How I Invested in a $350 Million+ Real Estate Portfolio

Reed Goossens

United States
Real Estate
Long-Term Investor

Who are you and what’s your story?

My name is Reed Goossens and my website is reedgoossens.com. You can find my books there and I’ve also got a podcast called “Investing in the U.S.” which is all about investing in real estate here in the United States.

I’m originally from Australia. I have a pretty deep southern accent as people like to say. I moved here in 2012 as a structural engineer. I was here to chase a girl and to live in New York City.

Prior to moving to the United States, I already had been bitten by the real estate bug and that was back in 2010. I read the book “Rich Dad Poor Dad.” And was at a crossroads in my life, early on in my career, I just finished a couple of years backpacking around the world, had met this incredible girl in the U.S. but was living in Australia and sitting in a cubicle and just thinking, “Oh god, I need to do more with my life“ and that’s where I stumbled upon the book “Rich Dad Poor Dad.” 

From there, I just started consuming myself with real estate investing in Australia, but I had a desire to move abroad again.

I moved to the United States with no visa, moved on a tourist visa, and then went door-to-door knocking to try and get a job as a structural engineer and finally got a job. Then it was all about educating myself about the U.S. market.

The first thing I realized when I moved to the United States in terms of investing in education is just the plethora of these communities that they had set up. 

When I went to New York City, it was just fast-talking Americans that had these incredible events that you pay 20-30 bucks at the door and I could just consume so much information quickly, surround myself with people who were like-minded in the real estate game and start educating myself about the benefits of investing in the United States. 

Little did I know how cheap the U.S. could be. I’m from Australia, a very high appreciation market. New York City is the same but then you have the other secondary and tertiary markets that were very, very cheap. 

For me, coming as a fresh-faced-bushy-eyed Australian, within four hours’ drive from New York City, I could buy a triplex for 30,000 bucks. 

Within six months of being fresh off the boat, I had purchased my first triplex for all cash, I couldn’t get financing because I was new to the country and didn’t have a credit score.

And quickly did I realize, the reason things were so bloody cheap in some of these markets was that there was Section 8 housing, government housing, but it got me started.

Everyone always asks “What’s your best deal” and it’s that first deal. And a lot of people ask why real estate.

My background is in structural engineering, I moved to London in 2008 to work on the London 2012 Olympic Games. So I could build stuff, I knew how to build physical things.

Going back, my dad was just a high school teacher but he had a little bit of success with buying houses in Australia. The family houses we grew up in took him from being lower-middle class to upper-middle class through real estate investing. He never invested in stocks. 

So the combination of me having that background in structural engineering, knowing how to build stuff, and seeing the bit of success my dad had as a blue-collar worker and rising up in his value through investing in Australian real estate, that just made the most sense to me. And that was it. 

Walk us through your process of identifying and executing on investment opportunities?

When I started, it was all about just getting the maximum amount of units I could, which was only a triplex for the money I had. Since then I’ve pivoted into what’s called the real estate syndication which is where I pool money together. 

That’s what my company, Wildhorn Capital, does. We go off and buy larger commercial properties. And we’re talking 100, 200, 300 units at a time in each individual property.

First syndication I was involved back in 2015 – 250 units in Houston, TX.

We raise the money, the benefit for us is that we can leverage other people’s money and the benefit for the investor is that they can find deals that they may not have the access to nor have the capability to go and take by themselves. They invest directly alongside us and we split the profits.

We look for “value adds”, and these are deals where the average rent across all the units is less than the market rate and we can bring it up to market rate through doing renovations, beautifying the property, making the amenities nicer, putting in a gym, making the leasing center look better — basically rebranding it, giving it a sex appeal, and then increasing the rent.

A basic example, we may have an $800 a month one-bedroom apartment. If I know the market is at $900 or $950 for a one-bedroom, I can go in, renovate it, put in new floors, new paint, new countertops, etc and I can increase that $100 or $150 a month in rent. Times that by 12 and then times that by 200 units, my Net Operating Income (NOI) goes up.

With the increase of NOI, I increase cash flow and the value of the physical asset. We typically hold them for four to five years and then we sell them.

And we do these very much on a deal-by-deal basis, typically buying between four and five deals a year. 

More recent deal 284 units in Austin, TX. The Reserve at Walnut Creek.

We’re a small outfit with about 2500 units in the portfolio. The assets under management are about $350 million and all of this in Texas. in Central Texas, Austin, and San Antonio.

Why Austin, why Central Texas?

You have cities like Los Angeles, San Francisco, New York, Seattle to some extent, Miami etc and these are very high appreciation markets, so not a lot of cash flow and your cap rate is very compressed.

A cap rate is just the valuation of an asset if you were to buy it all cash. So if I was to say, “I’ve got a 5% cap rate in the market,” it means if I went and bought a property, all cash, commercial asset, I would expect to get a 5% return on it, and that goes up with leverage if you put bank debt on it.

For example, in New York City there’s no cash flow because the cap rates are 2 and 3%. But the United States is such a large population, people have to live somewhere.

So there are these secondary and tertiary markets, like Central Texas and San Antonio and the cap rate is more moderate at between 5 to 6%.

When you have a cap rate that is higher than interest rates, so if you have a 5.5% cap rate but your interest rate is at 3.5, that gap means there is cash flow. You can get cash out of that. 

That is what you’re looking for. You’re looking for a moderate cap rate.

So rather than going to New York City and trying to buy 200 units where the cap rate in New York City is 3.5% and the interest rate is 3%.

And going back to Syndication. In 2012, the SEC released the JOBS Act which started online crowdfunding. The JOBS Act meant that you could publicly advertise your offerings and that changed the game. All these pop-ups of direct peer-to-peer lending and investing through crowdfunding was the start of this. You don’t need to go through a publicly-traded REIT on the stock market to get access to real estate deals. You can skip the middleman and go directly to the deal.”

It’s grown a lot in popularity because you can invest directly with a deal, you get those taxation benefits, you own a physical piece of real estate or a portion thereof and it’s a win-win situation for everyone.

Since you first started, what have you learned that has had the biggest impact on your success and the growth of your portfolio?

Many people go down this path of trying to achieve financial freedom thinking it’s going to happen in two weeks or 12 months. It’s got to become part of your DNA knowing that it may take you longer than that. It took me eight years. It may take you 10 years. It may take you 15 years. It’s your journey and you’ve got to be comfortable with that. 

In this world of instant gratification, we constantly want it to happen so much quicker. I’m the same, but the biggest lesson I learned, that it’s okay that it took me eight years. It’s my journey. It’s my story and I’m going to own it.

The biggest thing is understanding that it’s a journey. It’s not a sprint, regardless of whether you’re just starting from today, you’re trying to get out of your day job or whether you’re trying to build a business from scratch. It’s around for the long term.

You’ve got to enjoy it along the way because so many people want to just race to the finish line and race to the top of the mountain and there’s another mountain to climb. Trying to be present in the moment and just enjoy the art of creating something from nothing is important to me. 

What books, platforms or resources have you found useful?

Rich Dad Poor Dad is a good one for people who’ve never read it.

The 4-Hour Workweek is another great one just in terms of looking at systemizing your business and just again changing that mindset of stopping a bottleneck in your business. 

Practices, books, podcasts, all those things are important. The continuation of growing as an entrepreneur, I think that’s also another important thing. As you become an entrepreneur, never stop learning, that hunger for learning and wanting to find out more because as Tony Robbins says, “If you stop learning, you stop growing.”

It’s important in my life to continue reading books on subjects I don’t know about. I’m going to actually start learning Spanish soon. I want to because it’s just something new to the different parts of my brain that can trigger. All those things help to keep us curious and keep the fire lit within our belly.

What advice would you give to someone who’s just starting out?

I talk about surrounding yourself with people by finding networking events regardless of what you’re involved in, whether it is real estate investing or stock investing or building businesses.

Entrepreneurs’ Organization, EO, is a powerful platform where you can surround yourself with like-minded people because being an entrepreneur can be lonely.

If you don’t have a group where you can go to and bounce ideas off of, talk about certain problems in your business, it can drive you insane.

When I first moved to the United States, I created my own little masterminds of people that I looked up to. It didn’t cost anyone anything but we all brought value to the table. It was something we all looked forward to once a month because we were on that lonely journey and we could then bounce ideas off.

So reading books and podcasts and all that stuff is good but also then surrounding yourself through either an existing organization like Entrepreneurs’ Organization or going to a real estate event like I was going to or creating your own, which is also what I ended up doing.

I’m very big on getting good sleep, physical exercise and meditation. I’m learning as I grow as I become more of a CEO and a leader, that I need those things in my day to help me be a better performer.

I also surf a lot and little things like that that can help you turn off and switch off for a little bit. 

Then when you come back to your work, you can hit it and be effective rather than just burning out all the time. 

What investment opportunities are you excited about at the moment?

As I mentioned earlier, we’re very much a deal-by-deal scenario type of group, we have 11 deals in the portfolio and around $300 million assets under management.

We just closed on two deals which were quite interesting.

Andrew, my business partner, and I saw this deal two years ago. We underwrote it at a price, $20 million, we liked that number and submitted an offer. It was an off-market deal at that time in a booming location in Austin. The sellers were out of San Francisco. It was three older gentlemen, two out of the three people wanted to sell to us at that price and the third one held out.

Fast forward, two years later, one of them has unfortunately passed away and it forced a sale. 

And we actually bought that asset not with syndication, but with a private equity firm because they had a lower return threshold and in two years the value of that property went up 7 million bucks. The NOI didn’t change, it was just a compression of cap rates.

We finally closed on it like a month ago and during the closing process, the deal across the street fell in our laps. They’re like, “We know you guys have got this deal and the contract here. We’re actually thinking of selling. If you can get our number which is this, we’ll sell it to you.”

Another group was actually higher than us on the second deal in terms of offer price but because we had the relationships with the broker, we ended up winning the deal.

We end up tying up nearly 580 units in a period of two months two assets right across the street from one another.

We’re actually combining them today to be one big community, rebranding it with a different name, doing the exterior paint so it matches, making sure that the landscaping matches either side of the street so people think that it is one particular asset. That’s been exciting. 

Again, that’s through a new type of equity which has not been through friends and family and syndication. We went to a group out of San Francisco that we’d create a relationship with. They’d seen that we’d built a track record. Now we get less of the deal, but again, we wouldn’t be able to sniff that deal if they hadn’t been involved. 

Our relationships over the two or three years combined with their big checkbook and their ability to swallow lower returns because remember, those deals have increased in value because of cap rate compression over the last two years, which wouldn’t have suited our investors in the syndication world.

So during Covid, that was the big two deals that we closed and have been excited to wrap our hands around it, get the business plan going and make this a successful deal over the next five or six years.

Where can readers go to learn more about you?

You can go to reedgoossens.com. You can find my podcast “Investing in the U.S.” wherever you listen to podcasts.

And you can go to wildhorncap.com.

You’ll find my books on Amazon:

  1. Investing in the US: The Ultimate Guide to US Real Estate
  2. 10,000 Miles to the American Dream: Our Story of Financial Freedom

If anyone is coming through L.A., whenever they get back on a plane and they want to go for coffee and meet up, just hit me up at [email protected]

Thanks to
Reed Goossens

 for doing this interview.

If you have any questions or comments, leave a reply below.

Get More Stories Like This

Enter your email below to get early access to more stories just like this directly to your inbox

Leave a Reply

Your email address will not be published. Required fields are marked *