On this episode of The Engineering Passive income Show, Joseph is joined by Reed Goossens. Joseph and Reed discuss a wide variety of topics throughout this episode such as challenges you face when investing in real estate, adapting your skill set to aid you with investments, entrepreneurship in Australia vs entrepreneur ship in America and so much more. Don’t forget to subscribe and leave a five star review if you enjoyed this episode!
HIGHLIGHTS:
0:00 – Intro
0:43 – Joseph gives us an insight into Reed’s background
1:14 – Joseph encourages you to listen to Reed’s podcast ‘Investing in the US’
2:16 – Reed speaks about his background and why he moved to the US
5:31 – Reed takes us through the reasoning as to why he got involved in real estate and investing
9:16 – Reed states that he has lost count of the amount of former engineers that are now real estate investors
11:45 – Reed mentions how he believes engineering is a great degree to study as it is a problem solving degree
13:00 – Reed speaks about how his life looked whilst he was investing and working as a full time investor
15:01 – Reed states that it took him eight years to leave his full time job
18:08 – Reed talks about how his mindset changed as he was building his wealth by sharing some personal stories about challenges he faced with some of his first investments
20:13 – Joseph states that within this industry the challenges never go away and that every deal bring some new challenges
22:19 – Reed speaks about how he was needing real estate to be his day job whilst being able to use the skill set he had from studying engineering so he became a project manager and describes how it was the best decision he made for his career
26:51 – Joseph encourages anyone listening to this to take inventory of their skills and think about how they can use them to get into the real estate industry
27:45 – Joseph asks Reed if he has any stories he can share about experiences with other engineers that were passive investing with him
31:44 – Reed speaks about how the uncertainty of real estate can be hard for engineers to wrap their heads around or accept and take the leap of faith required for investing in real estate
34:49 – Reed mentions how the beauty of passive income is that you can do it alongside reliable investors who have experience
35:47 – Joseph asks Reed if he thinks he could’ve gone into real estate without his engineering degree
38:04 – Reed speaks about Australian culture and entrepreneurship in Australia vs. entrepreneurship in America
39:27 – Reed mentions how he used to have Australian investors but the majority of his investors now are American
40:31 – Reed explains why there is no multi-family housing in Australia
46:30 – Joseph and Reed playing a funny game where Reed tests Joseph’s knowledge of Australian slang
47:37 – Reed has a book called ‘Investing in the US; the ultimate guide to US real estate’
48:41 – Joseph speaks about when he lived in Australia
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.
Joseph Bramante: Aright engineers. Welcome back to the show. Today’s guest is Reed Goossens, all the way from Brisbane, Australia. Brizzi, he originally moved here in 2012 here being New York city for work. Engineer by trade and then got into the real estate game started with small duplexes and he launched his own real estate investing firm, Wildhorn capital. He’s now a very successful multifamily, syndicator of very large multifamily investment deals. He’s got several, I think we’re at like over 150 million AUM and growing, but we’ll get into that. And also has a very successful podcast, which I encourage you to check out, call investing in the US if you haven’t heard of it, definitely go check it out. So Reed, welcome to the show.
Reed Goossens: Good day, mate. Thanks for having me on the show.
Joseph Bramante: Yeah, Man. It’s good to have you here.
Reed Goossens: It’s good to Be here.
Joseph Bramante: You know, we’re going to practice, do a session on Azzie slang and see how many Azzie words I remember.
Reed Goossens: Yeah, let’s do it at the end of the show. I bet you forget a lot.
Joseph Bramante: No, man. So I watched this thing on Facebook called Ozzy man reviews. I’m sure you are aware. So that’s how I stay fresh. Like my Aussie slang it’s by watching, it’s just a funny thing on Facebook, but that guy is hilarious. So anyway, so tell me about your story. Obviously, you’re from Brizzi and then you came here in 2012 if memory serves that’s around the time that JayZ song came out, you know, New York, I’m sure that had nothing to do with why you came here.
Reed Goossens: No, it didn’t. Actually rewind a few years earlier than that in 2009, so engineering background, I graduated the university of Queensland in 2007 with a Bachelor of Civil Engineering, majoring in structural engineering. And in 2008, I went straight to London to work on the 2012 Olympic games. Preparing all the infrastructure actually the Paddington station, if you remember Paddington bear I was doing the upgrades for the Paddington station because that was the first station, you know, tourists and athletes would see as they’re coming from Heathrow airport. And so that was a really incredible experience. But in 2009, I went to the south of France and was a deckhand on the super yachts for a year. If you ever seen the show below deck on Bravo, it was exactly the same thing as that. And in that time I fell in love with an American girl and in 2009, we met kept in contact. I actually crossed the Atlantic ocean on this super yacht to the Caribbean because it’s winter in Europe.
Joseph Bramante: You sailed across the ocean to be with her. Is that what you said?
Reed Goossens: No, no, let’s not get that far. It was more for the experience. But in 2009, like I finished, did a year on these boats, had a great time, but you know, wanted to go back and no offense use my brain. So I actually ended up backpacking through New York city and that’s when I fell in love with New York city for the first time. So I fell in love with this girl, fell in love with New York city, moved back to Australia in 2010 and was just pining to come back to the US. And, you know, two years later in 2012, I was able to make the jump back here and you know, and chase a girl and live as an expat in New York city.
Joseph Bramante: Wow. That’s, so we have a lot of similarities, you, and I, so both civil engineers. I also had an emphasis on structural. I never actually got to, sorry, I had two summers at WS Nelson in new Orleans where I did get to practice and use my trade as an intern. But then I went straight to work for Exxon after. So after that, I never actually did engineering work anymore. But I also worked as a deck hand, not as lavish, I didn’t work on these big mega yachts. I worked on a towboat going up and down to Mississippi river, like Tom Sawyer. So, but that’s how I paid for university. So we got some similarities there, so I know how to work the lines and all that and do all the knots and stuff. But that’s very cool. And so you, obviously, you fell in love with the American girls and you can stay the same for the Australian girls, If never been to Australia. It’s just something about the accents. And I imagine for you, it might be the same, you know, for you, we’ve got an accent.
Reed Goossens: That’s exactly right.
Joseph Bramante: Look at these weird American accents, that’s so hot, you know, or whatever, you know, I think it is. Very cool. So a little bit jealous, cause you actually got to design and build something in New York, which is man that’s incredible. And you were actually just before the show, you were showing me a photo, that’s a photo of it right there behind you, right?
Reed Goossens: In the background. Yeah. Yeah. But I know this show’s all for engineers and sort of the premise that I get asked a lot on these shows is, you know, why’d you get involved and in around that story of that moving back to Australia in 2010, I got a civil engineering job again for a mining company in Brisbane in south end, I think you might even know where south end is. Cause I know he spent a bit of time in Brissy, and I was sitting in a cubicle and I was like, I’ve just spent two years abroad, you know, gallivanting around the south of France, met this incredible girl in the states. And I was like, I feel like a small cog in a big machine. I was in a cubicle. I was probably what? 24, 25. And I just had, I knew I had more to give and I didn’t know what that give was. I just knew that I’d been, I wanted someone to pay me to live my life to go traveling and go surfing and you know, chase girls around the world. That’s essentially what it was. And then I stumbled upon the book, rich dad Poor dad. And that was the sort of the aha moment for me. That was really when the penny dropped and that whole working for someone else and feeling like that small cog in a big machine really started to hit home. And that book just you, it opened my eyes in terms of, okay, there’s a thing called being an entrepreneur, right. There’s a thing called investing and I’d started to turn some, you know, decent money being in the mines, you working for Exxon mobile, I’m sure you work, you were in remote areas of Papua New guinea, all that sort of stuff. Cause I know you are in my show explaining the story. But I’m sure a lot of your listeners resonate with the fact that you just feel you’re in front of a computer, you’re doing CAD, you’re doing these, you know, on these flights to the middle of bloody nowhere and you’re stuck there for a month. And it just, I was like, this can’t be what I’m doing for the next 40 years of my life. I need to take control, but I didn’t know what entrepreneurship was or is at the time. But I knew I had to get my money working for me. And so was really the start of it. And it was a combination of just being a little bit self-aware and thinking, well, hang on, I’m an engineer. Like, you know, I’m building stuff with land and real estate. Why don’t I start investing in real estate? And that was the start of the journey to learn about, okay, let’s start buying a house and flipping house and this was all in Australia by the way. So I was learning about real estate prior to moving to the us. But it was that start of that coming home from traveling, the stuck realization that I was sitting in a cubicle and that I wasn’t in control of my life and then reading rich dad poor dad, that was the sort of the belt, the fire in the belly to get started.
Joseph Bramante: So I actually never read rich dad poor dad until recently. I’ve been doing real estate for 10 years. Never read it until recently. And I just kind of jumped in, but I’ll tell you, if you haven’t read it, go read it. And you’ll be from that very first chapter when they say a house is a liability versus an asset, I think that’ll completely rock people’s minds and get them into really understanding what real estate and entrepreneurship’s about. But so me and you were actually in Australia, obviously you were in Australia your whole life, but I was in Australia the same time as you were in 2010. So I was there from, I lived in Brisbane from 10 until I, sorry, from nine until 10. And I remember real estate was really expensive there. I was like my, my big takeaway, I was like, holy cow, this stuff is expensive. I was living in a little tiny condo that I was renting a condo in this high rise and it was just, the prices were astronomical. And so did you start your real estate game in Australia or no?
Reed Goossens: No, I didn’t, but I did start the education journey. And for, you know, all these people listening about, you know, I’m an engineer and as you mentioned before, I’ve got a podcast as well. And I’ve lost count about how many engineers, former engineers now, real estate investors, because it’s all about breaking it apart and putting it back together. Like we’re all geared that way. Even today in my business, I look at another business and I’m like, I can take that apart and put it back together and maybe I should have a at it, but yeah, for me, in the beginning, it was like learning, like just trying to absorb as much information. And luckily in Brisbane at the Bronco leagues club was the only, at least the only meetup I could find. And it was a small meetup for real estate enthusiasts, you know, who want to get in the investing enthusiast that is not a brokerage or, you know, whatever. And I started attending those things and just starting learning about the different ways. Like I learned about lease options in Australia, which are now you can’t do anymore. Fixing and flipping, There was back in the day, which, you know, like you would involve in mining. There was a lot of these young kids, who’d go out to these mining towns and be buying, you know, really cheap houses. And then within like a year, they’d be worth a couple of million bucks because the boom of the mining. And I’m sure now looking back, they’re not worth as much because what we all know that the boom and bus towns, of secondary markets, including very similar to America here. So I didn’t actually learn, so I didn’t do anything in Australia, but I was ready to pull the trigger. And at that time I was ready to pull the trigger. I was, you know, self-educating for about a year, year, and a half. That’s when I was like, I’m going to move back. I’m going to move to New York city and I’m going to chase this girl. And so I spent some of my savings moving halfway across the world. And ultimately needed to get a job in the US. And I landed. I remember, like I had A4 piece of paper, which is a 11 by 17. And I had filled out the entire front and back with all the engineering firms in New York city. And I literally started door knocking. I went from door to door, do you have a job? Do you have a job? Do you have a job? Some security would be like, get the hell out. You know, I remember walking door, you know, the bigger firms and was just that I just needed the job to stay in the country because I needed the visa. And so I continued as much as a realization was I needed to get out of engineering, and I knew it wasn’t going to be for me. It was also a realization that it’s a skillset and I’ll get into another story in a minute that I could use as a steppingstone to get me to where I want be in my career as a real estate investor, as the founder of a company that invests in real estate. So for all those people listening out there, I, 100% believe engineering is a great degree to study because it’s a problem solving degree. Practicing it, not so much. So, you know, being, you know, determining how many bolts you need in a connection, I’m like, oh, I really don’t care. I wanted to know how much you’re going to rent the space.
Joseph Bramante: How long was it from, So you’ve made the realization, which is a very key point here that you’re not going to go a hundred percent passive investor, a hundred percent real estate overnight. This is a process. Especially when you’re an engineer, cause engineers typically make they’re on the higher end of the bracket on salary. To replace that it’s tough, you know, and from personal experience, when I owned my first apartment complex. I owned 50% of a 20 unit apartment complex. I still had to work on this, a fulltime job in sales to maintain my lifestyle. It took me a couple more properties before I was finally able to replace that income. But you’ve made this realization, you’re getting an engineering job at what point, So how much longer did you work in engineering and what was that life like for you? What were kind of hours were you spending, you know, 40 hour week job, plus you’re working on the side. What is that like?
Reed Goossens: So, hit New York city, literally within the first two weeks. And this is the benefits of the American culture. I was at my first reias event. People who don’t know what the rear is. It’s a real estate investment association. And honestly like, you know, Joseph, I was so blown away with the amount of information readily available to me, this tapestry of reias around the country that I could go to, that I could pay 20, 30 bucks at the door. There’s probably a REIA in Houston. There’s a REIA in Austin. There’s a rear in every single MSA. And I was surrounded by people who wanted to be real estate investors, again, coming from Brisbane, which had a very small meetup group to now being in New York city, the big apple with 200, 300 people filling rooms who wanted to learn about cash flow and, you know, tax benefits of real estate investing. I was just like, my jaw was on the ground. And for me, part of my superpower a little bit is realizing where I come from. I was like, wow, this is at my fingertips. Holy crap. Like, this is awesome. And I just started going to those events religiously, religiously. And I challenge everyone who’s listening to this, do exactly the same thing, going to those things religiously two to three a month, and just starting to absorb all the information, because that’s what I was doing in Australia. Just not on a grander scale. And I was going to do something in Australia cause I was absorbing, okay, Yeah, I can fix and flip. I can do this, Blah, blah. Yeah. And through that, I was able to realize two things. One how bloody cheap secondary tertiary markets are here in America compared to Australia. And two, I couldn’t get, no one would borrow to me. So I had to use the cash I had saved. It wasn’t a lot of money, but I bought my first property for $38,000. It was a tripex in Syracuse, New York. And then your question was how much time, between picking up and I’m jumping forward a little bit between picking up the book, rich dad poor dad and leaving my W2 job. Now, remember I had visa issues. So I had to keep, to stay in this country before I got married. It took me eight years, took me eight years to leave my full-time job. And I’m jumping ahead of the story here. But at that time I’d already owned four major, you know, apartment syndications as a lead syndicator.
Joseph Bramante: So absent of visa issue, What do you think it would’ve taken you?
Reed Goossens: I think it probably would’ve taken maybe a year quicker, maybe a year quicker, but in my mind it was like, it was like, I needed a bunch of money in my bank account to say, this can survive me for next two years. It wasn’t my, it wasn’t exactly, you know, dollar for dollar my income, but it was enough to say, you know, and I can tell you the number, it was $175,000. And I was like, that could last me for two years if I didn’t earn a dime doing anything else. I was good at penny pinching and it was just me and my girlfriend slash wife at the, yeah, this is in 2016, 17. So that was what I needed to get in terms of a quote unquote, nest egg, to feel comfortable to leave the day job. And that was really what it is. And obviously since then I’ve grown my wealth tremendously, but I’m trying to put numbers to it. So people who can listen to this show and again, I’m still living in Los Angeles and the story, you know, goes on from there. But coming back around to your original question was, yeah, landed in New York city started, you know, educating, doing the same thing I was doing in Australia, just learning, learning, and then within six months. And at that point I’d been self-educating for about two and a half years at that point. Cause remember, I read rich dad poor dad in 2010 and I had self-educated all the way through. And then I was like, I remember nose stuck in a book on the subway, analysis paralysis. And I’m like, I’m never going to get to deal number 10 without doing deal number one. And I was, you know, we get into this mindset of risk and fear, you know, being fearful and, oh God, what happens if this, this, and that. But for me, it was like, I’d already moved halfway across the world. That was the hardest thing, I already got a job. I just moved in with this new girlfriend, you know, didn’t even know this girl I’d done all the hard things, like buying a bloody property was probably the easy thing. So it was all just about the mindset, pushing those boundaries to say, I’m comfortable with the outcomes, even the worst outcomes. If I lose my job and I have to move back to Australia, well, that’s the worst thing that can happen to me, right? If I lose this deal, it’s my bloody money. And it’s $38,000. I’m, you know, not that you go into investing to lose money, but these are all the thing, the thoughts that go through your head to process the push you need to go and make that first take, do that first deal.
Joseph Bramante: So a couple of things there, just want to really hit on that. This is really about the journey, not the destination. So this is going to take, obviously, this was, you said you did an eight, you maybe could have done in seven or six. But tell me about how did your mindset change as you’re building that wealth, as you go into years, one, two, and three, you’re continuing to increase your net worth, your portfolio of real estate’s increasing. How does that affect your mindset while you’re at work? Are you more relaxed? Are you more, did you notice any changes?
Reed Goossens: I was so hungry. Cause once I started to see just a little bit, I remember that first property, it was making me about seven, 800 bucks a month, clear cash, right? It wasn’t nothing to poke a stick at, but it wasn’t going to, I needed probably a lot more of them to replace the income. But what it also did was show me, you know, the other side of real estate and being fresh face bushy eyed tailed Aussie, I had no idea what section eight housing was. I ended up having a drive by shooting at my property, you know, like it was, it wasn’t the, it wasn’t the clean start that we all dream of. And I could have stopped. I could have said, this is ridiculous. I can’t believe I’m just going to get rid of this $38,000 property and move on down the road. I remember the two tenants moved out and there was only one tenant and that tenant wasn’t, you know, wasn’t giving much cash, you know? So these are all the, I’m telling all these little stories to show that if, you don’t just smacking it out of the park the first deal, it was about getting to that first deal to get across line. But I proved to myself that I could do it. And that was the biggest thing. Hey, I can do this and now I can go and do a deal Number two, and I can do deal number three. And that slowly got me going into what I now, you know, have built today. There’s a few more stories along the way, because I finally got a mentor after all these years, and got into large multi-family, but it got me going and again, I had lending issues. I couldn’t be lent to because I had no credit score. I didn’t got no credit score. Didn’t even know what a credit score was when I first moved here. So yeah, the question was how did it make me feel, it made me feel hungry for more. Because I knew it was like, Hey, I can do this.
Joseph Bramante: So once you started getting that first little, that $700 check every then you’re like, wow, how can I grow this? So the first deal, right? So the challenges, every deal has its challenges. And on that first deal, the challenge is doing a deal. And I think you hit on that. And then the second deal, you no longer have the challenge of doing a deal, but you’ve probably had a new challenge. And so every deal is going to have some other challenge that you’re having to overcome. And so as you get into this industry, and at least this is what I’ve found, that the challenges never go away, every deal is some new challenge, but you know, I’m not deterred by those challenges anymore. I know that first deal for me and for you and a lot of people, it’s scary, right? Cause you go from reading all this stuff in books and theory and hypothesis and ideas to like, okay, it’s like concrete, you’re going to do it. It’s like flying by the instruments, you know, like you can’t see, you’ve never done it before. You’re just having to trust what’s in that book. And I feel like as engineers, we’re probably more inclined to do that, because we have four years in college doing just that we were reading all these formulas and theories and whatnot about gravity and everything. And we, you know, we do entire designs based on formulas that we’ve read in a book. And in a lot of ways, real estate investing is exactly the same. You’re doing a lot of calculations based on formulas that you’ve read in a book and you just, it just takes, you know, five years for it to really come to fruition, as far as the exit. I mean, you’ll see it more immediate as far as cash flow goes, but the real big money as you probably know when you do exit those deals. So tell me about your first apartment complex. And then if you could tell me about, so you’re a lead investor, sorry, an active sponsor, syndicator many, many terms for it. Tell me some stories about passive investors, particularly if you have any that are engineers with you, and if you can share any insights because not everybody is going to do what we do and everybody’s going to go out and is going to be the sponsor on a deal, cause that’s another level of real estate investing. This is, you know, we’re professionals at this, this is our livelihood. There’s a lot more people who will go out and just be passive investors. And so if you could share some stories from that viewpoint and what your experience has been, particularly around the engineering side.
Reed Goossens: Yeah. So for me it was and I love what you hit on about the challenges. You are completely correct, challenges even today I have challenges, but they’re just bigger. There’ve got to be a few extra zeros on them. But for me and the story, and I can only talk about stories and I remember making the transition to LA because my wife was from LA and 2014, I’m here. And I get to the point where I’ve just had enough of engineering. I can’t do engineering anymore. I was have to go back and study, I think it was CP Eng. And I remember studying for it and going, I’m going back and doing stuff that I did in year 10, year 12 calculus. And I was like, I’ve been out of university for, you know, four or five years at this point. So I was just like, I was like, screw this. And I actually and this goes back to my skill set. I used my engineering firm to, not this picture, but another deal, was building a multifamily deal down long beach. And I reached out to the developer on that deal and I said, Hey, are you looking for a project manager or owner’s rep, because I’m a structural engineer. I can be a project manager. I’m wanting to transition. And for me it was the, I needed to be surrounded by real estate, 24/7. I was doing real estate on the side, but I needed a day job to be real estate as well. And so I actually made the transition and the guy was like, yeah, I’d love to have you on board. You probably have a big skillset that I just don’t, We don’t have internally. And I didn’t do engineering for them. I just came in. But having that knowhow building and designing and construction really, really was valuable for them. And that, that was, looking back on it, That was probably the biggest, in hindsight to anyway, that was the biggest positive that I’ve ever taken, every step I’ve ever done in my real estate career was making that transition. Cause I needed that visa, but I looked at myself and said, what skillset do I have that I can go and apply in a field that I want to be in, I so desperately wanted to be in.
Joseph Bramante: That’s great. So at this point, you already know you want to go into real estate. You know, you’ve got this degree in civil engineering or structural engineering, and you’re trying to figure out how you can marry the two together. So you can force yourself into that industry and get some industry experience learning, you know, at least one side of the industry on the development side, while you continue to hone your skills with the intention of eventually kind of breaking off and being your own sponsor on your deals. That’s amazing.
Reed Goossens: And I say that because there’s probably some people who are listening to this show who want to be active or are getting, you know, tired of the engineering and then in this passive side as well. But was just a personal story because I just knew that I had, we are all standing on a mountain of value, right? Regardless if you’re an engineer or not. And it’s about looking at that value and seeing how that could be applied and this goes for any industry, if you want to get into fashion, if you want to get into art, if you want to get into jewelry design, I don’t know what, you know, you always have a skill set that you can be applicable that can help you bridge the gap and learn on the job. So that for me was really, and I was at with that company for four and a half years, I built over 350 luxury ground up apartments in long beach. And I got to a point where I was like, look guys, I’m out. And I went and started my company. So, and at that point back to the earlier story, I done four major syndications as a lead sponsor at that point over about four and a half years, between 2000.
Joseph Bramante: You were doing about one a year. That’s incredible.
Reed Goossens: Well, it became quicker towards to the end. Like the first couple of years was helped co-sponsoring and investing passively and, you know, just learning this syndication business. And then I started doing it myself.
Joseph Bramante: So that’s great. So you started off, you were investing passively into other syndicates deals co-sponsoring as well, and then graduated into now you are full-time, you’re syndicating your own deals with your own investors.
Reed Goossens: That’s correct. Yep.
Joseph Bramante: That’s great. So another comment I wanted to make was so all engineers, every engineer’s going to have a unique, they’re going to be in unique situations. And you can go different routes with it. So the route you chose was, I’m going to take my skill expertise, and I’m going to force myself into this industry with the skills in the real estate industry, another route. So the route that I took cause I was with oil and gas is I said, well, none of my oil and gas friends are, you know, I can’t learn real estate in the oil and gas industry, but I am surrounded by a bunch of other engineers who happen to be making a whole lot of money for expatting overseas. So I was able to leverage my capital resources at that end. And so I think any engineer listening to this, any professional, etc., needs to just take kind of an inventory of what they have available to them, whether it be, you know, skills, how they can get into the industry from that perspective, or maybe the capital and or maybe operations or property management side, there’s multiple ways to get into the industry. You’ve also went in via kind of into this syndication route as a passive, which is a very common way. And honestly, I went straight to syndication, cause I just didn’t know any better. I wish, you know, in hindsight 2020 that I would’ve gone in passively, cause I made a ton of mistakes on my first deal that I probably wouldn’t have made, If I would’ve done it through past investing, but that’s another story. So anyway, I had a follow up question for you was, so now you’re syndicating deals, you’ve got, you know, hundreds of investors, if not thousands on your deals, have you had any experiences with other engineers that are passively investing with you and any stories you can share about that?
Reed Goossens: Yeah. I have a handful of engineers. So with my own podcast, I’ve spoken to a lot of engineers who have transitioned into real estate full time. I’ve also, you know, the handful of engineers that having invested with me you know, just love their job. They love what they’re doing. They love going to work and problem solving and designing and seeing something come to fruition, you know, many years later. And that’s the same thing what I do. I just do it in real estate, right. I am just building our portfolio. And so, but they know the benefits of investing in real estate, but sometimes some engineers, like you mentioned earlier, and I was one of them analysis paralysis and they just don’t want to, they’re good engineers, but they don’t want to be business owners. So a lot of the engineers who invest passively with me are actually just exactly that they just don’t want to be business owners, but they know the power of investing in real estate. So thus they, you know, they find good sponsors like myself, like yourself, Joseph, and they invest with them, right. Because they trust them. And when the stories of like, I’ve been asked many hard questions, you know, about certain investments, but because I think like an engineer, I know kind of what the questions are going to be, right? Because we’ve like to go down that rabbit hole of like, well, if you’ve answered this, then that means that, so very pragmatic. And again, just really wanting to learn. And they’re very, very numbered. We’re all numbers orientated. But my specific passive investors who are engineers particularly those who are in the civil and software engineering space tend to really, really look more at the numbers, which I highly, you know, applaud they need to. Cause if they don’t understand it, they may not necessarily want to invest if they don’t understand. So just, it really comes down to conversations and making sure that you’re transparent. But knowing that on the other end, you have someone who’s extremely knowledgeable with numbers and can crunch them pretty quickly. So yeah, sort of vibe on that level.
Joseph Bramante: Yeah. You know, I’ve got a lot of engineers as well and particularly you know, a lot of Exxon engineers and they don’t cut me any slack when it comes to reporting and whatnot. Just because I am former Exxon, they feel that they’ve, it’s their obligation to really just give me a hard time sometimes. But you brought up a good point in that, you know, being a syndicator on a deal from the engineering perspective, definitely isn’t for everybody because I do think engineers might be more likely to get into that analysis paralysis because you’re having to make decisions with imperfect data. You don’t know a hundred percent what’s going to happen. It’s not like in class or when we’re designing something when the data is perfect, you know, the exact output. Here we’re making investments based on market data based on, I mean, there is some perfect data, but there’s also a lot of imperfect data that goes into it. And we do our best to put contingencies around those risk. But nonetheless, there is some risk and I remember every deal you do, you’re going to get those butterflies in your stomach. And there’s that you’re always like second guessing yourself. And like, I think of this, that I consider that. And that’s the challenge for a lot of people is being comfortable with knowing that they’re making this, you know, concrete, you know, this permanent investment based on this, you know, fluctuating, imperfect data and comfortable with the risk, both the upside and the downside. But fortunately for real estate though, downside has been very, very minimal over the last, you know, decade.
Reed Goossens: I love what you say though. Cause I remember when I like, my engineering brain is very black and white, right? There’s no gray and there’s no gray matter. And so I think a lot of engineers when they get involved with real estate, that uncertainty, that I don’t, how can you, can you guarantee me that’s going to be like this in five years’ time? No, we don’t have crystal ball. And that’s the leap of faith that investing is, investing in Anything. Whether it be real estate or stocks or in a business or in commodities, there is risk involved, yourself. There’s risk with all that sort of stuff. And it’s about those calculated risks. You’re never going to have the answers to all the questions, right? And it comes a point like I was on that train going, okay, I’ve got to that point. I’ve read enough. I’ve understood enough. I’ve calculated enough. I need to go out and now take action. And that’s the leap of faith we all have to take, when it comes to investing, but sometimes engineers and I’ll put my hand up and say, I am one of them, it took me two and a half years before I pulled the trigger. But that was just because I needed the two and a half years to learn and do the reps and shots on goal and just like practice, practice, practice before I felt confident in myself to go out and buy that first deal. And so some of your listeners here today will be also thinking the same thing they want to get involved. They’ve been looking at deals, they’ve been going to meetups, they’ve been doing stuff, but they just never take that. They’ve never pulled the trigger and that’s because you don’t, you are uncertain of the unknown and it’s been comfortable in the uncomfortable to take that leap of faith and push your boundaries and say, I’m going to make an investment in this particular deal.
Joseph Bramante: Yeah. And that’s why I think particularly for engineers, at least doing one deal as a passive, a small minor investment that you’re not going to of lose sleep over. I think a lot of deals will let you get in for a minimum of 25,000. And you put them with a truly, you know, a seasoned syndicator allows you to kind of at least get over that initial challenge of doing that first deal, because now you’ve done a deal, you’ve kind of, you’re going through the motions of a deal. And that way eventually, if you do decide to go out on your own, you won’t have as many, you know, concerns cause you’ll, you’ve been through it and you’ll be like, oh, well, you know, I did this deal and there were these unknowns and it’s normal to not know this and it’s normal to, you know, make these assumptions. And I think that’s also part of it is just the unknown unknowns of the industry. Cause you don’t know a lot of this stuff. And you almost have to, I mean, strongly recommend it. You just have to do one as a passive, just kind of going through the motions cause sure you can listen to these podcasts. You can read all the books you want, but until you’ve actually done one and gone, you know, full a circle and a deal, you really don’t know. Cause there’s a lot of stuff that happens. And you know this, at the closing table, etc., that there’s no book that can prepare you for what, some of the stuff that happens, you know, at, you know, at the 11th hour, when you’re coming to the table, you’re making split decisions that, you know, high stakes decisions sometimes on deals and it can, you know, it is just, it can really send you for a loop if you don’t know what you’re doing.
Reed Goossens: And that’s the beauty of passive investing, right? That you can invest alongside like people like yourself, Joseph who have had that experience, you’ve gone out and you know, bruised your knees a few times on the earlier deals. Now you’ve set up your systems and you’d understand the different markets where the growth patterns are, where rents are going because you have active deals in the market that you can pull for data and that data can help them make a better investment decision. So the risk for a passive investor, listening to this show, wanting to invest with you is minimize because you have the reps on the board, right? You’ve gone out and got that experience. You’ve gone out and got that track record. So that’s the benefit of it. You know, the benefit and passively investing. You don’t have to go and do all that hard work. You can still do your day job that you love and, you know, use some of your accumulated money to invest passively in a deal and let Joseph do the hard work.
Joseph Bramante: So it sounds like having that engine degree though definitely helped you a lot. Do you think you could have done it without the engineering degree? Do you think that if you were, so you were sailing gall sitting around the ocean on these yachts, if you would’ve stayed doing that. How do you think things would’ve turned out? If not for that girl in America?
Reed Goossens: I always knew and it’s funny you say that, even before picking up the book Rich dad poor dad, I knew I wanted to be my own boss at some point in my life. And on the boats, I left the boats because I just was a henchman. I was just, you know, scrubbing deck. And I knew I just, I had more to give and again, I hadn’t even read the book, rich dad poor dad at that stage, but I just knew there was something inside of me that I wanted to be my own boss at some stage to live life on my terms. And that’s my biggest why. And that’s why I got involved of in real estate and entrepreneurship, because I could be my own boss. And that’s what drove me. Some people love having a boss, I didn’t. I’m a bad employee. So, you know, that’s what I always was striving to and I’ll continue to strive for. I don’t pay myself a wage right now. I’m an entrepreneur, they’re lumpy and I’ll continue to be that for the next 40, 50, 60 years of my life. And that is in itself and probably back to the engineer mindset that I’m just very, as a human being, I can handle uncertainty. Some people can’t handle uncertainty and they need that constant paycheck. I was willing, I’m sure like yourself, like when you wean off that to become, I’m an entrepreneur, it’s scary. And it’s uncertain and goes back to the points of, we were talking earlier about when you’re analyzing a deal, there’s uncertainty in everything you do. For us as entrepreneurs, we just geared a little differently. Even if I had stayed on those boats, I always knew that I was going to go off and do something, whether it be in real estate or not, you know, I couldn’t tell you because I’m now down this path.
Joseph Bramante: That’s true. That’s true. So let’s change topics a little bit as we wrap the show up. So obviously [37:46 inaudible] from Australia. So how similar would you say your mindset is to those of other an Australians? So you think there a pretty strong entrepreneurial spirit in Australia or you’re an anomaly?
Reed Goossens: I will say out of my friends, I probably am a little bit more of anomaly. I will say the American culture as much as the Americans love to, we are America. You know, it also is very more sympathetic to entrepreneurs and there’s more people wanting support entrepreneurs. I don’t know if that’s just a population, but, you know, thing like coming to the New York city, going to that meet up event all those years ago, I was like, wow, there’s 300 people here that all want to be real estate investors. Like everyone gets it. In Australia it was like, what are you doing? It’s like, yes, I understand real Estate’s good, but you don’t need to quit your job, bro. Like just have one or two houses, just be fine. Like I was like, no, I need to be the full-time real estate investor. So it just maybe was not, it was about the people who surround yourself with. Now I’m sure if I go back, when I go back, cause I will eventually move back to Australia. I would’ve had the NBA here in America, right. Building an American business is sort of like a lot of Australians who have businesses aspire to crack the American market. And so cutting my teeth here, building a business over the last 10 years will only put me in better stead to go back and be a big fish in a smaller pond.
Joseph Bramante: I am Curious. Do you have investors or a portion of your investor comes from Australia?
Reed Goossens: Yeah. In the beginning, yes. When the Australian dollar was a lot stronger. Yes. But now most of my investors are Americans.
Joseph Bramante: What is the exchange rate now? I haven’t checked.
Reed Goossens: Look, off the top of my head. It’s typically run at about a dollar, 70 cents. So yeah, So one Australian dollar will buy you 70 cents American, historically it’s fluctuated between 70 to 80, 80, you know, 85 cents. It’s very similar to Canadian dollar probably Canadian, slightly stronger.
Joseph Bramante: Very cool. So where about in Australia you thinking about moving back to?
Reed Goossens: I’m 35. I’m sure I like to have some kids in the next couple of years, I don’t need to move back immediately, but probably the next 10 years, I’d like to have my children grow up in Australia at some point. So there’s real estate in Australia, I can replicate what I’m doing here. I will say that there’s no multifamily in Australia. I can’t go and buy 250 garden style units in Australia. And we, you know, I can get into that.
Joseph Bramante: Why is that?
Reed Goossens: It is purely because two things, right? Sorry, first thing’s population, Australia has 25 million people in the same land mass, exclude Alaska. The mainland Australia, mainland America is roughly the same size. Maybe mainland America is maybe 50% bigger. We have less than one 10th of your population. And the second thing is you can inhabit pretty much north to so east to west. We cannot inhabit the interior of Australia. It’s a desert. So it’s all around the borders. And really predominantly on the Eastern seaboard. So we don’t have, so with the lack of population drives, lack of secondary tertiary markets like you have your Kansas cities and the Denver’s and the Charlotte, North Carolinas and all that sort of stuff. Co coupled with that is because of our population, We don’t, and I don’t want to say, use the word unsophisticated, isn’t the right word, but it’s just, we only have a certain amount of lending capacity in Australia for our population. So there’s only really five major, big banks. We don’t have a Freddy or Fanny you know, government backed securities. We don’t have that. So the lending in Australia is different. The lending in Australia is all built for to sale. So when I have, if I wanted to build a hundred units and I had a piece of dirt, the banks wouldn’t be able to say, okay, your future NOY is going to be this. So I’m going to value it on that future NOY. And here’s the loan. They’re going to say, no, you need to pre-sell 30% of the units off the plan, before we are going to get involved. So it’s all condominium, it’s a condominium market and that, and the rent to value. So your rent versus how much you can get in a house or a condo like you experienced, you know, is extremely low. So you’re never cash flowing in Australia. It’s all negatively geared. So think of LA, San Francisco, New York, think of those markets in, around the entire country. There’s very little, if any, if any cash flow, it’s all negatively geared in the real estate market, in the resi real estate market. Now, if you get hotels and self-storage and other stuff, there are other things out there, but by and large, it stems from [42:43 inaudible].
Joseph Bramante: It’s all based on appreciation of the assets.
Reed Goossens: It’s all based on appreciation. And it’s all based on lending practices as well. Certain lending practices drive us down a path. So coming out of uni, most people in Australia wouldn’t buy a house. They’d buy that condo that you rented a two bedroom, two bath condo for $400,000, $500,000 in, you know, somewhere that’s probably five kilometers or five miles from downtown Brisbane. That’s it.
Joseph Bramante: That’s absolutely crazy.
Reed Goossens: And I’ll say Canada, Britain, Europe, America is the only country that has what it has. And it’s still to this day, I think in my opinion, my humble opinion when it comes to commercial real estate, the number one country for yielding commercial real estate, not just multi, but also other things because of its lending practices, because of its business friendly. So part of the reason we’re seeing a lot of compression in cap rates in the multifamily space is because of international dollars, flooding this market, knowing that it’s, you can get a decent yield. You go by an office tower in London, 1%, 2% cap rate. You could buy an office tower in downtown New York, probably for 3% or 4% cap rate. So there’s just a difference there of yield. And, you know, got people from Asia, from Hong Kong, who just, I couldn’t even imagine what crappy yields are getting over there. It just doesn’t exist. But we also seeing a trend of American real estate trend towards that of other Western countries where you have very low cap rates, because there’s a lot of liquidity in the market because people, real estate isn’t an alternative asset. It’s a major asset, a big funds and pension funds and retirement funds are all investing heavily in real estate today. But back in 2008, it was, you know, still considered an alternative asset.
Joseph Bramante: The market’s definitely matured, matured a bit over the last decade. That’s funny you say all that. I really hadn’t really considered it. I knew that we had a surge of international equity coming into the market international capital, but I thought it was just because we were so, such a great economy, which is true, but it’s also because their economy when it comes to commercial real estate is just not there.
Reed Goossens: It’s there, but it’s just not as yielding. And it’s the yield that everyone’s chasing, right?
Joseph Bramante: Yeah. Very fascinating. Yeah. Cause otherwise it would just be like, ah, you just rinse and repeat, just take, you know, the model here and you go and you replicate it there. And Australia on the surface, Australia seems very similar to the US.
Reed Goossens: It is, trust me, from culture and the way we live it is, but just from lending practices and the cost of construction and the cost of dirt means that you can only, it only pencils at a condo. It never pencils at a four rent market. And they’re trying to push that in Australia, but it just, if you can’t get your cost of construction down, it won’t pencil. It just doesn’t make any sense.
Joseph Bramante: Australians are too damn expensive.
Reed Goossens: You want to build a casino? Build a casino? That’s all, you know, it’s completely different of that stage.
Joseph Bramante: Well, let’s wrap up with some kind more funny stuff. Slang. So obviously just personal thing. I love the Ausie slang. I just say it’s cool. You know, Australia is its own language. I know we’re both talking English, but when I moved to Australia, I had to learn English again because it comes at you so fast and they’re using words you’ve never heard of in ways that you’ve never thought to use them. And you really just took a little, I acclimated, everybody does. But you definitely, when you’re immersed in that environment, I just remember, wow, this was, I was taking notes. Like what does that word mean? So let’s play a game. Why don’t you test my knowledge? You say a sentence. I will try to interpret what it is that you said. I know I’m putting you on the spot here. So if you need a minute to think.
Reed Goossens: I’ll give you some, lay ups early. So I’m going to head to the bottle low.
Joseph Bramante: So the bottle low would be the bar, right? Want to head to the bar?
Reed Goossens: Kind of, the bottle o is a liquor store. So you take it to go. You take it to go. I’ll give you another one. I’m going to hit the frog and toad.
Joseph Bramante: Oh man. I thought you said you were giving lay ups. Say it again.
Reed Goossens: I’m going to hit the frog and toad.
Joseph Bramante: I’m going to hit. I have no idea.
Reed Goossens: I’m going to hit the road.
Joseph Bramante: The frog and toad.
Reed Goossens: The frog and toad, sorry, toad, meaning I’m going to hit the road.
Joseph Bramante: I never heard that one before.
Reed Goossens: Yeah, there you go. There’s the first one.
Joseph Bramante: I lived there for a year, man.
Reed Goossens: Let’s think of another one and actually funny, The book that I wrote investing every chapter has some, I should probably I’ll open it up.
Joseph Bramante: Let’s do a plug for the book. So what is your book?
Reed Goossens: Investing in the US. The ultimate guide to US real estate and yeah, here we go. Aussiesms, okay. Got one here. I’m going to put my togs on.
Joseph Bramante: Okay. It’s not thongs, thongs are sandals. Is it crap, I don’t know.
Reed Goossens: Speedos.
Joseph Bramante: Speedos. I was thinking that, but anyway.
Reed Goossens: We’re going to meet up tomorrow avo?
Joseph Bramante: Yeah, tomorrow afternoon.
Reed Goossens: Tomorrow afternoon. So Arvo for everyone out there. Afternoon arvo. That’s probably, That’s too easy.
Joseph Bramante: I knew you’re giving me the hard ones. I feel like I knew more, a lot more Australian than this.
Reed Goossens: You’re a bloody bludger
Joseph Bramante: Bludger. No, I don’t know, Bludger.
Reed Goossens: Is like a lazy person. Oh, you’re a bludger, get off the couch you bludger.
Joseph Bramante: Well obviously need to go back to Australia. It’s been too long. It’s been 10 years. That was still one of the coolest experiences of my life though. Cause I lived in CBD in Aurora tower. If you know where that is. And I would go downstairs. I was on the 44th floor, which is the highest I’d ever lived in my life. 44 stories up. I would go downstairs, walk across the street, then go up this other building. I think it was like capital one tower or something. And that was my office. I didn’t have a car for a year. It was the first time I’d ever lived without a car, which as an American is a bit, as an American who’s had a car most of you know, until, since I was 16, you know, that was a weird thing to like, not have a car it’s kind of rite of passage and it’s just a different way of life. You’re getting groceries every day. Like you just, I had a tiny little apartment and I paid a whole lot of money for it and everything was, I remember everything was really expensive there. It was good.
Reed Goossens: Hopefully you got paid in like the equivalent of…
Joseph Bramante: Oh yeah, I got a cost of living adjustment from Exxon. It was great. So I was making good money there. I was spending all of it, but I was making it. But I remember the food was really good in particular, the stakes, you know, I live in Texas and we are known for steaks here. But I remember the quality of the meat in Australia was really top notch. Like almost like, like I don’t remember seeing like organic and not, like everything was basically organic. It was just like super healthy food. Maybe it’s just the area I was living in.
Reed Goossens: The average Australian steak will be probably if you go to like a Vons or, you know, what’s a HEB in Texas, your average steak won’t be as good as the average steak you get at like a Kohls or a [50:27 inaudible]. What I still really love today is Australian lamb. Lamb is, I’ve had Colorado lamb here and it’s just not as, it’s a little fatty. But yeah, if you can ever have New Zealand or Australian lamb. Oh, so good.
Joseph Bramante: And yes, unfortunately for those of you who may like kangaroos, yes, they do eat kangaroo there. And it is delicious and it’s not, you know, it just comes like a little medallions and a little package already marinated and you put it on the Barbie and it was good, but all right Reed, Hey man, Thanks for thanks for coming on this show.
Reed Goossens: My pleasure.
Joseph Bramante: It was great catching up with you and I see what you’re doing and you just keep kicking ass man. You’re doing a really good job up there. And if you ever come to Houston, man, Let me know. Love to go out and get a beer with you.
Reed Goossens: Let’s do it. If I ever start looking at deals down there, I remember one time I went down there, I got food poisoning and never went back.
Joseph Bramante: So sorry.
Reed Goossens: Thanks man for having me on the show. It’s been awesome.
Joseph Bramante: All right, see you Reed, take care.
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.
