Are you thinking of moving from the restaurant business to the real estate business?
Jeremy Cisneros did just that. He went from owning a McDonald’s franchise to investing in the multifamily space. He joins our podcast to share his insights on operating and optimizing businesses and how he’s able to wear different hats in real estate with his experience as a lender, underwriter, and investor.
[00:01] – [07:24] From McDonald’s to Multifamily
- Why Jeremy made the move to multifamily
- Bringing his restaurant experience to real estate
- Managing and developing people and processes
- Looking at things on a weekly basis
[07:25] – [11:22] Scaling a Multifamily Business
- Jeremy reveals how he and his group sourced 1200 deals
- The importance of having the right partner and processes
- Don’t waste time with the wrong deals
- Empowering and giving autonomy to your deal team
[11:23] – [14:50] Employing His Lender Skillset
- Here are lessons he learned from being a lender
- Common misestimations people make in deals
- Building relationships goes a long way
[14:51] – [15:49] Closing Segment
- Reach out to Jeremy!
- Links Below
- Final Words
Tweetable Quotes
“…there’s many years of long days and hours to, you know, see how an operation works together and get more efficient. It’s just kind of taking those learned skills from people and working in developing those individuals to bring that into what we do today.” – Jeremy Cisneros
“… having a borrower’s hat in the lender’s hat, I know that when I’m presenting something to a lender, you got to be a little bit more aggressive to get the proceeds you want. So I get it. It’s a back and forth game.” – Jeremey Cisneros
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Connect with Jeremy though https://www.symphonycapitalgroup.com/ and https://www.thegrowthvue.com/.
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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
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Email me → sam@brickeninvestmentgroup.com
Want to read the full show notes of the episode? Check it out below:
Jeremy Cisneros [00:00]
We’re not just looking to raise capital, we are looking to provide and leverage some of our real-world asset management. So that’s one group. And then the other group I work with is called Growth Vue Properties. And we are really a deal finder sourcing… I think last year, we sourced almost 1200 deals 100 plus a month, we have a good team and process in place. And, you know, we’ve been able to partner with some large equity groups and capital partners to take these deals down. So we’re doing things a little differently on those two respects, but it’s been a tremendous ride.
Intro [00:30]
Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we’ll teach you how to scale your real estate investing business into something big.
Sam Wilson [00:42]
Jeremy Cisneros, a McDonald’s owner-operator turned multifamily investor. His hands-on experience in turning around and optimizing businesses from top to bottom really helped him out in the multifamily space. Jeremy, welcome to the show.
Jeremy Cisneros [00:54]
Thanks so much for having me on, Sam. Excited to be here. And looking forward to it.
Sam Wilson [00:57]
Hey, man, the pleasure is mine. There’s three questions I ask every guest who comes on the show. In 90 seconds or less, can you tell me where did you start? Where are you now? And how did you get there?
Jeremy Cisneros [01:06]
Yeah, so I started in the residential space similar to a lot of folks. I got my license as soon as I got to California from New York, originally background in McDonald’s franchise owner, operating. And today we’re in multifamily investing, passively along the way, and then eventually became into the active space. So here we are today. And yeah, I’m sure we’ll dive in a little bit deeper.
Sam Wilson [01:28]
That’s really fascinating. So you own McDonald’s franchises. But how many restaurants did you own?
Jeremy Cisneros [01:35]
We own seven in midtown Manhattan and the Upper East Side. So my father kind of scaled that up over the course of his almost 30-year career, and I was in it five years there before we sold.
Sam Wilson [01:45]
Gotcha. Okay, so you guys have divested of those? Can you walk us through, I guess the thinking behind selling off a McDonald’s franchise, it seems like those would be, one, hard to come by and, two, valuable assets to own.
Jeremy Cisneros [01:57]
Definitely, the goal was to scale long term, but the overarching reasons of just squeezing profit margins, and increasing costs, etc. And then being in the environment of New York City, you have to pay the taxes as a franchise owner. Real estate taxes are really expensive. And what we saw was just long-term, wanted to divest. And so we had an opportunity. One of our locations sat on a very valuable piece of dirt over the Hudson Yards project on the west side of Manhattan. The developer approached us and then approached the corporation on the land. We own the lease up until 2022. So they bought us out of our lease, and they bought the land and we sold the other six locations to another operator.
Sam Wilson [02:37]
Gotcha. And it was at that point, you said, “Hey, I’m going multifamily,” or did you already have your hands in multifamily before then?
Jeremy Cisneros [02:43]
I wish I had, you know, I spent a few years in residential. Nothing wrong with that. It was a great experience. I was a realtor, as I mentioned, just kind of working with buyers and sellers, but then multifamily, probably two or three years after that, and have been really just kind of obsessed since.
Sam Wilson [02:59]
What are some things that you’ve learned are some things that you feel like you’ve brought from the restaurant slash franchise space that you bring into the multifamily investing space? That gives you a competitive edge, I guess, is the question I’m asking, over what you see other people doing.
Jeremy Cisneros [03:14]
I’m an underwriter by background, I’ve done a lot of lending. So that has helped him kind of rounded out my operational experience that I had, working physically in the trenches at McDonald’s from the back office, looking at P&L and our balance sheets on a daily weekly basis, has been really helpful to really optimize the revenue, and then fine-tune the expenses without really like crippling the payroll, at the end of the day. You understand what it’s like working shoulder to shoulder with those who are actually performing what comes out on that store-operating income or net operating income, as we’re familiar with in real estate, what it actually takes in the day to day working long hours. I can empathize and I definitely able to, I think now, there’s many years of long days and hours to, you know, see how an operation works together and get more efficient. It’s just kind of taking those learned skills from people and working in developing those individuals to bring that into what we do today.
Sam Wilson [04:06]
When you say developing those individuals, what are some thoughts that come to mind?
Jeremy Cisneros [04:10]
We’re not vertically integrated at the moment. And you know, I love people, sometimes a gift and a curse to manage a whole team. We have 350 employees across our locations, and individual stores, you know, it’s just a lot of personalities and characters. And I think a big control aspect of owning multifamily is owning your own management company as well. So what we do as asset managers, we oversee the property managers who are professionals in those designated markets, and we’re just really talking with the regional managers, just making sure we’re aligned with our core visions and core values as we kind of set those up in my companies through a known system Entrepreneurial Operating System that I’ve now implemented from one business to the next.
Sam Wilson [04:51]
Yeah, and I think you’re referring to EOS system in Traction.
Jeremy Cisneros [04:55]
You know, like, Wickman, yep.
Sam Wilson [04:56]
Wickman, there you go. That’s who it is. Yeah, that’s really intriguing. Tell me about when you manage those people and those processes, I guess, what are some things that you look for, especially in your property management side? Maybe again, you’re coming at this from a different angle than what a lot of us may be coming into the industry from, do you feel like there’s things you see differently?
Jeremy Cisneros [05:06]
I think each asset is different. You know, again, I looked at the numbers pretty regularly, I think conditioned to look at things on a weekly basis. And my father is a big proponent of what gets measured gets done. So we just make sure we’re looking at things on a micro-level, and making sure that we’re just optimizing as much as possible, you know, we want to be as fair and transparent with our tenants who are maybe looking for a better living experience and community. So we’re happy to provide something like that at a reasonable cost. We think at the end of the day, and then seeing what’s working with renovation turns, improving the communities, the amenities, just deferred maintenance, and all that. Not everything is a heavy revenue driver, but the experience can help reduce turnover and sometimes unforeseen expense at the end of the day, when you’re looking at your bottom line. It’s not something that you can quite measure. But the less turnover, you have, the obviously more profitable you’re going to be.
Sam Wilson [06:09]
What are some of the things on a weekly basis, some snapshot items that you look at? Maybe that you say, “Hey, this tells us where we are.” And you can look at it in one minute and get kind of the health or state of the union for each property? Are there you know, five things you look at for each property? Or what is that?
Jeremy Cisneros [06:25]
Yeah, typically, when we’re doing our renovation plan, it’s a little bit different than looking at more of a stabilized asset. So a lot of our deals have been more of a value-add plan. So we’re sort of like net neutral from a cash flow perspective. But if I see things dipping below that debt service coverage ratio of like 0.10, I’ll start to fine-tune and see like what’s going on. Sometimes you just have, you know, leaky toilets, at the end of the day, it could be something as miniscule as that just flushing money down the drain, you know, no pun intended, and you don’t realize it a few months go by and you’re like, oh, wow, this line item has increased with technology, it’s pretty easy to kind of catch upfront. So things like that. Obviously, tenants are all different. And they all pay at different moments in the month, we wish everyone paying on time. But it’s not everyone’s circumstance. So I think looking at things weekly, and then checking in on different revenue in different expense items, kind of those two small examples I gave are definitely what we try to keep our on site property managers looking at and kind of training them to look at these things without the help of us in the long run.
Sam Wilson [07:25]
Yeah, I love that. How have you scaled your multifamily business, what has been your preferred approach?
Jeremy Cisneros [07:33]
So I work with two groups Symphony Capital. So we do a lot of partnerships, our co-general partnership, as it come in the syndication world, we have really scaled our deal flow, when we have partners who are in contract, and we’ll bring some capital, we also bring some of that asset management experience. We’re not just looking to raise capital, we are looking to provide and leverage some of our real-world asset management. So that’s one group and the other group I work with is called Growth Vue Properties. And we really deal finder sourcing… I think, last year, we sourced almost 1200 deals, 100 plus a month, we have a good team and process in place. And you know, we’ve been able to partner with some large equity groups and capital partners to take these deals down. So we’re doing things a little differently on those two respects. But it’s been a tremendous ride thus far.
Sam Wilson [08:20]
Source 1200 deals, that’s a lot of deals is that 1200 That you underwrote? And then you know, 120 of those you took a second look at or is that 1200 That you underwrote and said, “Hey, here’s deals that we feel we could move forward on.
Jeremy Cisneros [08:34]
Our team is not that big just yet. Those were the ones that hit the inbox. We took our first plan was we go through our neighborhood screen because we’d like to be at least 30 to 45 minutes with an MSA of 500,000 plus. And if it fits that we then use neighborhood scout and a few other tools to fine-tune, hey, does this neighborhood got good job growth, median household income, decent crime in schools. And then if it fits those boxes, we’ll go to our pre-underwrite phase, if it checks a few boxes, then we’ll go to a full underwrite phase. And that’s where I pick it up from there. You know, it takes time, but we’ve really developed this efficient, streamlined process now.
Sam Wilson [09:08]
I want to spend a little time here because this is really I think, interesting. What is your final objective through Growth Vue Properties? I mean, is it to take it down yourselves? Is it to present a deal to an operating partner and say, “Hey, guys, you know, we want to share the deal. But now you guys take it and run it.” What’s the objective there?
Jeremy Cisneros [09:24]
Yeah, Growth Vue Properties, we like to be the lead syndicator and sponsor on a deal. And then we have a great, like I said, partner within the capital space who’s just looking to get more multifamily deals. So they’re more of a self-storage investor historically and are kind of pivoting in this direction. So we would still obtain the asset management going forward and work directly with the property manager. And we’re, you know, in a couple of markets now.
Sam Wilson [09:48]
Okay. These are deals that you guys want to take down yourselves and hold in-house. It sounds like you’ve structured a creative finance partner for it.
Jeremy Cisneros [09:56]
Yeah, I’ve been very fortunate that my partner, Samson, has got some great partners, tips and ways of building teams that’s has been his background. And now that we’ve kind of put a couple years into building this process and this engine and system, it’s starting to pay some dividends.
Sam Wilson [10:09]
That’s interesting. 1200 deals, that’s a lot to take passes, or at least even just to look at, I mean, it’s a lot of emails and say, “Hey–
Jeremy Cisneros [10:17]
It’s a lot.
Sam Wilson [10:17]
Yeah, how have you made it easy, where you don’t spend too much time looking at the wrong deals?
Jeremy Cisneros [10:23]
That’s a great question. A lot of time could be spent looking at bad deals. So our team that has kind of scaled to about five or six folks now specifically, just on the deal team, our training and just looking at so many deals repetitively, they know to pass or kill more deals than they are letting through because and when we empower them, we give them the autonomy to do so. If they’re something on a line where this prime is okay, but the income looks good. We’ll talk those through and work on them as a team. But yeah, you can end up spinning your wheels on these deals that are just at first blush should have been removed for preliminary reason.
Sam Wilson [10:56]
Right? And have you done that primarily with virtual assistants? Or is these people you’ve brought it in-house? What’s that team look like?
Jeremy Cisneros [11:04]
Definitely like to leverage VAs, but all of our employees so far have been interns or equity members. That’s kind of like I said, Samson has been a great connector there, of bringing in folks that he’s known from previous experiences. And they’ve been tremendous. So all local, either Colorado, I live in San Diego. So that’s where our two hubs are at the moment.
Sam Wilson [11:23]
Gotcha. That’s awesome. Okay. Very cool. Talk to us a little bit about your lending background. I know, you said you came in, you did some brokerage work. And then you did some lending. How does that play into your current business? And I guess, what skill sets did you obtain while doing lending that you employ currently?
Jeremy Cisneros [11:39]
Yeah, so I was specifically in the commercial real estate lending space at a regional bank. My group did loans from $20 to $150 million, our average travels is about $50 million. So these were good-sized, typically ground-up development deals. And it was a different structure. Usually, we were the senior analyst, and we worked with the debt fund that would provide the whole loan and boost their return, very interesting structure. But what I learned going through that whole process was I brought the deal in from the broker or the borrower directly, and I worked on it through the whole process to close it. It wasn’t set up where you bring it in as a sales team. And then you kind of get it through the credit committee, and then you pass it off. And the deal, you know, the underwriting team closes it, the structure here was very flat, if you broaden the deal, you closed it. And then oftentimes, it stays on your books, and you also help manage the deal too, after you’ve closed it. It’s a great experience. And those few years, I feel like it was there for six years rather than three years. And it was just a tremendous experience, many hours reminded me of like a New York firm that I worked for. And that whole time there, it was just learning how to use your lender hat, doing work conservative, because the credit committee would typically slash rents, they would reduce expenses for both the borrowers or… and come to a happy medium att the end of the day. I think I used those skills today in my underwriting.
Sam Wilson [12:56]
What are some things you saw commonly when deals were sent to you that you guys went back to you and said, “No,” you know, like you said, raise expenses, cut rents, anything else that comes to mind that you said that you saw people were commonly misestimating?
Jeremy Cisneros [13:11]
Yeah, a lot of our deals came through New York borrowers specifically multifamily. So these would be deals that would have tax abatements for 21A, specifically in that market. So we would just verify it through lenders and counselors that we had locally in the New York market, we’d also just always have to double-check the buildable square feet, the FAR, the floor area ratio just based because everything in New York is vertical in the city. So you know, whether you’re able to build to a 3 FAR or a 10 FAR is gonna make all the difference as an air rights. So it got pretty complex. I don’t particularly acquire in New York City, I have some colleagues that do. And that’s a whole other can of worms considering when New York’s going through. But I’d like to think that in the future, we’ll help because I would love to get into development in the future. So I think that kind of helps. And just now having a borrower’s hat in the lender’s hat, I know that when I’m presenting something to a lender, you got to be a little bit more aggressive to get the proceeds you want. So I get it. It’s a back and forth game. It’s a little bit of negotiating. At the end of the day, we try to build relationships long term with specific lenders.
Sam Wilson [14:15]
Yeah, I think that’s a great point, you know, and that’s something that many have come on here and said as it pertains to lenders, as it pertains to insurance brokers, whoever it is, like, these are long term relationships. It’s not, oh, thanks for the loan. I’m gonna go shopping again, with 20 other people on the next deal.
Jeremy Cisneros [14:31]
We get that a lot. And the people that kept coming back and borrowing from us, we had great relationships and we were able to be flexible, what we were able to provide up to maybe a couple more dollars or reduced the rate a little bit. We weren’t the cheapest lender. We’re primarily just bridge lenders, construction lenders, but relationships went a long way.
Sam Wilson [14:51]
That’s fantastic. Jeremy, thanks for your time today. It’s been fun learning about your history there in the McDonald’s industry all the way to multifamily and how you guys have grown and scaled your company. Certainly appreciate it. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?
Jeremy Cisneros [15:07]
I appreciate the time, Sam, has been awesome. Like I said, I’m affiliated with two groups, symphonycapital.com, or thegrowthvue, that’s VUE, .com. And feel free to reach out. I’m always open to have a quick conversation with anyone who’s interested.
Sam Wilson [15:22]
Jeremy, thanks so much. Have a great rest of your day. Appreciate it.
Jeremy Cisneros [15:24]
You too, Sam.
Sam Wilson [15:25]
Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories so appreciate you listening. Thanks so much and hope to catch you on the next episode.
