From a 19-year-old who traded his long hair for his first real estate job to a passive investor with a history of successful deals and strong relationships, Gordon Gallic took quite a journey to get to where he is today.
My brother Joel and I enjoyed hearing Gordon talk about his journey to passive investing, how he builds phenomenal relationships, and how he vets a sponsor’s Track Record.
I hope this podcast series, The 7 Keys to Passive Investing in Multi-Family Real Estate, can equip you with the knowledge you need to vet out sponsors and deals confidently. For the entire conversation, you can listen here. I anticipate you’ll learn as much from Gordon’s story as I did.
Gordon’s Commitment to Passive Investing
In 1976, Gordon acquired his first passive investment property for 13k in Springfield, Oregon, but it wasn’t until he sold the property in 1994 for 750k that he realized return potential on this investment strategy.
Shortly after, he began to invest with another group, whose owner he’d known since the ‘70s. As a minority owner, Gordon invested in three to four larger projects in Vancouver, Washington, and Portland, bringing Gordon more into the multi-family investment space. Again, networks and friends in the investment space helped Gordon make this switch.
As Gordon approached his fifties, he said he knew it was “time to look at some other sources of income besides a paycheck from lending money. And so that was my goal, to expand my passive investment strategy.”
In 1991, Gordon started Gallic Financial knowing the future was in passive investing, and in 2009, Joel and I went to Gordon’s office with a passive investment opportunity.
Partnership is Essential
By the time we met Gordon in 2009, he had a whole network of people: old realtors, people he had invested with, etc. Gordon revealed, “it wasn’t until I ended up getting partners that my real estate portfolio seriously became more attractive, more profitable and less stressful.”
But how did he find those relationships?
Gordon believes knowledge is power, and passive investing is challenging without the proper knowledge. He recommends turning to trusted peers as a source of this knowledge. Most of the people he’s led into passive investing have done it because they trust him–they knew how to vet out a quality partner, and usually, most people take a few losses in the process.
“People learn to trust you over time…[I’ve] never advertised for an investor.…” Gordon said. This was in line with what Joel and I had experienced back in 2009 when we started working with him. We learned about him through his reputation, and because we trusted those people, we were sure we would trust Gordon.
Gordon’s Take on Track Record: Testimonials are TV Soap
Trustworthiness closely intertwines with a sponsor’s history and filters down into everything else.
He emphasized the importance of a sponsor’s character, “They don’t care as much about what you have to say. It’s who’s on the other line.” They could say anything they wanted, but it didn’t matter if they didn’t have the experience to back them.
Though testimonials and word of mouth are essential in establishing relationships, Gordon said, “you can get those [testimonials] buying soap on TV. This soap is the best soap.” As odd as that connection was–he was right. What someone says is one thing but having the history tangible like a packet or presentation speaks miles to Track Record.
In the end, Gordon said there’s no way to be 100% sure that someone’s history won’t be a little patchy. Sometimes he wasn’t sure about the deal, but if he trusted the sponsor, it made up for any hesitation.
His piece of advice for evaluating a sponsor’s Track Record is meeting them face to face, which allows someone to “identify whether there’s a feeling of trust, goodwill, and commonality.”
Here are a few questions Gordon asks potential sponsors when evaluating their Track Record:
Does the type of real estate they’ve been doing match the type you want to do?
Are you both in it for the long haul?
Is there an exit strategy if things take a negative turn?
I learned a few valuable lessons from talking to Gordon:
Towards the end of the conversation, Gordon said, “Do your homework,” which you can use in any step in your investment journey. Get your hands on whatever information you can about investing, review the sponsor’s presentation, and look at properties before you sign for them. Learn everything you can about any given point in the investment process because it’s your money on the line.
Relationships are essential to any investor-sponsor deal, but building that trustworthiness takes years and years. Once the trust is there, business starts to take off.
Make sure you know who you will be making the investment deal with because investing in a property is a long-term commitment.
I’m grateful for the opportunity to learn from investors and friends like Gordon. If you want to hear more about Gordon’s story, listen to the podcast’s second episode on our website. Until next time.