On this episode of Engineering Passive Income, Joseph talks about his story and explains how he went from top of his classes, to a high paying engineering role with Exxon, to unemployed with a negative cash flowing apartment complex with asbestos, to now having 13 acquisitions and being able to have the freedom to do whatever he wants with his life. Joseph gives you what he did wrong and what he did right to get back to the top
HIGHLIGHTS:
0:00 – Intro to the podcast
2:05 – Joseph explains what the podcast will be about and talks about his early days just out of college and his first internships of his career
3:12 – Joseph applied to 2 oil and gas companies and ended up getting a job at Exxon, which brought him to a pivotal point
4:18 – Joseph noticed his opportunity for upward mobility at the places he interned wasn’t very good so he went the oil and gas route
5:03 – Almost immediately they send him overseas
6:19 – When he moved to Papa New Guinea was when he really started making a lot of money, with almost no expenses
6:57 – Joseph talks about his manager who was a rotator, and always seemed to buy houses and rent them out which peaked Joseph’s interest
8:09 – Joseph and a friend came up with the plan to buy 40 foreclosed houses and they needed a loan of $3,000,000,
9:12 – After being rejected a lot, a bank suggested joseph to buy an apartment complex rather than individual houses, so he bang to read up on it and fell in love with the math
10:39 – After 6 months, Joseph closes on his first property and becomes and apartment owner, but within the first 6 months, he instantly regretted the decision
11:29 – They lost 15% of their occupancy pretty much immediately
12:07 – Their renovation attempts seem to be working, but the insurance they had purchased turned out to be fraudulent
13:06 – They were installing central AC, which requires permits, meaning you have to do an environmental which showed up asbestos
15:18 – The final nail in the coffin is he lost his job at Exxon, leaving him with no income and an apartment complex which was negative cash flowing
16:25 – The next day, Joseph spent over $10,000 on a real estate group so as he could get his property on track
17:26 – Joseph spent the next 6 months focusing on real estate, and managed to turn the whole property around, with a $30,000 per door renovation and doubling rent as a plan
19:03 – Joseph goes through the steps of the renovations
19:38 – After a slow start, Joseph leased the whole property up
20:11 – They made a 200% return on the refinance, and it was then he realized multifamily was for him as he talks about what they have today
21:22 – Looking back, Joseph feels so grateful
21:56 – Multifamily has given Joseph the freedom to do whatever he wants
22:46 – Getting passive income to the point where it matches your job takes a long time
TRANSCRIPTION:
Welcome to the engineering passive income show, where engineers and other professionals come to learn how to generate passive income, grow their wealth and get their time back. Your host is Joseph Bramante, an accomplished civil engineer, oil and gas professional, multifamily investor, an industry speaker. Learn about investment alternatives, the same types of investments that he used to achieve Financial freedom himself broken down like only an engineer can. Now here’s your host, Joseph Bramante.
Welcome to the engineering passive income show. I’m your host, Joseph Bramante and I’m just so glad you guys are here. I really just want to take a moment to thank you for tuning in. How you find your way onto the show, just want to say a special thank you for coming here. This is our very first episode, and I just want to give you an overview of what you can expect on the next several episodes.
So, as a reminder, I’m your host Joseph Bramante. I’m a civil engineer by trade. I started off interning at consulting firms and then spent five years in the oil and gas industry working for Exxon overseas. I then jumped headfirst into multi-family back in 2011 and just have tons and tons of stories and experiences to share with you guys about what I’ve learned over the last 10 years and not just my experiences, but we’re going to have all types of guests on the show from various backgrounds, like self-storage and mobile home parks and warehousing, just to name a few. And if there’s somebody who wants to talk to let us know in the comments below, and we’ll be sure to reach out to them and get them on the show. Not only that, but we’ll have a very interactive process in how we actually do our interviews. And we’ll let you guys know ahead of time that, Hey, we’re going to have so-and-so coming on the show. If you have any questions for them, send them our way. We’ll be sure to ask them on the show. So please go ahead and hit that subscribe button for us. And if you’d be so kind, just go ahead and give us a five-star review as well. Now let’s get to the show.
Hey investors. Welcome back to the show. Today We’re going to talk about my story. How I went from kind of middle-class to upper-class to unemployed, to the CEO of a multi-million dollar multifamily investment company here in Houston.
So I started off as an engineer, as you know, went to school, made great grades, and had some really awesome internships that really kind of enlightened me as I was going through and getting ready to make an ultimate career choice.
My first internship was for a small consulting firm out of Baton Rouge. The company was namesake by the main owner. He was a PE a professional engineer, and he was the only one at the firm. And everything kind of reported up to him. Your typical kind of engineering consulting firms structure. And my second consulting firm, consulting internship job was at a consulting firm in New Orleans, much larger firm called WS Nelson, had a great time there, spent the entire summer doing a lot of AutoCAD, detailed design etc., working on some really large projects for some very large clients.
And then ultimately, you know, when it came down to the end, you know, so we have finished these internships, career days coming. It was our last career day, and two oil and gas companies came to town. And I remember thinking, you know, what the heck, let me just go ahead and apply. And we’ll see what happens. I don’t know anything about oil and gas, but, you know, I was top of my class had really good grades, so I figured let’s see what that can do. So do the interviews end up getting a job at Exxon. And so I was at this really, you know, kind of pivotal point in my life. I was like, you know, do I take this offer at Exxon, which was substantially higher? Or do I go with, you know, WS Nelson and continue down my traditional consulting route? So that was the first kind of pivotal point I had in my career. And I bring this up because the decision I made is probably a decision that a lot of you are in right now.
And so what I noticed in the consulting firm, just during those two years that I was interning, it was two summers was that my opportunity for upward mobility wasn’t really that great. Unfortunately, the only way I would kind of move up was if somebody retired and, you know how that goes, people don’t typically retire every day. It’s a pretty rare thing. And so I didn’t want to get stuck in the same position for, you know, decades doing the same stuff and not really getting much exposure. I wanted to grow, wanting to do different things. So that’s when I decided to go ahead and do the oil and gas route, because I didn’t know anything about it and they’re offering me a lot more money. But what I liked about it was I was actually had, I was with a much larger company. I was able to go to various job routes with it.
So I took this job and almost immediately, they send me overseas. I’m here in Houston for nine months and opportunity comes up for me to go overseas. And I take it, which was another reason why I wanted to go at Exxon because as an engineer, you know we do all these designs, right? You’re back at the office doing designs for projects all over the world. And I remember, I was specifically, I was designing this I designed an I-beam for this, it was an overhead crane for this facility out in Freeport, Indonesia. And I designed this I-beam and a few weeks later I get a photo back of that I-Beam installed. And I was just like, man, I would’ve really loved to have been there to actually see it. And so that was one of the things I was really excited about working for Exxon.
So anyway, I’m overseas now in Australia, I was working on this very large LNG facility that we’re building out in the middle of the jungle in Papua New Guinea. It was our highest paying kind of hardest ship, our most hardship assignment they had. So I took it because it just seems like really adventurous. So I spent the first year in Australia, we moved in country to Papua New Guinea and then Papua New Guinea is when I really started making significant money. Also because my expenses were basically none. I had like a thousand dollars a month in expenses because Exxon was paying for everything. I had a driver, and my rent was paid for, everything. And one of the unique things about being an ex-pat, especially in those hardship locations is there’s really two types of ex-pats. You’ve got one that is a rotator. So they’re on the job site for like four or six weeks and they go home and then they come back four weeks later. And then there is a resident. I was the latter, the resident. I was full-time in Papua New Guinea. But my manager was a rotator. And this is around 2010. And I remember every time he would come back to the job site, it just seemed like he had some new crappy little house that he had just purchased for like $60,000 and was renting it out for a couple of hundred dollars. I mean, these things looked terrible, but he was renting them out and had accumulated quite a few. And so it kind of piqued my interest.
And remember, we’re overseas, we’ve got kind of really slow internet limited news. You know, the funny thing about when you’re overseas is, you know, they don’t really talk about America that much. You’d be surprised. We kind of live in a bubble here in America and you overseas, they could care less about us. So I really didn’t have much insight to the housing crash that was going on other than, you know, I kind of knew vaguely it was happening. But anyway, so he’s buying all these foreclosed houses. So I started looking into it and a friend of mine, one of my colleagues he’d already had like five through his family. And so I worked with him, I said, Hey, man, let’s go out and let’s buy some houses. Our boss is doing that. We should do it too. So we sat down, and we came up with this idea. We were going to buy 80 foreclosed houses. I had this beautiful spreadsheet, do it over a two year period. And all we needed was $3 million. We needed a loan for $3 million.
So I had this spreadsheet, it’s all, you know, dialed in looking good. And so I’m picking up the phone, I’m calling all these local banks here in Houston, and I’m sending them this spreadsheet, you know so proud of what I’ve done. And as you might imagine now, first of all, I’m calling these guys from a Papua New Guinea phone number. So they’re probably, you know, answering the phone already very suspicious. And then they hear me this 25 year old kid talking about, you know, trying to get a loan for $3 million and want to buy 80 houses over a two year period. I mean, it was just absolutely bonkers. And so as you can imagine, they all, you know, politely kind of hang up on me to say, no, thanks, not interested. And finally, one of them just says, look, Joseph, go buy an 80 unit apartment complex. Don’t buy 80 houses, just buy an apartment complex. There’ll be one roof much better than 80 roofs. And that’s when the light bulb kind of went off in my head. I had no idea I can buy an apartment complex. So fast forward a few months later, I’m on loopnet.com. I’m finding all these brokers getting in touch with people. And I start my hunt. Also I started I bought like half a dozen books or so on Amazon and had or on Kindle and was just reading these books. I went through a book a day almost in the very beginning. I was just so pumped and excited about it.
And what I really loved about I was at the formulas, I fell in love with the math, you know, again, a big geek engineer over here. I loved the math side of it. So I just memorized all the formulas and really went to town in breaking down this industry. So just with reading a couple of books, I kind of felt so emboldened, plus, you know, I was 26 at the time, 26 years of age, you know, felt a bit embolden just to go out there and take the world by storm. So I’m calling these brokers, I’m getting in touch with them and getting shown these properties, all remote what have you. And this is before COVID, this was before zoom, you know, I was remote working to the extreme back in 2011 on my first deal.
So finally, after about six months, find my first property. And well, not my first, but I go under contract and win and closing my first property after about six months of effort, and then, so there you have it. So now I’m an apartment owner. I’m 26 years old, got this 26 unit apartment complex. And it’s, you know, 2011 within the first six months, I instantly regret that decision. And, you know, honestly had I bought that property or had I not bought that property and lost that bid and been forced to maybe go a little bit longer without going under contract for a property. I may have never even gotten into industry.
And here’s why. Within my first six months of owning that property first we lost 15% vacancy almost immediately because it was two neighboring properties that the seller owned. He sold us one and all the residents went next door, once they got news that we owned it. So that was the first bad thing, which wasn’t, you know, I kind of brush it off as I, no problem, I want to do a renovation anyway. So I just started renovating those units that people had moved out of. Then we are, so we’re doing this renovation and we’re paying everything cash because, you know, that’s how we do things at Exxon, as far as we know. You know, we’re trying to Exxon the crap out of this project and it is, you know, initially it seems like it’s working, I’ll say that. So we’re doing our Exxon thing on this property and we are, you know identifying subcontractors and whatnot. And then the next bit of bad news comes in that the insurance that we had purchased we find out, You know, I get a phone call one day from the broker who had sold us the insurance that the guy that he bought it from was a fraud. We didn’t actually have insurance. So it’s, you know June, no it’s like, April, May, we’re going, you know, June is hurricane season. It’s kind of a big deal. And so we find out crap, we don’t have insurance.
So, you know, now we’re starting to panic. We’re reaching out, we’re trying to get other insurance, which if you don’t have insurance and you own a property, it’s very hard to get insurance. So, we’ve got that problem. That’s kind of a problem right there. And then we get the next issue comes up, which is one, honestly kind of knocks me down a little bit, but still somehow, I managed to rebound is that we get a phone call from our, so back up a little bit, we’re doing this renovation, we’re installing a central AC. Our property had all window units. So we’re installing central AC on the property. And part of that process is to apply for permits. And part of the permitting process is, you’ve got to submit an environmental. Now, normally not a big deal. Today Most lenders it’s mandatory you do an environmental. Lenders typically on your side. I know it can be a bit challenging sometimes, especially when you’re first starting out. You’re like, why am I doing all of this crap? Trust me, it’s worth it. They’re in your court at the end of the day. Well, this was back in, you know, I think multi-family, wasn’t as mature as it is now back in 2011, wasn’t required. Our lender let us close on a deal no problem. Probably because they were not multi-family lenders to begin with. They were just kind of a general lender.
So we didn’t have an environmental. No problem. We pay for one comes back like a week later, and then probably one of the worst things you can imagine is on there. We have asbestos and I remember, you know, after a few choice words between me and my partner. We immediately get on the phone. We’ve got guys working in those units. We have units with sheet rock down. We send them home, like guys, stop work, go home, no more questions. We kept it very just point blank, just kind of real quiet because, you know, we work in oil and gas industry. We know about asbestos, we know all the dangers and risks. So as soon as we found out we stopped work sending everybody home. But now we’ve got this huge mess because now we’ve got a property. There’s four units that we’re renovating that we can’t touch because it’s got asbestos. So now we’re getting bids to get asbestos abated. And we’re trying to figure out how to do this.
And then like a few weeks later, just the final nail in the coffin hits me find out that I’m getting let go from Exxon. So it was just back one after the other, after the other. And finally just the knockout punch lost my job. So mind you the property is already negative cash flowing. Me and my partner we are keeping this thing afloat with our own money. And once I lost my income, now it was dependent on him. And so I was obviously, you know, a bit upset, you could say that and upset, aggravated, angry, embarrassed, all those things. If you’ve been let go, if you’ve been fired, you know what I’m talking about. It is, you know, for me personally, it was the biggest upset, it is the first time in my life I’d ever been, I ever failed at something, you know, the kid used to kind of winning and winning and you make the grades, and you know, you get the jobs, and you do all this and had all this academic scholarships, etc. And then just to get that termination paper, I’ll tell you what, that was a pretty big blow to the ego and really kind of kept me in check after that.
But so nonetheless, the next day, I’m rebounding, I’m spending over $10,000 to join a local real estate group to kind of, you know, get myself in a position to succeed on this property. Cause I obviously didn’t know what I was doing. I read some books, thought that I knew what I was doing. I was wrong. I had this 30,000 foot level education of how to operate properties and how to do multi-family.
And I guess today it would be similar to just listening to podcasts about how, you know, people like me have gone and done multi-family, but when you actually get down to, you know, the boots on the ground and actually doing a deal, you quickly realize there’s a lot of the nuances and a lot of the, just going through the motions that you need to have to get comfortable doing deals. So anyway, I joined this group and immediately started taking action. I spend the next six months focusing on real estate, reading additional books, taking courses professional courses at CCIM, continuing getting very involved with the mentoring program and then managed to turn the whole property around and within like a six month period, it Sounds a bit crazy, but we can put this plan, another plan, right. To do a 30,000 per door renovation on a property, mind you, that we spent 25,000 purchasing 25,000 per door purchasing. So we spent more, we were going to spend more on the rehab than we did on the purchase. And we were going to double rents. It was a crazy story, and I pitched this idea to all the mentors at that group, that real estate group that I joined, all but one told me it was a crazy idea. Even the CEO was like don’t do it, it’s a crazy idea, but I was in a position where I just made all this money overseas. And I was, you know, their advice was to sell the property. And I was going to lose the majority of what I made for the last five years. And I just, you know, I couldn’t afford that. So I was like, you know what? I’d rather go out with a bang and let’s just go all in versus just backing out now, cutting my losses and still losing. I’m going to lose either way. So if I’m going to lose, I am going to lose on my terms.
So we went out and we went all in on this property. I had some money left in my 401k, cashed it out and use that to collateralize a new loan, a bridge loan that was full recourse. Me and my partner did it. And we proceeded down this route of doing his massive renovation. Step one was we vacate the property. Step two, we did a moderate asbestos abatement on just the key areas. Step three, we came back, and we did the full renovation and step four, released it back up at double the rents. And then I’ll tell you what it was, that was probably the most nerve wracking nine months of my life. Cause it was, you know, we’re spending money like crazy. We’re doing this renovation. We’re spending money, no money is coming in the door. We have no idea if it’s going to work. No leasing, nada. And when we started leasing it was a slow start because we were releasing in the wintertime. But around March, April, May, and we leased that whole thing up. And for me, that was the moment that I knew that multi-family was for me. Because we’ve read books. You’ve heard the podcast, we’ve seen all the presentations, but until you actually go through it yourself and you realize, and you see, you know, the NOI increase and you see the cap rate and you see, you know, for us when we got that refinance that term sheet, and I was like, wow, you’re going to give me all this money Tax-Free, we made over a 200% return on the refinance, got all my money I made that I put into the deal times two, still own it today.
And that was, I was sold at that point I’m in, hundred percent, let’s do this. So at that time though, I did have a job on the side. I’m working in the oil and gas sales, but also working, you know, the majority of my evenings and after work still multi-family. But I use the success of that first deal to go forward and raise capital for more deals and, you know, fast forward to today, you know, I continue working with the same people on that first deal that or for the most part that I am today, we formed a company back in 2016, we are now on our 13th acquisition. We’ve got new development that we’re working on. We’ve done several other large value adds. We’ve got one, right now that we’re doing that’s even larger than the first. We’re doing a 37,000 per door value add on a property. And yeah, so it’s just been a crazy, crazy experience. And, you know, looking back on everything, I’m just so grateful because now I’m in a position where, you know, a lot of my friends who never, who were still with Exxon, majority of my friends at Exxon are no longer at Exxon. They’ve been let go, or they’ve jumped ship, they’ve gone elsewhere. And you know, my original partner as well, he’s gone to several other companies. And I tell you why, it’s just one of the most humbling conversations I have is when I am meeting with other, my former colleagues from Exxon and other places. And just seeing, you know, how much of a difference that multifamily has made in my life. And given me that additional freedom to do what I want. I can take three months off and travel like I’ve done numerous times. I don’t have to work, you know, come in super early or I can basically do what I want. I live life on my terms. And that is the freedom that, you know, that really you can’t put a price on.
And for a while, you know, it was an ego thing for me, and I just kept pushing forward and pushing forward. And it was, I came from a very high income earning bracket. And it took me several years to replace that, to replace that income. And that’s definitely one of the big challenges as an engineer is the big hurdle. Cause you’re making very good six figures in your engineering roles and your other analytical roles. And to get that passive income to the position where it’s replacing your salary takes a long time. However what doesn’t take a long time, it’s just getting that additional revenue. It’s where you got that extra couple hundred bucks a month, a couple of thousand dollars a month. It really, you know, it takes, you know, over time, it really kind of loosens up your mood.
I’ve got, you know, my original partner, whose got, you know, a lot, I can’t say how much, but he’s got a lot invested. He could retire if he wants to right now, but now his mindset is completely different. You know, he goes into work and he works because he wants to work. He doesn’t work because he has to work and it’s a completely different mindset. And you know what, I hope that all of you listening to this can get to that position where yeah, you know what, you might be at a W2 right now, but, you know, with disciplined investment and choosing great opportunities to invest in overtime and by time, I mean, time, I don’t mean one, two, three, four, five years. I mean like 10, 15 years over a period of time, you’re going to be able to basically replace that W2 income, but just be patient with yourself. And I think, you know, once you get there, you’ll look back and you’ll see it was all worth it. But anyway, that’s my story, guys. I’ll catch you guys on the next episode. If you have any questions or want more detail please send in the comments, send me an email and we’ll be sure to get that, get a response to you, but we’ll be going over this in more depth at a future podcast. So have a great one guys and see you in the next episode.
This was another episode of Engineering Passive Income with Joseph Bramante, download resources and join our private investor group at www.engineeringpassiveincome.com. Then be sure to leave us a review on apple podcast. Thank you for listening. And we’ll see you on the next episode.