Axel Ragnarsson (03:07):

Early in my college career, I think it was my freshman year. I started learning about real estate and then I wanted to get into flipping houses and that was what I wanted to do next. So spent a lot of time on BiggerPockets and a lot of the big real estate investing sites learning about that, bought some flipping books and some real estate investing books and quickly realized that flipping houses maybe wasn’t for me. I realized I wanted to get into more rental property investing or investing in some income-producing property. My mindset was, you do the work once and get paid forever. You can’t really beat that. The more I looked into flipping and the more people I spoke with who were running house flipping businesses, the more it seemed it was just a really time-intensive job, and I wanted to build a portfolio of passive income, and that was my ultimate goal.

Axel Ragnarsson (03:48):

So real quickly figured out that I needed to figure out how to buy multifamily properties or income-producing properties. I didn’t have really any money in the bank. So I had to figure how to do that without a lot of money. And that led to me doing a couple of deals at college, and then subsequently growing a buy and hold real estate business. Four or five years later, which is I guess, four or five years after I bought my first deal, that brings us to today. Now the business has grown, I’m having about 65 units in the market, in New Hampshire. I’ve got a property management company and things have been going pretty well.

Robert Leonard (04:19):

Did you end up doing any flips at all?

Axel Ragnarsson (04:21):

I did. What ended up happening was, is the more I networked and the more people I met in the industry, the more I met folks who were either wholesaling single-family houses or just dealing in the single-family space in terms of transactional flipping. Well, I want it to keep my focus on multifamily, if I had a wholesaler that brought me a deal that made sense as a flip, I started to build a lot of private financing connections and it made it so that I could take down those deals and do them. I ended up doing a few of those early in my career, early in business. It just reaffirmed the fact that that really wasn’t for me and I got out of that pretty quickly. I found that project management and managing contractors really wasn’t a strong suit of mine.

Axel Ragnarsson (05:00):

My strong suit was raising money and going out and finding deals and speaking with owners of multifamily. I wasn’t very good at finding deals in terms of finding flips. You can only do so many deals through wholesalers or through other folks. If you really want to build a flipping business, you got to go get the deals yourself. For me, it just reaffirmed that it wasn’t for me. It was a good experience, learned a lot of things, but I shifted back to multifamily pretty quick.

Robert Leonard (05:26):

Did you use the money that you earned from flipping to fund your first buy and holds? You said you had skills in raising money or did you just raise all the money?

Axel Ragnarsson (05:35):

I raised most of the money and it was all in the form of private debt. First deal I did was a three-unit deal in a town that pretty much bordering where I grew up. I knew it really well and knew that this was a market where multifamilies were not abundant. If you were to find one, you’d have the pick of the litter in terms of the tenant base. I found that deal on Craigslist. I had a connection through an internship I did in college with a guy who just did a lot of private money lending and built a relationship with him over a year, year and a half or so, of actually working at that company and basically found the deal, brought it to him and said, is there any way we can work on this? He gave me a loan. I think it was 90% loan to value if I remember correctly.

Axel Ragnarsson (06:13):

And then I just took every dime I had and brought it for the last 10% plus closing costs. I didn’t do another deal for probably a year after that. But after that, I found a couple more smaller multifamilies and followed the same game plan and saved every single dollar from, in terms of cashflow from that first deal, did a refinance on that one. And then I just kept rolling it into more. It wasn’t until I had done a few smaller multifamily deals that I actually got into flipping. Like I said, I really only did a handful of those. I think I’ve in total done, maybe seven or eight flips. They were all multiple years back, early in the business and took the money from those and rolled them into multifamilies, after that. But I got my start really just raising private debt, how I started doing those deals.

Robert Leonard (06:54):

Last time we talked, which was late 2019, you had about $6 million or so in assets, under management. Where are you at today and how many units do you own?

Axel Ragnarsson (07:02):

It’s funny because I think it’s an interesting metric that people use to describe where their business is, right? Right now I have just about six million, it’s same figure in terms of what I currently own. That said, we grew it to roughly 80 units, which was just under a shade under 10 million. And we’ve actually been selling a lot of property the last six to seven months. It’s just personal business goals of wanting to get into larger deals and needing to build liquidity in order to go out and do that, and just taking advantage of where we’re at in the market. There’s an unbelievable appetite in terms of buy and hold. Investors who want to go out and buy smaller multifamilies in the market that I buy in.

Axel Ragnarsson (07:39):

It just made a lot of sense to sell those and pocket the equity, bank the cash, and go out and look for some larger deals. Right now, portfolio is at about 65 units. Like I said, it just got to do a shade above 80 at its peak, and we’ve been selling them off. To answer your question quickly, it’s the same dollar amount in terms of what the portfolio looks like, however, we have a little bit more cash in the bank and that’s what we’re prioritizing right now.

Robert Leonard (08:04):

I know you have a goal of hitting 150 units by the time you’re 28 years old. Why that goal? Why that number of units by that age?

Axel Ragnarsson (08:12):

It’s funny, it’s an arbitrary number. I picked 100 units. It was always a big goal of mine when I got started. 100 units, that’d be really cool, but there was really nothing mathematical behind it. Once I realized and refined it a little bit more, I realized I wanted to earn between 25 and 30 grand a month in passive income, just free cash flow after expenses, debt, service, everything, bottom line, that’s what I wanted to make a month. And that was always a big dream of mine. And for me, 150 units, if I’m the significant equity holder in those properties really gets me to that figure. I backed into that income goal by just saying, I need 150 units at roughly 125 to $150 a month in passive income. That’s going to get me there per door.

Axel Ragnarsson (08:56):

That’s how I arrived at that goal. 28, just an arbitrary number. For me, that was five years after I got out of college. That’s how I backed into that. But again, I’m sure people set goals in slightly more precise ways than that than I do with that one. But that’s the high level goal there.

Robert Leonard (09:12):

I see a lot of people set their goals to 30, for some reason. I thought it was interesting that you said at the 28, I’m like, that’s interesting. It’s a couple of years shy of where a lot of people will say, 30, I want to hit 100 units, 200 units, 1,000 units, whatever it is, but a lot of people use 30 as their benchmark.

Axel Ragnarsson (09:28):

Yeah. That makes sense. It’s just a round number, right? I think 30 is, for a lot of people, a lot of people want to really have the life figured out by the 30, right? Just at a base level. For me, when I got out of college, I think I had nine units. I said, you know what, in five years I want to be making this, right? And that’s really how I got to that figure, was more of a time constraint goal in terms of five years being my timeframe. Where we’re at right now, I’m 26 right now, turned 26 a few months ago and have a little over a year and a half to get to that figure. I think the decision I’ve been making the last five, six months is, I think I need to take a couple steps back in terms of what the portfolio looks right now in size to take five steps forward.

Axel Ragnarsson (10:08):

That’s why I’ve been selling a lot of the smaller properties that I have, the duplexes, the three units. It’s really been a calculated decision in that short. I want to ding that unit countdown, but really this is going to enable me to make maybe some key hires or to spend money on marketing or to actually really build out an infrastructure that allows me to go out and buy 75 units in 2021. A lot of what I’ve been doing is counter-intuitive to that goal, I should say, but in terms of the actual metrics of it, but I think it’s important to realize where are you at in the grand scheme of what you’re trying to accomplish and what do you need to do today to get there?

Robert Leonard (10:42):

I was going to say, you said you were getting just over 80 units, as now you’re going backwards. I was like, you’re going the opposite way of where your goal is heading.

Axel Ragnarsson (10:50):

Exactly. It’s one of those things where if you’re a buy and hold real estate investor, and you’re not actively going out and flipping property, or you don’t have a day job, you don’t have another business where you’re taking that cash and funneling it into more rental property. That’s not something that I’m personally doing. All of my deals are really just buying discounted property, adding value, refinancing my initial cash out and rolling into the next deal. But it’s inherently a very cash intensive business if that’s how you’re trying to grow a portfolio. I’d love to just continue going out there, finding great deals and buying them. That said, it requires a lot of money out of pocket to close these deals. Even if you’re financing a good chunk of it, you can still have all the transactional costs in terms of points on your private money loan, in terms of the closing costs.

Axel Ragnarsson (11:31):

And then you have renovation costs after you close. With a lot of these value ideals, especially in multifamily where you’re turning the tenant base a lot of the times to add this value and raise the rent. You don’t really have any income the first six, nine months. And if you do, if you do have income, it’s going to pay your higher interest debt service, it’s going to pay your renovation and your turnover costs. So you’re not really making money until you get it stabilized and you get it reified, which usually takes six plus months, with the types of deals that I’m doing. For me, in order to continue putting fuel on the fire and putting gas in the car, if I’m going to use a loose analogy there, it’s, I have to sell some of these deals cash in on the equity that I’ve built so that I can roll it into larger deals. Sell the 300 building, so I can take my proceeds to go buy the six, and that’s where I’m at.

Robert Leonard (12:15):

When you say, sell the three to buy the six. Is it like selling, say a duplex, three unit, four unit, you take that cash, and then that cash you have, you’re able to use that and say, okay, this could be a 20% down payment on a much larger property. Say you sell it a triplex, you get that cash in. Now, maybe that’s enough to be a down payment on a 10 unit or 12 unit, 15 unit, whatever it is. And now you went from three units to 10, 12, 15, whatever it is. Is that how you approaching?

Axel Ragnarsson (12:41):

Exactly. I can basically give you a quick example. Just in September, I closed on the sale of a duplex I owned and I think I came out 50, 60 grand on top of what I had all into that property. There was that figure, plus the equity that I had left in that deal. It brings some cash back into the bank account for round numbers, it was around a hundred grand that I brought into the bank. And then I sold the three in a property as well, around the same time, in similar numbers, I put another 125 just in terms of the equity that I was recapturing into the bank. That money, that equity, shouldn’t say that money, but that equity there’s a certain return on that equity that you get from the cashflow from a deal, right?

Axel Ragnarsson (13:18):

Because the values of property have just grown so significantly, especially small multifamily in Manchester, New Hampshire, where I invest, where you invest, over the last six to nine months, the values are going to 40, 50 grand. But my income, my cashflow had not gone up at the same level. Now my return on my equity is lower just because I’ve grown the equity in the property, just organically through market appreciation. For me, I wanted to grab that and I want it to go and put that into a new deal, a discounted deal that I went out and found. I found a package of 12 units, these two particular buildings, it was a seven unit and a five unit, were part of a larger portfolio that I was buying from a seller in different stages. But at that point I needed roughly 300 grand to close that deal.

Axel Ragnarsson (13:57):

For me, it made sense to sell these two buildings, take the equity, take the appreciation that, that I’d seen there in terms of just the market that has just been rising here, take the money from those properties and go use it to help close these 12 units. For me, raise private money to close those deals at around 80% loan to value. The balance that I needed to bring to the table, was just a shade under 300. 225, 250 that came from this duplex in this three unit deal, and then I just brought the rest and I basically turned those five units into 12. That’s been something that I’ve been doing, is continue to find discounted deals today, find the deals that I can sell that I don’t really want to own any more, or maybe my return on my equity is low.

Axel Ragnarsson (14:37):

Maybe it’s not something that, I see myself owning longterm and how can I take that money and move it into something that’s going to, one, earn me more passive income today, and basically be a better building in my portfolio in terms of the next five, 10 years.

Robert Leonard (14:51):

You’ve mentioned value-add a couple of times. For people listening that are new to real estate might not know exactly what that is. What is a value-add deal?

Axel Ragnarsson (14:59):

Basically it’s a way to describe typically a multifamily property or some commercial property where the business plan is to come in, add value, which is inherent in the name value-add, and usually has to do with raising or increasing the income and decreasing the expenses. You’re basically increasing the NOI of the property, the net operating income. In multifamilies specifically, oftentimes that’s buying a building that’s distressed in some way, maybe management isn’t doing a great job in managing the property. Maybe there’s some deferred maintenance, there’s opportunities to basically fix a bad roof, or turnover the units, and actually increase the cosmetic appeal of them and attract a better tenant or something like that. It’s basically increasing the income, raising rents. And then at the same time, you’re trying to decrease the expenses as well, so that you hit a higher NOI.

Axel Ragnarsson (15:45):

A lot of the properties that I personally buy, or that a lot of people buy that are described as a value-add deal or value on a cap rate. Capitalization rate for those who are familiar with the shorthand of a cap rate, but basically it’s a metric that’s used to value commercial properties. In multifamily, one of the best things you can do is increase the income of your property because it directly increases the value. When we’re going out and looking for value-add deals, it’s basically deals where we can increase that NOI and therefore add value.

Robert Leonard (16:18):

How has the COVID pandemic impacted your approach to real estate? Did it cause you to slow down? Is that why you possibly started selling off some deals as well? Or did it make you want to actually buy more?

Axel Ragnarsson (16:30):

It certainly did, early in this process or early in just the whole COVID landscape, right? March, April, June, definitely hit paused in terms of doing any new deals. At that point, I think most of the real estate industry just stopped what they were doing, figured out a way to maximize the performance of their existing portfolio in terms of rent collections, in terms of just trying to figure out what they were going to do over the next six, nine months as we navigated this new landscape. The first three months, I definitely wasn’t looking for new deals. As things progressed and we started to understand a little bit better, the timelines on maybe getting out of the virus, as some stimulus started to get passed, as interest rates continue to drop, which is a big driver in a lot of the market activity throughout the country, whether it was multifamily real estate or single family real estate, any kind of real estate, the low interest rates has continued to drive demand on the buyer side.

Axel Ragnarsson (17:18):

I started to re-enter the arena and start looking for more deals. Basically what I decided was, any deals I do today, they really, really have to be something that I see myself owning longterm, because if we do see some market correction in 2021, multifamily real estate, I think the fear is that we’re going to have a lot of evictions coming next year when the eviction moratorium lifts, that’s a big concern in the multifamily real estate sector. If that happens and we see rent collections dip, and that’s going to negatively impact net operating income. We’re going to see probably property values dip if that happens, in the multifamily space, I need to make sure that I can weather the storm and hold the properties I’m buying now longterm. Any deals I’m looking at now, I really want to make sure I see myself owning them five to 10 years.

Axel Ragnarsson (18:02):

For me, that’s prioritizing good neighborhoods. That’s prioritizing really good unit layouts within the buildings that I’m looking at that, unit layouts are really a good indicator of the tenants you’re going to get. If you have a weird unit layouts and functionally obsolescent unit layouts or some old buildings that we look at in New Hampshire in New England, I was trying to stay away from those. Really wanted to make sure that if I was buying with private financing, that I could get into longer-term debt quickly. I didn’t want to get into projects that had a long timeline in terms of turning them around. I didn’t want to get into really heavily distressed deals. I just wanted to buy it a significant cushion today, at its simplest level, I needed to get a discount on today’s market value to make it worth my while.

Axel Ragnarsson (18:42):

I’ve done way less deals since COVID hit than I have in years past. I did close a larger portfolio and it was just because it was just a home run deal. It was just something where I had to buy it. For me, a lot of the way I’m hedging what’s going on right now too, is selling the properties, like you mentioned. Right? I think that’s something I’m doing to make sure I sleep at night, is put cash in the bank so that if we do run into problems, specifically with rent collection or something like that, I can pay all my debt and I don’t have to worry about that. I’m also trying to build some reserves so that I can act quickly if we do see the market start to tick down. But that’s a long answer to your question, I guess.

Axel Ragnarsson (19:18):

But short answer is, it’s certainly slowed down the acquisition side of the business and really forced focus on the operational side of the business in terms of really making sure we’re collecting rent today and running our properties as tight as we possibly can. And if we’re looking for deals, they got to be great ones.

Robert Leonard (19:33):

Outside of just deciding whether or not to buy more properties, how have your properties actually been performing? How has COVID impacted?

Axel Ragnarsson (19:41):

Rent collections have been pretty good. I do have one property in my portfolio where I had three tenants, basically three units out of the six in the building, handed me the eviction moratorium paperwork, and basically said, hey, we’re just not paying until January. Three out of 65 units really isn’t that bad in terms of a ratio. It just so happened that they were all in one building, which is funny. Overall rent collections have been good. They’ve been up and over 90% for my portfolio since March. They might be a little bit lower than, the nationwide average, but I think it’s a function of the fact that most of the properties in my personal portfolio are class C neighborhood, class C tenants. So it should be a little bit lower.

Axel Ragnarsson (20:21):

But outside of that, I really haven’t run into too much turmoil outside of just one dog building I own, which we’re trying to sell actually right now. We’re getting some of these tenants out, we’re working with them. It just so happens that’s one that we wanted to put on the market anyways, so it’s all going to work out. But knock on wood, all of the tenants that I’ve had have by and large, maintained their income, have really kept their jobs. It’s really changed how we go out and lease units down in the future, we’re screening tenants and looking at employment, we really want to see consistent employment, more so than ever. A tenant that’s applying for a unit right now that has employment in hospitality or employment in the restaurant business, it’s tough right now. It’s too bad, but it’s something that we’ve just got to be so mindful of, especially when replacing tenants with eviction moratoriums, because it’s really hard to get out.

Robert Leonard (21:08):

We’re going to talk about the market in just a minute, but you mentioned that we both invest there. So we both have a good idea as to what’s going on. I know there’s a couple of big hospital systems in that town. I’m sure you’ve probably been looking for tenants that are medical professionals instead of working at restaurants. There are a lot of restaurants in that area too. So I’m thinking you’re probably focusing on those medical professionals or things of that nature.

Axel Ragnarsson (21:29):

Yeah. There’s the two hospitals, I think we’re thinking about, we go to Elliott and then there’s CMC, which I personally have a lot of folks living in my buildings that work at CMC specifically, because I have some buildings near that hospital, but it’s certainly something that we really look at now. Screening tenants has never been more paramount than it is right now. Maybe four or five months ago when we had a longer, we had more time, till they handed this eviction moratorium and maybe it was more important then, but it’s still so important now, because of the fact that dealing with problematic tenants right now is extraordinarily difficult.

Axel Ragnarsson (22:00):

And this is in a market like New Hampshire where relatively landlord friendly states Massachusetts or California and New York, it’s even worse, right? It’s so critical to find good tenants, because once you get them, you’re pretty much stuck with them. You’re right, I think that looking at employment, something in the healthcare industry or something in public sector or something that’s more fixed, is going to be really valuable for landlords.

Robert Leonard (22:24):

What else are you looking for when you’re screening tenants right now, other than just the industry that their job is in and maybe how long they’ve had that job, what else are you really focusing in on right now?

Axel Ragnarsson (22:34):

I think a higher income versus render ratio is a good thing to look at. We typically look at three to one in terms of monthly income versus the monthly rent that the unit is going to cost. That’s a metric that we use and now we’re trying to bump that, trying to get that closer to, four to one ratio. So there’s a little bit of a buffer there. I think we’re looking at basically the number of income sources within an application. We’re looking at tenants where there’s multiple earners that are going to be living in a unit, that’s always great. Outside of that, you got to make sure you’re following fair housing, right? Obviously you don’t want to discriminate, but those aren’t discriminatory things, right?

Axel Ragnarsson (23:11):

It’s just right now, we’re really just prioritizing income. If we have two applicants, applicant A and applicant B, and one just makes three times as much as the other, obviously that is an extreme scenario and we’re going to want to go with an individual, but we’re really harping on that specific piece of an application. Obviously, we do all the other stereotypical things like eviction checks and credit checks and background checks. But right now we we’d like to see at the most surface level, a nice buffer between what the lease amount is versus what their monthly gross is, as a tenant.

Robert Leonard (23:41):

You’ve mentioned that the market you’re investing in is Manchester, New Hampshire. That market was just rated by Fortune as the number seven best place to invest in the real estate during the pandemic. That’s crazy to me. I was happy to see it because I invest there as well, like you said, but it was crazy to me because, Fortune is a large publication nationwide and Manchester is a relatively small town in a small state of New Hampshire. What do you think makes this market so great? What did Fortune see in this market that made them rate it so highly?

Axel Ragnarsson (24:13):

I think that’s wanted, when I saw that article, I was pretty surprised myself, because you start to wonder, a town like Manchester, it’s not a very large population, how does that get on the radar of a magazine like Fortune, it’s really surprising. But I think it has a lot to do with what we were just touching on in various ways, which is a very diverse employment base. There’s a lot of different employers. There’s a lot of educational employers. There’s a lot of healthcare employers. There’s a lot of utility employers. Eversource has 6,000 jobs or something like that. I think that are based in the Manchester area. It’s a very diverse employment based comparatively to a lot of markets that we’re on the flip side of that fortune article, some of the worst places to invest where it was hospitality dominated or tourism dominated or the employment was concentrated in one sector.

Axel Ragnarsson (24:57):

I think that at a very high level, some of that Manchester really has going for it. And then the other thing is, it’s not a very densely populated city. It’s not an urban area, like a Boston, right? I live in Boston, I’m an hour South of Manchester. Boston had an exodus when COVID hit, rents were dropping in Boston at an extraordinarily alarming rate, similar to San Francisco and New York and a lot of the major cities. A lot of those people went to suburbs for sure, outside of Boston. But there were a lot of people that migrated up to New Hampshire, whether it was Manchester or elsewhere, because it’s the less densely populated and the cost of living is lower. And if we’re going to be working remote, for the foreseeable future, why not live somewhere where you can get more value for your money.

Axel Ragnarsson (25:37):

I think another thing too is, Manchester is still relatively affordable in terms of you take the median income of the average earner in Manchester and compared to the median rent, basically it really hits that three to one metric that we were talking about as a market itself. It’s an affordable market in terms of the average rent versus the average income for most of the people living there. I think those are probably three big things that Fortune was looking at. Although I’d love to get into their algorithm and find out what they liked about it. Because it’s so interesting that it got picked up by such a big publication.

Robert Leonard (26:08):

That was exactly going to be my next question, is how do you think it even got on their radar, but it sounds you probably have no idea either.

Axel Ragnarsson (26:14):

Well, the funny thing about Manchester is, the vacancy rate in Manchester is so low. It’s like really one of the lowest in the nation. I think last year in 2019, it was 1.9 or 2.1%, something extremely low. As a frame of reference, Boston’s was 2.5, 3%. New York city’s I think was between two and three. It’s comparable with these historically, extremely good rental towns, is a pretty poor way to put it. But these cities where, that are just historically known as unbelievable housing markets in terms of the buy and hold strategy, right? You’re not going to find better tenants and you’re not going to find them faster than markets like Boston, New York city, et cetera. The vacancy rate is so low that oftentimes that’s what draws in a lot of the out of state investors in the New England region, people from Boston and even outside of New England, investors from New York city or Connecticut, right?

Axel Ragnarsson (27:04):

There’s a lot of external money coming into a market like Manchester, which I think is driving a lot of interest in that area, because there’s a lot of business growth. New Hampshire is a very business friendly state, Manchester being the, it’s not technically the capital of New Hampshire, but it’s the largest city in New Hampshire. It’s really where if you’re going to bring your business to New Hampshire, you’re probably going to bring it to Manchester. I think a lot of those things help it gain some awareness, at least regionally. And who knows maybe those factors got up to the guys at Fortune magazine and then it got picked up. I’d love to know. I’d love to know how they learned about Manchester.

Robert Leonard (27:40):

The writer of that article could be from New Hampshire, who knows really. It could be anything. You didn’t choose Manchester just because of that Fortune article, you’ve been investing there for a long time. Why did you choose Manchester in the first place?

Axel Ragnarsson (27:52):

I wish I could say that I had some really great foresight and I saw this coming, but I just grew up a half an hour South of Manchester. And I grew up in New Hampshire. And if you want to buy multifamily property in New Hampshire, the vast majority of the inventory is in Manchester. It’s really where are you going to start looking. As I started to live in other places and I lived in other parts of New Hampshire and on the Sea Coast when I was in college and then I moved down to Boston and I’ve spent a lot of time in other places in New England, just where family and friends live. I started to realize more and more and more how strong the Manchester market was and something, I don’t want this to become a sales pitch for Manchester as a market, this whole show.

Axel Ragnarsson (28:28):

But something else that was really interesting about the market is, it’s cost prohibitive to build there. It’s not very profitable to build, to rent, as a model, ground up development with the exit strategy of renting it out, is not a very viable strategy in Manchester, because the rents just don’t support the building costs oftentimes, unless you’re building very luxury for like, you’re catering to such a small percentage of that market. If you do that, it’s hard to do that. The housing stock that’s there, the inventory that’s there that tenants can choose from to live in, is really all there is, and it’s most base level.

Axel Ragnarsson (29:00):

The population is growing, but they’re fighting over the same unit. Rent growth has been so strong over the last three, four, five years as a result of that, that the market has just seen such an influx of just interests outside of New Hampshire and the values of the property that it just continues to rise. I think that is something that I did notice early on, was that, this is going to be a market that will maintain really good rents, because there’s not too much supply being added to the market.

Robert Leonard (29:26):

We are talking about a market in New Hampshire, a small market. A lot of people listening to the show, probably aren’t familiar with that. Most of our listeners aren’t from New Hampshire or even this area, they’re all spread across the country and even internationally. So not a lot of people are going to know Manchester. But that’s not really the point of the conversation. The point of the conversation is, you can take what we’re talking about for Manchester and look for all of these different things that Axel is talking about, that I’m talking about in your local market, whatever that is. If you’re in Florida, if you’re in California, if you’re in Texas, Idaho, it doesn’t really matter. You can listen to all the things that we’re talking about for Manchester and then look for these different things in your local market, whatever town you’re considering investing in.

Axel Ragnarsson (30:06):

Exactly. And that’s a great point. I think, we mentioned a lot of things in terms of looking at the market, how much supply is being added to the housing stock, right? Manchester, there wasn’t much, so rents are going to stay strong because tenants are competing over the same amount of properties. Median income versus median rent to look at how affordable a market is. That’s really important. Just looking at the employment base of a market, that’s really important. You’re right. I think we do talk about a lot of stuff here that do apply across the board, regardless of whether or not you’re interested in Manchester.

Robert Leonard (30:34):

I think you could have expanded outside of Manchester by now, given you’ve done over 80 units. I think you’re experienced enough to go outside of Manchester. Why haven’t you?

Axel Ragnarsson (30:43):

It’s funny that you bring that up, because it’s something that I’m starting to entertain now. I really do like Manchester and I’m bullish on Manchester, I’ll keep buying there. For me, I’m teetering on the point of not being diversified as a real estate investor, right? I have so much of my own net worth tied up in one city. There is some risk involved in doing that. I’ve actually started to look out of New Hampshire and into some Southeastern markets with some partners that I have both locally and scattered around the US, and looking in markets where the price per unit is a little bit lower on multifamily properties. So we can get some more scale for the similar prices or for similar prices that we’re paying for smaller buildings in Manchester.

Axel Ragnarsson (31:23):

Some of the markets that we’re looking in, our Chattanooga, Tennessee, Knoxville, Tennessee, really like those markets. We’re looking in some Northern Florida markets as well, and just the big metrics that we care about, population growth, job growth and income growth are just the big ones, right? You need those three if you’re going to invest somewhere. All those markets are really some of the best in the country in terms of excelling in those areas. So starting that process now of going outside of New England, that said, I love Manchester, we’ll keep buying there, but hopefully, if we would have this conversation a year from now, I’m a little bit more diversified outside of just that one area.

Robert Leonard (31:59):

Yeah. We’ll definitely have you back on the show for a third time and who knows, six months to a year, we’ll see if you kept your promise on expanding outside of New England.

Axel Ragnarsson (32:08):

You get to hold me accountable on that one, because I know I want to jump on that train and really get something done outside of the area, build some momentum in another market and get going on that.

Robert Leonard (32:18):

Yeah. We’re pretty connected on social media and we text from time to time. I invest long distance, so I’ll definitely keep you accountable on that.

Axel Ragnarsson (32:26):

Sounds good.

Robert Leonard (32:27):

When I first got into real estate, I didn’t realize what we’re going to talk about next. And I think a lot of new investors don’t realize this either until they get started. And if I had known this sooner, I think I could have grown faster. I think new investors can too, if they learn this early on. I want to talk about how the real estate business is really the sales and marketing business. Talk to us a bit about this.

Axel Ragnarsson (32:50):

This is something that I say a lot and I’m really passionate about this, I think passionate is a funny word, but this is something when I’m speaking with newer investors or folks in real estate who are trying to scale their business specifically, I really harp on this. Because at its absolute core, you make money in real estate by finding deals and by raising money or finding partners to work with, to buy deals. If you’re going to simplify that even more, you got to find deals and you got to find money. The way that you find deals is you take a very sales process oriented approach to actually getting in front of sellers, making offers, analyzing deals and just building the top of that funnel.

Axel Ragnarsson (33:28):

The people who are the most successful in real estate, aren’t the best people at identifying a broken heating system or walking through a property and picking out bad wiring in the walls. Obviously all that stuff’s important and it’s great to have those skills, but you make money in real estate when you do deals and you make great money in real estate when you just do a lot of great deals. You just have to build a top of that funnel. And for me, the top of that funnel is just getting deals from different sources. Brokers, from cold emailing that I do, direct to owners from cold calling, from looking on a lot of, for sale by owner type sites Craigslist or Zillow, and just getting as many deals in the top of the funnel as many addresses, analyzing them, making offers and just getting the most at the bottom as I possibly can.

Axel Ragnarsson (34:09):

For me, a big thing that I’ve stopped doing since COVID hit is, read real estate books. Obviously it’s good to read real estate books. It’s great to build that education, especially when you’re new in the business, but I’ve almost started entirely reading sales books and marketing books. Because for me, it’s just the name of the game, is I want to meet as many other investors as I can, because that’s going to open myself up to potential partnerships, potential synergies, and more deal flow. I just want to speak with as many sellers of real estate as I possibly can. How can I get in front of as many sellers as possible? We could go into a whole rabbit hole of actually how you get in front of sellers.

Axel Ragnarsson (34:40):

Quickly, for me, that’s just cold emailing, cold calling, doing a little bit of direct mail and just reaching out for rent ads, doing some more manual prospecting stuff on websites like Craigslist or Facebook marketplace and just building the relationships with as many sellers as I can. So then on top of mind, when they go look to sell. So taking a really sales minded approach to that has been extremely beneficial for me and building processes around that as well, and truly systematizing that, it’s just helped me look at more deals and just, increase my likelihood of finding something that’s going to work for me.

Robert Leonard (35:12):

It’s funny you mentioned that about the real estate books, because I actually feel the same way. I host another podcast called, Millennial Investing, and that’s mostly focused on personal finance and stock investing, side hustles and entrepreneurship. But I feel the same way about those topics as I do about real estate. I tend not to read that much about real estate books either. It’s like, once you read three, four, five, six of the good main business, real estate books, you know what need to know. Real estate really isn’t that complex, right? It’s pretty simple. Once you’ve read those, you have enough understanding of what you need to do from the real estate perspective. And now you need to worry about those other skills. I laughed when you said that, because literally next to me, I have this book here.

Robert Leonard (35:51):

If you’re watching this on YouTube, you can see, I just held the book up. It’s called, The 1‑Page Marketing Plan. I’ve been reading about marketing as well. You can see, I have a bunch of sticky notes in it. I haven’t really been reading real estate books that much. I’ve been reading sales books and marketing books and trying to learn how to get my name and business out there. Just like you just said. I think that’s really funny that we’re both doing the same thing without having talked about this before the show.

Axel Ragnarsson (36:14):

Exactly. I think it’s funny because I think that so many investors get caught up with reading the how to, how do you analyze a deal? How do you speak with a seller? Speaking with a seller is obviously important, but the real goal, the thing you should be focusing on is how do I just have as many conversations as I possibly have? How do I get in front of the most sellers? The reality is that, if you want to buy good deals, let’s define good deals. Is you want to buy deals at 80% of its current market value, you have to look at 50 deals probably to get that deal. How do you look at 50 deals? Brokers can send you deals. You can go on the MLS. Those are probably not going to be great deals.

Axel Ragnarsson (36:50):

You’re going to find the deals going direct to seller, or you going to find them building great relationships with brokers, where they bring you off market deals or other investors or wholesalers where they’d bring you off market deals. You just got to get to that 50, so that you can get to that deal as fast as you can. For me, it was like, okay, it’s great to know, create a financing strategies and what banks will lend me, what kinds of money and what I need to get a mortgage. And all of that stuff does matter, but it doesn’t mean anything if you don’t have a deal. For me, it was like, I need to send 25 emails to owners every day. I need to make 15 cold calls a day. I want to speak with two new investors every week and build a connection with them.

Axel Ragnarsson (37:28):

I want to meet one wholesaler a week. I want to reach out to 25 for rent ads each week or something that. And just build the top of that funnel and start building relationships with all these sellers. Sales books have been key in actually building processes around that, like you’re saying. It’s great to read the real estate books, but after you read a few of them, like you said, you start to get the core concepts and you really only need the core concepts to make a lot of money in real estate. Most people aren’t going to do the sales stuff. And that’s what really makes you the money.

Robert Leonard (37:54):

I think, you definitely need to read those books, they are important. A lot of people listening to this show are new investors. This show is tailored towards newer investors. If you haven’t read three, four, five of the main, most popular real estate books, then I recommend you do that. But once you’ve read those three, four, five books, don’t continue reading six, seven, eight, nine, 10 of books that are saying the same thing, teaching the same thing, just in a different way. Go out and broaden your horizon. Think about the skills that you need in your real estate business, like sales, like marketing, that aren’t necessarily real estate and read those types of books and then go from there.

Robert Leonard (38:27):

I think it’s important to read those books. You need to know that information, just don’t get stuck on only reading those books, realize that there’s a lot of other skills that you need and you can learn that will help your real estate business.

Axel Ragnarsson (38:38):

Exactly. The real estate business is a business, right? Business books are going to be just as valuable as real estate books. Like you said, it’s obviously critical to really hone in on the core concepts. Once you do find the deal, you certainly need to know how to raise the money or how to get a mortgage or however you’re going to find it. You need to have that in place, but that stuff you can get those answers on the fly, right? It’s good to have a lot of that understood going into a deal, but what’s really going to allow you to grow faster, whether it’s you’re getting your first deal done or scaling from 10 units to 50 units to 100 units, is understanding that this business is just driven by conversations with sellers and investors and just other folks in the business.

Axel Ragnarsson (39:22):

For me, if I were to do anything over again, right? It’s just understanding that I had to do that earlier and just really placing an emphasis on just having conversations with people in the real estate business, rather than just understanding a financial concept explained to me in a 10th different way in another book. Right? I think it’s a point, like you said, obviously you got to do that work and really understand the core concepts and to have a good handle on that. But after that, get out of that and get into the more active business building type education and type content.

Robert Leonard (39:49):

I know you’re a go getter like me. You wouldn’t get to 80 units by 26, if you weren’t. I’m sure you’re using this time to better yourself rather than just sitting around and being lazy. Other than just reading sales books, what have you been doing during this pandemic to better yourself?

Axel Ragnarsson (40:07):

That’s a great question. I think it’s been a really unique opportunity here. Not letting you out of the house makes you think about what you’re going to do with your time. I remember early on, I really started to place a larger emphasis on, at a high level, looking at my business and figuring out really where I wanted it to go. I found myself getting pulled into working in the business rather than on it, back in March, April of, once COVID really hit. Something that I’ve really prioritized the last six, seven, eight months, is joining networking groups and masterminds, or just other groups of really like-minded individuals, specifically those who are farther ahead of me. I used to be really shy about, or just adverse to spending money on really on education and mastermind groups outside of just books or stuff that was more low cost.

Axel Ragnarsson (40:51):

That’s really been different for me in the last six months where I’ve been spending money on joining some higher level groups, where you really have to pay to play in terms of paying to really meet the people who are doing the deals and who are ahead of you. I’ve just realized that I want to surround myself with people that can pull me up a little bit more. That’s been something that I’ve really focused on in terms of personal development or self development, which in turn, obviously develops the business. Mastermind groups are something that I’ve been placing a bit more of an emphasis on in terms of just trying to get around people that are where I want to be.

Axel Ragnarsson (41:19):

The other thing is, as I have just been reading more, obviously reading so critical, I’m sure you talked about that on the show a lot and your other show, how critical reading is in terms of getting ahead. I knew that, but I lack the discipline sometimes to really sit down and open a book and keep myself focused for a long period of time. That’s been challenging for me. I think just a by-product of what’s happened here in terms of the world slowing down a little bit, which is a funny way to put it. It’s slowed down in that we haven’t really been able to do much in terms of getting in front of people, in terms of face-to-face networking or, going on face-to-face meetings with people in your network, stuff like that.

Axel Ragnarsson (41:54):

For me, I’ve been spending more time at home. I’ve been spending more time working from home, which has actually allowed me to focus on reading a little bit more. That’s been something I’ve really placed an emphasis on, I’m trying to read a book every couple of weeks, which for me, it’s a lot. I was a book a month, a book every couple of months type of person. I’ve certainly seen my businesses grow and I’ve certainly felt myself grow as a result of doing that.

Robert Leonard (42:16):

What has been the most influential piece of advice that you’ve ever received? It could be about business, entrepreneurship, investing, or even just life in general. What piece of advice has had the biggest impact on you?

Axel Ragnarsson (42:29):

That’s a really good question. Just off the top of my head, something that really sticks out to me is, I had an investor tell me once, and this is something that applies to real estate investing or any business, or just a life in general, is just focused on what matters. He gave me that advice in a real estate setting, where it was focus on what matters and we just talked about it. What matters is finding deals? What matters is networking and what matters is working on your business, right? Those are the things that really matter. And those are the tasks that really drive the success of your business. If you can spend as much time in those areas, your business is going to grow a lot faster. Just outside of that too, focusing on what matters in life, what matters to me, working out, spending time with people that I like to hang out with, right?

Axel Ragnarsson (43:09):

Friends, family, spending time with people that are above me in a business sense. And then as it relates to the business, spending time in my business, doing what I really enjoy, which is stuff like that. Having conversations like this, going out and meeting new people, actually working on deals. For me, as it relates to real estate, I’ve been doing a pretty good job of getting rid of everything in the business that isn’t something I enjoy, property management was that for me, I’ve got a lot of the low dollar per hour administrative tasks, off my plate. Now I really just focused on building the business in terms of finding deals, building the brand and the business, have the podcast, which has been great and everything like that.

Axel Ragnarsson (43:46):

But focusing on what matters, I guess, in terms of what drives the success of the business. And then outside of that, I think everyone understands what matters to them, but you get so caught up doing everything that you have to do in life. You can’t really do that.

Robert Leonard (43:56):

Axel, thanks so much for joining me again on the show. I really appreciate it. I know the audience is going to get a lot of value, just like they did last time. For those listening that are interested in connecting with you, where’s the best place for them to go?

Axel Ragnarsson (44:09):

I have a podcast of my own. It’s multifamily focused. It’s called the Multifamily Wealth Podcast, you can find that on iTunes and Spotify. You can find me on Instagram at multifamilywealth. I’m pretty active on there. You can also find me on LinkedIn. If you just search my name, Axel Ragnarsson. There’s not going to be too many of those that pop up on a LinkedIn search. You should be able to find me. Really, Instagram and LinkedIn are the best ones for me and you can find my email on both of those as well.

Robert Leonard (44:33):

I’ll put a link to both of those profiles as well as his podcast in the show notes below. So if you are interested in checking that out, you can find that in your favorite podcast player below. Axel, thanks so much for joining me.

Axel Ragnarsson (44:44):

Thanks for the invite. Love it. Hopefully we chat again soon.

Robert Leonard (44:47):

We’ll see you again in six to nine months and we’ll hopefully see you out of state.

Axel Ragnarsson (44:50):

Yeah, that’s great, man. Thanks again.

Robert Leonard (44:52):

All right guys. That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (44:57):

Thank you for listening to TIP. To access our show notes, courses or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decisions consult a professional. This show is copyrighted by The Investor’s Podcast Network, written permissions must be granted before syndication or re-forecasting.