Today’s guest is Shawn DiMartile.
Shawn DiMartile is a multifamily investor with over 300 multifamily units. He's co-founder of Takeoff Capital, host of The Real Estate Takeoff Podcast, and author of the eBook "California Gold".
Show summary:
In this podcast episode, Sean DeMartel, shares his journey from being an air traffic controller to building a real estate empire. He discusses his decision to invest in a 32-unit apartment complex, his transition to full-time real estate investing, and his strategies for engaging with podcast hosts to share his unique story. Sean also talks about his interest in California real estate, particularly in San Diego, and shares a case study of a project where he is adding 11 units to a two-bedroom house. He also discusses his strategy of buying retail properties instead of distressed properties.
--------------------------------------------------------------
Intro [00:00:00]
Introduction and Background [00:00:30]
Leaving Air Traffic Control [00:03:20]
Reaching out to podcast hosts [00:10:03]
Telling a unique story to raise capital [00:11:46]
The California Gold Rush strategy [00:13:58]
The strategy of buying retail [00:18:44]
Design strategies to make small units feel bigger [00:19:36]
Different holding periods for projects [00:21:45]
--------------------------------------------------------------
Connect with Shawn:
Linkedin: https://www.linkedin.com/in/shawn-dimartile-ba6595274/
Instagram: https://www.instagram.com/shawn_dimartile/
Web/Ebook: https://investorshawn.com/
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → sam@brickeninvestmentgroup.com
SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson
Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234
Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f
--------------------------------------------------------------
Want to read the full show notes of the episode? Check it out below:
Shawn DiMartile (00:00:00) - People like to invest with those they know, like and trust and connect with. Because at the end of the day, people are investing with you, right? You know, Yes, they're investing in your company. ET cetera. But you are the biggest risk factor. Anytime someone's giving you their money to go, invest in a project.
Intro (00:00:17) - Welcome to the How to Scale Commercial Real Estate show. Whether you are an active or passive investor, we'll teach you how to scale your real estate investing business into something big.
Sam Wilson (00:00:30) - De Martel is a multifamily investor with over 300 multifamily units. He's co-founder of Takeoff Capital, host of the Real Estate Takeoff podcast and author of the book California Gold. Sean, welcome to the show.
Shawn DiMartile (00:00:43) - Thank you so much for having me. I'm happy for this, Sam. I appreciate it, man.
Sam Wilson (00:00:46) - Absolutely. The pleasure is mine. Glad to have you. I think back on the show, you've been on this show before, I think maybe two years ago or so. Approximately.
Sam Wilson (00:00:54) - Yeah. We'll have to look that up.
Shawn DiMartile (00:00:55) - I forgot about it, too, because I reached out to you and you're like, Dude, you've been on my show before.
Sam Wilson (00:00:59) - Well, and you know, it happens. I'm with you. You host a great podcast. I was I was pleased to be a guest on the show last week. You asked great questions and make it very, very easy on the guest. I will say that I've certainly you know, there's a lot of there's a lot of podcasts out there, but you run a great one. And I certainly appreciate coming on that show. And again, that is if you want to plug it one more time, what's the name of that podcast again?
Shawn DiMartile (00:01:20) - The Real Estate Takeoff podcast. Thank you so much.
Sam Wilson (00:01:22) - Yeah, absolutely. Check out Sean's podcast. Sean There are three questions I ask every guest who comes on the show in 90s or less. Can you tell our listeners where did you start? Where are you now and how did you get there?
Shawn DiMartile (00:01:32) - Easy.
Shawn DiMartile (00:01:33) - So I started as from a poor family in Louisville, Kentucky, grew up, couldn't really afford to put myself through college, join the Navy as an air traffic controller, got out of the Navy after five years doing that, did it for the FAA, started making some decent money, saving, wanting to figure out where to start investing because I wanted to, you know, climb the the ladder and get to, you know, even more wealth and found the Bigger Pockets podcast years ago and got obsessed, studied hard and then eventually I went all in on my first real estate investment. And this is before I even bought my first house. I liquidated my 401 K and I bought a 32 unit apartment with a couple of buddies. Um, started the podcast around the same time and then shortly after that got a multifamily mentor. Fast forward a little bit and we started syndicating properties with that mentor. And here I sit today with about 300 multifamily units, boutique hotel and numerous Airbnbs to encompass my portfolio.
Sam Wilson (00:02:34) - Man, that's really cool.
Sam Wilson (00:02:36) - I love I love that story that the, the, the bootstrapping story is one. Of course it speaks to my heart because there's I just get tired of people being told that, hey, you know, you're limited by whatever the limiting factors are. They place on you where you come from, what your what your religion, your race, whatever it is like. Oh, well, that's like, that's nonsense. Anybody can do anything. So we all have incredible capacity for success. So I think it's really cool how you have done this. Air traffic controllers, I'm sure we talked about this on your last show. Air traffic controllers are paid pretty well. Like you you you get tenured in that and it's and it's I mean, it's not a low paying job. Why did you what what about that? Were you like, hey, this is going to be long term. I want to do this another way.
Shawn DiMartile (00:03:20) - Yeah. So the thing about air traffic control, that just makes it so tough, obviously you're under a lot of pressure.
Shawn DiMartile (00:03:26) - Everybody knows it's a really stressful job. That's no secret. But what makes this even worse is that there's a hyper shortage of air traffic controllers in the nation. So when you sign up to be an air traffic controller, you sign up and agree to mandatory overtime. And basically across the country, everybody's working six day workweeks. As an air traffic controller, my days off were Tuesdays and Wednesdays, so I would usually only get off Wednesday and be working the rest of the days. So my work life balance was basically zero. I would work crazy shifts, you know, Sunday I would wake up and be at work at 5:30 a.m., work till 1:30 p.m. and then go back to work at 10 p.m. at night and work the graveyard shift that very same night. And I did that every week. And the outlook for that was that I was going to be working into my 50s before I could finally get off on weekends. And this just didn't make sense to me. And it's great money, you don't get me wrong, But I mean, you really become a slave to that job.
Shawn DiMartile (00:04:24) - And you look at the people retiring in their 50s and they look like they're in their late 60s. And that was really, you know, a light bulb moment for me that if, you know, what do I want? Do I want to sit here as a W-2 making really great money or do I want to try to do something else so I can finally get my time freedom back?
Sam Wilson (00:04:41) - No, man, I think that's huge. And that's what you just mentioned there, I think is just a sound piece of advice. Look at the people 20, 30 years older, older than you in whatever career it is you're looking at and go and not just one, because there can be some outliers, but look at all of them as an aggregate and go, Do I want to be what that group looks like physically, mentally, emotionally, lifestyle wise in 20 or 30 years? And if the answer is no, get out. I mean, I could.
Shawn DiMartile (00:05:13) - Not agree more. That's a great way to put it because that is what you will become if you stay in a grinding job like that.
Shawn DiMartile (00:05:20) - Mean hell if you're mining coal and you look at guys that are retiring from that and you've got to you know, that's obviously more physical, right? But it's the same thing. Like, you know, do you really want to spend the majority of your life doing that work? Right?
Sam Wilson (00:05:33) - And we still live in a country where you can choose. I mean, that's that's the other thing is that you get to pick still in the states. There's places in the world where you don't get to pick and you're going to be doing whatever it is mining coal or air traffic controller whether you want to or not. So and that's and that's that's too bad, actually, to hear about the air traffic control job because, I mean, there's a lot that is on your shoulders. And I mean everything obviously that you say and do is recorded on on live lines. You make one mistake, man, and they will roast you. And rightfully so, because, I mean, you do have planes in the air that need to not be connecting with each other.
Sam Wilson (00:06:13) - So it.
Sam Wilson (00:06:15) - Of course.
Sam Wilson (00:06:15) - Yeah, but that's wild, man. How did you get out? At what point in time do you say, hey, look, I've got enough coming in from my what was now side hustle, now become full time real estate job. You said, Hey, I can quit being an air traffic controller.
Shawn DiMartile (00:06:27) - That was in 2022, actually in March of 2022. I had that was after we had syndicated a couple properties. In January of 2022. We sold that 32 unit that we had bought a couple of years before, made some profit on that. And then also had you know, at that time I had three Airbnb listings that were producing a lot of cash flow as well. And you know, I was I was I was right around the the net income that I was making from air traffic control. But. You know, I knew that if I wanted to grow the real estate business further to where it's, you know, that is my full time job and and grow that company that I needed to make that jump.
Shawn DiMartile (00:07:07) - So that's why I made it last year just going all in to really give the real estate everything that I've got and it has paid dividends.
Sam Wilson (00:07:15) - Okay, cool. I want to hear about that because there can. At times. We've seen people flounder. When they make that jump, they get out there like, Hey, I'm going to go do this. And it's like, Oh man, crud. Do they do this and do that or they do this? They don't get the momentum. How did you how did you carry that momentum forward once you said, All right, I'm out and congrats on doing that? I bet that was I bet that was a fun day to finally walk away and say, all right, guys, I'm going to do my own thing. But how have you established the momentum in the in the strategy that you want to employ, I guess, over the last what is that, 18, 17 months?
Shawn DiMartile (00:07:51) - Yeah, I mean, you know, it really just when I mean, going all in, in order to keep that momentum going, I had to start doing everything that I could to get my name out there and get in front of as many people as possible.
Shawn DiMartile (00:08:05) - So dedicating more time to being guests on podcast, writing more content as far as blogs, my book going to more speaking events, going to more like really anything and everything that I could do regarding the real estate strategies I was doing, I put I dedicated my time to joining business clubs, everything. So by doing so, that was getting me in front of more investors, making more meaningful connections with other operators. All of that stuff really, I think was necessary and critical for me to keep that momentum going and keep doing deals. So last year we closed on two deals and all of that stuff definitely would have been harder, you know, if I was doing my W2 job, you know, But there is give and take by leaving that W-2 job. I left behind a lot of money from the W-2, which makes it easier to qualify for personal loans, things like that. That's all out the window now. So, you know, it is a double edged sword and there are some pros and cons of doing it.
Shawn DiMartile (00:09:07) - But ultimately, I needed to to be able to go all in.
Sam Wilson (00:09:10) - Right. Right. No, I think that's that's fantastic. And what would summarize most of that at or of gosh, I can't speak today what would summarize most of that as there we go I'll find the right the right word is engagement. Like you just got to get out and engage. You mentioned getting on podcast, making sure you're right in your blogs. We'll get to your e-book here a little bit because I want to I want to talk about that. But what's what? And I love that strategy because the name of the show is how to scale commercial real Estate. There's a lot of people potentially in your shoes listening to this going, hey, you know what? I do want to make this leap, but what do I do? Either, you know, you started having your portfolio already, you know, working before you quit your W-2, which is smart, but they want to know what those next engagement steps are.
Sam Wilson (00:09:50) - And I think you outlined some of those. What did you do in order to get on more podcast shows out of the gate without as much maybe traction or industry experience as maybe what you felt like you should have in order to do so?
Shawn DiMartile (00:10:03) - Um, a couple strategies that I use. Number one, I like to reach out to podcast host directly myself. The reason why is I host my own podcast and I get bombarded in my email inbox as well as, you know, my virtual assistant getting bombarded with people that want to come on the podcast and they put their copy and paste intros to try and get on the podcast. And I just found that that wasn't super effective with me. So I thought, Hey, I don't want to be one of those people, so I'm just going to do it myself and reach directly out to these people to maybe staying a little bit better of a chance. So that was one method. And also trying to just and focus on highlighting my unique story, because I know that when people go when when people have someone on a podcast, you know, if you just say, I'm, you know, a real estate investor and I've been listening to your podcast, well, yeah, so is everybody else.
Shawn DiMartile (00:10:51) - So I tried to highlight what might make my story a little bit more unique or a topic. Um, and I think that in combination with having my own podcast, definitely helped because, you know, I'm able to make better connections that way, maybe even do a podcast swap and have that host come on my show. Think all of these strategies combined increase the probability just a little bit that I would get on those shows. And that's really it, right?
Sam Wilson (00:11:17) - No, I think that's that's fantastic. And I think telling that unique story certainly stands out. Yeah, you're right. If you if you had sent me an email, Sean said, Hey, Sam, I'm a multifamily investor and I'd love to come tell you, you know, about multifamily investments. I mean, God bless you that there's lots of opportunity in the multifamily space and what you do is great, but it's not not a story. It's not a unique story. You got to how does how do you feel? Like a learning to tell your unique story has also helped you raise capital?
Shawn DiMartile (00:11:46) - Oh, that's a good one.
Shawn DiMartile (00:11:48) - It's it's helped me raise capital because people like to invest with those they know, like and trust and connect with. Because at the end of the day, people are investing with you, right? You know, Yes, they're investing in your company. ET cetera. But you are the biggest risk factor. Anytime someone's giving you their money to go invest in a project. So the sponsor is so important and I like to tell everything about my story. And I even put this on my socials and things of not only what I'm doing in real estate, but me as a person, how I grew up, the challenges that I faced, the mistakes I've made. I like being really transparent about big mistakes I've made in my real estate investing because I know people want to hear that. So I think really, when it comes to the unique story, it's it's being personable, like, you know, hearing about my struggles, being poor, growing up and having absolutely zero money. I mean, when I was in college, I was working at Cracker Barrel as a server.
Shawn DiMartile (00:12:42) - My parents couldn't give me jack diddly to help with college because they didn't have any money. Starting from something like that and getting to, you know, growing your portfolio resonates with people because everybody listening is in the same shoes. So and I remember back whenever one of the first podcast I heard on Bigger Pockets was a PE teacher, and to this day I'm still friends with them. That grew a portfolio of hundreds of multifamily units and retired. And I loved it because I was a guy just like him that didn't have a high paying job. And I think that people like that, right?
Sam Wilson (00:13:14) - Yeah. You're teaching kids to play kickball in elementary school and then you found real estate and found a way to really create wealth for yourself, which I think shoot, man, if I could play kickball and get paid like I could in real estate, certainly.
Sam Wilson (00:13:27) - To be awesome. Right?
Sam Wilson (00:13:29) - But that option just presently doesn't exist. So outside of that, let's talk a little bit about your strategy. You got your hands in some unique things.
Sam Wilson (00:13:38) - You mentioned those there in your in your bio or in your in your intro there about boutique hotels, Airbnbs multifamily properties give you some unique things you're doing because I know you wrote an e-book called California Gold, which most. Okay, a lot of investors hear California and they're like, No. Yep.
Shawn DiMartile (00:13:58) - And I'm glad you brought that up. So I'll be as short as I can because so I've always felt the same way about California. I've always thought to myself, no way. And until this year, outside of my Airbnb here, I had zero interest because of the same things everybody else, you know, the politics, the landlord, tenant laws, etcetera. And then two years ago, San Diego implemented a new municipal code. It's the only city in the country that has this and that got me interested. So for a little bit of context, San Diego is geographically constrained, but it's growing. It's constrained by the ocean of the West. You've got mountains to the east, Mexico to the south and a military base to the north, and all of the flat available lands been built on.
Shawn DiMartile (00:14:38) - So what San Diego did that so unique is they took accessory dwelling units, which I'm sure a lot of people have heard about, otherwise known as Adus. And they expanded it to where you can put unlimited adus up to the floor area ratio. So what this means is I can go and buy a single family home, you know, less than a mile from the beach, and I can add ten units or more to that property if it's big enough and put new product on the line. And some of the most coveted communities that otherwise get no new buildings. And so when I saw that and I saw that, okay, not only can I build, you know, I can build these for 150 to 200,000 per unit with nice finishings and I can sell them for north of $400,000 a unit and I get to put my own tenants in there. So I'm not buying a value add multifamily where who knows when I can get those tenants out? Because here in California you can't just say, Hey, I don't want to renew because I want to renovate it.
Shawn DiMartile (00:15:32) - So doing value add here carries more risk. And then, you know, we can maybe get into more of the minutia. But this strategy carriages, so much less risk. It's in my own backyard where most of my investors in and it just made so much sense numbers wise that that was the light bulb that went off. And I named my book California Gold, because I call it the new California Gold Rush. There's only so many lots that qualify and make sense to do this investment. So the well will run dry eventually. And right now it's a rush to find the lots that you can put all these units on and you can make a killing.
Sam Wilson (00:16:06) - Wow, that's fantastic. Give me a case study on that. Like what's you know, what's a what's a well, just give me some examples of things, assets that you've bought and how you did it.
Shawn DiMartile (00:16:16) - So I got a project right now in an area called Ocean Beach in San Diego. I bought a two bedroom, one bath, two bedroom, one bath house on a 7000 square foot lot and it's a half a mile from the beach on a hill.
Shawn DiMartile (00:16:29) - I'm adding 11 units to it to where it's going to total 12 units in the back of the house there is. So there's one unit being added to the existing house and then the huge lot behind it. We're building a three story structure with units on all three floors, second and third floor units will have. Corrected views of the ocean. Now, what's what I love about this, though, anybody that's, you know, heard about the negatives of multifamily development knows that a lot of the risk is holding costs because you're sitting around waiting for the government to give you permits while you make no money and you're just burning through it. Right. This strategy is different because I bought an existing house that I can rent out and not only am I renting it out, I got an Airbnb permit. So the property's actually cash flowing while we're waiting around to get those permits. So we reduced one of the biggest risks we've mitigated substantially by doing that. Now the rest of the plan is to obviously we've designed the units they're getting permitted now, build the units, fill them with tenants, put on permanent debt and cash flow that property.
Shawn DiMartile (00:17:34) - And now we have a property that these units I'll finish it by saying this These units in this Ocean Beach community, 10% of units there have air conditioning and in unit washers and dryers. Every single one of our units is brand new in unit air conditioning and heating, washer and dryer in unit in ocean views. And that's just something you're not getting with most units there.
Sam Wilson (00:17:57) - Wow. Okay. Let's let's dig into I guess there's a few questions at one. That's a that's a completely awesome strategy I think. I think finding those the the riches there in the niches is the phrase goes and this is exactly what you've got on the acquisition side of things. Are you basically just paying retail price for that property just because of the upside potential?
Shawn DiMartile (00:18:22) - Yes, exactly. We are paying retail now. We paid a little bit less than retail. We were able to negotiate that property down 150 below asking. But we were also able to get seller financing on that deal, which helped a ton, 80% seller financing, 5.4% interest interest only payments.
Shawn DiMartile (00:18:38) - So that was infinitely better than what we were getting offered by by.
Intro (00:18:42) - Banks, right? Right.
Sam Wilson (00:18:44) - Yeah, absolutely. Okay, cool. And I've got I got a buddy in a in a completely different strategy. But this is this is something we're kicking around a lot. He's like, man, he goes, you know, because we are very accustomed to going out and finding off market, you know, either distressed or, you know, whatever it is you name it for how we can get a discount on the buy side. And we're looking at his strategy and how effective it is. And I'm like, Dude, just get on the MLS and start buying retail. Your your cash flow is insane on what you're doing. So why waste time, you know, trying to nickel and dime your way to success when you've already got the plan built and you just you can afford to pay retail. There's enough margin there is what I'm getting the numbers.
Shawn DiMartile (00:19:22) - Make sense.
Sam Wilson (00:19:22) - Right? So cool. So you can buy retail your product still make sense or your margin still makes sense at retail when you build those seven units, how many square feet are those approximately per unit.
Shawn DiMartile (00:19:36) - So our two bedrooms are a little over 600ft². And then we're providing a number of studios that are about 346ft² right now. I know a lot of your listeners are thinking, my goodness, that's small, but that is sort of the trend here in Southern California to get the units a little bit more affordable. But to combat the how small they are, we're implementing a ton of strategies and design to make them feel a little bit bigger. So floor to ceiling windows, bringing in tons of natural light. And the studios have these really cool excuse me, Murphy beds that convert to couches. That way the that unit can feel big for the tenant.
Sam Wilson (00:20:15) - Yep. Yeah. Love a good Murphy bed. That's cool. All right. So and again, a 7000 square foot lot is not that big. Like I'm sitting like my my lot here is only 9000ft². And I'm going, wow. Okay, so that's that's 2/7 or I guess whatever, two nines. Anyway, it's 2000ft² smaller galley. I can't do the math here on the fly.
Sam Wilson (00:20:36) - It's too, too early in the day. But 2000 square foot smaller, I'm thinking, how do you fit seven units plus a house? Where do they where do they park?
Shawn DiMartile (00:20:44) - So good question. With this strategy, one of the one of the things that also make it great is the city doesn't require parking so long as you're within a transit priority area. So TPA for short, that just means you're within a half a mile of major public transportation no matter what kind it is. So this the the tenants are going to have to park on street parking, but there's a plenty of street parking in this area. It's far enough away from the beach and a community where everyone will be able to find parking. But that's not really a huge downside for this market because that's street parking is what everybody has. If you've got, you know, private parking, that's huge. And by the beach.
Sam Wilson (00:21:21) - Right. No, absolutely. Absolutely. Cool, man. That's awesome. I love that. Just the the again, the finding something unique and then finding a way to scale that.
Sam Wilson (00:21:32) - So, I mean, you've answered a lot of questions. You've thought really I think obviously you've thought really well through this strategy and it's and it's effective. So you're then taking these units and you're selling them off. Is that what I heard?
Shawn DiMartile (00:21:45) - Yeah. So, you know, some of these because of our investor appetite, you know, some investors don't want to hold as long, some do. So some projects we're going to be doing shorter holes that are more like a 3 to 4 year hold where we're going to lease it up, get it stabilized and then sell it off for a quick pop on their money. And then some of our deals we're going to be doing like 5 to 7 year holds or even longer so we can just hold these cash flow on them and then reap the rewards of the increase in rents that we're going to continue seeing.
Sam Wilson (00:22:12) - Man, that's awesome. Sean, We've got about three minutes left here on the show. I want to hear a little bit more about what our investors can find inside of your book and how they can gain access to that.
Shawn DiMartile (00:22:23) - So to gain access to the book, it's really easy. Go to investor Sean Simple and I spell my name Shar investor Sean and the book is going to tell you everything about this strategy, all the basics. You can read this book in 15 minutes and it's going to tell you not only like what the rules are, the municipal code, it's going to show you the websites you can go to to find out how many units you could put on the calculations, all of that stuff, ways you can mitigate risk. All of that is within that book compacted down as much as I could get it. And then, you know, also, if you're while you're at it, make sure to follow me on Instagram. Sean underscore Demartini Hopefully we could throw that in the show notes or something. But I talk a lot about this strategy on my social media as well.
Sam Wilson (00:23:07) - Fantastic. Yeah, we'll make sure we include your name and the spelling of that. For those that are not sitting in front of a computer or able to actually access the show, notes Martellus de Martinelli.
Sam Wilson (00:23:18) - So when you're looking up Sean, that's how you spell his last name. Sean Thank you again for coming on the show today. Man, the day was a blast. I certainly loved hearing about your strategy going to the Navy, becoming a air traffic controller. What it took for you then to get out and just building, building your wealth such that you could exit your W-2, looking 20 years in advance, saying, I don't want to be that person? You gave us some great insights on capital raising, on how to be authentic and just being yourself. Your unique story, crafting that unique story and telling it such that investors can relate to you, man. And then also just the you know what to do out of the gate, getting on podcasts, blogs, writing an eBooks, engaging in the community. Man, you've dropped a lot of great things here today outside of downloading the e-book there at your website link. Is there any other ways you'd like our investors to get in touch with you or learn more about?
Shawn DiMartile (00:24:02) - You know, I just want to emphasize one more time to follow me on Instagram.
Shawn DiMartile (00:24:06) - I'm putting a lot of work into it. You're going to see some super cool content that's really high quality. And outside of that, man, you'll get everything else off of investors. Sean And thank you so much, Sam, for like plugging all this stuff and all your kind words. I do appreciate it, brother.
Sam Wilson (00:24:20) - Absolutely. Thank you, Sean. Appreciate it. Have a great rest of your day. You too. 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 appreciate you listening. Thanks so much and hope to catch you on the next episode.
