Gino Barbaro’s Insights on Multifamily Real Estate Investing

In this interview, we explore the multifaceted world of multifamily real estate with Gino Barbaro, co-founder of Jake and Gino. Barbaro shares insights on his journey to real estate, highlighting his unique “Buy Right, Finance Right, Manage Right” framework. He discusses key moments in his career, adapting to industry changes, and misconceptions about multifamily investing. Gino also offers advice for newcomers, underlining the importance of community and mentorship, and shares his perspectives on future trends in the field. Join us for a deep dive into the strategies and experiences that shape Gino Barbaro’s approach to real estate investing.

From Family Restaurant to Multifamily Real Estate

SBS – How did your real estate journey begin?

Gino – The answer to that is very simple. I had immigrants as parents. They’re both from Italy. My father opened the restaurant when I was seven years old. I went to work with him and loved every minute of it. Then, I ended up opening a restaurant with my family when I got out of college. That, to me, was the beginning, but it was more of a small business. Becoming an entrepreneur and building a scalable business came after my father passed away in 2007. I had been working with him since I was seven years old. I looked at that and asked myself, “Am I living his dream, or am I living my dream?” I loved the restaurant, but I loved working with him more, and I understood that I didn’t want to be there anymore.

I wanted to do real estate full-time. I met my business partner, Jake Stenziano, at the restaurant I worked at in 2009. He moved to Knoxville in 2011, and we partnered up there. So, the short answer to your question is that it was just family roots and the willingness to build a better life. 

SBS – What happened with the restaurant? Does your family still own it?

Gino – That’s a great question. I ended up leaving or retiring in 2016 and pursuing full-time real estate. My brother continued for two or three years, and we sold the restaurant in February 2020. We were very fortunate to be able to sell it right before COVID hit. From 1994 to 2020 (26 years), my mom and brother worked there. It’s a great feeling in one aspect because you’re part of a community everyone knows. In Gino’s Trattoria, we did many baptisms, communions, confirmations, graduations, and wedding parties. It was just an amazing experience for me.

One of the things that I really regret was not understanding the value that I provided people. Even through that little store, I was part of the community. People would come home from work and pick up food, and I didn’t respect that enough. It wasn’t on my radar until I started creating other businesses. I created value for so many communities. The only problem was that I couldn’t scale it bigger. But at the same time, I did provide a lot of amazing memories and a lot of great food for people. 

Challenges in Transitioning to Full-Time Real Estate 

SBS – What challenges did you face when you started doing real estate full-time?

Gino – The first challenge was that I still thought I was an imposter. My identity was wrapped up in being the pizza guy and being in that restaurant business. That’s what everyone knew me as. I felt that way until I said, “That’s it. That life is over. I’ve learned real estate, and I’m doing it full-time.” That, to me, more than anything else (and I think most entrepreneurs can agree) comes down to your beliefs. Your beliefs are behavior-driven. If you believe you can do something, ultimately, you can do it. That was probably the biggest challenge for me: to leave that industry and go into a different one and gain credibility (what they call ethos). It took a little while. It didn’t happen overnight, but once I became successful and closed a few deals, things started working and moving for me.

Wheelbarrow Profit System

SBS – Can you summarize the “Buy Right, Finance Right, and Manage Right” framework, and how much did it impact your investing success?

Gino – I break my life down into two parts of my investing journey. That’s life before I met Jake and life after I met him. Before I met Jake, I made a couple of, I would say, unwise decisions because I just didn’t know how to invest. Everyone goes into investing and says, “Let’s invest in a deal.” What kind of deal? I was scattered and all over the place.

When I met Jake, we bought our first deal and realized that three-step framework — let’s buy the deal, finance the deal properly, and manage the deal. Now, our students are using it to buy businesses.

Whether you’re buying a single-family home, an apartment complex, office space, self-storage, or mobile home parks, we believe that if you buy and finance the asset properly, that’s the wheel. Those are the two legs of the wheelbarrow. The managerial is the wheel of the wheelbarrow that’s in constant motion. You have to focus on those three pillars to have a successful business. If one of those pillars is off, the wheelbarrow will not work.

I’ll give you a perfect illustration of what’s been happening in our industry for the last two years. People have been getting what we call bridge debt, which is temporary financing. Two years ago, interest rates were very low (they were at 3%). People were getting this temporary financing, and in two or three years, rates would go and reset to where they are. Well, no one knew that rates would jump this quickly and this soon — and that ended up happening. So, they didn’t finance it properly. They bought it at 3%, and now, two years later, they need to refinance it at 8% or 8.5%.

For us, long-term fixed-rate financing gives more time, and there’s a lot less risk in that. So when you’re looking at those three pillars, if you violate one of those, then your asset is going to be at risk.

Shaping Business Strategy

SBS – What key moments have shaped your business strategy after meeting Jake?

Gino – The restaurant industry made me understand and embedded a hard work ethic in me. People want this fantasy of being an entrepreneur, sitting on the beach, working four hours a week like Tim Ferriss. The reality is, if you’re an employee, you could possibly do that, but if you have to run a business and learn how to invest, it’s a lot of hard work.

Years from now, you can say, “Okay, I’m going to relax and pull back,” but most of us don’t want to do that. We enjoy what we’re doing, so we don’t even ever think of the word “retirement.” It’s not in our vocabulary.

For us, early on, it was about values-based decision-making. Go out and select a partner who aligns with your values, beliefs, and goals. Jake wanted to invest in real estate full-time, for the long term, and buy apartments. We’ve never ventured off of apartments. We’ve never bought crypto. We’ve never bought mobile home parks. We only stayed in our lane. That was probably one of the biggest “Aha” moments.

It served us over the last couple of years because we haven’t bought into these bad deals. We haven’t gotten what we call the shiny object or the get-there-itis, where you find a deal and say, “I’m going to take this deal because there’s nothing else.” We were true to what we believed in. We didn’t overpay on these deals, and we made sure that this is what our values are. Let’s stay aligned with our values.

The other thing is when you find a partner, you just need to commit to the partner and tell them, “I’m going to work as hard as I possibly can. I won’t let you down.” You should expect that of your partner, but the partnership has to align — and we’ve been able to align it. 

Keeping Abreast of Real Estate Trends

SBS – How do you keep updated with the trends in real estate? How do you decide on what to adopt and what to pass?

Gino – That’s a great question. We created the Jake and Gino community to do that. We’re teaching others; when you become a teacher, you’re doing videos and podcasts. We’ve been interviewing thought leaders. Since we have a weekly podcast, we’re on with a different expert every week, so I don’t have to go and read articles— I’m listening to the people who wrote the articles instead.

Real estate moves slowly. There hasn’t been that much of an adoption of new information out there, really. It’s about cap rates. It’s about investing. It’s nothing sexy. Now, if you want to adopt AI into the management side, it’s new, but investing in the asset hasn’t changed. Yes, different market cycles will tell you to dictate if cap rates will be higher or lower, or what you’re buying at that point in the market cycle may be different, but your philosophy and what you’re doing don’t change over time. 

Debunking Misconceptions

SBS – What are some misconceptions about multifamily investing and real estate?

Gino – The biggest one is “It takes money to make money.” That just goes across the board in every industry. It doesn’t take money— it takes knowledge. It takes the ability to implement that knowledge. If you understand the business and can attract really good deals, you will be able to attract capital just like any other industry.

All of these successful entrepreneurs like Bill Gates, Steve Jobs, and Mark Zuckerberg, I don’t think they started with a pile of money. I think they started with an amazing idea, concept, and a way to make people’s lives easier. Once they showed that, whether it’s Airbnb or Uber, whatever the idea or the concept was, that concept needed leadership. So, if you’re a leader with a great concept. For example, I found this 30-unit apartment complex. This is how I’m going to add value.

You have a proper business plan, and you can articulate that the capital will flow to you if you can do that. That’s probably the biggest misconception in any business, especially in real estate. There are other strategies. You can use creative financing, raise the capital, and find other partners, but if you don’t know the business and you don’t have a business plan, then that’s dangerous. So, understanding and learning the business is, first and foremost, the most important thing. 

Adapting to Post-COVID Market Changes

SBS – After COVID, there are many market changes. Can you remember one experience of how you adapted to those market changes and how it has affected your business overall?

Gino – If you take a stroll down memory lane, when COVID hit, everything was shut down in the US. In Florida, it was a lot better. But still, if you needed to rent an apartment, you couldn’t go into an office because people didn’t want to have that closeness. We ended up doing virtual leasing. We went into all the apartments, took videos, put them online, and it helped us show the residents our apartments.

We also did virtual staging, where we’d stage an apartment virtually and put it online so that the resident could go on the website, look at the unit, and not interact or be near the property management company. They would say, “I want this unit,” or “I don’t want it.” 

Smart technology is coming into our space. We deal with residents in lower-built properties and more affordable housing, but you’ll see smart locks coming through. You’re going to be seeing the thermostats coming through that smart technology. At some point, when that price point comes down, it will be adopted in the apartment space and our space as well. 

Managing Risk and Pursuing Growth Opportunities

SBS – How do you balance risk and growth opportunities in the real estate field?

Gino – One way we balance risk and growth is by following our framework, underwriting deals, and looking at what we want to achieve and our goals. Now, we’re fortunate that we invest our capital. We don’t have any investors other than our employees. If an employee has been with us for two years or longer, they can invest in our deals dollar for dollar.

We mitigate the risk by being diligent and knowing exactly what we want to buy. If a deal comes to our table and checks all the boxes, we’ll proceed forward. But if it’s something like, for instance, in a flood zone, or if the median income of the residents living in that area is lower than what we want, we don’t need to take a chance right now. We can pass on it. We’re not going to force a deal, as they say. We’re going just to be waiting for the opportunities.

We’ve been in the business long enough to know that we will act when an opportunity comes across our table. You need to act quickly in this market, but we will act and ensure that we focus on what we’re trying to buy. Obviously, we’re also focusing on those three pillars I mentioned (the finance and the managerial).

Guiding the Hesitant

SBS – What advice would you give newcomers looking to start multifamily investing in real estate but are hesitating or afraid?

Gino – For me, it all comes down to what your “why” is. I had a very strong “why.” That’s why I could shift from one industry to the next. I have six children, so I have a lot of mouths to feed. I knew I was working harder and making less money, so I needed to find something different.

Now I can go out there, scream from the rooftops, and tell everybody that multifamily is the best vehicle, and if a pizza guy can do it, anybody can do it — and that’s the truth. I just think you have to have a big enough “why” to be able to get into any industry.

I love multifamily because I am my own boss. I can control my properties, raise my rents, refinance my properties, or sell them. I’d recommend getting educated if you want to get into the business. Go online. There are so many different websites and so many different places. You can start learning about it.

Remember one thing — multifamily is a business. When most of us start, we only think of it as real estate, but it is a business. Thus, the principles that you learn to scale a regular business, like a restaurant, can be used to scale a multifamily. I didn’t know how to scale the restaurant. I learned how to scale multifamily because I said I didn’t want to be that person who goes and fixes toilets and manages these properties. There are systems. You can learn to do that, and you can hire as well.

So, don’t be daunted by the fact that you see these big apartment buildings. Look at it as a business and entrepreneurial venture, and go online and learn. First, start getting that massive education. Ultimately, like I said, go back in and ask yourself, “Why am I doing this? What am I trying to achieve with this?” For me, it was to be able to opt out of the stock market, to be able to not worry about any kind of bitcoin or cryptocurrency, and to be able to own an asset that is a basic human need (aside from food and clothing). People need a place to live, and there are a lot more people that are renting. It’s something that will be viable in the near future and long-term. 

The Power of Community and Mentorship

SBS – Why do you believe community and mentorship are essential for success in real estate?

Gino – That’s a great question for me. I don’t know if I would be here if it weren’t for my business partner, Jake because entrepreneurship can be lonely. It could be a struggle. You have nobody to talk to. Sometimes, you don’t want to get on a call in the morning, but I won’t miss a phone call because I know my partner will miss a phone call. So, I would let myself down before I let my partner down. Having that partnership was crucial for me.

As for the community aspect of it, in 2020, when everything shut down, we were still doing in-person events with the Jake and Gino community in July 2020. We all got together, and people wore masks. That community pulled me through COVID, and seeing other people wanting to continue to learn and network was amazing. For me, community is one of the most important things because you’re out there, looking at other people doing what you’re doing. You have that (I don’t want to call it a support system), but it’s a great thing to be able to talk to people about bettering their lives, personal development, investing, and not just about gossip and blaming others. Being part of a community is just amazing.

Forecasting the Future

SBS – What future trends do you expect to see in multifamily business and real estate?

Gino – For real estate, it’s very interesting. This year in the United States, the least amount of homes have been sold since 1995. Let that sink in. I think homeownership is on its way down. I don’t think it was the American dream like it was 30 years ago. The younger generation is getting married at an older age, and when you get married, you start buying a home. If the average person is getting married at thirty-something and starting a family, they have been renting all those years.

Retiring baby boomers are selling their homes and moving into nice apartments. The whole landscape is shifting. You see this whole built-to-rent community where people are building single-family homes and renting them. It’s easier. This generation doesn’t want to do anything. They don’t want to do stuff with my parents. They don’t want to fix a screen door. They don’t want to fix a water heater. They just want to go into the apartment, turn the key, and then, when something’s wrong, they call people up — and there’s nothing wrong with that. It’s a great thing.

But you can’t buy apartments on the internet yet. You still need to rent an apartment. You still need a place to live. So, if you can pick markets and cities where people are still moving in, where there’s still demand for your product (for multifamily), you will be okay for the long term. The last time I checked, inflation was not going down. Rents are going to continue to go up. Asset prices are going to continue to go up. For investing in real estate (any niche) in the long term, you should be okay. There’s more risk if you’re doing it for the short term.