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Importance of Team Building with John Carney
John Carney is a highly-respected thought leader in the specialised and lucrative field of real estate investing. As a third generation property investor/developer he has achieved (and continues to build upon) his own wealth creation and lifestyle freedom. His property deals in the US, Australia, and Indonesia have amassed generous profits and comprehensive international experience.
A published author and sought-after international keynote speaker, John’s popular presentation and book, Real Estate is a Team Sport. The Nine Players You Need to Profit, outlines the steps to become a smarter and more profitable property investor.
John teaches investors to plan for the future and build cash flow positive real estate assets in order to multiply their wealth. He believes the more a person exercises their investment muscle and ‘plays the game,’ the closer they come to achieving the BIG WIN.
- Who John Carney is
- How he got started in real estate
- On starting a company in a foreign country
- On having clients on the other side of the world committed to buying something in cash with a quick close
- Providing great service and learning a lot
- Difference between Australian real estate and US real estate
- On building a good team
- On real estate as a team sport
- Engaging your team
- 5 step method to real estate investing
- 1) Discovery
- 2) Structure
- 3) Source
- 4) Measure
- 5) Grow
- What's next for John
- Market he’s focusing on
- “Income follows assets.”
- “If you engage your team, there is absolutely no limit to what you will be able to achieve.”
- “Service is a big point of difference in the market.”
RESOURCES AND LINKS FROM THIS SHOW:
- John Carney's website
- America Property Source
- Real Estate is a Team Sport by John Carney
- The Real Estate Locker Room Show with John Carney
- Email Address: firstname.lastname@example.org
- Contact information: 970 - 390 - 3595
Larry: Welcome to the Brain-Pick-A-Pro show live from Lake Wylie, South Carolina. I’m Larry Goins. I really really appreciate you guys watching. As you know, every week, we bring on a different rockstar in real estate and this week is a great guy. He is mover and a shaker. I mean, this guy is way up here in what he’s doing. He currently lives in Cleveland, Ohio, one of my favorite places. The home of the Rock Hall, Rock and Rock Hall of Fame. I’ve been there may times. My good friend, John Carney, what’s going on, Buddy?
John: How are you doing, Larry? Thanks for having me.
Larry: I’m good. How have you been?
John: Pretty good, pretty good.
Larry: Awesome, awesome. Thanks for being on. Why don’t you start out and tell our viewers and listeners a little bit about yourself?
John: Well sure, sure. I’m back in Cleveland, Ohio. I was born and raised here, Larry. But when I graduated from College, I went to Miami, Ohio. I headed west, heads out in Colorado for 12 years. I met a lady who is from Australia, and as things would have happened in our life, I ended up living in Melbourne for seven years. We got married, had children, real estate and development down there. I came back in June of 2016 to work on some real estate development projects and multifamily in my father and his partner’s business which they were pioneers in the downtown Cleveland, multifamily space. Actually through the 90s, the Landmark companies were part of the development of the warehouse district here. They kind of were the spark that brought people out of the suburbs and made living in loft apartments cool again.
Larry: That’s awesome, man. That’s awesome. I love that. I love that. So, let’s go way back. How did you get started in real estate? What got you cranked up about real estate?
John: Well my first job and we can call it a family business, right? My grandfather and his brother own some shopping centers on the westside of Cleveland. My uncle managed them. So, like at 13 or 14, I would spend the mornings of my summer vacation filling in potholes with asphalt, picking up cigarette butts in the parking lot, painting fences, pulling weeds, all the glamorous stuff. Right?
Larry: Right, right.
John: I don’t think anyone ever forgets their first work experience. You know, bad language and power tools. It was pretty fun for a 14 year old. I did that for a number of summers and then in college, they were in the downtown Cleveland space and I was able to get into the labor union and I carried bricks and I really knocked down walls, and really got to see the development side of real estate from the other side of the coin. That sort of how my father and his brother had been raised back when my grandfather was digging basements, right? They were doing the same thing. That sort of where seed was planted. There’s a lot of attorneys in our family and extending my school years to sitting in the classroom in my 20s wasn’t my thing. Nothing against attorneys.
Larry: Right, right, right. I hear you, man. I am the same way. I am not even a college graduate. I just graduated high school and that was it, right?
John: Yes. I mean, you’ve got the fire in you. You know, real estate is for anybody that has motivation behind them. I think.
Larry: But you know what? Most people. I’ve read something a while back. Most people who have a college degree are working for someone who doesn’t.
John: That’s an interesting statistic.
Larry: It is. It really is. It really is. So, you really went straight to, you know, jumping into commercial and multifamily type stuff, strip centers. Do you do any single family or did you just go straight on in and you’ve never looked back?
John: Well, I didn’t really go straight into the family business. We’ll call it that at all.
Larry: Right, right.
John: After school, I worked on a project back in Cleveland. I was pre-leasing in one of the buildings that we still own and operate, but I moved out to Colorado and I was out in the high country, in a Ski town working, you know, a handful of jobs to live that dream. We can fast forward to my early thirties where I met a lady from Australia. As our life is planned of all this, I suppose, I ended up moving to Melbourne with her in 2009.
John: That was, you know, our market was in the tank. Tanking getting worse. I ended up in Melbourne, which is, you know, the people aren’t familiar with Melbourne, Australia. A modern livable city. They boast to be the world’s most livable city, but to where I was in a market with outrageous prices and real estate was climbing, right? Complete opposite world. Opposite end of the world, completely opposite experience.
John: When I was living there. I took my knowledge and expertise in the US market and spun that into a business. I launched a company called America Property Source and we enabled Australians to safely invest in US single family homes and small multifamily. Our market of choice was Phoenix and that was whole based around relationships in a team of people that I had on the ground there that I knew and trusted. You know, that was my jumping in the deep end, Larry. I started a company in a foreign country which had its own learning curve. And then, you know, we were taking and replacing cash only at that time for a foreign national, then it had to be a 100% cash acquisitions in a foreign country. It was great because everyone did well and that may have sounded easy because of the time but it was really, you know, a focus on the work we did as a business, myself and my partners establishing an awesome team of people that we trusted and who were good at real estate to service our clients on the other side of the world. That was a fun experience, man.
When I moved back to the states, I’ve had some of my own investments, personal investments under my belt. I did some development work in Australia with some partners and now here I am back in the bigger game but had the experience to get there my incrementally making sure each deal I was participating in got bigger and bigger along the way.
Larry: That’s great, man. It sounds like in Australia, you were selling turnkey properties to people in Australia, but the turnkey properties were in Phoenix. Is that right?
John: Yes. We were selling properties before turnkey was a thing. I mean, like we had, our partner on the ground, his name was John Williams and his team, I mean, they were putting together funds and buying a lot of single family homes and helping. He was in wholesale and there was a lot of inventory back 2010, 2011, 2012. We had have clients on the other side of the world commit to buying something in cash with a quick close, right?
John: Like I’d send them an email and then I’d call them and say, this is it. This is what you’ve been looking for and they would buy it. I had to make sure that when they got on a plane and flew over there, I was delivering everything that they were expecting. So, in order to be successful, we did, we set up tours. People would fly over there. Alread, we’d set up their LLC and their foreign exchange and their bank accounts and get them in a position to buy. Some people would like to go over there and get in a car with our team on the ground and then they’d say, “yes, I’ll have that one. I’ll have this one.” But other people would like to never travel to America and were just buying off of our mailchimp.
Larry: Right right.
Larry: Wow. That’s awesome, man. That’s great. It’s amazing that people will buy from Australia small properties in the states. They never had it done before. But when real estate is hot, it’s hot and everybody wants a piece, right?
John: That’s true, and the australians love real estate, like they call it property. I would end up inevitably talking in Aussie property language, right? So that’s the water cooler conversations in Australia. Everyone’s got a story of if they haven’t made a fortune on real estate, their brother or sister or friend or cousin has, right?
John: So if you want to buy an investment property today, you live in Victoria, that’s the state. You got Melbourne, the big capital city, you’ll probably looking at about an hour out of town and you’re probably looking at an entry level property at, I don’t know, maybe 350 to 400,000 dollars.
Larry: Right. That’s a lot.
John: Yes. They call it negative gearing. So if you’re investing in that property. If you’re going to be in a single family home business, most people have to feed that until they get their tax return and then they kind of get their profit once a year. I mean, it’s real tight. There’s a real art and science to it.
John: Because prices kept escalating and the Aussie dollar against the US dollar cap is becoming more and more attractive.
John: My timing was perfect. Just ot kind of give you an example, I would say that the clients that I had, they engage their team and they actually paid attention to their portfolio because not everybody did. You know, they all doubled plus, some of them two times the value of their initial outlay.
John: I charged the fee on the frontend of provided service. They’re buying 40, 50, 60,000 dollar properties in Central Phoenix, right? B plus C plus or B minus C plus areas.
Larry: That was a long time ago.
John: Yes. You look at them now at 150 grand plus. There was a time during the sweet spot where our clients were using a foreign exchange service that we had, they were trading their Australian dollars and that went from like 87 cents when we started all the way up to a dollar rate. Now the Aussie dollar has dropped down to say like high 70s than we’re in there. I mean, some people have made a 30% return on their currency alone not to mention, you know, one and a half times capital growth on their investments.
Larry: That’s huge.
John: It was a great way for me to provide a great service, you know, and learn a lot.
Larry: That’s awesome, man. What do you say the biggest difference between Australian real estate and US real estate?
John: At the end of the day, it’s just numbers, really. I mean, I think that there’s ways in Australia to get into the market and do some off market and creative deals. It’s not as popular there. They have more of a strangle hold on you. You can’t just go into foreclosure, right? I used to joke that they’ll follow you to the grave and then dig you up and take your watch.
John: Whether that’s true or not, that’s just how I’d like to think about it. There’s full recourse for everyone and for everything. It’s just a smaller country, right? The population of Australia is 22 million people sort of, like Texas. Texas has oil. They have minerals. When you think about it like that, they’ve got, you know, only a handful of banks that control the market. It’s a Math game. So the main difference is Math and then the strategy because the result is the same. People want to have assets, income follows assets.
John: They want to create that passive cash flow and have more financial freedom and time freedom to do what they want. So, there is really that differences in the Math and the strategy. You need a little bit more, you know. the perception is you need a little bit more money to get started there.
John: That’s also the perception here in America. You’re in this game and you know how it’s played. You know, people can get into real estate, can start out with very little money or no money down if they take the time to learn strategies, recruit a team, and you know, the sky's the limit, really.
Larry: Exactly, exactly. So it sounds very similar to Canada, from what I hear, where there’s only a few major banks that control everything. Most people there have good credit, you know, because the banks will follow you. You know? So it sounds very similar.
John: Yes. I mean like, I don’t know much about Canada other than at the same time, we were sending a lot of Australians into the Phoenix market. There was a lot of Canadians coming into the Phoenix market. I know it’s a lot of people everywhere coming in, but yes. Each country is different. One of the things that I like when people ask me about how to get started, I’m always going to back to the team of people you recruit. Being in a different country, I had asked a lot of questions. I had to ask a lot of people for help just to get America property source registered. You know, there’s a lot of work that had to be done before I closed my first deal and received a paycheck, right?
John: If you’re willing to go out and spend the time surrounding yourself with good people and you have a plan and like that, I believe that you can get going, right? Would you not agree? Well, I don’t want to turn it around and interview you. I mean.
Larry: Oh, no. Absolutely, absolutely. I do agree.
John: So that’s it. The main difference is the dollar sign. You need the same team players you need here. You need a good accountant that knows real estate, especially in Australia because there’s a lot of nuisances in their tax code especially as it relates to a real estate. You’d probably need a good solicitor to look over your documents. A good solicitor can act as your title agent there, or they have a conveyancer. They don’t necessarily have the same title company we have up here in the North. Are you a lawyer state in South Carolina?
Larry: Yes. In North and South Carolina, we typically use lawyers.
John: Yes. So very similar in that regard. You know, you’ve got to have a good insurance guy.
Larry: Just a different name.
John: Different name, just semantics. So on and so forth. So I mean, you have a good team of people and then when I got into real estate in Australia, it was really surrounding myself with the same people and I did a couple of development sites. I had a startup company. I ran a startup company over there. I was renting an apartment in Melbourne and I didn’t have any fixed assets in Australia. We didn’t have anything to leverage off of. All my assets were held by me. I had a partner who is a developer who I approached. I had a lending. She was a mortgage broker. I was part of his development company and real estate services company. The agreement was, if I found the project and drove it, he’d check in and make sure that it was on track and provide the financing.
Larry: That’s great.
John: We partnered with the builder. I still had to bring some cash over like we had the proper channels and bring money over to Australia that I had access to in the States but was able to accomplish this through teamwork and asking a lot of questions.
Larry: You know what, John, you’ve mentioned your team multiple times and you actually wrote a book called Real Estate is a Team Sport. Tell us why that is so important.
John: Well, we’ll go back to America property, right? So I had clients that I had this experience where I was so intimately involved in the insourcing and the closing of all these transactions. I also became very intimately involved in the property management by default. I didn’t want anybody to fail. As the company grew and the client also grew, the transaction volume grew, it came back to me that the people who were struggling, the clients that were struggling, just were not engaging with their team in America. I was thinking, I am like, gosh we provided just A players, right? All the resources you could ever need to be successful from a far were in place. They’re just a phone call away or a Skype call away. I mean, it was not, in my opinion, something that was, not everyone had that mentality. They thought that if they looked at real estate, more like buying shares or stocks, right? And they will just buy it, set it, forget, wait until it appreciates and then I’m going to sell it and move on, right?
John: Right? That’s just not the reality. So, we had some people that weren’t engaging with their property managers. They were missing. They weren’t checking in on their bank accounts and they were struggling. We put a lot of time and effort and energy in money into making sure that when something kind of went sideways, it got corrected. What we learned from that was, what I learned from that was my partners on the ground were awesome. They didn’t have to do this. They wanted their partners in Australia to be successful. So, I mean it was really a tribute to them. They were going out and putting out fires for people they hadn’t even met. These were guys who were generally wholesalers too, like they weren’t necessarily like, you know, they were just good people.
Larry: They were corporate.
John: They had their teams and they said, sure, we’ll swing by here and fix this the swimming pool or we’ll do this for you and we’ll do that for you, we like this guy’s buff for properties, but like let’s make sure that this doesn’t happen to the other three in his portfolio. So we had this learning experience where a book came out, you know, it’s written for an Australian living in Australia because I could give it people and say, this is how you would go about doing this in your country. I have done it in your country. I have done it in my country. These are my experiences and if you engage your team, there is absolutely no limit to what you’ll be able to achieve.
Larry: That’s awesome, man. One of the biggest things that C people have struggles with other than marketing to get a deal is how do you find a team if you’re virtual investing. Right? How do you build that team? How do you build your boots on the ground and your attorneys, your realtors, your birddogs and that sort of thing, your buyer’s list. All that stuff. So I’m really glad you wrote that book. Where can people get a copy of that book?
John: You know, it’s on Amazon. If anyone wants to shoot me an email, you know, to my email address which is JC@JohnCarneyOnline.com, we’ll post them a copy, mail it to you. When you get me speaking in Australia mode, it’s just my vocabulary, and I live with an Aussie, right?
Larry: There you go.
John: We’re always making fun of each other the way we pronounce things.
Larry: That’s great. That’s great. So, tell us about the cash flow multiplier. You’ve got a five step method for real estate investing. Tell us a little bit about that.
John: Well sure. I’m going to have to like pull this up.
Larry: Sure, sure.
John: You know, it’s like this. We always use to start with people on a phone call, Larry, like if you came in and said, John, I’ve got, you know, all these money, just sold my business. I want to buy US property. You know? I want to buy five properties of hundred grand each in cash. I’d say, that’s great. Let’s understand what the end goal is. I’m not a financial adviser but I want to understand, you know, what is your reason for wanting to do this?
John: You know, that’s what I mean by step one like discover your reason why you want it. I got a phone call over the summer from a gentleman who was referred to me through my ForEx account manager, right? He managed all the currency trades for my clients. This guy has a son. I’m just going to give an example, a real life example. He said, I want to buy a million dollars worth of property. I want to buy it in Vegas and I’m ready to come over and do it now. I was like, alright. Why do you want to do this? You know? He wanted to do this because he had a son who is high school playing basketball who is most likely going to be recruited to a US University, a college, he wanted to start now so that when his son, you know, finally had a degree and moved back to Australia, he’d have real estate knowledge and experience and he’d have some assets he could sell or leverage to help his son buy a home since the property values in Australia seemed to be going through the roof right now where it’s completely unattainable for somebody who is between 18 and 30.
Larry: So, we can turn five into one in Australia.
John: Yes. Exactly. That was his compelling reason. There were other services, he had his heart set in Las Vegas, I didn’t have a network there.
John: He was doing his own. He was an entrepreneur and owned a tech company and basically I said, you know, I gave him some advice. You know, I haven’t really heard from him since. But, you know, discovery. That is a big part of why does somebody want to go into this because there is some time and effort that’s involved. It’s not just investing in an apartment building and now you’re upgrading to the new model Porsche, right?
So, step two is structure, right? You’ve got to have the right structure. Are you a C corp? There are some instances on the commercial side where you might want to be a corporation or are you an LLC or a limited partnership, you know? If you want to play a real big game, is that something you want to do?
John: Structure is important, right? It offers you protection, tax advantage, and you’re really planning for future success by focusing on the structure now. You go back to the team, it’s in line with the first two players. I believe everybody in real estate has to recruit for their team. Number one is an accountant. They’ll keep you accountable. They’re the number people. Number two is, whether you like them or not, you’re going to need to have a real estate lawyer or a contract lawyer, or something that can help you with the structure.
John: Generally speaking, I have found that the real estate accountant and the real estate lawyer know each other in every market in the world, right?
Larry: Right, right.
John: So that is sort of the progression of the five step method. Then you have the sourcing, right? You got to go out. You’ve got to find the property. So, do you need birddogs? Do you need marketers? Are you doing your marketing? Do you need a direct mail guy? Who do you need on your team? Do you need a website? Do you need a VA? Like, who do you need on your team to make this work? Generally, if you’re just starting out, you need yourself. If you’re not a licensed realtor, real estate agent, you’re going to need to find one, right? Or a wholesaler or somebody that you’ve vetted and you feel that’s going to be able to deliver what it is you want, right?
John: You’ve got to sort of follow through it. That first, second, one hundredth purchase, and then you’re going to measure it, right? You’re going to measure it against your math, your Pro forma, like your calculator or whatever you’re using to determine whether this acquisition or this investment was successful or not, right? Everybody is different but that’s just a step in my five step method.
And then, step number five is to replicate it. You’ve got to grow. You’ve got to scale. One deal is just the beginning. Deal one is just the beginning for some and some people might discover that they need to have 10 duplexes. Other people may discover that those 10 duplexes are the catalyst to their first 100-unit apartment building, right?
John: So I mean, everybody is different but this is really just a framework that I used for people to understand that for me, it was never about how many houses can I sell you for your, you know, this whole amount of money you have. In order for you to be effective, right? We’ve got to look. So, like from Phoenix back in the day, if you want two houses in Central Phoenix or do you want, you know, one and a half houses, a little farther out in an area where probably it’s a little bore to get in but you’re going to get a little bit more out, right?
Larry: Right, right. Better appreciation.
John: So there’s just always that balance, right? Capital growth or cash flow? Where does it fit for you and your strategy?
Larry: That’s a really good point. Good point. I love it. So, what’s next for John Carney?
John: Great question. You know, I’m in the development game right now and the multifamily management as well. So the business I’m working in, the Landmark companies here in Cleveland, we are modernizing, we’re looking at efficiencies and technology and providing the best community experience for our residents. Right now, I’m sort of focused on the sale systems and marketing systems for our apartment communities and what can we offer residents that’s a point of difference in the market?
Larry: That’s really good. I love that. Now, you primarily focused on the Cleveland market or do you branch out?
John: For the moment we’re in Cleveland. We’re in the downtown Cleveland area. So some of the buildings that we own and operate were historic warehouse conversions back in the late 90s. There are no swimming pools and the community rooms and the amenities that a new construction property coming up in the ring suburbs or the ring parts of the market are able to do, but we have to compete for those tenants, right? So we can upgrade units and we can upgrade our amenities and we can really focus on service so I think service is a big point of difference in the market and we hang our hat on that. For example, we had our monthly management meeting today and we’re talking about suite turns and making sure all our suites are market ready, right? Then the question was, are you still able to keep on track with every maintenance call? We try and answer every maintenance call, you know, 24 hours or less, but that really mean same day, right?
Larry: Right, right.
John: Our team, everything is on iPad. Maintenance calls, you know, leaky faucet, clogged toilet, there’s only so many things that can happen in an apartment.
Larry: Sure, sure.
John: We want to provide good service and we want to be able to get in and get out when people are working and not disturb them.
Larry: That’s awesome, man. That’s good stuff. So, John, you’ve got a lot going on, man. You’ve taught us a lot. If somebody wanted to reach out to you, follow you, see what’s going on, I know you have a podcast as well, so how would they reach out to you?
John: Look, probably the best way to reach me is by email which is, you know, jc@JohnCarneyOnline.com. I am available by text, you know, if you really want to get me on an eastern standard time even though I have a Colorado phone number, but you know, my cellphone is 970-390-3595. You know, I’m happy to talk with anyone about joint ventures on multifamily deals or if you’ve got a question about the cash flow multiplier or building your team, I’ll schedule some time to chat with you.
Larry: Awesome, man. That’s very generous for you to give out your cell phone number. I don’t even get mine out.
John: You know what? My podcast is up, okay I’m able to plug that, right? So the Real Estate Locker Room Show, keeping in line with real estate as a team sport. But, I’ve had a lot of guests there giving out their cell phone numbers. So I’ll do the same thing, you know.
Larry: That’s awesome. That sounds good, man. Hey, I really appreciate you being on. Thank you so much. Thanks guys for watching. I really appreciate it. Be sure to share and like and follow and give us some feedback. I really would appreciate that. Thank you guys so much for watching and we’ll see you on the next episode of the Brain-Pick-A-Pro show. Thanks a lot everybody. See you later. See you, John.
John: Thanks, Larry. Have a great day.
Larry: You too.