I was trying to solve the problem of time. I don’t need 30 million or $300 million to enjoy my life. I just want more of my time back. A lot of these types of investments, even private credit and real estate debt funds, they’re always reserved for endowments or the ultra wealthy, a lot more accessible to accredited investors. Consistent, reliable income that solves the problem of income. And then I invest the rest towards multifamily deals, which allow for more growth, equity, and tax advantage growth. Just focus on Houston, for example. Be the best there is in your niche. I think that has a ton of advantages when people just focus on being the best at one thing and not trying to be the best at everything.

Welcome to the Real Estate Masters Podcast where we bring you the top real estate investors in the country. If you also want to be in the top 1%, you are in the right place. Listening to podcasts like this is exactly what helped me to scale my real estate investing business to seven figures, flip over a thousand houses, and more importantly, step out of daily operations of my business over a decade ago so I could start and grow other businesses. So get ready to learn from the best and start building a business that works for you and not the other way around. Enjoy. What’s

Going on guys? Tom, thank you so much for taking the time and coming on here with us today. I know you’ve been in the business for a long time, a good 20 years. If there was one thing that you could credit to your success in this business over the past 20 years, what do you think that one thing would be?

Just persistence. Real estate investing and owning as many single families as I’ve owned and managing apartments and really doing a lot of it on my own. It’s been a lot of brain damage, but I’ve just always stuck to it. And it’s always been my dream to be a success. And real estate was kind of my only option. I never wanted to own a retail store. I’m not smart enough to be a tech executive. So real estate was kind of a head and still have tunnel vision. It’s real estate or I’m just not going to make it. And so I stuck to it for a long time and I had a lot of help over the years, a lot of mentors that helped steer me in the right direction. I think that was what contributed to some of my success is finding people who were where I wanted to be and asking for help.

I love it. I love it. And what drew you to real estate in the first place?

Well, what initially drew me to real estate and just business in general and entrepreneurialship is I watched my dad, he worked for 32 years in a power plant and he had a heart attack on a golf course and was kind of forced to retire. And he just said, “Whatever I got, I got. I’m not dying in a power plant. I’ve been there long enough.” And a couple weeks after that, he got a telescope in the mail. It was this big package and we opened it up. And it was cool, this telescope. But I think I was at that age where I just looked at my dad and this telescope just symbolized something to me. It just represented what, 32 years of kind of doing what you’re told, what that will really get you. So I just went to the library, to be honest, and I read books on selling stuff on eBay, on anything I could just about business. But all the books I read, which are hundreds and hundreds of books, they all kind of. Real estate seemed to be the common thread in all of them.

I love it. I love it. And then for the people listening, what does your business look like today?

Well, I own and manage a portfolio properties in Toledo, Ohio and some of the surrounding areas. I like to be like boots on the ground where I can put eyes on the property. I have my management team and my maintenance guys. I can visit the properties a lot. And now, and really since I had my daughter, I started really kind of focusing more on investing passively. And my first passive investment about six years ago, seven years ago now went terrible. I did a terrible job of like. The deal was perfect, you’re right, but the operator wasn’t. I didn’t do a good enough job. So that’s when I kind of started my company now where I raise capital for. I invest in other people’s deals and I invest my money before I let my investors know about it. So I have a select few operators across the country that I have vetted very well and I invest most of my money passively into their deals.

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What was the main problem that you were trying to solve when starting your business?

Well, it’s interesting. That kind of goes back to what I just talked about. The main problem that I was trying to solve is how many hours I work. My dad worked shift work, nights, have to switch to days, overtime, holidays. And I just followed in that same path, working in an industry. I became a fireman, which was 24 on, 48 off, but I still worked all kinds of jobs, all kinds of hours of the night. And I was trying to solve the problem of time. I don’t need 30 million or $300 million to enjoy my life. I just want more of my time back. And ironically, as I got more and more units, I had a little over a hundred units and I was making a lot of money, doing really well. But ironically, I actually lost control of my time. I had less time because I was managing all this stuff. And then it really took a three foot tall little blonde haired girl to kind of open my eyes up, my daughter to figure out how do I invest in real estate and still have my time? And that’s when I went down the path pretty deep into passive investing. Passive investing, you have economic ownership, but I don’t necessarily care for the operational ownership of it. So that’s why I’ve been focused on mostly lately. But yeah, solving the problem of time I think is what everyone strives to do in some way. But I found that I actually had less of it the more properties I owned.

It definitely seems to be a common trend. I mean, everyone gets in the business for time, freedom, and then usually ends up with less time than they would’ve working a nine to five job. Why do you think so many investors overlook this part of the business once they’re already in it?

Well, I think it’s just the accessibility. Real estate is accessible. You can go out and buy an eight or a 12 unit building or a 16 unit building if you have a little bit of money saved. And I think that’s just the path that’s promoted. There’s not a lot of books. I’m actually writing one, but there’s not a lot of books about passive investing or how to go about it. And I think recently, I think it’s starting to pick up. A lot of these types of investments, even private credit and real estate debt funds, they’re always reserved for endowments or the ultra wealthy. And now they’re a lot more accessible to accredited investors. Even myself, I didn’t know about. I could own a piece of a property in Houston, just the economic ownership, not a operational ownership. I just don’t think it’s promoted enough. And that’s what I’m trying to do, let people know that these institutional grade investments are available to you. And that’s why I try to position myself as the guy who’s the expert in vetting the operator because you’re no longer investing in a deal, you’re investing in people.

What’s the most common mistake that you see people like yourself that invest this way do that you think could be really easily avoidable?

Well, I think what people do too much is they invest too much money or they’re too concentrated in one market or even in one operator. You find an operator that you trust and you just want to let them handle everything. I think it’s good to find. I don’t think you should have 20 of them, but two or three I think are good because you’re diversifying over different operators as well as markets. And I also think that people get too heavy into, say, real too heavy into multifamily real estate where their money’s tied up for five years. And you can kind of open yourself up to some market cyclicality that’s not under your control. So that’s why I take about half of my resources and put them towards just income funds, private credit and real estate debt. And I also vet those operators. And I earn like 12% annualized returns paid monthly. There’s no equity. There’s no tax advantages, but it’s consistent, reliable income. It solves the problem of income. And then I invest the rest towards multifamily deals, which allow for more growth, equity and tax advantage growth. So I think people should diversify that way within the private alternative space. And I actually think people should invest completely in the private alternative space. The public markets, all stocks are correlated. So I don’t think there’s any diversity in the public stock market, but I think people should understand what diversification means in the private space as well.

Can you share maybe one or two strategies that you use when looking for an operator?

Well, communication is probably the most important thing. What I like to look for is I do like people that are vertically integrated, meaning they have their own maintenance team, their own community managers, leasing agents all under their umbrella. I think you gain a lot of operational efficiencies that way. I don’t have a problem with third party managers. I think they can do very well, but that’s one thing I do look for and I kind of focus on vertically managed. I look for operators that are laser focused in one area. They don’t try to be an expert in the whole Southeast of the United States. Just focus on Houston, for example. Be the best there is in your niche. And I think that has a ton of advantages when people just focus on being the best at one thing and not trying to be the best at everything.

Yeah. What do you think separates the top operators from everyone else in your experience?

I think the top operators structure their deals in such a way that they’re paid by performance and not by fees. You can have 10, 20,000 units and giving your investors a return, but in essence, you can just kind of become a holding company if you’re making too much money on acquisition fees, equity management fees. So I look for companies that. And I don’t mind an acquisition fee by the way, but I look for people who can truly know how to add value or drive NOI, whether it’s through strategic rent increases or operational efficiency. I think people underestimate how much it actually costs to operate a large multifamily complex. So to answer your question, I think the best structure of their deal is that the investors get paid first before they do. And they get paid on the back end when they improve the property and are able to exit at a much higher price because of their operational.

Yeah. The word success always intrigues me. I feel like everyone defines it differently, measures it differently, strives for it differently. How do you define the word success? How do you measure it and how do you strive for it every day?

I used to measure it in how many properties I owned, how many units I had, assets under management. And now I’ve changed that completely. And I got to credit my daughter for that because that no longer became a priority when I realized I didn’t have time to spend with her. So success to me is measured by one word, significance. And you can be successful in life. You can have boats and lake houses, but how many success is measured that way? Significance is measured in people. How many people have you helped? How many people owe you a thanks? Or how many people could say, “Hey man, that guy really helped me.” And so now with the investors I have, when I help put their money into good deals and earn a good return, you build relationships. And so I think success for me now is just measured simply by the word significance.

What do you think the biggest change that you’re seeing in the real estate market right now?

Well, you probably know one of the recent stories of a real high profile guy that I give him credit. He came out and talked about how he ended up losing about $15 million of investor money. I won’t mention his name, but people who know who I’m talking about know who I’m talking about. I think investors are. After the 2022 era when you could just throw a dart at a map of your county and make money selling real estate, it seemed easy. It was easy to raise capital. And it really kind of rewarded people that. Or what it’s doing now is it’s punishing people who do terrible underwriting or are just good capital raisers and not good operators. So I think right now you’re seeing this period right now, this five or 10 year period, I kind of define as a period of operational period or operational efficiency. I think the cream will kind of rise to the top in the next five years of people who know how to operate property and not just raise money for it.

Yeah. If you were starting from scratch today, the business completely goes away, all the investments go away, but you get to keep all the knowledge that you’ve learned over the years, what would you focus on first to rebuild what you have now?

Oh man. I’ve been asked a question similar to that and starting over. Yeah. I don’t know if I could do it again. Maybe I’m just getting older. But the hours I put in painting walls and chasing tenants around for rents and stuff back in those days, it would be very difficult to start over. But the knowledge I’ve gained now is I think I would build my portfolio differently. I used to just invest for growth and growth and growth. I wanted more units, more assets, more net worth. And I think if I had to start all over again, I would flip that around and invest in income first. Income is what gives people optionality. It can get people out of their W-2 jobs sooner. So I think I would invest more heavily into private credit funds or like a real estate debt fund where you’re the bank and not the operator, just to provide income. And that income can compound a lot faster. And then I would invest for growth. I’m okay with how I did it. I got to where I am, I suppose, but I think I kind of did it backwards. I think I would invest for income first and then for growth.

I like it. I like it. I’m sure you’ve been a big influence and mentor for other people in this space, but who’s been the biggest mentor and influence for you over your time in this space?

I’ve had a lot of them. A good friend of mine, Ryan, locally, a long time ago I had a house that I just couldn’t sell. I just didn’t know what to do. And he was like, “Well, we buy houses.” Guy, you’ve seen his number and name everywhere. And I just asked him to go to lunch one day. I bought him lunch or a couple beers and stuff. And we’ve been really good friends for the last 20 years. And he didn’t buy that house, but I didn’t blame him. Funny story, I actually ended up having to sell that house on eBay. It was a terrible situation. It was in a war zone area. I shouldn’t have bought it, but I got out of it. But anyway, that’s how we met. And I’ve kind of followed his path. I’ve actually bought a lot of his houses at that time and some of his apartment buildings as he grew. And so I have a ton of respect for him and his operational ability. Yeah, look up to him a lot.

I love it. Where can people find you? Where can people connect with you? If someone’s listening to this and curious about putting their money in operators’ deals with you, where can they go?

They can go to my website. My company is North Corp Capital. You can go to northcorpcapital.com. There’s a ton of free resources on there, an operator vetting checklist that you can download for free. Or my phone number’s on there, my email. It’ll be me answering. I answer everyone. I’m on Facebook and you can also find me on LinkedIn. Just look up Thomas St. John and feel free to connect. And like I said, I answer every call.

I love it. I love it. Any final advice for investors that are looking to grow, scale, or maybe simplify their business?

Yeah, man, read a lot of books. I think books are underrated these days with podcasts like we’re on now and YouTube shorts and stuff. I think books still have a ton of value and just educate yourself as much as possible and find mentors. Find people who have already gone through what you’re trying to go through and they’ll save you a lot of time.

Yeah, for sure. Well, Tom, thank you so much for coming on everyone. Thanks for watching and we’ll see you next time. Thanks

A lot for having me.