want to learn about how you get involved in these syndications, you want to go to peoplescapitalgroup.com, you can fill in your information. We'll get in touch with you and we talked about we have going on. Hopefully these opportunities are still available by the time we get in touch with you. We're always connecting with new investors, we're always bringing new opportunities to the board and we're always looking to build a relationship. A lot of times we'll get in touch. We will start to get to know each other, maybe you come to a couple of events, maybe check out a few webinars, listen to some podcasts and it might be a year or two till you're comfortable and knowledgeable enough to move forward with an investment in People's Capital Group and that's perfectly fine. It all starts with educating yourself, watching the webinars, picking up information, reading books.
Make sure if you are connecting with some type of guru or educator that they're not trying to sell you a bunch of books and CDs. We don't sell books and CDs, we don't do the coaching guru upsell. I'm not here to tell you I'm going to transform your entire life and you got to get to work and make it happen. Listen, we all have our strengths and weaknesses. We're very good at repositioning properties. I'm not trying to sell you a book or a CD. We work with lots of investors and be aware of those people out there that are pushing their educational material because of course, they're looking to sell you educational material. I'm not saying all of it is useless. There's a lot of great material out there and a lot of it is worth the cost and a lot of other stuff is very overpriced and pressure sold. I won't name any names, but we've seen that so beware of that.
At the end of the day, we educate for free, we educate people about what we're doing, we're actually doing it, we're executing it, we work with lots of local investors, we have an excellent flawless track record. Our intentions are just buy more buildings. We will present opportunities to our investors, your position is completely passive. Our investors earn double digit cash on cash returns. The tax benefits are phenomenal and put their internal rates return through the roof. That's it. It’s education, it’s here is the building, here's how it works, here's what we're paying for it, here's how much the investors are getting, here's the minimum investment, here's the escalating scale and here's the exit strategy and the reposition strategy. Here's some red flags and here's what's likely the outcome of the scenario. Here's best case scenario, here's a little worst case scenario and here's a much more middle of the road scenario.
By working with people that know what they're doing, we've done this time and time again, we can predict, this one's going to be a snag, this is going to be a challenge here, this needs a challenge here, but this is a good opportunity, and recognizing that value opportunity where others won't and explaining it to our investors. They learn a lot when they invest with us. They get monthly updates, they get quarterly financials, and that's really all free education. We just call the learner and we will give you all our documents, our spreadsheet, our contracts we use to submit offers on homes and we'll give that to our investors that are eager to learn more, and we call it the learn and earn program where we just give you all that stuff for free. We're not selling you books and CDs as I said earlier. We're an open book, we give our investors our documents and spreadsheets and things we use to analyze properties for free if they're investing with us. That's really a great step forward to help hungry investors that want to learn more and more about this business.
You should always be educating yourself. To do that you can go to our website peoplescapitalgroup.com. You can check out more of our podcast episodes, or set up appointment with me to come in and talk one on one if you're sophisticated, accredited investor and you have a minimum investment amount of $30,000. There's no reason why I won't give you an hour of my time for free to sit down and talk about what we have going on, review some different investment opportunities we have on our books right now and see if it's fit for you. If it's not no love lost. It’s simply an educational session you get for free. It's a great way to learn more about real estate. We could do it over Zoom, we could do it over the phone, you don't have to be local to New Jersey. I don't have to have you come all the way out to Berkeley Heights. We can do it over Zoom as well. If you guys want to learn more about that, please go to our website, peoplescapitalgroup.com.
Again, we have three awesome new investment opportunities. One is fully funded, the other one is pretty much close to fully funded. We're opening up this great 25 unit to our investors in the next few weeks. First we got to get everything locked up nice and tight. Then we're going to pass this one off to our investors and hopefully get it funded very quickly. We have a lot of eager investors for this one. if you want to get in line for our next investment opportunity, if you want to put your mind to work in the next 90 days, go to peoplescapitalgroup.com, subscribe for more podcasts, check out our website, put your information in there, we'll get in touch with you. We'll talk to you. We'll sit down one on one, educate you on real estate investments and syndications and what we do here. At the end of the day, if it's a fit for you, great. We're going to start making some passive cash flow together. If it's not then you learned a bunch of information for free and knowledge is power. Enjoy your night and please subscribe for more information peoplescapitalgroup.com.