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Cash Flow Champs

Cash Flow Champs Real Estate Podcast

Jenny is a Managing Partner at Vertical Street Ventures and focuses on leading the VSV Multifamily Academy. Prior to VSV, she was a Sales Director at Procter & Gamble setting national sales strategies for several billion-dollar brands and launching key initiatives across top retailers in the U.S. Her overall experience in leading teams, strategy, and project management gives her a unique ability at VSV and helping others achieve success through the VSV Academy.

Jenny received a Bachelor’s in Business Management at the University of Arizona and her MBA at the University of Minnesota. She currently lives in Southern California with her husband and kids.

What You’re Going to Learn:

  • Journey into Multifamily Investing and Overcoming Challenges
  • The Power of Teamwork in Multifamily Investing
  • Strategic Market Selection and Data-Driven Predictions
  • Jenny Gou’s Impactful Journey and Resident-Centric Approach
  • A Piece of Advice by Jenny Gou

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Show Highlights

Journey into Multifamily Investing and Overcoming Challenges

Journey into Multifamily Investing and Overcoming Challenges

Prashant Kumar- What inspired you to enter the multifamily asset class, and could you share your journey in that area?

Jenny Gou- Sure. Like many of your listeners, I actually started with single-family investments initially, focusing on traditional long-term single-family housing. After accumulating a handful of properties, we had a lightbulb moment, just like everyone else, where we realized we wanted to scale bigger and faster. That’s when we began learning about multifamily through meetups, podcasts, network meetings, conferences, and books. As we delved into the subject, we knew that was the way to go. Learning from others was what got us started.

Paul Senior- Jenny, that’s truly unique. I want to echo Prashant’s sentiment and acknowledge your incredible journey, from a refugee camp to Proctor & Gamble to college and university, and where you are today. Your story is a testament to resilience and determination. Well done. Now, speaking of multifamily, I can relate to your experience in the single-family space. I also transitioned into multifamily after acquiring several dozen single-family properties. The desire to scale bigger and faster resonates with me, just as you mentioned. However, I’m curious about the challenges you faced during this transition and how you handled them.

Jenny Gou- Absolutely. To add more to my transition and journey, I actually left my full-time W-2 job at the beginning of January-February 2020, right when the pandemic was starting. Surprisingly, I made this decision even before buying a single multifamily property, which might seem a bit unconventional. I wouldn’t necessarily recommend that everyone quit their job without a plan. However, one of my unique challenges that year was dealing with the impact of COVID-19. My initial vision and plans were disrupted as everything shut down due to the pandemic. Brokers weren’t selling, lenders weren’t lending, and there seemed to be no opportunities in the market.

To overcome this challenge, I made the conscious choice to double down and devote 100% of my time to learning. I sought out a mentor, focused on education, and aimed to accelerate my growth once the market reopened. As you know, by the summer of 2020, things started to improve, and the market picked up its pace quickly. Fortunately, I was able to find a mentor promptly and fully immerse myself in learning. By the end of 2020, we had successfully acquired 800 units, both as passive and active investors. This exemplifies how wisely leveraging one’s time can lead to remarkable outcomes.

Paul Senior- That’s awesome. You made a crucial point about having a mentor or coach. Did you receive any coaching or participate in a coaching program during that time?

Jenny Gou- Initially, I didn’t have a formal coach or mentor. I met someone at a meetup who was speaking and had achieved success with properties in Arizona. I approached him and offered to work for free as his intern, leveraging my corporate career and available time. He was already occupied with his W-2 job and a few properties, so he gladly accepted my help. Eventually, we became partners and started Vertical Street Ventures together. This experience taught me that you never know whom you can meet and partner with.

The Power of Teamwork in Multifamily Investing

The Power of Teamwork in Multifamily Investing

Paul Senior- Absolutely. You’re sharing valuable insights for those aspiring to become multifamily syndicators, whether transitioning from the single-family space or working a W-2 job. It’s crucial to have a mentor or coach who can guide you and show you the proper way to navigate this field. Making significant mistakes in this area can be costly, so seeking guidance is essential. At Cash Flow Champs, we offer the Cash Flow Champs Aristocrat coaching program, where we have current and accepting students. If you’re interested, reach out to us via email at paul@cashflowchamps.com. Jenny, your story during the COVID-19 pandemic and how you partnered with your mentor is impressive. Speaking of challenges, teamwork seems vital in the multifamily space. Could you shed light on the importance of teamwork and collaboration in this environment compared to the single-family space, where one can often navigate alone?

Jenny Gou- I believe it depends on your goals. Can you do it all by yourself? Yes, it’s possible. However, you’re likely to make more mistakes and take longer to achieve your goals and find success. Personally, I didn’t leave my demanding 150-160 hours per week job to replicate the same workload elsewhere. The power of a team lies in the ability to leverage each other’s strengths and compensate for weaknesses. At Vertical Street, we have a partnership of four individuals, and each of us brings different strengths to the table. This complementary dynamic is what makes it work. If you want to accelerate your success, I highly recommend finding the right team members, as I mentioned earlier. Additionally, having the right team enables you to maintain a balanced life. Being an entrepreneur is tough, and having a supportive team around you becomes critical in such circumstances.

Prashant Kumar- Jenny, you brought up an excellent point about the importance of having the right team. Could you elaborate more on your team at Vertical Street Ventures (VSV) and the essential components that should be present in a team? Also, how do you go about finding the right team members? This information is valuable for our listeners.

Jenny Gou- Absolutely. When we started VSV, Steve and I initially wore multiple hats, as expected in the early stages of a startup. However, as we gained momentum and scaled our business, we brought on additional partners to divide the workload. It’s crucial to ensure that you have the right people in the right roles, not just at the leadership level but throughout the company. This means placing individuals in positions that align with their strengths and passions. When you find someone who excels in their role and enjoys what they do, it creates a magical synergy. As we have grown, we now have distinct areas of focus within our team. Personally, I primarily focus on the academy side and lead our coaching business. Steve is dedicated to capital raising and investor relations. Kyle focuses on acquisition and asset management, being our boots on the ground in our target market. Kyoshi serves as our CFO, overseeing the CPA side of the business and our CPA firm. Each team member brings unique strengths and fulfills specific roles. When building your team, identify any gaps you have and find the right person to fill them. It may sound surprising, but many of the individuals I’ve connected with and partnered with were initially met at meetups and networking events. That’s where you’re likely to find suitable partners.

Strategic Market Selection and Data-Driven Predictions

Strategic Market Selection and Data-Driven Predictions

Paul Senior- It’s absolutely crucial. Our partnership at Cash Flow Champs has a similar origin story, as many of us met at meetups or through virtual platforms. Adding to that, Jenny, as someone coming from Proctor & Gamble and starting your own business at Vertical Street Ventures, did you find that certain skill sets from your previous job helped you transition successfully into the multifamily space?

Jenny Gou- Yes, not only for myself but also for many successful individuals I’ve encountered in real estate and syndication, having a business background has proven advantageous. It could be skilled in sales, marketing, or any aspect of running a business. Syndication is essentially operating a business, and managing the property’s profit and loss statement (PNL). It’s first and foremost a people-centric business, dealing with residents, partnerships, and relationships. However, it’s also a business in terms of generating income and managing expenses. Thus, the most successful individuals in this industry often have a corporate or finance background. The skills I acquired at Proctor & Gamble, such as team management, strategic initiatives, brand development, and PNL management, easily translated into the real estate realm. The main aspect I had to learn was the specific real estate terminology and nuances of the industry.

Paul Senior- That’s fascinating. I’m curious to know, what is your team’s primary market for investments? Being located in California, I would assume that the high price per door may not be ideal for your investment strategy. So where are you located in terms of markets, and how did you decide on those markets despite being based in California?

Jenny Gou- Absolutely. You’re correct in assuming that we don’t own any properties in California due to the high costs. About 99% of our property portfolio is located in Arizona, and we also have one property in Texas. Our decision to focus on these markets is primarily data-driven. We analyze factors such as population growth, job growth, the expansion of corporate headquarters, cost of living in comparison to the national average, and the gap between mortgage and rental rates. By examining this data, we determine where we should concentrate our efforts. Arizona has been a hot market over the past few years, and while it has become more expensive, there is still significant potential for growth due to the continuous influx of people moving there. This trend is similar in other states like Texas, Florida, the Carolinas, and Georgia. As long as people are migrating to these areas and there is a shortage of housing supply, we believe there is ample opportunity for investment.

Prashant Kumar- That’s interesting. Where do you obtain these data points to make your predictions? You mentioned supply being less than demand in Arizona, and you expect prices and rents to continue to rise. How do you substantiate these claims with data?

Jenny Gou- We rely on a variety of sources for our data analysis. For real estate information, we have access to Costar, and we also review reports from top brokerages that provide deep market analysis by Metropolitan Statistical Area (MSA). We also refer to census data to track population growth, job growth, and average income levels. Additionally, we closely monitor the corporate landscape to identify companies moving to Arizona or expanding their presence there. While Austin often receives attention for its tech industry growth, Arizona is also attracting numerous tech companies. These are the key resources we regularly consult to ensure we stay informed and keep track of relevant trends.

Prashant Kumar- That’s great to hear. What are your predictions for the future? Are you solely focused on Arizona and Texas, or do you have other markets in your sights?

Jenny Gou- Currently, we have a $100 million fund, which will eventually encompass around six to ten properties. We have already secured contracts for the first two properties, both located in Arizona. However, our focus is not limited to Arizona alone. We are also expanding into the Dallas-Fort Worth (DFW) area in Texas, as it consistently demonstrates strong growth numbers. So our primary focus for this fund is on Arizona and Texas, particularly the DFW market.

Jenny Gou's Impactful Journey and Resident-Centric Approach

Jenny Gou's Impactful Journey and Resident-Centric Approach

Prashant Kumar- Understood. Regarding the fund, is it a $100 million equity fund, or does it encompass the overall $100 million property purchase?

Jenny Gou- It’s a $100 million fund involving multiple classes of investors, including debt. Our class A investors participate as debt investors and receive a 10% preferred return paid out monthly. They don’t hold equity. Classes B and C, on the other hand, receive an 8% preferred return and have an equity upside when we sell the property.

Prashant Kumar- You mentioned different classes such as A, B, and C. So class A is essentially structured as pure debt with a 10% return. Is that correct?

Jenny Gou- Yes, I consider class A as a debt investment. They receive a 10% annualized cash flow, which represents the preferred return. These payments are made monthly, starting from the second month.

Prashant Kumar- So, if I understand correctly, the 10% return for class A is fixed, similar to debt. However, I’m curious if there is any debt component in the fund as well. I mean, while the 10% return is considered equity, is there any involvement of debt in the fund?

Jenny Gou- Are you referring to lenders’ involvement? We work with lenders to finance the acquisition of the properties, but within our fund, lenders are not part of it. The fund consists of investments from our investors.

Prashant Kumar- I see. Okay, that sounds good. It’s really impressive. Now, I would like to ask, how do you inspire people to join your deals and your academy? How do you encourage individuals to become part of your ventures and enroll in your academy?

Jenny Gou- Yeah, for the fund specifically, honestly, I’ll tell you, right now is a very tough time to raise capital, as I’m sure you’re aware. The market is quite challenging. However, our track record speaks for itself. We have successfully completed five deals in their entirety. Out of those, we sold three properties outright. The last one, which we sold last year, had a holding period of just under two years and delivered a three-fold return for our investors. The one before that resulted in a two-fold return. Additionally, we have executed two full cash-out refinances, and we are currently working on a third, which will enable us to completely recoup the initial investment and generate infinite returns. Our track record is what demonstrates our performance, and I always emphasize to potential investors the importance of considering the sponsorship team and their track record. Do they consistently perform? Can you establish a sense of knowing, like, and trust with them? These factors are crucial when deciding where to invest. Similarly, when it comes to our coaching program, building relationships and finding a tribe or family-like connection is key. The individuals who join our coaching program resonate and relate to us, and that is the makeup of our current student database today.

Paul Senior- Jenny, it seems like you have made a positive impact on many lives so far, despite your relatively short tenure in the real estate industry, which is common for many of us. Can you share a story with us that you are particularly pleased with, in terms of how you have helped someone achieve passive income or reach their goals?

Jenny Gou- Absolutely. From an investor standpoint, we refer to these moments as “AstroTurf” moments. We like to give them a name. We have had investors come back to us after property sales and express their gratitude. They shared stories of using the returns to completely replace their front lawn with Astroturf. Others have bought new cars or used the funds to support their children. Hearing these meaningful stories and witnessing the impact we have on our investors’ lives is incredibly fulfilling. However, it’s not just about our investors. We have also launched a program called “Residents First,” which we are currently rolling out this year. We believe that our residents, who are key stakeholders living on our properties, should also benefit from our deals. The Residents First initiative has two main components. Firstly, we aim to enhance every touchpoint of their experience on the property, from the moment they express interest in renting to the day they move in and beyond. We prioritize meaningful resident events and strive to ensure that each interaction is the best it can be. Secondly, we provide financial education. As our properties typically cater to the working class, where individuals may have multiple jobs and live paycheck to paycheck, we are developing a financial education plan for each resident to opt into. This will empower them to become more financially savvy and work towards financial freedom, whether it’s purchasing their own home or achieving other financial goals. So, it’s not just about us. The Residents First initiative is our major focus this year.

A Piece of Advice by Jenny Gou

A Piece of Advice by Jenny Gou

Paul Senior- That is beautiful. It’s all about giving back. Ultimately, accumulating wealth on your own serves no purpose. It’s a wonderful thing to have the ability to buy whatever you desire, but when you extend your perspective beyond yourself and consider how you can impact the lives of others, that’s when true fulfillment is found. You are doing an outstanding job in that regard, and I want to express my gratitude. On behalf of the residents, I have a lighthearted question for you as we transition to our lightning round on the Real Estate Cash Flow Champs podcast. Could you share one piece of advice you have received and how it has shaped your life?

Jenny Gou- I would say, and I know it sounds cliché, but over the past several years, I have met countless individuals, including myself, who were constantly in a cycle of learning. We attended conferences, listened to podcasts, and read books, but failed to take action. So my advice to people is that the first deal is the most challenging one. Set a goal, outline the steps you need to take, and then just go for it. You will learn so much from that first deal, and the subsequent ones will come much easier. Avoid falling into analysis paralysis because it leads nowhere. We all say we wish we had learned this 20 or 30 years ago and taken action earlier. Finally, all of us, including you, Paul, and Prashant, took action, and now we are more successful because of it. So, do something, get off the couch, and take that first step.

Paul Senior- Absolutely. You sound like Nike with their “Just do it” slogan.

Jenny Gou- Yeah, exactly. They got it right.

Paul Senior- That’s awesome. Do you have any personal habits that contribute to your success?

Jenny Gou- You might have heard of the Miracle Morning routine. I try to incorporate most of it into my daily life, but one habit that I consistently follow is reading. I have a stack of books on my nightstand, and I visit the public library regularly. I make sure to read every day, whether it’s related to real estate, personal growth, or even a fiction book. Just read something and ensure that you’re learning something new every day. That’s a habit I encourage everyone to adopt.

Prashant Kumar- Jenny, this podcast has been fantastic so far. I would like to delve a bit deeper and hear what deeply resonates in your heart that you would like to share with our audience. It could be something meaningful in any aspect of your life, whether it’s related to real estate or relationships. What do you truly, truly, truly believe? What is your “why”?

Jenny Gou- Thank you for asking that. I would say life is short, and the decisions I’ve made to get where I am today were influenced by unfortunate life events. I encourage everyone not to wait for such events to occur before making a change or pursuing their desires. Don’t let the realization of life’s brevity come after it’s too late. Figure out your own “why.” For me, it’s my family. I want to spend more time with them, which is why I relocated across the country. Once you identify your “why,” your decisions become clearer, and no one will question them. So, hopefully, that answers the deep question. It’s about discovering your “why” and taking action to pursue it.

Prashant Kumar- That’s truly inspiring. Jenny, this podcast has been exceptional. Please share with our listeners how they can reach out to you.

Jenny Gou- Absolutely. Our website is verticalstreetventures.com. You can visit us there, and my contact information is available. We are also active on all social media platforms, so feel free to connect with us. I love discussing real estate and meeting new people, so I’m always happy to have a chat. Thank you for having me on the podcast. I hope I was able to provide some value.

Prashant Kumar- This has been an outstanding podcast.

Paul Senior- Thank you so much, Jenny. And of course, thank you for your time. Remember, it doesn’t matter where you currently stand; what matters is the effort you put in and taking action today. Jenny’s message was clear- don’t wait for unforeseen events to force a change in your life. Pursue what you want to do now because you never know what tomorrow may bring. So, whatever is meaningful to you, take action today, whether it’s real estate, relationships, or moving across the country as Jenny did. We’re excited to hear about your journey. Thank you, Jenny. Hopefully, we’ll have the chance to talk again in the future.

Paul Senior- Thanks, Jenny. Thanks for your time. We appreciate you.

Jenny Gou- Thank you for having me.

Paul Senior- Have a great day. Goodbye for now.