“Challenge yourself. Don’t be afraid. You know, a lot of times we may have things that hold us back. But if you feel good about something and you feel like it’s something you want to take to the world and you know you can help somebody with it. Even if it’s one person or a million, then go for it. Don’t be afraid, you know, have a plan. And make sure you can execute. But when it’s time to press the go button, go for it. Don’t be afraid.” John Rubino is the CEO and founder of JID Investments. He has a unique background from the military to a passion for real estate and he loves helping people become more passive and their finances by owning real estate along with his partner.
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Investing In Real Estate Passively With John Rubino
Description: “Challenge yourself. Don’t be afraid. You know, a lot of times we may have things that hold us back. But if you feel good about something and you feel like it’s something you want to take to the world and you know you can help somebody with it. Even if it’s one person or a million, then go for it. Don’t be afraid, you know, have a plan. And make sure you can execute. But when it’s time to press the go button, go for it. Don’t be afraid.” John Rubino is the CEO and founder of JID Investments. He has a unique background from the military to a passion for real estate and he loves helping people become more passive and their finances by owning real estate along with his partner.
I’m excited about our next guest, he is the CEO and founder of JID Investments or you can find him at jidinvestments.com. He has a unique background from the military to a passion for real estate and he loves helping people become more passive and their finances by owning real estate along with himself and his partners as they seek out proven operators and then pull money together to go in it and hope to win well and win well for your finances. So that being said, Please welcome John Rubino to the show. Hey, John, how are you doing?
Hi, Brett. Good to see it. Thanks for having me.
Absolutely. We’re excited to dive in. Would you ever listen to us for a quick overview of your background and your current focus?
Sure, yeah, born and raised in Brooklyn, New York, graduated college way back in 1997. And served in the Navy for 20 years, you can see some of these cool airplanes behind me were a blast to get to do that as my first dream job. And back in 2013, I started my second dream job part-time while I was finishing my career in the navy. JID investments stood up the business after really loving and having a passion for real estate started back in the early 2000s. And just really stayed with real estate for about a good you know, eight, nine years, I passively invested with some good friends and learned a lot about the business, learn about the analysis, the due diligence, looking at different markets, understanding the different concepts of budgets, and looking at how deals are put together, how to structure deals. And, you know, we’re always learning I’ve been with JID for over eight years now. And when I started the business, I got four years left to go in the military. And so kind of glad I did it, then because I kind of got my feet wet, I got beat up a bit, I understood things and kind of grew so that I had confidence coming out of the Navy to do a full time. And now that I’ve been doing it for going on four years now full time, we’ve enjoyed and seen a lot of the fruition of the work we’ve done and the energy we put into it at a full-time pace. And so we’ve completed about 16 projects today, a little over six and a half million invested with about two and a quarter million realized in revenue. And we’re currently managing six assets in our portfolio. of the 15 million invested with about eight to 12 million of projected revenue. Our business is unique, you know, we serve and we work with sponsors and investors that have asset class investments where they’re actively pursuing and they’re actively managing and overseeing the project. And we come in as a partner because a joint venture limited partner, we have about 146, 150 investors that we go out to, and we raise money on a deal by deal basis, we do it through a form D five or six B or C of filing through our corporate securities attorney. And we’re able to raise anywhere from half a million to a five million dollar project. So the sponsors love us because we bring value and we can raise a level of capital that’s very challenging for them at times to go out and raise. And for investors, we allow them to look at really solid and vetted projects that we’ve put through our process. And we bring it to them hopefully on a silver platter for them to look at and spend, you know a limited amount of time given their busy schedules because they’re out doing their jobs and they’re running their companies full time my partner David and I, we put our stamp of approval on that we put our money to invest And we’ll hopefully bring it to our investors to potentially participate.
I love adding value and connecting the parties. so important and it helps the operator to focus on buying the deals and operating. And then for yourself too, to be an extra side ear on that set of eyes instead of years on that as well and then to present that to passive investors who don’t have the time or the energy to vet all of these. So that makes perfect sense. Now before we dive into a couple of actual deals and break down some returns and such, I’m curious, who is John growing up? And I think we’ve all been given certain gifts, John, right? And these gifts are given to us by God to be able to be a blessing to others. So I’m curious what it was like, maybe one or two gifts, maybe you identify when you were younger? That helps how you bless others today.
Yeah, you know, listen, you hit the nail on the head. I love that you said that Brett means a lot. You know, faith and family to me here are hand in hand. My mom and dad were hard working. You know, I was an only child but they worked hard to give you a good life. But I didn’t take that for granted. You know, dad was a US Marine Corps infantry officer, he was recon, he fought for our country and Korea won the bronze star and the Purple Heart. You know, he’s my hero. I got a shadow box on my wall here. And every day I look at him and just think of the wonderful opportunity he’s given me in life started his own real estate company as a construction builder in New York City put up eight floors on the World Trade Center in 1993, when the first bomb went off, and mom was a schoolteacher, 30 years and ran her private practice as a therapist as she did family therapy. And so I have two parents that both owned their businesses, as well, as we are, you know, specialists and what they did best and they always pushed me hard. They always pushed me hard with school and to work hard. I went to Catholic school for 12 years in my life, went to military high school, and went to a Military College. So that structure and organization have always been around for my family. But Mom and Dad always taught me that the number one of my life is my faith and it wasn’t for about a few years back that I had a challenging situation in my life that I went through that I feel God brought me through and brought me out of it. And at the end of that I think, you know, a couple of things that he taught me was, Hey, I’m here for you, but you got to find me, I’m not gonna find you. And he also kind of gave me that gift that hey, you know, yeah, if you stick with me, things are gonna be good. And you know what I’ve been with, and I’ve never changed, I’ve kind of felt like that was my resurrection. I feel like now my faith is my foundation, and my family is my foundation. And so that, to me, has been the greatest gift because it’s allowed me to live such a more fulfilling life. And I and I think through real estate, God has put me in a position to touch people’s lives, bring to them things that I never thought I would have been able to do before. And just enjoy getting to know people, learning about them, sharing with them, and just having an overall relationship, whether or not we do business together is fine. But as long as we can respect each other and look at each other in the eyes and know that we’re gonna, you know, look at each other with respect and integrity. That means so much so you know, it’s a great question. I’m glad you asked it. But that, to me are the two things that I’m grateful for that mom and dad share with me.
Love it. Yeah, that, that hits home. And my dad was an entrepreneur and construction and in the Bay Area, building houses, and I fell in love with real estate. And my mom was the foundation of my faith and shared it at a young age. And that was the most important thing. And, and it’s never left. And it’s always been the one thing that’s been stable and consistent despite any other circumstance. If I feel I’m obeying and following God like everything else can be going sideways, but I’m at peace. But if the opposite is true, like if, if I’m not right with God or close to him, then everything else can be going great, but I’m not at peace. So that’s something that resonates a lot with me. So that being said, let’s dive into some strategy here. Right, let’s talk about some deals. What are you seeing right now? Maybe a current offering or deal that you’re looking at? Maybe just kind of give us or a sample deal that’s done recently. Your choice on that. Okay, John?
Yeah. So overall, I mean we’re all challenging or challenged right now with the environment. We have COVID got the elections, you know, some of the big cities are dealing with some civil unrest. Our strategy has always been centered around the sponsor and the market, where are they? Where are they operating? Who are they? What are they doing? And are they presenting us a project and opportunity and asset class that they’ve done before? Well, I like to rinse and repeat. You know, I like those sponsors that come to us and say, hey, we’ve done 100 of these, you know, this is something we’ve done before in this market because they know they know everything at that point. They know the city codes, they know what they have to deal with when it comes to a specific opportunity. They know the ins and outs Have that specific opportunity, they’ve dealt with the risks and the challenges. So that, to me, is always important. And we’ve had that mentality pre COVID. And I think it’s helped us to not necessarily be horrible, or I should say, invulnerable to get through this situation, but it’s helped us to be resilient. And it’s helped us to kind of come, you know, come to grasp, but yes, we have to navigate through some choppy waters, but we’re still doing well. I mean, we’re hitting one to 2%, inside our projected returns, our sponsors are getting creative and still making things happen. And we stick by our mindset that the developer makes the money when they purchase the property, not when they sell it. So that’s very important for our location, the sponsor. And then yeah, we look at the risk of returns. We look at all the intangibles, but the sponsor and the markets are big. We’re seeing a ton of deals right now and we’re seeing deals all over the country, West Coast, East Coast, Midwest, Northeast, but we still are staying with our formula for success. And in our case, we love Washington, DC, we love Virginia in the Maryland market because it’s my backyard. And it’s three of the best potential markets in the country. We also like the Southeast because the cost of living is low. It’s very conservatively based on their fiscal and their economies. The weather’s great, a lot of businesses are moving down there, and the cost of living is low. So when you add all those things up, you know, those are just great places to invest right now. And we’re seeing a lot of folks down there. So saturation as well as managing things. But we liked those markets. We just fully funded apartment development in Frederick, Maryland. And Frederick Maryland is interesting. And it’s a great market because it’s in the heart of the Biomed district in the country. So you got the National Institute of Health where Dr. Fauci is, you got the NASA National Cancer Institute, you have four teachers, which is a biomedical research facility that’s looking at vaccines right now. So where else would I want to invest in an area that is just exploding right now with what’s going on, given, Unfortunately, the pandemic, but at the same time, state of the art studies and research, we’re going to be doing 190 apartment unit development and construction. And then in about four years, when those projects are done, we’re going to turn around and potentially, we’re going to recap out of the event, we’re going to come out of the investment. We’re bringing in a 1.2 million of equity, which we raised in 12 hours, which was the most successful raise we’ve had today. And, you know, that’ll all be long term capital gains, and then we’ll probably end up doing it when we recap out, we’ll get a one would get our 1.2 million back and are planning to make about 100% return over the four years to a to x on the returns. And what they’ll do is give our investors the opportunity at their discretion to then turn around and come in to potentially invest on the long term hold, which at that point will be 190 units fully stabilized and collected in a cash flow distribution quarterly, semi-annually, and then have the back end of capital gains sale whenever that goes to the final, the final finish point.
So yeah, nice to make sure I gather and thank you for sharing. That’s fantastic. Yeah. So 190 units, they’re building it from the ground up. DC, Maryland, Maryland area. Yep. Yeah, Maryland. And fantastic. Opportunity. Sounds great. So, that 1.2 million goes in today. And what we’re hoping you’re hoping for is within, is it two years or four years, 48 months, okay, four years, four years, then it’s two x right? So you went from if you put 100 grand in, let’s say they were hopefully 200,000 which point it’s a refinance of that property. So that’s cash comes back out. And so you guys are made whole and they can take their cash and and and just go with that and pay ordinary income tax on that right because of the interest.Faith and family to me here are hand in hand. Click To Tweet
Now also, though, pay the 48 months, again, the company, the entity we stand up, we’ll make the two x we usually give 60% of that. So the investors will walk away with a, you know, a 60% return on that over the 48 months. So it comes out to around 16% return on investment on their invested capital, so about 16% annualized, but 64% total project return and then they’ll end up having the opportunity to take that 64% and that’s gained, that’s long term capital gains. And then we’ll have an option on the follow on to take a fraction a portion of that money and the invested capital they brought in the post-tax dollar and then bring it into the long term home which you’re right that cash flow that they’ll earn on that portion of the investment, which is the long term home will be treated as income Come, and then when we sell the property and the back end, or we refinance out that additional profit they receive would be treated as gain long term debt.
Okay. Got it? All right, excellent. Um, first of all, fantastic returns and proven operators are great locations. Yeah, so it’s illiquid for four years. 100,000 sits there. And then four years later, you know, up to 60% or so. So about 160,000, which I could just roll into the deal long term, right? I still defer my tax and am I still following?
Well, no, you have to pay the capital gains, because there wouldn’t be a mechanism like an opportunity zone or 1031, or 1231, to use in this case. So you would have to pay that gain on the 60. So, you know, 15% plus your, your state tax. So let’s just say you’re paying 10,000, you know, hypothetically, or notionally, so you’re taking 50,000 out of 60, to get your 100,000 in principle, and then we’ll have a scenario where we may have 50% of the monies, or 40%, or somethi out and get the conventional financing on the permanent long term home.
Okay, we’re getting some details here. But the key is nice returns, right? tax stuff, we do have the deferred sales trust for larger deals, 500,000, or more, or million or more of equity, to kind of solve some of that. But that being said, That’s fantastic. Okay, great. So there we go, long term hold. And the whole idea is to get you, let’s say, 10, 15, you know, percent on your money, right? passively, right. And for track records that have been for people who have long-term track records, and then just continue to do that. Now, once you’re in it long term, you get the depreciation right to offset some of the income. And it’s not rocket science, right? It’s just about finding trusted operators, trusted professionals, like yourself to bring the two together and being patient with your money. Is that a fair summary?
It is and my job really, is to go out to the market to look at the property? You know, it’s a great opportunity. The reason why is again, we’re being very selective right now, given COVID. Given where we are with the election, and everything, we’re focusing on close to home developers, we’ve been doing deals with this developer on our 11th project with them, and every project we’ve done has hit or exceeded profits and proceeds. So you know, for us, it was like, you know, this is probably a no-brainer for us, given what’s on the stat sheet. I went up there about three weeks ago, I saw identical properties that were about 10 miles away from our site, the property managers from both the two properties that I looked at will be the same property manager that we use. So when you start looking at all these things, you’re like, Man, this is just, you know, the risk is being mitigated on this each way I look at it. And of course, there’s a risk. I mean, for us, the big thing here is, you know, do we get the building permit? What’s the financing look like, and the funding looks like for the construction? Are we going to get that, you know, so these are all the things that we look at and are still kind of out there. But we know we’ve looked at this with a lens to mitigate and get and get around the risk. There’s no way that we know
Exactly! Right. Otherwise, everyone would just throw all their money and all of it right. It’s always a risk. That being said, what, what is your take on just the, you know, say, post-election, and even six months from now? What’s your take on real estate values? What do you think there’ll be some opportunities? If so, what does that look like? Give us kind of your gut feeling over the next six to 24 months for real estate opportunities?
Well, right now, my focus is we have a very large opportunity to raise, which you and I’ve spoken about, and it’s in DC. So I feel, regardless of who wins the election, DC will still be very well insulated and absorbed. We have the federal government, we know the federal government’s not getting any smaller, it’s getting bigger. We have Amazon HQ2 that was announced about a year and a half ago, we’re realizing the first year of that this year for 40,000. Jobs increase just primarily to Amazon over the next 10 years. So we’re gonna see a 3800 to 4000 increase in jobs over the next 10 years each year. So 40,000, and that doesn’t include the tertiary, which we anticipate to be around 120,000 on top of that, so we’re excited about DC regardless of the administration, but I do think you have to see who wins this and how it kind of plays out because I know there’s you know, not to get politics involved that the administration’s have different visions on which way they want to go with the country from a tax perspective, which I’m sure you’ve looked at, from how they want to govern from how they want to implement policy to how they want to, you know, look at the housing market and what regulations are deregulations. They want to bring in. So there’s a lot of things. I’m always going to be a market-based investor. I’m going to always be a market-focused business and I love markets. Do I like where we are? And I still think, you know, regardless if you get in, we’re gonna do well, some of the markets may take a little bit more of a hit versus others, you could argue that there’s a 180 on each potential administration that comes in or stays in nationally. But I think that you know, when you look at specific markets that you’re in, you know, that that definitely would be your advantage going into a post-election year for this year for the presidential election.
Excellent. Well, thanks for sharing. What’s the biggest mistake you a client or partner have made when it comes to capital gains tax deferral?
I think that the biggest mistake I see is just I included in this is just really planning and understanding and having an idea of what we need to do with those gains, you know, before they’re earned, right, and what are my options? What levers Can I pull? Can I pull a DST? Can I do 1031? Can I do opportunities on what’s available out there to me, you know, not the day I get money back, but three years out, you know, and how can I plan for that? Once the monies are coming in? And then how do I? How do I research those areas to make sure I’m staying current with changes in legislation, changes in potential policy, state federal-local levels, so that I’m that I have options, you know, it, you know, I may want to do a DST, but I realized three years from now that I need to do an opportunity zone because opportunity zones have been blowing up, there’s more, there’s more on the plate, there’s more flexibility, the laws have been kind of opened up a bit more. So just knowing what my options are. And then just staying on top of that, whether you do that yourself or you have a trusted agent, you go to your broker, your CPA, your DST professional, your capital gains professional, and just having those options available to you and your investors in my case, or your clients, people I work with, because I’m going to get that call and say, hey, look, I like what you want to do on the follow on maybe it’s an opportunity zone for me, but what are your folks doing from 1031’s perspective, or capital gains perspective or deferred DST perspective? These are all the things that we want to have in our back pocket.
Well said yeah. And you get clarity with that with capitalgainstaxsolutions.com to learn more about all of those. That being said, John, are you ready for the lightning round?
Let’s do it!
All right, knowing what you know, now, if you could go back to your 25-year-old self, what’s the one Golden Nugget you would make? Sure you would do?
I would probably invest more, I would have gotten a couple of profile properties. I think that if we could go back and do that, that would be wonderful. Just to have maybe, you know, 10 or 12 single families or have a 300 unit when I’m just going out and getting mailbox money every day,
Man, I wish I could have done that.
Yeah, well said. What is the one book you’ve recommended or gifted the most in the past year?
Oh, my goodness. Um, you know, I’m a big Robert Kiyosaki fan. I also love Dale Carnegie‘s How to Win Friends and Influence People but I just started reading Extreme Ownership by Jocko and Leif. I can’t remember the slab leak Brunson great book, Extreme Ownership. And then there is that Dichotomy of Leadership, which is a follow on the book, but I am loving it, these guys are pumping me out.
And for me, and I’m sorry, I know this is a lightning round. I’m trying to scale my company right now. I’m trying to find those people I can bring in that can just really get us to the next level. And that book just got me hanging off a cliff. I love it.
Really good book.
Highly recommend it.
So, good. Likewise, I have Extreme Ownership, I gotta check out the dichotomy of leadership. Give me the mobile or digital resources you recommend for your business.
I love LinkedIn. I love it. I’m on LinkedIn every day posting pictures, utilizing it to just communicate, to advertise to meet new people. I just think I don’t know how it’s not $1,000 a year to be a member on LinkedIn. I know they have the sales navigators and stuff but I really love LinkedIn and YouTube has been great to get the message out to share I think when people see you like there are now and the hero’s talking, it’s great because they could take their time they can go back and listen they can pick out stuff rather than being pressured to talking to someone you know face to face or on the phone. So I enjoy that it lets their guard down a bit and lets them you know, kind of see folks but I love those two outlets to me. Those are the best right now.
Yeah, so well said so true to favorite leadership quotes or themes that you strive to live by.
Oh, my goodness, I know I’m gonna mess this up. But I did my best. Remember, Colin Powell said that success is defined by how many times you’ve bet it’s not defined by the success you have but the way you fail and how you pick yourself up to continue. I don’t know if I got it right. But the fact that we have to allow ourselves to fail, obviously we don’t want known failure or catastrophic failure. We split sleep sweeps under the carpet, but we have to allow ourselves to, you know, take a hit every once in a while. It grounds us, it gives us a basis to focus on to try to make ourselves better. I know Jocko talks about it in the book Extreme Ownership that, you know, we got to take ownership, we got to allow ourselves to fail because the only way we’re going to learn is if we fail. So I think that to me, you know, I didn’t get the code exactly right. But, you know, being allowed to fail is not necessarily a bad thing, as long as we learn from it, and we implement it and make us make it make us better.
Well said. Next question, what are you curious about right now?
What am I curious about, um, you know, I’m a little bit perturbed and a little bit concerned about what’s going on in the nation, I am, I’m concerned about how things are changing. And, and, you know, I’m not going to get into all the details, but I just really hope that we find a way to come back together as a nation, you know, we’ve always come together. And we’ve always been united as a country. But it just seems like there are so many things out there now. And everybody’s kind of waving a flag and calling their tribal, you know, unit or whatever you want to call it. I just want to see people come back together, I want us to be the country that I know we can be in the country I was honored to serve. And it just hurts sometimes seeing what I see. But you know what, we can’t just sit back and let it happen. We got to get out there and be motivated to make it better. So that’s the one thing that’s kind of concerned me a bit.
Yeah, let’s hope for some more peace, more unity, more freedom, and more justice. How do you stay centered in your values? John, after all your success, and after your years in the military, and now your years? and civilian life, right? And real estate, everything that you’ve been able to accomplish? How do you stay centered in your values? And then second, how do you stay encouraged to reach for new heights?
Yeah, so my faith is number one in my life. It’s my foundation, follow my family and my freedom, and my friends know the four apps. So I think that having a foundation centered around faith and your relationship with God, and Christ to me, is what makes me who I am. And it’s given me real balance. And being able to step away from the day and going and enjoying the family taking my son to baseball practice or coaching my son’s football team. I love that, you know, just having the balance. And then what was your second one? there? I missed that last one.
So yeah, how do you stay encouraged to reach for new goals? Like you accomplish all Yeah, amazing things. And then like, What keeps you going to reach for new ones,
You know, talking to people like yourself, you know, people that are doing great and are successful and want to instill that and share that with others and, and just listening to people that just, you know, again, share the same values that you have, and that want to go out and do the things that you do. And you know, when you hang around winners, you’re a winner. And I love feeding off the energy of people that I see. Want to do the same things I want to do, and that’s why I love what I do. I just truly do.Through Real Estate, God has put me in a position to touch people's lives, bring to them things that I never thought I would have been able to do before. Click To Tweet
I absolutely love it. Love it. With that being said, I want to thank you for being on the show, I want you to ask, I want you to give us one last thought and also remind your listeners where they can find you.
Yeah, one last thought is, you know, challenge yourself. Don’t be afraid. You know, a lot of times we may have things that hold us back. But if you feel good about something and you feel like it’s something you want to take to the world and you know you can help somebody with it. Even if it’s one person or a million, then go for it. Don’t be afraid, you know, have a plan. And make sure you can execute. But when it’s time to press the Go button, go for it. Don’t be afraid.
Love it, love it. And I thank you, John, first of all for sharing your inspiration, sharing your wisdom, your service to our country, and sharing about your faith. So appreciate that it’s encouraging for me and our listeners. And with that, I want to encourage you to keep using the gifts and talents you’ve been given to bless others and help you become financially free and have more cash flow, and invest in real estate, love that. And with that, I also want to thank our listeners for listening to another episode of the capital gains tax solutions podcast. As always, we believe the highest net worth individuals and those who helped them struggled to clarify their capital gains tax deferral options, not having a clear plan is the enemy, and using a proven tax deferral strategy, such as the deferred sales trust or investing passively, or someone like John Rubino at JIDinvestments.com is the best way for you to grow your wealth. Hey, with that please rate review subscribe if you are selling a highly appreciated primary or home public stock, private stock, real estate, private practice business, cryptocurrency please go to capitalgainstaxsolutions.com do a john told you to do and pre-plan and be there early, right? Because if you’re too late, the tax is triggered. But if you can plan it, and you can with us at no additional charge, unless you use the deal or use the trust you get paid for using the deferred sales trust. You can save a bunch of tax and we want to help you do so with that. Thank you, everybody. God bless some people today and we’ll talk to you next time. Bye.
COO & Partner at JID Investments, Entrepreneur/Small Business Owner, Real Estate Investment, Syndication & Navy Veteran.
He has a unique background from the military to a passion for real estate and he loves helping people become more passive and their finances by owning real estate along with his partner.