Feb 11, 2022
Jason Yarusi believes that we cannot ever know if something is worth pursuing until we try. This has been his mantra in everything that he does–from real estate investing, family, ultrarunning, and his many other endeavors.
Currently, he is a managing member at Yarusi Holdings, which he founded with his wife, Pili. Yarusi Holdings is a multifamily investment firm that repositions under-performing properties through operational efficiencies, rebranding, and value-add renovations.
[00:01 - 05:46] Opening Segment
- Jason Yarusi talks about the “aha!” moment that led him to real estate investing
- He said that our goals will be changing over time
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- How he handles the changing of his goals
[05:47 - 12:39] Consistency is The Key
- The top reason many people don’t try new things in their lives
- Jason talks about the power of consistency
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- This is applicable whether you’re in or out of real estate
- Don’t miss Jason’s explanations on why he wakes up every morning at 4:32
[12:40 - 20:49] Why Engage the Community in Your Properties
- The right mindset to have before investing in real estate
- Jason lays out the many advantages of investing in multifamily
- Should you work with Jason’s team?
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- He reveals their unique value proposition
- The deal size that offers the best economies of scale according to Jason
[20:50 - 23:24] Final Four Segment
- A tool or resource you can’t live without
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- Asana
- A real estate mistake you want other investors to avoid
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- Not trying
- You have to try and ask many questions
- Your way to make the world a better place
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- Investing in community engagement
- Reach out to Jason
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- See links below
- Final words
Tweetable Quotes
“Discovery comes in the action.” - Jason Yarusi
“When you look at what you're trying to do in your business, you have to look at it from a sustainability factor.” - Jason Yarusi
“We can help others change the narrative of their future through opportunities like multifamily because multifamily gives you a lot of advantages. Besides of course the cash flow or the appreciation, you get depreciation, you get tax advantages, you get debt pay down, you get portfolio diversification.” - Jason Yarusi
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Email info@yarusiholdings.com or jason@yarusiholdings.com to reach out to Jason. Follow him also on LinkedIn. If you’re pursuing value-add, rebranding, management, and successful exits for undervalued multifamily properties acquired on and off-market, visit Yarusi Holdings now.
- Listen to Multifamily Live to accelerate your multifamily investing today.
Connect with me:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Like, subscribe, and leave us a review on Apple Podcasts, Spotify, Google Podcasts, or whatever platform you listen on. Thank you for tuning in!
Email me → sam@brickeninvestmentgroup.com
t Want to read the full show notes? Check it out below:
Jason Yarusi 00:00
I think the process becomes of something of consistency to build up, right. So even getting back to a 100 mile race, like I'd done a bunch of marathons and like, there's like a training program like go and run, like for the next four weeks, you're gonna run this set miles each day, you know, yada, yada, yada, right? So but you get to a certain point for 100. It's like, it's not like prior two weeks out from the race, you're going to do like an 80 mile like pre-race run, right? You're just like, “Okay, so I'm like, What do I going to get exposed to here?” So my point was like, I'm just gonna run six miles every day, no matter what, just get up every day. So raining, snowing, hurricane hot, cold, wet, just run, just getting a consistent mode. Because you just this is what you set out to do. So this is what you're going to do.
Intro 00:41
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.
Sam Wilson 00:53
Jason Yarusi is the Founder of Yarusi Holdings with his wife, Pili. They have acquired over 1,110 multifamily units in 2017. He's an avid ultrarunner, workout enthusiast, and he hosts the Multifamily Live podcast. He wakes up every day at 4:32 AM and what did I hear, Jason? You're an aspiring ukulele player?
Jason Yarusi 01:11
Growing into it right here, set this up. My hands are telling me different.
Sam Wilson 01:14
I love it. You know, always be aspiring. Jason, welcome to the show.
Jason Yarusi 01:18
Well, thank you for that. And yes, the delicate instrument like ukulele where I just have hands that are like rocks that anything I touch. It's like trying to break something. It's a bit interesting. But yeah, I'm psyched to be here.
Sam Wilson 01:29
Hey, man, practice. I don't know, even if it doesn't make you perfect. It's still a good thing to get in the reps. I love it. Jason, I'm looking forward to jumping in today. There's three questions I ask every guest who comes on the show. Can you in 90 seconds or less tell us where did you start, where are you now, and how did you get there?
Jason Yarusi 01:41
Yeah, sure. My wife Pili back in 2003, it took her 13 years to finally look at me for us to get together. Right. So after a lot of hard here. Wwe were living in New York City, running bars, opening breweries, restaurants. Hurricane Sandy happened, my dad had this crazy business, still does, live some buildings, went out there, started doing that, love to helping dad and really scale his business and help a lot of homeowners you know, raise their homes not flood again, realize very quickly that we did not want to be working in the narrative of working for dollars. And when we stopped, nothing came back. We're having our first baby, you know, she really was pregnant. Found real estate, got real active in real estate, we found now we're helping dad with active construction, then we're doing active real estate at the same time. So we're just making active on top of act of doing flips wholesales, everything else that comes with that, knew that it was potentially the answer but didn't know where to answer fell, found buying rentals at a state, realized we could use our management experience to help empower people to really make these properties better together, and just saw that wasn't going to be scalable with a small multifamily, found large multifamily. And that was the aha moment. We'd go out there, buy these buildings using syndication, make them better businesses, make them better places to live, do use economies of scale. And from that, use our background and really just management of other philosophies and carry that forward. So that's a quick 90-second, might have been a 96. But I lost count
Sam Wilson 03:05
96, you're close enough, and that's great. I love it. That's a lot of moving pieces and a lot of transition. How did you navigate all of that transition? And what was the prize your eye was on when you guys were going through all those transitions.
Jason Yarusi 03:16
You know, sometimes you think the prize is there in front of you. And you think you're set out on a mark. However, it changes based on the parameters that come up, right? So when you're looking at the narrative of going out to help my dad, right, if that didn't happen, right, Hurricane Sandy, if that didn't happen, I probably would have never taken that step, right. Because I was not, my dad's had this business. It wasn't our path to go into it and my brothers in the same time, right. And he was working for me. And we were opening up restaurants and opening soda brewery, I was doing a lot in that capacity, right. And that would have carried forward to a sense. And if you think about how that would have carried forward events in New York City today, with so many things closing and so many things that had changed up, it would have been a whole different transition, right. So sometimes you get your eye on the prize, where you're think you're opening businesses and open your future and the narrative changes because dad needed help. So we that we're doing went to help dad, right. And from there, it's usually the discovery comes in the action, right? And what the action there with the construction was that we could have worked, you know, my dad was doing 12 to 15 projects a year. Now over the course of one year we did 300, right. And so if you look at that massive growth, so there was 25 hours in the day, we could have used them, right. But here we are, Pili and I were together, we're now, she's pregnant. And I'm like, Well, I'm gone all day, I'm running at night, you know, running on fumes, never going to see the baby, right? So something has to change this narrative here. Or we're just going to be in a path that's driven by something else, right. So the goal becomes, okay, I have to get to time where the time can be driven on what I want the time, like if I want to be sitting here on a podcast with you or I want to be you know, hanging out with my kids on a Tuesday, I can set the schedule right and we looked at real estate is that driver and now was that piece and it was that discovery that okay, this is potential piece for us to look at. But you don't know where you don't know, right because I didn't just jump into multifamily where that was that driver that would give us that advantage. We did we thought was logical, we got a real estate license. We thought that was okay, that maybe that's it. But here you are now, you know, agents, you know, you're on hours that fit everybody else's schedule, right. And so that was that point where it's a goal that gets in front of us until a new question comes up, that gives us a better answer. And it's been so much of like how we treated life is that, you know, if I were to say back, you know, when I'd first moodier city that yo Yeah, you know, today I would fast forward to today I'll be living in Tennessee, you know, buying apartment buildings. I was like what, you know, like, okay, probably not, you know, that would have been the narrative of that moment.
Sam Wilson 05:47
Right. I think if we can take anything away from today's podcast, it came in the five words where you said that discovery comes in the action. Can you elaborate more on that? And how you mindset-wise, how did you just keep moving forward? Because it sounds, I mean, to get hit by a hurricane, opening breweries, opening restaurants and bars, doing that stuff and be like, “Oh, crap, we just got hammered.” And then, “Hey, now we're gonna travel across the country, you know, doing 300 homes.” What are you doing with your dad's home business raising homes? What was that?
Jason Yarusi 06:12
Yeah, it was actually, so during the course, oh, we did about 2,000 of them is that we take houses that were on the ground that had gotten flooded, or during the storm, and they would lift them and lift them up, maybe four, eight, ten feet up in the air, put a new foundation in so they would meet the new FEMA guidelines. And so their flood insurance would now come down to a minimal risk right here and hopefully, these houses won't flood when the next Hurricane Sandy comes in, right. And so this is still happening today happens all over, you know, in the east coasts, happens in Florida, happens a lot of these seaboard markets here. And just because you're seeing flood insurance, you know, skyrocket because the NFIP at the time, you know, the National Flood Insurance Program, they basically were discounting to get people to get insurance, but they discounted such capacity here would add a panel of these claims. And they almost put themselves out, you know, bankrupt themselves twice, right. So now they're jacking up everybody's premium to try and bring them to a reasonable rate. But if you're going, you're a homeowner working, you know, paycheck to paycheck, paying flood insurance, and it used to be, you know, 3,000 a year, and now it's 17,000 a year, what can you do, right? You're at risk where you just can't go home? So the point about action that comes down for us is that, you know, I think back to like the what-if scenario, right? And those two words drive a lot, right? And the what-if can be? What if I had just tried that? Right? What if I just got out there to do something, right? What if I just, you know, said yes, instead of saying, no, we're tried that profession did that I just scared to do because I was gone. I had a secured job, you know, working at the factory? Well, that's the what-if one side of it. But the other one upside of it is like what if I could have something great happen by trying something, right? There's usually the opportunity of what if I can do something compared to what if this happens, right? And I found that we were a good combo, Pili and I were, I'm always like, “Yeah, let's go, let's go.” And she gives me that moment of clarity that will make a good decision. But she's open to the risk element that to a spoke, I would say exposes is a weird world, but open us to opportunities that could potentially give us new questions, right, and even with apartment buildings is that as we've grown into this, we've surrounded ourselves with good people. And that's been our advantage to get out of the gate. But it's also given us the ability to learn new questions, right? Because I can only be good in my philosophy based on just knowing that I need to ask that question, right? I don't need to sometimes know the answer until I need the question answered, right. But you get stopped in your process many times because you want to know everything you got out of the gate. So I won't start you know, I like ultra running. If I was to say, oh, I need to know how it feels to run 100-mile race before I run 100-mile race, it would be like, “Well, I'm never going to do it. Because how would I know that? Right?” I don't know how to experience it without the action of trying. Nor do I know how I'm going to react until I do something. Right. And that's what most of life is that we stop, don't start at all, because we want to know all these answers. And the second that, you know, you get out of the gate and it's not perfect. So yeah, just wasn't for me.
Sam Wilson 09:11
Let's talk about running here for a minute. I'm not a runner. I don't claim to be yeah, it just it's just not in the cards for me. But talk to us about your progression of running, especially getting into Ultras, I mean, that's kind of a new wave of the running world. And it's kind of I mean, this takes a lot of grit and discipline, you know, if you're gonna go out and run a 100-mile race that's unfathomable to me. Talk to me about just that progression, and kind of some of the things that you've used as tools to help you succeed in that.
Jason Yarusi 09:38
You know, I find some people love to run, some people run, and I'm just, I just run right and it just, it's part of what I do. So to say that I'm like, avid like, I'm going to go out there. I think the process becomes something of consistency to build up, right? So even getting back to 100-mile race like I had done a bunch of marathons and like there's like a training program like go and run like for the next four weeks. You're gonna run this set miles each day, you know, yada, yada, yada, right? So but you get to a certain point for 100. It's like, it's not like prior two weeks out from the race, you're gonna do like an 80-mile, like pre-race run, right? You're just like, Okay, so I'm like, what do I get to get exposed to here. So my point was like, I'm just gonna run six miles every day, no matter what, just get up every day. So raining, snowing, hurricane hot, cold, wet, just run, just get that consistent mode. Because you just, this is what you set out to do. So this is what you're going to do. And that's usually the part, you know, we're hard critics of everybody else. But you're we're usually easy critics of ourselves, right where instead of saying, Hey, you should just gotten up when your alarm went off, right? You'll hit that alarm 57 times and knock it up, and then be late for the entire day, and everything will be stressful, and you'll be in traffic. And it would just be one of those modes, because, but you won't feel any better for hitting the alarm 50 times because it was annoying, right? But you've gotten now to that part where you've just let yourself off the hook so many times. So I've been pushing to not let myself off the hook. Because what's the advantage there? I'm not gaining anything in myself in my life, right. And if I want to get back, we get back to that item, then I want to spend time with my kids. Well, I got three little ones, I got seven, five and three, right there up. There's like, Robert, you don't know. So sometimes they're up, sometimes you're down, you don't know when they're gone, you know. So I get up at 4:32, 4, 3, 2, 1, go. So I can have a moment to do my thing, collect myself, be ready for the day, and put myself in a position where I can take on what's coming in front of us. And then when they wake up, not feel rushed, not feel strained, not feel passed that on to them. And part of my process is I get up and I run and I do that. Just run out, run back, and just done right. And do I want to do it every day? Absolutely not. I just do. This is what I do.
Sam Wilson 11:48
There's so much fruit that comes from one getting something accomplished or out of the gate. Like I've done something today like having that even just that sense of accomplishment early on because success begets success. Right? And so I think if you can start that day, you know, with that consistent habit that were like, “Hey, man, you know, I've already got a win under my belt for the day” because there's a lot of I mean, days will throw a lot of crap at you, you know, and it'll make you feel like, did I really get anything done tonight? Yeah, I at least hit my consistent, you know, at least the one consistent thing out of the gate early on. I think that's absolutely fantastic. Talk to us, you know about the things that you focus on. So you know, three things we talked about kind of off-air was mindset, we've talked about that a little bit and the mindset it takes in running the mindset, it takes in, you know, in your business, what are some other things that you really focus on, that are kind of drivers for why you invest the way you do?
Jason Yarusi 12:39
You know, when you look at what you're trying to do in your business, you have to look at it from a sustainability factor, right. And so and that's not just on the business model, right? But it's also on you want to do it, is syndications, they're not meant to be okay, we'll be in this for maybe you know, a three-week flip or wholesaler like three, four months, right? You might be 3, 5, 7 years into opportunity even longer, right. And so it's putting yourself in the right mindset to understand that this is going to be a process that you will be involved in where you have the ability to help others, right. There's a lot of investors out there that we're able to help right, you know, my aunt’s come for, to mine, she worked for a bank forever, had money and like her IRA, and like literally probably made like 17 cents. And of course, like with all the stocks and other points over the course of like 30 years at a bank, right. And one of the times she just mentioned some tour and use your self-directed IRA, I've made her more money. And, you know, the course of the four years that she's been into our deals than she would have ever made in three lifetimes at the bank, right? Just because it gave her that opportunity to understand it. There's other arenas out there for, now, she's not going to go out there and do it. And if she wanted to cool, I'd love her to but just doesn't want to. Right. And there's a lot of people like that. Then you give them the opportunity here where they can change just like we can help set the narrative for our future. We can help others change the narrative of their future through opportunities like multifamily, right because multifamily gives you a lot of advantages. Besides of course the cash flow or the appreciation, you get depreciation, you get tax advantages, you get debt pay down, you get portfolio diversification, right? So there's a lot of ways that we can help others meet their goals where they don't directly have to be doing the do.
Sam Wilson 14:24
I love that. That's absolutely fantastic. Talk to us about community engagement. What does that mean to you inside of your properties and what are you guys doing that's unique that you feel like sets you apart?
Jason Yarusi 14:34
You know, you look at a story of just thinking about people and sometimes if we get to just on identifying with actually that there's actually people living here you'll see the adverse effect right, it's like you go to like open up like a Wendy's without having like the customer service out aspect. But when we come into as like ally these properties the customer service aspect has been long gone, right? We brought a property in Decatur, Decatur, Georgia, closed on December and they're having trouble collections from tenants. Well, they open the leasing office for two hours a week, right? And so of course, like, where are people gonna go pay rent? They like what if it's like a two hours on like a Thursday from like 12 to two like, people are at work, or they worked all night and other sleeping or they're on their lunch break, they're watching your show, I don't know. But you're not making it easy for them. Right? On the other side, you know, they have maintenance calls, and you're not responding, you're not showing up, you're not getting it done for them, right. So you come on here and you show people that you want to make this better, you want to make this a better place to live, it's two-fold. One, they're going to take better care of the property because now they're treating it more like a place they live and not just somewhere they're passing through. But if I know and they're going to come tell us, hey, there's a leak here, a leak there. Well, it's not going to be 1, 000s of dollars that are running down the drain every month, just because we're not aware of it, right because they know now we'll come fix it. So we'll see a lot of our expenses start to curb. On the other point here, it will start to bring the level up with the community. So you can get back to bringing it up by doing good things where you will be able to increase the rents because people will be happier to live there. So if you start meeting the market, start setting a destination. And if you get to that level, you start get to that next point where friends start to live by friends and be involved and you find that if someone lives with their friends, there's a less likelihood for them to move because they're not just living there in a place where it's like the unknown parameter of them by themselves.
Sam Wilson 16:25
Jason, I love that. I love the fact that you guys are focusing on community engagement first. I mean, because yeah, it's it goes back to the basic tenet of capitalism, which is that I provide something of value, and then you in turn are willing to pay me for it. We're both made better by the transaction. It's just a beautiful thing. So I think really being active on the community engagement side and making it a place where people want to live is really cool. Are you guys buying things that are, you know, lower classes of properties and doing heavy lifts or what does that look like?
Jason Yarusi 16:55
So, we typically are looking for in-place assets, B2C assets, built 1975 to 2010, in our southeast markets here, and what we're looking here is that we're looking to not find the heavy lifts, I've already done enough flood zone properties, I know the uncontrollables there. I don't want to do anything with environmental, I don't want to do anything with foundation, I don't want to be in, war zones are very, very important areas. I want to find places where it's workforce housing that's been underserved, whether it's on the property side or the management side, typically on both right, and of course, it's a driving leader for a lot of people looking for these properties today. However, there are still opportunities there, right. And it's more in creating the relationship and carrying it through with your network, right. So say we have 10 opportunities, they're probably 70%, 80% still coming from brokers and the other you know, 20 30% is coming from a mix of, you know, connections, you know, it's direct-to-seller and other in the multifamily world, you know, there's everything doesn't have to be brought to market. So you have a lot of stuff where the broker will have this pocket and it won't see the light of day, right. And so it's going to go to that network. So it's just showing use case that you show up, you say you're going to, you know, offer this price, you're going to transact at this price, you're going to be an easy close, you're going to get the closing done, right, that carries weight with the broker.
Sam Wilson 18:06
Yeah, that's fantastic. Is there a certain size you guys are staying under or over that you find makes sense right now?
Jason Yarusi 18:12
you know, ideally, if it was perfect world would be 75 to 150 units, because that gives you the best economies of scale there. And the ability to have on site leasing and onsite maintenance that's paid by the property right for did it in a good way because you can put a leasing person on 10 units if you want to, but it's not gonna be paid by the property, right. So, however, we've been finding a couple of opportunities, we just did a 36 unit, right where it was an opportunity came in front of us, and we capitalized on the time, right? So driven by the part here is that, like, if we can find a 36-unit in a market that we're currently early in, we can leverage some of the economies of scale between the properties here where we're running multiple communities, and basically sizing down on our ability to have where we can afford on a 36. But maybe on 93, we're a little underserved on how much our payroll is costing here. So now we can split it across properties here and have both properties win by the kinds of scale being split.
Sam Wilson 19:05
We're seeing a lot of that I think that's the frontier, I think, to the people starting out, or people scaling up their business, that's still a viable opportunity, you know, because there's lots of that stuff in the sub seven. I don't think any new product is coming online sub 75 units, but certainly, some legacy stuff that's still out. And that's opportunity for people entering the space, I think to get in and buy some real valuable assets that your institutional players just they're just not going to monkey with.
Jason Yarusi 19:32
Yeah, they don't want it doesn't give them the yield that they're looking for. They don't want the Cubans and it's hard in the resale because you're yet to know who your end-buyer is going to be. And so if you're buying a 50 units, that's not going to go out to an institutional player, that's going to sell it to another group that's like myself or is going to sell to like a doctor or lawyer, someone in that context. So you know, those groups want to go in there and be able to get into a property and so out to like a life insurance company or something right and a larger property where there is a community and they also have a certain threshold of capital, right? So It's a $10 million deal, our minimum’s got to be 40. You know, and so they're at a certain point where it's got to be a certain amount of capital for them to put to get back the returns they need for it to make sense.
Sam Wilson 20:09
Right, Man, that makes a heck of a lot of sense. Jason, I have enjoyed our conversation. That has been tons of fun. You know, we've talked everything from mindset, family, focus, community engagement, how you guys are finding opportunity, what it takes to scale, you've given lots of thoughts. And again, the one that I just go back to over and over is that you said discovery comes in the action. And I ask people that question all the time on this show. I said, like, what's the mistake, you can help our listeners avoid which you'll get a chance for this. And more often, and more often, but a common answer is just take action. But I've never heard it quite put that way of discovery comes in the action because there's always that step. But then it's like a flashlight at your feet. You're like, “Oh, wait, I took a step forward. Now I can see where I'm going the next step.” And I think that's a beautiful way to put that. So I appreciate you coming on today. Here's the final four questions. What is your resource, think software think something you use online a program you use a software or a digital resource that you find you can't live without?
Jason Yarusi 21:00
Oh, man, well, you know, everything can be taken away. So I say that's a hard narrative: not to live without. But let's say Asana. Asana is a very useful part of our business, tracking of all the moving pieces we have between all the properties right now. And so I think that's been really beneficial.
Sam Wilson 21:13
Asana. What does Asana do?
Jason Yarusi 21:15
It's an action-task platform, similar to like, you would set up like, like a Monday, right? Or like a Podio, where you, it sets action tasks, it assigns members to sets out narratives of things that need to be part of a, dictating the scope that needs to happen and accordingly time, so it's been useful in that light.
Sam Wilson 21:32
Love it. Okay, cool. Very cool. If you could help our listeners avoid one mistake in real estate, what would it be and how would you avoid it?
Jason Yarusi 21:38
Surround yourself with people doing it, right, those in the sideline, trying to figure it all out, right? It's not a new industry, right? We always want to be smarter than everybody else and have this magical thing we're going to do. And that's some fantastic thing that's going to be magical, right? Go out there, find someone else who's doing it, ask them a couple of questions, go out there and try and then go back to them and ask them more. Once you need to ask more questions. It's as simple as that. Go out there. Ask people that you want to do something because you may find like that, just seeing them do it, you realize you don't want to do it, right. And that's almost more powerful. Sometimes it's just to learn what you don't want to do instead of trying to figure out everything what you might want to do.
Sam Wilson 22:13
Right, absolutely love that. Question number three is this. When it comes to investing in the world what's one thing you're doing right now to make the world a better place?
Jason Yarusi 22:19
It gets back to community, right? We're constantly trying to serve that narrative where we get in there, and we do want this to be a better place to live. Right? And because, if you constantly look at a point where it's just money-driven, it's going to be short-lived, right? Because there's gonna be a certain point where that's not the right play for the time, even and you're not, you're looking too much on the short term than in the long term.
Sam Wilson 22:38
Right. I love that. Jason, if our listeners want to get in touch with you or learn more about you, what is the best way to do that?
Jason Yarusi 22:44
Yeah, you can go over to Yarusi Holdings. You can find everything about our company, about us here. Talk to us about that sense, and some of the events we have coming up in the future.
Sam Wilson 22:51
Awesome. And we'll find all those links, of course there in the show notes. Jason, thank you for coming on today. I do appreciate it.
Jason Yarusi 22:57
Awesome. Thank you for having me. It's been great.
Sam Wilson 22:59
Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners, as well as rank higher on those directories. So I appreciate you listening. Thanks so much and hope to catch you on the next episode.