Controlling $100 Million of US Real Estate Investment
Originally a structural engineer from Queensland’s Sunshine Coast, Reed Goossens has spent the last 6 years in the United States, building his brand as an Australian international investor. With his company, Wild Horn Capital, and his podcast series ‘Investing in the US: an Aussie guide to US Real Estate’, Goosens has now accumulated over $100 Million USD of multi-family real estate, and now works to facilitate investment for others.
In this episode of Property Investory, Goossens shares his fascinating life story, the highs and lows of property investment, and how he swapped a small duplex into an entire apartment complex.
– Reed Goossens
While Goosens originally lived on the Sunshine Coast of Queensland, he moved to the United States about six and a half years ago pursuing a different career that has changed his life.
I’m the co-founder of wild horn capital and I’ve got my own podcast called ‘Investing in the US: an Aussie guide to US Real Estate’ and I currently control about 100 million dollars worth of multifamily US multifamily which will shortly get into what that means in the show. But my background is really in structural engineering and went to the University of Queensland in Brisbane to get that degree so I’m sure that’s a bit of an elevator pitch but that’s my story in a nutshell.
Goossens briefly explains what his average day looks like.
I connect investors with good cash flowing deals commercial real estate here in the United States so we do a syndication model and it’s where a pool investors money together and we go off and buy large commercial deals specifically multi-family and we provide our investors with a really solid rate of return and look to double their money in five to seven years time with in certain markets around the United States.
Wow, that is a very very lucrative offer. You know when you can say that you can double people’s money in five to six years which you don’t get in any other type investments like that is easily and properly-being stable. I think it’s it’s a no brainer to invest, isn’t it?
Yeah look it is there’s obviously a lot of things that have gone into it and I’m sure we’ll get into the show a little bit about what the differences are between the between Australia and the United States.
And I will preface that I have not actually invested in Australia so my I can compare the differences of why they’re different but in terms of why America is is better or worse than Australia, I don’t have much of a comment to say on the Aussie market just because I’ve never actually made any money in Australia so coincidentally enough.
Growing up on the coast of Queensland, Goossens decided to move and work overseas after he finished University.
I grew up on the Sunshine Coast in Noosa I’ll just inland and do some little place called Karoly and I went to Central a big state high and my dad was a deputy principal of the school going through high school so I had that sort of upbringing. Was hugely into showjumping and horses back in the day. That’s what I did upon the coast we had the sort of little hobby farm and jumped horses and was surfing and did all that awesome stuff that you get to do living on the Sunshine Coast which is pretty special part of what pretty special part of the world. Yeah. When you graduated from high school and went to university and thought you know what the hell am I going to do. I thought I was going to be a vet but needed an OP 1 and I didn’t get an OP 1 I got an OP 5 and when studying civil engineering instead and I really enjoyed that and then moved to Brisbane and started a lived in Brissy for four or five years and then got the bug and went away and as I say pissed off overseas.
In case you’re unsure, Goossens quickly explains what he means by OP 1 and OP 5.
When I was graduating they there’s a rankings system one to 25 one being the best 25 obviously being not the best.
And you would get ranked in 1 to 25 you know one to five was was pretty good you know five to 10. Not too bad in anything really over 10 if you want to get into a decent university or this new dubious degree you’d probably needed to get under 10 in order to pursue that unless you have to go through some sort of other roles or back entrances into some different courses so open. I’ve got me a wide slew of options in terms of what I wanted to study but really just vetted or veterinary or small or civil engineering and I chose to engineer and I really really enjoyed it.
As a part of his degree, Goosens worked for a company that eventually gave him work overseas in London, after he graduated.
Part of the program at University Queensland was that you had to do a minimum of like 90 days as a quote-unquote professional engineer before you graduated. So in all, you know university holidays I was getting jobs with different companies just being essentially an intern as they call it here in the States but I don’t recall that in Australia.
And it was better than pulling beers at a bar even so I was earning some decent money and then in the final year of uni you sort of working part-time and that company had a sister company in London and I sort of said to them Look I really really want to go overseas I’ll figure out a visa as long as you can get me a job. And they got me a job with McDonald in London and this was the beginning of 2008 and it was actually Mott MacDonald was the head structural civil engineering company on the 2012 Olympic Games. So I moved overseas and sort of fell over ass over backwards into a pretty awesome role helping the upgrade of the Paddington Station which was obviously the iconic Paddington station in order because that was going to be the first station that people would see coming off the London Underground from Heathrow.
After 12 months in London, Goossens caught the backpacking bug, eventually taking up work in South France.
I actually moved to South France where a good friend of mine had started working on this we called the mega yachts the superyachts in the south of France and I did a weeklong course and I joined him down there and I started day working in the south of France and on Teevan there’s a whole story in and around that mate that I can get into for the whole 60 minutes but I know who don’t have a lot of time but
I did spend a good 12 months in the south of France and I actually met my now wife at the time was my girlfriend backpacking on the beaches a sense of fashion Spain.
So yeah that’s a bit of a brief story but it’s a pretty good one as well so yeah.
He explains more about his time in France, working on the yacht of a Russian Billionaire.
I somehow kept my job and my visa was only for 12 months in the UK so I was not ready to move back to Australia at that time and I really wanted to just you know was I think it was 22 or 23 at times so wanted to go continue travelling and my buddy was like yeah let me come and give this thing being a deckhand on that for the rich and mega-wealthy in the south of France to crack and I did and I spent the first three or four months just day working in the south of France you know living niece and on TV and getting a walk in the docks of a morning asking for work and then slowly building up a bit of a résumé and then I eventually got a job on my mates who was I work for a Russian billionaire and it was incredible you know the most incredible experience my entire life.
I worked for the super-wealthy was living in our mind. Mind you to all you listening out there it wasn’t that I was leaving this super-wealthy life I was up you know one of the minions slaving away keeping clean surfaces clean and really trying to make the boat shiny and the boat next Audie. And that was what I did for a good part of six months and then I actually got the opportunity to travel on that yacht across the Atlantic Ocean to the Caribbean where or when it becomes winter in Europe. A lot of the yachts head to the Caribbean or Fort Lauderdale in the United States and I expect I was at sea for 10 15. It was 10 – 12 days yeah and it was just incredible.
Eventually, he decided he needed a change of pace.
When we got to the other side I work on the yacht for a couple of weeks probably about a month and then I sort of said look this is ah this is an awesome experience but I did go to university you know you want to use my brain and I didn’t want to you know scrub decks for the rest my life as much as it was an incredible experience but I’m glad that I continued backpacking around America and then eventually found my way back to Australia after about two and a half years of being a being abroad.
Goossens looks back on the lifestyle of his boss during this time, and the experience he had working under someone so wealthy.
He apparently is all self-made and you know he was just in that world but being just I think more the experiences of living in that lifestyle living in Monaco for a period of time it was just like wow like you know you can’t get all the people who work on these yachts a down to earth Aussies and Kiwis and South Africans and Americans who just go out to experience the world and so is very contrast of the workers vs. the owners of the boat and the people who come in. You know what holiday on these boats and chartered these yachts it was just known just different worlds. Yeah. So um yeah really I’ve made some incredible lifelong friends that you know 12 months that I was doing that and I still know people doing today that are still in the industry and loving it.
What I wanted to know after you came back to Australia after two and a half years of travelling. What happened next.
Yeah so obviously I’d fallen in love with an American girl.
She a coincidentally she coincidentally had applied for university in Australia to do a masters and that was probably going to be why I got back in early 2010 and she was coming at the end of 2010 2011.
So I got back into the workforce as a civil engineer. It was a pretty stark contrast to getting back and living back in the world of corporate Australia. And it really sort of I sort of had that really aha moment like oh my gosh what the hell am I going to do for the rest of my life. And I didn’t even know what the word entrepreneur was. But all I knew that I had had more to give and I really wanted someone to pay me just to live my life right then just travel the world. So I sort of started picking up books and understanding what the hell was I going to do with my life I couldn’t sit in the cubicle next 40 years and I stumble across the book like I’m sure a lot of people have stumbled across the book Rich Dad Poor Dad at the time and that was the book that sort of the penny really dropped for me. It really outlined Okay what I needed to be doing with my life and my energies in order to be you know transition from an employee to a self-employed business owner investor. And that is really where the journey started all the way back in early 2010.
So with the concepts learned from Rich Dad Poor Dad, Goosens took these ideas and started to apply them very quickly.
I picked up that book and from there it was you know I had the idea I was fortunate enough to work and really when you take the blinkers off and you start seeing life in a different sphere you know if that makes sense and that was I was already working as a civil engineer with some big developers and all the sudden I was like oh my gosh how did they become developers you know what are they doing that I did wrong and it was that book that sort of sparked that interest in me to go out and start learning as much as I could and you know I think within a couple of months I was you know starting to find local networking events that would help in terms of real estate education. And obviously Erika had moved to Australia at the time and fast forward probably to the end of what must be what now 2010 2011 because she finishes her uni stuff. I was pretty close to pulling a trigger on potentially a flip or lease option in Australia and leaps off from a stall it’s still a store thing. And but I still had a bug to live overseas and live in New York City and she’d obviously finished her Masters and we said Screw it let’s move halfway across the world and she should back in the States and we had there was a really an awesome visa for Australians that could mean that you could come and work here if you had a job offer. So we packed up our lives I quit my well paying civil engineering job and moved halfway across the world to say let’s give this a crack and yet that was sort of just the decision again. As I said I’ve pissed off overseas.
The second time around.
The second time around.
I love it.
Goossens shared with us the people who influenced his decision to begin investing in property, particularly his parents.
My dad actually did inspire me to get into a property and going back to when I picked up the book Rich Dad Poor Dad that I could have got into stock investing or business investing or real estate investing. My dad was a schoolteacher principal.
And you know he had done well for himself that he’d bought properties in it in growing markets and on the Sunshine Coast back in the mid-90s and you know he doubled his money in 10 years. You know he was or property value doubles in 10 years. I remember him a piece of land in Coolum beach up on the Sunshine Coast is telling me for 110000 dollars back in early-mid mid-90s. You don’t put your house on it for like two or three and a thousand bucks and then you go the mid-2000s it was worth over a million dollars like it was. Stuff like that he did it done very well for himself and so he always said to me you know a fool and their money are easily parted and that was always a sign. It stuck with me and something that rings true today and I like you always got to be educated a pleasant listener podcast like this. I’m constantly learning I don’t know it all I don’t claim to know it all but I’m always trying to educate myself because I never want to be the fool right. So um so yeah it was definitely my parents brought me up with a good work ethic but also you know we’re a blue-collar work ethic and they sort of instilled in me some really good financial just basic basics to go off and try and get my money working for me essentially at an early age that’s great and I loved that work ethic because I think it’s so important from parents point of view to instil that to children nowadays.
The work ethic instilled in him by his parents, as well as his time working the docks in Southern France, proved very useful to Goossens when he first arrived in New York City and started searching for a job.
What I learnt with the yachts was that you know I would wake up every morning it’s a fight and go walk the docks and you got your approach every single day work your day work no no no no no and I got really over a period of time working on the ice. The rejection was a big thing right and you got used to rejection. So what I did was when I moved to New York City I was a print out my portfolio. I just put on a suit. I literally was just walking into engineering joints and was like look I’m here I want a job. Give me a job. And over a period of literally three weeks, I probably walked into 30 or 40 different engineerings and I was targeting I was very specific I was targeting mid-level companies you know 10 to 30 employees because I wouldn’t have the HR restriction and I could just get to see someone and with literally within three weeks I had like four or five interviews and people were just blown away. What the hell is this guy doing is walking in and who is this Australian guy like crazy like people.
People dig it right and they were like oh my gosh he’s got some backbone and he wants to work so I want to give my job and yeah within three weeks I had a job offer. I think it was in a month of being there I had a job offer but it was scary for over a period of time. You know we’ve we got a lease for 12 months might my girlfriend Erica time she might know my wife but she got the job pretty quickly. It was just very daunting so I joined the local rugby club I started you know Ainsley had a bunch of mates but it was sort of very hard and is probably end up being six or seven weeks before I sort of really got the job offer you probably two months in total and all sort of really cutting it close with the visa. So it was sort of it all fell into place eventually but it was really cut touch and go there for a little bit time.
Within two weeks of arriving in New York, Goossens was attending real estate conventions and gaining vital insights into how to begin his property investment journey in the US.
Within two weeks of Fresh Off The Boat, I was at my first called REIA events here real estate investor association group and they’re all around the country and in different cities and different ones and I happened to be at the New York REIA and I was just so consumed like just this incredible content that people are giving away for you know small door fee. I would have had to pay a guru in Australia thousands of thousands of bucks yet I was getting it for 20 or 30 dollars at a local monthly chapter REIA event about lease options flipping houses.
Finding the right market understanding how to price out a deal is just incredible and I was just reading and consuming as much as possible and within I think it was seven or eight months I had purchased my own. So then I combine that with the fact that the American market had so much lower barriers to entry compared to Australia. I’d pick I’d chosen a submarket or market about four hours drive out of New York City because I was couldn’t afford New York and it was just like oh my gosh I can pick up houses for fifty thousand bucks like this is crazy. While on there on paper like how does that even make sense I could pick up a duplex eight 58000. I bought my first duplex. It was forty-eight or forty-five thousand bucks. And yeah I got my feet wet because I had to do it. And the fact was I couldn’t get any leverage on that because I was fresh off the boat I didn’t have any credit. I had to figure out what the hell credit was and that was essentially a way that did the banks say hey you know you we we we think we can lend to you because you’ve got this really good credit score. You got to build that up over a period of time so I had a bit of money saved in the bank remember I was going to do something in Australia but I said it said I’d moved to America and from that, I just found a market that I was going to invest in it was a four-hour drive away. Nothing crazy in terms of the market it was just I had to get started right I was you know that old saying you don’t get ripped by reading about going to the gym you got to go the gym. Right. So you know it was sort of that sort of analysis paralysis and within I guess I was you know within the first year being there I purchased my first property in upstate New York and then six months after that I purchased another one pretty quickly. So that’s how I got my feet wet in the United States.
While they generated immediate positive cash flow, there were still lessons to be learnt from these initial investments.
There was positive cash flow from day one but you know definitely learned some lessons about what it’s called Section 8. And you know we think you know Australia doesn’t really have ghettos compared to what you have here in the United States.
But I was definitely in one of them. And that’s why houses are so cheap. But I didn’t know that at the time. Right. And I had to I learned some few things. On the first six months, it was going really really well. But then you know that the Section 8 tenants they’re not the most you know if you think you can you know it’s fifty thousand dollar property and I’m renting a unit out first call at 700 bucks a month. I’m not going to the most desirable tenants. So I learned pretty quickly that I probably needed to be in a little bit nicer market pay a little bit more for the properties in order to not have the headaches and the turnover that I had. And in every time a tenant would leave the trash the place I spent another two or three thousand bucks you know putting into it to try and you know make it whole again. So definitely learned a lot. And through that experience, I was able to roll some capital into more deals and I actually flipped a few houses in Philadelphia is another good entry barriers dent low barriers to entry in that market and that really got me going and I’m sure we’ll talk about the story about how I got into what I’m doing now but that was really the start of it all and got my feet wet within you know within 12 to 18 months I probably had three or three or four little properties that were you know we’re going okay.
I definitely had not quit my day job at this stage but was well on the way to doing something.
But this wasn’t the only problem he faced on his path of investment. Goossens describes one of the houses he intended to flip in Philadelphia as his worst investment.
The biggest lesson I learnt on that deal was that it just didn’t have enough what’s called after repair value. And it was just that there was not enough meat on the bone to do what I needed to to do what I wanted to do and essentially we bought a rowhouse. Me and my business partner at the time he is no longer his partner.
We partnered up and we bought a little rowhouse. And when I say rowhouses it’s these sort of older houses think of Paddington in Sydney you know it houses separate they’re separated by party wall there’s a wall and they have a common wall. Yeah. So the inn in Philadelphia in the East Coast it’s very traditionally they call them brownstones in America are very very quaint looking things and in Philadelphia, it’s used as quite reasonable barriers to entry because your little village is slowly gentrifying. But with that house we the houses around it all the house next door I should say it was a three-story and ours is only two-story I thought well here we go. We could put the third floor on this thinking okay well we’re going to be able to spend you know 150000 200000 dollars but a third floor of the roof deck and do the remaining of the house and flip and flip and we’ll sell it for maybe four regret. You know we bought the house for 110 it ended up being a nightmare. We ended up spending well over 250000 dollars we had to fire the general contractor who was stealing stuff for our site.
It was just a whole nightmare and it ended up taking well over 18 months to do. We didn’t have to sign off from hatrack an electrical from the local city so we had to sort of rip open walls again and show them the new plumbing and just all poor management a little bit too own muskies with the car with just trying to think I could get the proper ARV at the end of the deal. So yeah that was a lot of lessons to let on. Matt Dillon hij I didn’t.
I did look person lose my shirt but I had some friends and friends and family involved in the deal. Actually my dad and you know first time quit raising money but I promised my dad to serve return and I made good on it so I gave him his return and I obviously came out of pocket lost money on the deal but I got out of it with me with my shirt on and it was definitely a lesson learnt that I would never do again.
Goossens discusses exactly what triggered his transition from individual property investor to entrepreneur and multi-million dollar business owner, namely through the guidance of an old friend, and the use of a mentor.
A friend of mine came down from 2013 I should say 2013 A friend of mine came down from Canada and we’d actually study together and the University of Queensland and he was the first guy I met the first day at college at Union College in UQ and he came down to two to New York and we went out for some drinks and in our sort of boasting I made about these three little properties and I’m killing it and blah blah blah and I think looking at doing some flips in Philadelphia blah blah blah and he’s like look that is incredible. Like well done you know and then all of his sudden he just says I just closed on a 70 unit 7 0 and I was like What the hell. How did you close on 70 units and how did you do that it’s in Canada and what they bought was what was happening and he explained to me that the power of OPM: other people’s money. And he was here. He had got a mentor and he was able to go and raise a real bit of money through friends and family for the for a downpayment on a commercial asset in Canada and through commercial financing world, he was able to go and purchase some this deal with with a lender carry back financing. So it was just incredible to me that he was able to do that and then he sort of explained to me further the power of you know a cap rates and net operating income and the strategy that I was doing on my smaller properties was that I’d go in and buy these houses I would put about five grand into them maybe three or four ran into them for new flooring Lecour pay and I’ll be able to charge you know 100 150 bucks more a month and that would necessarily raise the value of the property because it was still classed as a residential on my small duplexes but he was doing the same thing but on 70 units and when you do increase the net operating income of your asset by increasing 100 bucks over 70 units. That increases the value substantially and that’s why in this in the northern North America banks view multi-family real estate apartments as businesses and so they value them on the cap rate and the cap rate is equal to the net operating income divided by the value. So if you can increase you know why you can increase the value. So it is just same principles. But just on a larger scale and so what I did was I you know he really inspired me to go and take more action and really get him and get a mentor and because I couldn’t do what he was doing and he couldn’t have done what he was doing without getting that mental and riding on the coattails of that mentor you know. Credibility is huge and not only done a handful of small houses so I’m skipping a lot of details but essentially that is how I got started and I went found a mentor and through that mentor was able to build credibility build a brand was able to raise money on his deals and through doing a number of deals with him.
I was able to branch off on my own and do my own deals and that’s in a nutshell how I got started. Five and a half years ago.
Gossens describes how the new forms of investments are more favourable than traditional stock market investments, and how this kick-started his new career.
People are becoming more smarter with their money and they’re controlling in Australia you can control your super funds. In America, it’s called IRA self-directed IRA’s is a retirement fund. So there’ll be a lot less a lot more people looking for different ways because they’re sick of the stock market. They want their money to invest hard assets because of all the taxable benefits that you have. Combine that with appreciation forced appreciation which is what we’re calling that when we go in and we did it it’s up only we increase the value. To increase the rent and increase increases the value. There’s also obviously the cashflow aspect and then there’s an amateurization that the tenants are paying down your loan. So there’s a lot of positives as you know we talked a lot about on your show but there’s a lot of also a lot of people out there looking for alternative investments and not having to do it the traditional you know put give your money to a stockbroker and some guy is going to put your money is kind of gambling in the stock market. So through that is definitely a network of people interested in investing in in multifamily commercial assets and through proper branding through education through creating pitch decks I was able to raise a small amount of money over a couple of deals and that was I was able to kick start my career in terms of doing larger and larger deals.
Finally, Goossens re-evaluates the defining moment that changed his career trajectory.
I think that there’s no time clicking right you again I think is the aha moment where I had that meeting with my mate Scott from Canada and he was just explained to me the power of commercial real estate and that was really ah ah ah okay I get it I’m doing on the small scale I need to be doing on the big scale because you know doing it on a duplex is not really moving the needle but doing it on 70 or 100 or 200 units that’s like really powerfully moving the needle. So you know increasing on a 10 cap say 10 cap rate if you increase a dollar you increase you know why buy one dollar. Increasing the value of the property by 10 bucks. So that is just how valuable is how incredibly powerful this world is of commercial real estate and why a lot of big developers get into commercial because it just so much small scale yeah.
Leverage. That is amazing.
The Tricks and Benefits of International Investment in the US with Reed Goossens
Previously, Goossens mentioned he relied on a mentor to get his foot on the investment ladder in America.
I knew I had to get a coach or mentor you know all good sports teams have one, I sort of had done a few little deals here and there but hadn’t really achieved financial freedom that the book Rich Dad Poor Dad book was talking about know I was still an employee I was starting to invest I was getting a little bit of cash flow but it wasn’t because it wasn’t anything to write home about but it was a step in the right direction. So I really thought I needed to up my game and looking for that mentor I wanted obviously someone who was actively investing and there’s a lot of people as you know in Australia there’s a lot of gurus and there’s even more of them here that they claim that they’re doing stuff that I’m not actually doing anything. And I essentially stumbled across a mentor who was reasonably priced. He was he’d done a few big deals. He was also relatively new-ish but had you know the right backing the right mindset. Similar age. So I sort of said well I’m gonna hitch my wagon to him and through that there’s obviously a big education piece you know about you branding myself in a certain way about developing pitch decks, through the education piece and trying to educate investors about this world of syndication which is what it’s called here in the United States.
He explains what he means by syndication.
Essentially when you pool investors money together and you get from point A to Point B. So think of it like if you’re going to go hire a Boeing 747 right to get from Sydney to Perth it’s going to cost you as an individual a hell of a lot of money. However, if you can split that cost up with 100 other people and you are the captain or the co-pilot or up in first-class, you know you have and everyone else is in the back you know in the economy you can. Everyone can enjoy the journey together getting from point A to Point B. And so syndication and being a syndicator is essentially your you’re acting as a captain. If that makes sense, you’re steering the ship. So, in general, there’s a lot of investors out there’s blame for that. Looking to place their money in a high yield or relatively high yield good returns over a medium to long term prospect. So they’re looking too for capital preservation. So there’s a whole bunch of things that I’m sure we’ll get into about the different ins and outs of it.
Goossens compares American multi-family building investments and Australia strata title buildings, pointing out the vital differences.
Buying something within our case it’s you know we buy multi-family which is thought of a garden-style apartment multi-family might be discussing what the hell’s he talking about in the United States. Again back to in compared to Australia we have strata title the options for financing in the United States or obviously a lot greater than there are in Australia. So there are banks willing to lend on the future value of a project or a set of apartment complex let’s call it 100 units and the banks are saying here in America say well okay when you build that I’m going about to get you know you’re going to get a net operating income of X number of value add on whatever the market cap rate is and it’ll end you on the entirety of those hundred units in Australia strata title which is condominiums in other words condominiums us or use here and in states and local governments get taxes from strata and the sum of the parts is more than the sum of the whole combined with the fact that there are not enough lenders in Australia that commercial lending you know in America you can get fixed-rate commercial terms for fixed for 10 years and amaturise over 30, in Australia you can’t get anywhere near that.
Goosens facilitates these multi-family investments which both maximise and investors return and minimise their risk.
It’s back to you know reducing risk. Understanding what type of loan you can get on the asset here in America we can get non-recourse agency I say agency it’s backed by the government stocks and bonds and the government is obvious. Get money working for it. So they put it into bonds and those bonds forms loans in order to lend out and help investors like myself provide housing to people of America. And they will offer it at very attractive rates and also be called non-recourse. Meaning if the deal goes south for an unknown reason of your own you will not be held liable. We are still it’s still a business at the end of the day and if you know something happens you know people need a roof over their heads in a crisis and a GFC type of crisis. Renters look for affordable housing and apartments and multi-family are affordable housing. We look to buy 1980s 1990s early 2000 built assets. We don’t look to buy brand new class A buildings. We look for the best class B and we look to go for that value add. So we want to see what the rents are. The in-place rents and we want to go in there you know paint and paint the units put new appliances put new flooring put new light fixtures and then increase the rent you know anywhere between 75 to 150 bucks depending on the unit type. And so if there is a value add strategy there combined with the fact that we have nonrecourse debt low leveraged fixed for X amount of years 7 10 12 whatever you want. Amaturised over 30. And combined with the fact that it’s the risk of people moving out to few in a duplex scenario when I first bought back in back in the day. If one of my tenants moved out I was 50 per cent vacant. Yes, a 100 unit building. The likelihood of 50 people moving at once is extremely low hence why the bank will say well okay well that’s very low risk and we will make it non-recourse. So that’s a bit of a lesson in financing what no one in America versus Australia and the difference of multifamily and how they lend it in terms of risk and how we mitigate that.
He explains the role of his company in mitigating these investment deals.
The way in which we structure it is like like going to buy a house you need a down payment. We would raise that down payment from our investors and we would obviously chip in some money as well. But what we are bringing to the table is obviously the deal we found it is where we’re experts in the field. We’re also bringing the loan to the table. So all our investors take no loan risk and obviously I was talking about non-recourse before. But we still as owners and operators need to be underwritten by the bank and we need to have a net worth. We have liquidity. And then we bring the loan to the table as I said. So for international investors, it’s very hard to get leverage in the United States but because we live here. We bring that to the table so to speak. Think of like we going to put 25 per cent down about fever’s or 25 or 30 per cent down and it would the rest running 75 per cent. We will bring from a bank or admit long nonrecourse low-risk low leverage fixed-rate term and then we may overrate some money in terms so we can do the CapEx and you know couple improvements to the property over next period time and we may raise a little bit of an operating fund just to have some money on hand just in case anything happened so that typically is the way in which we purchase the deal the way in which is owned is that all. So if you think of a pie like a circle 70 per cent of the deal is owned by our investors who are who bring limited partners who bring the equity to buy the deal. And then 30 per cent is left for me my business partners and that is what we take as pulling this deal together. There are some small fees on the front end but that’s essentially what we’re doing all the hard work and all our investors are passive investors. They’re completely hands-off. They don’t lift a finger. They don’t make decisions they are literally investing their money in a vehicle that will create the cash flow and that will we try to double their money in five to seven-eight years time depending on the deal depending on the growth. So, in a nutshell, is how we participate in these deals. Yes, 70 30 split typically is is how we do it.
He goes on to further explain how his shares work and how his business accesses their shares over the life of the investment.
If we create a Proprietary Limited company in Australia and investors would buy shares into that entity. So if we’re raising call it buying a 10 million dollar deal and we’re going to raise 3 million dollars then investors would buy shares into the deal and that 3 million dollars would buy them ownership of 70 per cent of the deal. Right. And then that remaining 30 per cent is allocated to myself and my business partners and we are the managers and it is the way in which we split the shares up the Class A shares and Class B shares and the class A is limited partners and Class B is for us as the general partner. So that’s how we access you know in terms of our value in the deal. So when someone underwrites me they say okay Reed owns X amount of money X amount of per cent in this deal deal worth 10 million bucks.
And how these shares work in practice and incentivise his business to invest successfully.
The cash flow from the property over the period of the hold, whatever it is we typically do what’s called a preferred return which means the first X we can’t ever guarantee anything in real estate. And if you ever get approached by someone who says that, run the other way then the next best thing is a preferred return and it means that it’s sort of like an IOU. So if we’re projecting that the property may cash flow 8 per cent a year. So if you’re putting in ah you just call it a million bucks you’re expected to get eighty thousand dollars a million dollars into the deal into a 10 million dollar deal. The deal should pay you 8 per cent or on that million dollars. Right. We may offer a preferred return of 6 per cent to investors so it’s saying well the first 6 per cent of cash flows out of the first 60000 bucks is going to invest it’s your guys it’s yours. We don’t participate in it as far as the managers and then anything over that. We split 70 30. So if they if for some reason the deal ends up getting 10 per cent cash on cash returns or 10 per cent cash flow we get to participate in that upside if that makes sense. So there is a we are incentivized to make sure the deal works but it was good to prefer turn now. On the flip side if for whatever reason the deal doesn’t is stuttering or doesn’t is not going right the first year and we only get 4 per cent but we you know we give you an IOU or a preferred return of 6. Then that Delta is tacked on to the previous year. And if there’s any then the next year if we don’t hit it blubber keeps getting tacked on until when we sell the asset then there’ll be a catch up of that preferred return to the investors. So it’s really where we’re we’re very much aligned to make sure that the deal makes money for the investors and make sure we get that preferred return otherwise we don’t participate.
The passive nature of multi-family investments means these investments work slightly different from others when it comes to equity and leverage.
This is all flow through ownership. So someone who invests 100000 thousand dollars into a deal with leverage and lots of stuff that the money is probably worth on from day one, you know 120-130,000 dollars with leverage.
As an investor, they can’t go and leverage against. They can go and use it as a net worth requirement. They couldn’t go and leverage against because they are passive in the deal and with lending requirements for the United States I’m sure like in Australia if you in a passive deal scenario be very hard to use it as a say hey I want to put this as my quote-unquote equity down on another deal or pull it out of the deal because you could only pull that equity out if we chose to refinance or we chose to seal the deal.
Goosens stresses the importance of a good team and details his most recent big investment deal.
We just we’re ready to close on a deal coming up here between now and Lulus before Christmas and I’m not much going to be back in Australia when we’re closing on.
That’s the power of having a team around you and we can present a whole podcast about developing the right team. But we got this deal in Austin Texas and I’m sure a lot of your listeners probably have heard of Austin Austin is definitely on the map.
And it’s more of a global city now we got it off the market because of my business partner. He lives in Austin and we have built up a bit of a reputation through my podcasts and through obviously his local networking and it’s going to be the largest deal we’ve raised to date. But it’s going to be a cracker of a deal and we pick it 284 units. It was built in 2002. We’re picking it up at a five and a half cap where the market in Austin is probably more like a four and a half cap so it’s where it is upside there. And yeah he is we really looking forward to having it plants a flag in Austin Texas and I’m really really excited to get this closed but it’s looking back. We’ve closed about it. We bought about a thousand units in the line and a bit shy of last 18 months. So there’s been a big rapid expansion for us with Wild Horn Capital. But it’s yeah where we’re leaps and bounds and going on to do more and more.
In order to get investors on board, Gossens has worked to brand himself in the US Market.
It comes back to branding. A couple of years ago I started a podcast called investing in the US and originally it was about educating international investors about the benefits of investing here because when I first moved the United States I hadn’t I didn’t know what an LLC was.
I didn’t know what credit was. I didn’t know you know what the taxation system was but there were some attractive low barriers to entry for international investors like myself. So I said well hang on through my mentor let’s brand myself, I have this weird Australian accent and there are all these Americans talking to me so why not start a podcast about it. And you know I can be the number one in that space because I’m the only one in that space right. And over time I’ve nation pivoted and I sort of named it investing in the US because it’s over a period time I’ve met 150 episodes or whatever. But you’re going to get real estate for so long. It’s more you know how we talk about business startups and just investing in general in the US and not just for international best is for everyone. But you know you had to really niche and lean into what I was and that was Australian, I had a story, I moved halfway across the world for love. Blah blah blah. That is people like that people think it is genuine and that through that I developed a bit of a brand and over the past three or four years it doesn’t happen overnight but over a period of time you build credibility and trust and now people come to me to look to invest or my business partner and you know we can offer them a place to invest their capital.
While he originally intended to work with international investors, the reality isn’t so.
The majority of my investors are American right.
The goal in the next two to five years is to bring actually more money from overseas markets and really double down on that on the brand. But the majority my investors are international as deals are getting harder and harder to pencil here in the United States because they are becoming compressed market. American investors are expecting a bit of an unrealistic return rate into IRR internal rate of return I know that investors in Australia or in Asia or in Israel or in Europe would jump all over it like white on rice. So you definitely needs to continue the brand and all that good stuff in the near future.
As an Australian investing in America, it took some time to learn the terminology and strategies of real estate in the US.
One of the things I first learnt when I moved to the United States is investing lingo know to understand what the different lingo is and making sure I’m really I got my head wrapped around it probably took a decent 2 years to really understand it and really have honed in on it in the last three or four years since I’ve been in syndication.
You got to understand different terminology so it’s like anything if you put your mind to it you read books and you’re listening to enough podcasts you’re going to learn it pretty quickly regardless of where you are in the world and it’s all self-education. But you know I was you having the mathematical brain of a civil engineer structural engineer it helped a little bit you know I’m really good at spreadsheets so you know that there’s definite does help but doesn’t the but for people listening out there doesn’t do it because you’re not mathematically inclined. You should try and educate yourself to be. But really understanding lingo regardless of where you are in the world or you’re investing whether it be Australia or America you know you’ve got to really understand the local lingo and you’ve got to build your team around you so you can be successful and whatever you do.
Goossens reinforces why he has chosen to follow this path.
Look it’s it’s all comes down to financial freedom right. I want to control my time. It’s me, my business partner, we got we obviously we have as I said before we got a team around us. We have third party property managers who manage our deals.
We have lawyers who help us close on the deals with general contractors who are the third party to us but we are the puppeteers and we control our time. I don’t have a day job anymore. I wake up and I do what I want and do it because I love it and that’s really the true thing that I got involved in real estate for was way back in the day I picked first picked up that Rich Dad Poor Dad book was to invest for long term wealth and have a paycheck you have life someone pay me to live my life and obviously I’m up I’m a syndicator I’m quite a fund manager what he won’t call me but I control my time. And the most valuable asset in my life is my time and it’s all I can do whatever I want. I don’t have to wake up and ask for time off or whatever if I want to. Do you want to go away for a weekend or go for a long weekend away? I do what I do as it can and really creating a life by design is all that I’m about and it’s really living life on my terms. So so that’s what I’ve been very very focused on achieving and why I’ve got so large so quickly. But in saying that with the same breath we’re also being my business partner and I are cognitive of living a life by design you know he has kids I don’t have kids just yet but he’s you know he’s making sure he’s picking them up right up after school every single day because he kept you controls his time. Yes. So yeah it’s really really important to me.
And how he conditions his mindset every day.
I think doing these things what I’m doing right now talking to you, talking to other thought leaders I was speaking at a conference over the weekend. I love getting amongst and being just chatting and talking shop. One of the biggest things I think of start one of the bigger things I’ve found for starting my podcast. I don’t make any money off my podcast but it opens doors. And you know who doesn’t like talking about themselves for 45 minutes.
But the fact is its sort of like it’s a door that’s opened and you know it might Erica always says my wife she’s like she’s you you know you take something you know cause I’m always just beaming when I get off a podcast because it just makes the juices flow from within me.
I love chatting other people in and diving into how they build their business and what makes them tick and that just I know something about it. It’s really I guess I’m a civil engineer I didn’t have this. I was the very black and white brain and so is creating my own podcast I really enjoyed it and that’s helped. I think it has helped me keep really sharp. I try and I wish released an episode a week but I’m trying to just be around other thought leaders and as they say, you’re the average of the five people. Surround yourself with so I’m very much you know I love doing that sort of stuff you know and just checking in with art with people who really help me move the needle. That makes sense.
Goossens advises his greatest book recommendations for anyone interested in property investment, business growth, and branding.
There’s obviously Rich Dad Poor Dad for those people who are just getting started and trying to understand the world of investing and in creating time for themselves and financial freedom. That’s a really good book to start with.
The book I also love the book The Four Hour Work Week in terms of systems another book and it’s actually you would know of it. It’s called the Key Person of Influence. It’s actually an Australian author talks a little bit about creating brands and nothing to do with investing but it’s got that positioning yourself as a key person of influence in your sphere and how that can attract investors or business partners or employees or whatever that might be. That’s a really awesome book. And Thinking Grow Rich is another one of those.
And the best advice he’s ever received.
Think it’s got to go back to my dad: A fool and their money are easily parted. I think that’s got to be one of the number one.
Goosens attributes some personal habits that help him in his success.
I’m a very active guy. If I don’t run or work out or do something for a two day two or three days on end I tend to go a little stir crazy.
I have always been very very active person I’m getting I’m a morning guy I know not all people listen to the show maybe morning people. In the morning I will be in the gym but one thing that’s definitely helped me in the last little while is n it goes a little bit more back to you know this new world we live in. Being an entrepreneur is the new black you know trying to always go go go go go and achieve things is meditation. Allowing yourself to have the calmness in the mind too not to say okay can put I can put it down now I don’t need to look at it 24/7 and it will be all my finding me on social media all the time trying to just break up a little bit and meditation has allowed me to do that. I’m not an expert at it whatsoever but it has just allowed me that mental calmness.
The other thing I do is journaling getting out of my mind and onto piece of paper is really important for me to help me start my day or my week or whatever it might be and also being you know having a lot of gratitude having you know I’m not a hugely religious person but I do think gratitude is really important because you only live your life once you make the most of it while you’ve got it. And if you’re not appreciating the goals that you are kicking in even small as they might be you need to read it not the heart to it. Otherwise, you’re just never gonna be able to get ahead because you always think you gotta get to the next. Thing.
If Reed Goossens met himself ten years ago, he’d have this to say:
I think the big thing I would say to is enjoy you know like you’re going on a pretty awesome frickin journey and enjoy it. No, I don’t think there’s any one piece of advice I honestly look back and there’s not anything that I regret and I’m really proud being sitting here 30 years of age I’m really proud of that and I want the next 30 years of my life to be exactly the same.
So I’m going to do whatever it takes to be successful and not just business but know mental success physical success love and gratitude. I think you know to be truly successful across all aspects of life it means that you have to be. You can’t just be successful in one. So yeah.
Additionally, he has a unique perspective on how he sees the future.
Something that I’ve changed my thought process on so much in the last little while and he goes back to being present day. The old adage of what do you do when you grow up. What are you going to do it’s constantly a race. Race through university white racist Gorecki university race through life lullaby them were going to retire at some point in future. You know I’m just going to work as hard as I can in the next couple of years and see what doors open because I don’t want me sitting here today talking to an Australian podcast and saying that I’ve done all this stuff five years ago I would not have even thought even six years Ten-Year going and thought to be doing that. So it’s I’ve changed my mind I’m really obviously focused on the business and trying to create a really awesome portfolio for investors. But in terms of just I’m also going to take that goal that target and the time pressure off the table and say look I’m going to just enjoy the journey as well because if I don’t then what the hell are we doing. You know so a little bit philosophical and cheesy but it’s I think you have to because like you know there’s a quote an exact quote but it talks about a song right you don’t you listen to the end of the song.
The best part of the song is a rides the ups and down the course is an attack on a view life. You know we’re all in this journey together and if you don’t stop and enjoy your view every now and then what’s the point in doing it.
He can admit he got lucky, and that both hard work and luck played a key role in his success.
If you look back like yes I work bloody hard to get a job but it had to take that one person to say yes in order to give me that luck to then give me job to then help me on this journey to where I am now it takes that one person to say yes to invest and it takes that one person to say yes to get a day job back work in the south of France so there is a little bit of luck it was you got to put your neck out there but it does take one year yes it will change your life and if you don’t if you change your story you change your life and that’s it. Tony Robbins says that and I’m a huge fan of his but that’s I think it’s a mixture of both. But obviously not being afraid to back yourself and say well look if the worst-case scenario is when I first moved away from Australia is that I had to move back. I definitely thought about that I thought if I don’t get it I don’t get a job I’m gonna have to move back to Australia. But that’s not the worst-case right to go move back to Australia and back to my family. I got a civil engineering job and if that’s the worst thing that happens to me then I’m living pretty good so that’s how I’ve always approached life and going and giving it a crack and backing yourself and backing decisions. I think that’s the number one piece of advice I can give to people listening to this and looking back at it whether it’s life or hard work I don’t know if it falls in either bucket but it’s an ability to back yourself and I think that’s really important.
If you want to find out more about his investments or contact Goossens, here’s how:
You can head over to my website which is just reed goossens dot com R E E D G O O S S E N S and you can check out all the stuff on there.
Hit me up contact me. Is pretty easy to find.
So it’s probably easier to get in touch.
Or search up his podcast.
You can search by name and just investing in the US it’s pretty straightforward. Or an Aussie guide to US real estate. Either way, they’re all pretty searchable.
If anyone’s ever come in through L.A. and they want to catch up for a beer or coffee. I’m always down to meet other Aussies who are travelling the world or just moving to the states to make it happen.
This episode was produced by Hannah Dowling with narrations and interviews conducted by Tyrone Shum.