Jenny Gou, Managing Partner of Vertical Street Ventures, joins us to discuss leaving a successful corporate career and using those skills to launch her multifamily business. We discuss partnering, asset types, markets, going full time, and much more.
Connect with Jenny at https://verticalstreetventures.com/.
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Transcript
Devin Elder:
Jenny, welcome to the podcast. How are you?
Jenny Gou:
Good, thanks. Thanks for having me.
Devin Elder:
Yeah. Thank you for coming on. And I can’t wait to dive in and unpack some of your story here in the real estate investing space. Before we do that and start talking about what you guys are buying and markets and assets and things like that, let’s start at the beginning with your background. And I love when people shift gears, because this is my story and lots of other people’s story, after having a career, after doing something else, not necessarily growing up with it, but shifting gears maybe from a professional background to real estate and then really having a lot of success with it. I love that story. So what happened for you? What was your background and what made you come over to the dark side here?
Jenny Gou:
Sure. Yeah. Currently I’m a full-time Real Estate Investor & Syndicator, but prior to this life, I actually spent 13 working in corporate America at a company called Procter & Gamble. So I was a sales director there managed some of our sales strategies for a few of our billion dollar brands, launched initiatives, managed people, all of that stuff. Loved what I did, but didn’t exactly have the flexibility that I want in my life. And right when we were living in Cincinnati at that time, we had started to invest in single-family. Just like I’m sure many of your other listeners out there, we started the single-family route. Accumulated a portfolio of 10 single-family homes and just really wanted to accelerate that journey and started learning about multifamily.
Jenny Gou:
And then coincidentally, we had moved to LA about over two years ago and that’s when I decided to leave my corporate job to pursue multifamily full-time. And so at this point it was February of 2020. Didn’t have a single multifamily door under my belt yet, but believed in the model so much that I jump shipped and then dove head first into this industry. And even despite COVID and all things that transpired last year, within a year, I was able to accumulate almost 1,000 doors both passively and as a GP. And so I like to say, if I can do that during a crazy year like everybody else, anybody can do it.
Devin Elder:
I love it. Well, that’s very abbreviated version, I’m sure. But I appreciate the overview. When exactly did you jump on the corporate job? Was that January 2020?
Jenny Gou:
February of 2020.
Devin Elder:
February, 2020, and then March. Pretty crazy timing. I’m sure you were second guessing yourself, six weeks after you left probably a cushy corporate job that you’d been at for a long time. And then COVID comes out of left field, right?
Jenny Gou:
Absolutely did. And everything as you guys remember shut down. My kids were then homeschooled. So my days were definitely different than what I had pictured it to be, leaving corporate America. But you know what? It’s what you make of it. You make the most of your time. How do you change your mindset? Use the resource is that you have at that given moment and do what you got to do.
Devin Elder:
I love it. I think so much of anything, I guess in life is the way you frame it for yourself. And I think it’s really easy to frame things in a disempowering way and it’s almost just as easy to frame things in an empowering way. And it’s almost like it doesn’t matter, your brain doesn’t really care, but once you set the framework for something, then you’re going to follow through based on that framework. So I love that. It’s what you make it and what an interesting year. But it sounds like it didn’t stop you, which is the difference maker between people that have a lot of success in this business and those that don’t get started or don’t take it very far as just perseverance.
Devin Elder:
It’s not a lot of fun to hear that, but that’s the main ingredient a lot of the times is just keep on going, right?
Jenny Gou:
Absolutely.
Devin Elder:
Yeah. So was there a period in your corporate career that was a catalyst for you? Like I can’t do this anymore, or was it just a gradual education around real estate to say, oh, wow, we connecting the dots. We could make this a big thing over time?
Jenny Gou:
It was a little bit of both. I actually met my husband at P&G we were interns together. So nobody reported to anybody to be clear. So, both of our retirements and really all of our savings was tied up in Procter & Gamble stock. So on one route we wanted to diversify, of course we didn’t want to be tied to just one route of retirement. So we looked into real estate as a means to diversify our portfolio. And then concurrently, we both had stress high travel jobs in this space. And when we had moved to LA, we both actually needed to travel even more because our jobs were remote.
Jenny Gou:
And so that probably was the biggest catalyst in terms of you know what? We are not spending our lives the way we planned it to be. We wanted to be more flexible, wanted the kids to have more time with us. And so that was a catalyst just deciding that we wanted to really design more of our lives, versus having it be such a default, the traditional nine-to-five job that most of us are part of these days.
Devin Elder:
Yeah. That’s absolutely the truth. I remember thinking when I was in the corporate world that I just didn’t want to be one of those guys who was traveling more than half the month and had a young family. And that was a real driver for me as well. And your free time really is your ultimate wealth. Obviously we need money to function and to pursue our dreams, but that’s the final layer I think, is having control over your time, which is real tough to do in a W-2 environment, right?
Jenny Gou:
Absolutely. And that’s the thing we’re passionate about helping others to learn themselves because we wish somebody taught us this 10, 15 years ago-
Devin Elder:
Absolutely. Yeah. I feel the same way.
Jenny Gou:
And so we spend a lot of our time talking to our friends and family telling them, they wonder, “Hey, Jenny, what are you doing? You left such a good paying job.” Well, my husband just left his W-2 job as well to join us. So we’re both fully retired and we want to spread that knowledge. And I’m sure a much smarter person than I came up with this quote, but we want to live our lives by design and not default-
Devin Elder:
I love it.
Jenny Gou:
And so if we can enable others to do the same, that’s what we want to spend more of our time doing.
Devin Elder:
Ah, I love it. That resonates with me so much. There was a period in my mid ’30s where I just took over this mantra that every day moving forward needed to be a good last day. If this was it, which I hope it’s not, I hope I got a bunch more, but we don’t know. And it really changed my life, building everything around that framework. Is this a good last day? I mean, you going to have your good days and bad days, but in general, are you going to have big regrets abouts not spending time with your kids or doing different things? And that completely the way I structured my life having that approach. But it’s one thing to think about that, or dream, it’s another to have a real vehicle that can deliver that. You have to have the vehicle because you can’t just want those things and then go back and work a 65 hour week job.
Jenny Gou:
Right. It doesn’t magically appear. That’s for sure.
Devin Elder:
That’s right. So how long was it before your husband also jumped in that? Because that’s quite noteworthy to have a two income household like that with good jobs and to both be able to make the transition in a pretty consolidated timeframe.
Jenny Gou:
Yeah. Definitely plan for it. Don’t just jump ship-
Devin Elder:
Absolutely.
Jenny Gou:
Yeah. So when I left last February of ’20, we had planned for Ronnie to stay as long as he still loved and enjoyed and was so growing in his work. And so that was happening. So he likes to tell people, he wasn’t running away from anything. He was actually running towards something much bigger for him-
Devin Elder:
I Love it. Yes.
Jenny Gou:
And so what I said was look, our company… So I started Vertical Street earlier this year with my formerly mentor now partner, Steve Louie. And I said, look, we are growing really fast. I can either go hire somebody to help us because Steve and I are bootstrapping. We’re essentially a startup, or you can leave and come work with us and we can really knock this out of the park. And so to him, that was a no-brainer to one work with his wife of course, but then also help start something and expand on something much bigger.
Devin Elder:
Yeah. That’s great. I love that aspect of running to something. And there’s really no excitement like being an entrepreneur. Obviously, there’s ups and downs there can be incredibly high and incredibly low, but it’s exciting. It’s taking your destiny into your hands and going out and making it happen. There’s something extremely rewarding about that, I think for the right personality type, because it’s a ride.
Jenny Gou:
Absolutely.
Devin Elder:
It’s a ride. You mentioned 10 houses earlier. I always chuckle about that. It’s like everybody has this idea, we’re going to get into single-family, buy some rentals, same thing I did. I want to get 10 rentals. Then you go out and do it and then you go, ah, I really don’t want 20 or 30 of these. You run into some issues. What was the catalyst for the transition to multifamily? Was it a conference, or a book, or you mentioned a mentor? What was that transition like for you guys?
Jenny Gou:
Yeah. And the reason that we stopped at that magical number of 10 is if you think about it from an individual standpoint, the government max’s your loans at 10. And so I’m sharing a lot of info because I want to make sure people fully understand this is that you can sign on 10 loans. And then our next strategy was to have me sign on 10 loans just to build on that portfolio, but really at that point we say, gosh, there’s got to be… You max out 20 homes and then what? So we wanted to just find a way to scale faster. And again, concurrently, we just met the right people at the right time.
Jenny Gou:
We lived in Cincinnati. So we went to a Joe Fairless meetup in Cincinnati and then just, boom, light bulb went off and we said, absolutely, we need to pivot. And multifamily is the way to go.
Devin Elder:
I love it. How many people has Joe Fairless influenced or turned on to the path? It’s incredible.
Jenny Gou:
Yeah.
Devin Elder:
Absolutely incredible. Yeah. That makes sense. And it’s funny too. I think a lot about as a principal and a sponsor that financing is like, it’s no joke, more work if I want to go refi one of my rental houses. I dread it when I need to refi it of single-family house for 250K it’s literally easier to go buy a 15 million apartment complex from a paperwork perspective. That’s one of the reasons we’ve grown our portfolios. It’s like I’d rather do these big projects. I feel like it’s almost less brain damage on the loan side, which is interesting, because they’re huge and complex, but I would rather do paper for work on a $15 million loan than refinancing one single-family house.
Jenny Gou:
Absolutely.
Devin Elder:
That’s right.
Jenny Gou:
And that’s true Devin, for a large multifamily versus a small and we’ve done everything. We just closed on a 252-unit properties this year.
Devin Elder:
Congratulations-
Jenny Gou:
Thank you.
Devin Elder:
Fantastic. And what market was that in?
Jenny Gou:
That was in Arlington, Texas.
Devin Elder:
Yeah. I love Arlington. There’s so much going on and it just DFW there and what do we call it-
Jenny Gou:
Oh, my gosh.
Devin Elder:
Jerry World. I was up there for a Old Capital Conference a few weeks back and it’s just so impressive with a Cowboys Stadium there and everything.
Jenny Gou:
Yeah. And it’s actually just three miles from the Cowboys Stadium, so [inaudible 00:12:18].
Devin Elder:
Oh, excellent. Yeah. That’s so much going on there. Congratulations on that.
Jenny Gou:
Thank you.
Devin Elder:
Can you tell us a little bit about that asset, vintage, you mentioned the size, what was it deeply distressed or a light value add, or what was the game plan?
Jenny Gou:
Yeah. Absolutely. So it’s a 252-unit property in Arlington. I would call it a class B minus, even C plus just because of the age it’s 68 vintage, but the bones were very strong, so not a ton of exterior work needs to be done-
Devin Elder:
Oh, good.
Jenny Gou:
But our largest opportunity is just property management. I think the owners had it for quite a few years, even when I was doing the inspection and due diligence, you could tell there’s just so much opportunity and just how we manage the property to get the residents happier and all the deferred is taken care of, but really it’s our value add model that we know and do very well, buying a B, B minus property, upgrading it to make it nicer, cleaner, safer, and then improving the resident, a profile and quality in the community, five year old and we look to refire or sell after that timeframe. So very standard sure for that playbook.
Devin Elder:
Yes. I love it. So that’s Arlington, which we’re in Texas, we love Texas. That’s great. What’s your strategy on market selection? Is it one market? Is it many? How do you guys approach that?
Jenny Gou:
We are actually predominant in Arizona? So between Steve and I at Vertical, we have nine properties in the Phoenix and Tucson area. We are expanding into Texas as a GP team just to one broaden our scope. But I will tell you, Arizona still has a ton of opportunity. It consistently is a top three market for population growth, job growth, low [inaudible 00:14:21].
Devin Elder:
Rent growth. I mean, I’ve some of the rent growth numbers I’ve seen out of Phoenix are eye popping.
Jenny Gou:
Rent growth. Yes. Double digits. So we were at Mastermind with Charlie Young and Michael Baker, and we were talking about all the different cities and Phoenix, he popped up a graph 23% rent growth over the last year. I mean, phenomenal-
Devin Elder:
Wow, it’s incredible.
Jenny Gou:
Okay. And I mean, the sky is still the limit there because of the population growth. So we’re very excited about the Arizona market still. In fact, we have four other deals under contract right now and they’re five or six Cs I can talk about them but yeah, my point is there’s still so much room to grow in that market. And then also in Tucson because all that growth is traveling down south with Tucson, given how all hot Phoenix is.
Devin Elder:
Yeah. They’re seeing halo effect from Phoenix, right?
Jenny Gou:
Yes. Absolutely.
Devin Elder:
I love it. So you guys have expanded, you’ve built the team, you’re in multiple markets. How do you approach your acquisitions and I guess broker relationships, if you don’t have 20 year established broker relationships and you’ve really broken into the business, gone full-time, clearly you’re taking down deals. Was it hard to be taken seriously by brokers on these larger projects or what’s been your experience there?
Jenny Gou:
It is one in any competitive of market, absolutely challenging to get your foot in the door. The best strategy or the best recommendation I would have for folks starting is to find yourself a mentor in that market. So when I started last year, extremely green, I met Steve first, he became my mentor. I just left corporate America. He was still working full-time and I offered my services to help him manage his property free of charge. I essentially said, “Can I please intern for you?” Just to learn the ropes and for him, it was a win-win to have somebody with a huge corporate background to help him manage his properties, alleviates a lot of his time and effort as well.
Jenny Gou:
So that was a win-win and while I’m helping him manage his properties, I’m also still underwriting and calling brokers. So guess what? I was able to name drop and say, “Hey, I’m partnering with my partner, Steve Louie,” who had an established relationship in the mark get ready. So instantly you have credibility with somebody established who you are leveraging to get and find more deals.
Devin Elder:
I love it. Yeah. That’s the name of the game, you stand on somebody’s shoulders that’s gone before you and you make it a win-win scenario. You’re working for him. You’re partnering on deals. He’s maybe doing more deals because of you, it’s total win for him. I’m going to imagine, right?
Jenny Gou:
Exactly. And that’s the thing a lot of people we tell folks, go find yourself a mentor, but there’s an art to finding a mentor because the last thing you want to do is go up to somebody who’s well established and say, “Hey, can you please be my mentor?” And that’s it. So you have to approach it the right way. Find out what their gap is, what do they need help with, and then add value before you start asking for help. And that’s the thing people miss when they go in search for a mentor.
Devin Elder:
That is such a great takeaway. I love it. It is tricky too, because somebody that’s successful is maybe busy, which is, or maybe they block their time. Maybe they’re busy when they want to work and when they don’t want to work, they don’t want to work. If they want to go on vacation or play golf on Mondays or whatever, that’s their prerogative and when they are working, they’re busy. So it is difficult. We struggle with that too, where people want to help out, but it’s like, well, if you don’t have a skillset to bring here or something to bring to the table, it’s very one sided and somebody busy that’s successful and has a portfolio can’t do that a lot of the time.
Devin Elder:
So kudos to you for finding a way to make that work and to add value first. I think that’s a big part of this industry and breaking into it is finding a way to add value first. You guys now are doing coaching, mentoring. You have a program. Tell me about that.
Jenny Gou:
Yeah. I think I’ve had many mentors throughout my lifetime, both at P&G and now in this industry and they are absolutely critical to accelerate what you want to do and get there faster. So since we’ve started the company and over the last 18 months, we’ve met a ton of people who have also wanted to get into the Arizona market because it’s such a great market with a ton of opportunity, but yet it’s so challenging because of everything that I just mentioned above. And so unfortunately I wish I had 40 hours in one day to coach and mentor as many people as I can. It’s just not possible. And so what Steve and I decide is, again, we brainstormed the strategy to how do we impact as many people as possible in a scalable and sustainable way.
Jenny Gou:
And so we launched our own coaching program roughly in late July, early August. And it’s been tremendous, we’ve had tremendous feedback so far. Right now, it’s a small group of students working their way into the Arizona market. And we’ve been able to teach them step by step tactics, but thinking larger term two, helping them with their vision and their goals and their magical time, but they can actually leave their W-2 job as well. And again, overall super exciting feedback. And we’ve already helped two of our students secure deals in the market, which has been awesome.
Devin Elder:
Excellent. Yeah. That’s huge. It’s one thing to teach the content or walk somebody through it. It’s really something special when you can have that much of a knowledge transfer that one of your students actually closes their own deal. That’s like the full circle at that point, right?
Jenny Gou:
Absolutely. And nothing is a better compliment than the success of the people you teach, right?
Devin Elder:
100%. Yes.
Jenny Gou:
And so I’m nothing but proud of what they’ve done so far, because it’s been such a short amount of time and they are just off the ground running, which has been amazing to see.
Devin Elder:
That’s exciting. Do you like coaching better, or do you like chasing deals better?
Jenny Gou:
That’s such a hard question.
Devin Elder:
Hard, right? Yeah.
Jenny Gou:
That’s really hard. I love the action of taking down deal and my strength and my superpower is the asset management side. So I love just seeing the business plan and seeing and executing it through. So that drives me a ton, but I also have a huge passion to help others find their definition of success through real estate. So I love my kids equally. I’ll put it that way.
Devin Elder:
It’s a good way to put it. Yeah. It’s interesting. There’s this real feeling that, I get this sense from you and I certainly had this of, I mean, gosh, in my ’30s, when I started all this like, “Hey, nobody told me about this.” I’ve had a lot of conversation with a lot of smart people over my life and nobody told me this was on the menu. It took me seeking it out. And so I love seeing the light bulb go off for people when they have that aha moment, if I can be the conduit for seeing that happen for them. And they go on and the ability to change your life in some meaningful ways that is not accessible through a lot of other avenues. That’s really rewarding and exciting.
Devin Elder:
The asset management piece. I would call that the work of the deal. I mean, we all talk a lot about acquisitions and raising capital and all that. Stuff’s really exciting and it’s necessary. It’s a lot of hoopla to get to the starting line. I mean, closing a deal is yeha, now the five year track up the mountain begins. What is it about the asset management side? Was it your corporate background and manage people? What drew you to the asset management piece and what do you like about it?
Jenny Gou:
Yeah. I think you’re right. It’s my experience and background in what I did before. I mean, we set sales strategies, national sales strategies for some of our brands and managed team across the country and all of those that skillset transferred very easily into real estate. So really all I learned was the lingo and macular. It’s not rocket science, but the skillset was very easy to go over to real estate. So same thing, you’re managing a team, your property manager, your lenders, your brokers, all of that as a team, your investors. So that was a natural flow. And then from a project management standpoint, I mean, I launched multimillion dollar initiatives for P&G. Same thing, I’m launching a business plan for an apartment building with budgets and dates, and gates, and timelines, and owners. So it was a natural fit for me. And I just happened to also enjoy it, a lot. So it was a good fit for all parties.
Devin Elder:
I love it. Yeah. That project management component is just vital to these deals. We do all our underwriting and make these forward looking assumptions, but the rubber meets the road with asset management. So, that’s important. I worked in IT and tech for a period of my corporate life and I chuckled it now, my concern are drywall and very light construction. And it’s like the simplest business model compared to what’s happening on some more cutting edge tech stuff. It’s almost comical how simple some of the pieces are compared to maybe some of our passport a job. So that’s interesting.
Devin Elder:
Well, what do you guys see Jenny for the future? I mean, you’ve got a lot of momentum coming out and a lot of free time and energy now that you’ve shed the jobs and it clearly you could see that and how you’re growing the business. What do you guys see for the next year and beyond and are you going to go at it hard for a few years and then be more passive, or is this something you envision doing for decades? Where are you guys at with that piece of it?
Jenny Gou:
Yeah. It’s actually such a moving target for us. And arguably, I would say, I’m probably working more hours now than I was before, but I controlled those hours and I control how and when I spend them and where. So that’s a big key component, that’s different. From a, where do I see this company? When we started Vertical Street in January this year, we had a goal of acquiring 25 million in assets. We’re on-
Devin Elder:
Okay. Over what time horizon?
Jenny Gou:
For this year. For year one.
Devin Elder:
For this year. Great.
Jenny Gou:
We are on track to close 90 million by the end of this calendar year-
Devin Elder:
Oh, my goodness.
Jenny Gou:
So that’s why I say it’s a moving target, because at any given moment, we said, okay, we’re going to pause and slow down. We’re going to close on 90 million. We launched an academy this year. We’re in the middle of writing a book. We have a monthly meetup. I mean, my answer is, I don’t know because it just evolves, but it evolves for the better. Next year my goal is to double what we did this year in acquisitions and expand our program to something bigger so we can touch more lives. So ask me again in a year, what our vision is because it’s an ever moving target.
Devin Elder:
I love it. It was really an unfair question, we’re the same way. I set an annual target on a calendar year for capital raised and basically assets, doors acquired. But gosh, I go out much past a year, three years, five years. And it’s like, if I look back five years, I never could have imagined we’d be where we are. So I feel like forecasting too far in the future. My guiding light is I want to be enjoying what I do every day. And if that’s not happening, I’m going to hire somebody or change something so that I’m continuing to enjoy myself. So, if we can keep doing deals and I continue to enjoy myself, that feels pretty sustainable, but it’s real hard to put a number on it, there are too many years in the future.
Jenny Gou:
Yeah. And you hit it on the head, Devin. I think it’s good to have a goal and your vision for the future, but more importantly, it’s the journey and the process to get there because once you hit your goal, then it’s like, all right, well, now what? So you have to enjoy what you’re doing and the second you stop loving what you’re doing, then you need to get out or move on.
Devin Elder:
Yeah. 100%. It’s a crazy thing, because you can stack up a tremendous amount of equity in this business and I’ve had conversations with very successful people that have been at a little while and it’s not trying to just be sitting on a huge stack of coins and that’s it. You really have to enjoy that process as cliche as that is. But you’ve talked a lot about it in this interview and it’s helping other people along the way is pretty freaking exciting and rewarding too. And so it sounds like you guys have all cylinders firing there with the education piece, helping people along, growing your own net worth and wealth, having something you’re engaged in, obviously giving your investors a vehicle that, I mean, really frankly can blow the doors off what a lot of people are doing for their idle capital. So it’s just a win all the way around when you can structure something like that, you keep doing more, right?
Jenny Gou:
Absolutely.
Devin Elder:
Yeah. That’s exciting. If somebody wants to connect with you, learn more about the book about what you guys are buying, all that stuff. What’s a good avenue for that, jenny?
Jenny Gou:
Sure. We’re on all social media vehicles, Facebook, Instagram, LinkedIn. But if you want to learn more about us or set up time with myself or my partner, Steve, you can go to verticalstreetventures.com and get on our calendar.
Devin Elder:
Outstanding. We’ll link to verticalstreetventures.com in the show notes, can click through on this episode and connect with Jenny and the team. Thank you. I’m inspired by your story. I wish you guys continued success and let’s sync up again this time next year and see where you’re at. What the goals are. I’d love to check back in with you.
Jenny Gou:
Sounds like a plan. Thanks for having me.
Devin Elder:
Awesome. Take care. Thanks.
Jenny Gou:
Bye.