Creating Passive Income: Investing In Apartments With John Casmon

Cultivate passive income through apartment investing and secure your financial future with a powerful and tangible asset that can generate wealth for generations to come. In this episode, John Casmon, the founder of Casmon Capital Group, delves into creating passive income through apartment investments. John shares his personal journey from corporate executive to successful real estate investor and discusses how investing in apartments can help secure your financial future. He breaks down the dos and don’ts of apartment investing, including strategies for identifying the right properties and avoiding common pitfalls. John provides motivation and practical tips for those wanting to begin investing in real estate by helping them overcome their hesitations and take that first step. This episode is a must-listen for anyone looking to build passive income through real estate investments. Tune in now.

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Creating Passive Income: Investing In Apartments With John Casmon

Thank you for joining us on this week’s episode. Thank you to Julie and Melanie for joining us as co-hosts. We also have the distinct pleasure of welcoming John Casmon from Casmon Capital to the show. John, thank you so much for joining the show. We appreciate your time and we’re looking forward to what you’re bringing, and what knowledge you’re bringing to the show. Thank you.

That’s amazing. I appreciate the introduction, Matt, Julie, and Melanie. I’m excited to be here and get into this conversation.

We are too. We are excited to have you and dive in. I got to ask though before we even dive in, tell us a little bit about yourself and your background, and how you ended up where you are now.

The short version of the story is I am a former corporate executive. I worked in corporate marketing and advertising for about 15 years. I worked for General Motors at one point. I worked at different advertising agencies. I spent a lot of time developing nice advertising marketing campaigns. I’ve done stuff for Pontiac, Buick, GMC, Nike, Coors Light, and Mountain Dew.

I’ve done a lot of different campaigns. What happened to me early on in my career was I was at GM when we went through bankruptcy. That experience opened up my eyes to money and how I secure my financial future. I watched people get let go who didn’t have a plan B. That led me down this path to say, “I need passive income. I need another source of revenue that’s not my W2 job.” That got me going into real estate.

Over time, I solely built up my portfolio with my wife. We started with a duplex where we lived in one unit and rented out the others. We scaled that to a 3-unit property and then 8-unit property. We had this 13-unit $1.5 million portfolio, but we kept running out of our own money. I had a second company I worked at that went through bankruptcy. I realized that this plan was working but not fast enough and not efficiently enough. That’s when I learned how to work with other people and started to scale, raising capital and partnering with other people for deals. Now, I’m helping other people get the same benefits of real estate investing.

We launched Casmon Capital Group. We have over $125 million worth of apartments that we’ve invested in with other investors. We continue to find cashflowing opportunities in great growing markets that allow us to increase the value of these properties, and deliver strong returns for investors. That’s what we do now. We buy apartment buildings and work with other people to join us on these apartment buildings. We try to help other people diversify their income and give them more flexibility in their investments.

That’s amazing. One thing I took away from that is the companies you keep working at keep going bankrupt. I’m kidding. You’re doing the job full-time and then you’re trying to have a plan B at the same time. How important is it to have a partner like your wife that was totally behind the game plan? “I have this idea. This is what we keep facing with these companies I’m working for. Are we going all in?” Talk about how important that was for the mindset and psyche of someone that’s an entrepreneur like yourself.

It’s critical to be aligned with your partner. It shouldn’t be you versus them, and you trying to convince them to invest in whatever it is. We all enter into this world with whatever preconceived notions we have based on our own experiences. You have to recognize, whether it be your spouse or significant other, whatever financial experiences they have.

Maybe they watched their parents lose their homes. Maybe they know people or they saw people invest in real estate or other avenues and lose money. They saw the negative consequences meant to them. They may have this trepidation or fear when it comes to investing. Maybe they weren’t taught about money. Many people in this country do not talk about money and investing. They don’t teach it in school.

My son goes to school too and he’s like, “Mom, why do I have to learn about XYZ? This isn’t going to help me. Why am I not learning about taxes, business, and how to plan for my future?

When was the last time anybody on this show did algebra? I don’t recall. I haven’t used it in 30 years.

I got a smart kid. He’s like, “Mom, they’re not teaching us about our future. They’re teaching us to go to college, get a job, make somebody else wealthy, work hard, and get a good retirement.” I try to teach my son to keep an open mind. He’s going to college and everything, but I put him in every business that I have. He learns it so that when he goes to college, he has something to back up on that he knows how to do.

That’s critical. We talked about what are financial goals were, both individually and as a couple, even before we got married. I found an old notebook where we literally wrote down our salaries at that time, how much money we had in savings, how much we could put into a joint savings account, and how we wanted to manage money. We had all that. When we took vacations, we had a budget. Back then, we were basically using cash. We would take out $1,000, “This is our budget.” We weren’t swiping credit cards. We got $1,000 and we better be efficient with how we use this money for this vacation. That impacted the hotels we stayed at, whether we drove or took a flight. All of those things were important.

To your point, Matt, it was critical to have a partner on board. It wasn’t like I had this idea and try to sell on it. We sat down collectively and said, “Here’s the situation. Here are some options to help us.” We aligned and say, “This makes sense. Why don’t we try this? Let’s continue to learn and grow.” That’s what I would tell everyone. If you are either anxious or maybe a little nervous, figure out what you’re willing to invest and what makes a deal risky, safe, or conservative. Try to mitigate those risks as much as possible.

One big mistake people make is trying to do it by themselves. You have zero experience in being a landlord, managing or analyzing deals, and going through this process, but you want to take your money and go out there and do something that you’ve never done. One of the riskiest options is betting on this person who has no experience, even though it’s you. You may be willing to work hard and grind it out and all those things, but there are easier ways. That’s something I didn’t know starting out.

For us, that house hack was a great way to start because we lived in one unit. We rented out the other unit. I didn’t even treat it like an investment. It was like, “I’m paying rent anyway, so if someone else can help pay this mortgage and most of the mortgage, I’m going to call it break even. We’re going to be good.” That allowed us to build our confidence. As that grew, that’s what we said, “This worked well. We’ve learned some things. We know how to screen tenants a little bit better. We know some things to do better. Let’s go out and buy another one.”

We then bought a three-unit and then we learned from that because now, we’re not living in it. We have to manage it. The numbers have to work. I can’t just shrug my shoulders. We then scaled into commercials. Figure out where your fears or concerns are and address them, but you can’t do that until you sit down, look at where you’re at financially, where you want to be financially, and then how you create that bridge to get from where you’re at now to where you want to be in the future.

Before we started, you had mentioned that you just acquired the 100-unit property in Atlanta. We know you’re in the Cincinnati, Ohio area. Are all your properties spread out across the country? During this learning process, did you try to keep them close to home so you could manage them hands-on? What kind of mindset did you have there?

We have a model that allows us to go down two pathways. One is going to be deals that we lead. We’re sourcing, finding, analyzing, and walking these properties, and leading the management of those deals. Those deals are going to be within a two-hour radius of where I live here in Cincinnati. Cincinnati, Indianapolis, Louisville, Columbus, and Lexington are the markets where I’m focused, but then we have great partnerships and relationships with people we’ve met over the years.

We’ve built these relationships over the years. That takes us to the southeast region, the Carolinas, Georgia, Florida, and Texas. We look at deals in those markets, but the difference is John’s not going out there and trying to win a deal in Texas or Florida. I have people that I know who are hitting the pavement every day in those markets.

You got Julie now too.

We got Julie down there. There are only 800 people in your town, but you’re still finding great deals all over.

Julie is number one in three categories on Amazon.

It was four. I hit eCommerce number one.

Congratulations.

Don’t short-sell her. Matching your point on how we do it, when we started out, we wanted to be stuff that we can do. I lived in that first property. That was super easy to manage. The next property was about 10 to 15 minutes away from where we lived. The next property was about 20 to 25 minutes away. What started to happen is we had a hard time finding deals in our market that worked.

We weren’t willing to go over to the other side of the tracks, where the deal’s cashflow was, but there was a little more concern on how to manage them and make them work. We started to learn about investing in other markets. This is around the same time we started learning about working with other investors. I struggled to try to figure out how to identify the best places to invest when I’m looking outside of the Chicago land market.

I talked to a lot of different people and had this idea to launch my podcast. My show now is called Multifamily Insights, but back then it was called Target Market Insights. My goal was to interview people and figure out the best tricks to find the right places to invest. We succeeded with that. It was great because I didn’t think people would tell me their little secrets. They came on and were like, “I look at this.”

A lot of people will do that. I could think of somebody you would have great synergy with.

That’s what we did starting out. I got that information from people. I got this database of different resources. I remember Cincinnati was a market that was very high on my list because my wife is from here. I knew I’d be moving here at some point. The very first interview I did was with a broker in Cincinnati who had sent me deals. I would analyze and tour the deals, but I wanted to get him without him trying to sell me a deal. If they got a deal and it’s the worst part of town. They’re going to be like, “This town is up and coming. It’s gentrifying.”

You want to pull back the curtain like in The Wizard of Oz. You wanted to see what was behind it.

We got him on. I thought he might be a little more coy or he wanted to be diplomatic and say, “The entire city is pretty good and there are pros and cons.” He was like, “This part of the city right here is where the growth is.” I was surprised.

You got to know your city. I know my city and backstreet’s 50-mile radius.

This guy gave me my farm area. I said, “Okay, cool.” Whenever I’m looking at deals now, if it’s not in this area, I’m throwing it out. When you’re not in that city and you can’t get into the nuances, you have to get some shortcuts. This allowed me to get his shortcut to say, “I know what’s in this region.” Without any bias, this broker told me that this is the region and the part of the city where he believes the most growth is coming in. I just fixated on that. In about six months later, we did our second deal in Cincinnati. Our first deal in Cincinnati was right in that pocket. We sold that deal but that conversation was helpful.

Matt, I think it’s important for you to stay focused on what you know and where you know, but also learn how to expand. One way is to do what I did, which takes a lot of time and effort. The other way is to invest with someone who knows that area. Julie is out there in Houston and I’m here in Cinci. We have relationships with people all over the country, but we still only focus on the Midwest and the Southeast. I’m sure there are great markets out West but for me, it doesn’t make sense to fly and go out there and build relationships.

Even here in the Carolinas or Georgia, while it’s not as close to me, it’s not that far either. It’s a quick flight and I know the people who are there, so I talk to them all the time. It’s a little bit easier for me to understand the dynamics because they’re also not that dissimilar from my markets in the Midwest. Out West, there are different dynamics. The tech industry is driving a lot of that. In Texas, you might have more oil and gas that’s driving some of that. You got to understand what’s going on in that market, and what factors you got to pay attention to. We try to keep it relatively local but also extend that by working with people who know those markets as well.

When you said West, I’m thinking like, “What are the hotbeds?” I live in San Diego and you’re right, the real estate market here on the West Coast is a whole lot different than where I grew up in Texas, and now what I can imagine is how it is in the Chicago land area. I’m thinking what are the hotbeds in San Diego right now. I would love for you to maybe share some of the criteria that you look for. You don’t have to get in-depth. Don’t give away the eleven herbs and spices.

Don’t give away the secret sauce. For our viewers, everything John and I, Melanie, and Matt have been discussing, you can get more information at FullerWalletMedia.com/Casmon. Go ahead, Matt. I apologize.

Without giving away all the eleven herbs and spices from the recipe, what are maybe 1 or 2 little criteria that you look at when you’re talking to an investor in a different market? What are the questions you’re asking them? Give us two little hot topics that are important on your list.

From an umbrella standpoint, the main thing I’m trying to understand is, “Will the demand for these apartments increase in the future, be flat, or decrease in the future?” We don’t know the answer with certainty, but I can look at different indicators. I have a pretty good sense of where demand is going to be. That’s what I’m trying to understand.

All of my questions are geared toward, “Will the demand be higher?” When I say demand, I mean demand in two ways. Demand from the renter side, the people who want to rent and live in these apartments, but also demand from the ownership side. Will people want to own these apartment buildings and buy them from me when I’m ready to sell? That’s what I’m trying to understand. My questions are geared toward that.

The first question for me is going to be what’s happening with the population. Are people moving to this area? Are they leaving this area? What employers are in this area? Are they growing? Are they retracting? I’m a Midwest kid. I live in Detroit and I’m from Cleveland. I’ve lived in Cincinnati and Chicago. I went to school in Dayton so I know the Midwest well.

There’s a reason some of these markets are known as the Rust Belt. You have jobs that lead there, especially those manufacturing jobs. What happens to those cities? What happens to rents? What happens to demand if those jobs disappear? I worked at General Motors from 2007 through 2011. I was there when we went through the economic downturn. I was there when we went through bankruptcy. I saw the impact it had directly on housing and real estate.

Anyone I knew on real estate was trying to fire sell and get rid of it. It obviously sprung back and did well, but you have to understand all those dynamics. I’m trying to understand where is the demand headed. I’m looking at a lot of different factors because I don’t think you should look at one metric and say, “Population is up.” I don’t look at just the census data and say, “Back in 2020, the population went up 10%, so we should be good. That’s great.” The one trick I tell everyone and this is an advanced-level trick is that all data is dated. They have to look backward to capture and report it, but it’s not necessarily real-time and it’s usually not looking forward.

I’ll give you an example. We talked about the West Coast. Phoenix has been one of the hottest markets in the country for the last 5 or 10 years. I don’t know what the future looks like for Phoenix because a lot of that growth was driven by the tech industry. We are now seeing the tech industry going through a lot of challenges. As people try to leave Silicon Valley to maybe get to Phoenix and maybe expand a little bit, will that continue? I don’t know. Those are the things that we’re trying to pay attention to when we’re selecting markets and taking in this information. That’s going to help us make informed decisions moving forward.

That is some amazing piece of content and knowledge right there. If you want more you can go to FullerWalletMedia.com/Casmon. It’ll take you to a sample deal where they could submit it and they can get in touch with you and possibly work together. This would be huge. If you feel like you can offer something to John or you have a deal on the table that you think Casmon Capital Group would be interested in, go there. That’s amazing stuff, John. Thank you so much. I appreciate it.

The sample deal is for two groups. One is if you have a deal and looking to maybe raise money or attract money for deals, it’s a great way for you to figure out what kind of information you should be including and maybe how to structure your offering. On the flip side of that, if you are trying to wrap your head around this investing thing, maybe syndications, and how you invest if you’re a newer investor, it’s a great way to learn some of the terminologies, and maybe what things you should be looking for before deciding to invest in a deal. Either way, it gives you a chance to learn a little bit from what we’ve done. We have a great follow-up where we get into maybe some key questions to ask and some red flags. From there, you can start to get comfortable with whether or not to invest in apartments or commercial real estate, in general.

Is Casmon Capital Group solely for multifamily, commercial, or residential? What kind of properties do you invest in as a group?

We’re solely multifamily. We are starting to explore ancillary opportunities, particularly in the hotel space and a little bit with short-term rentals. As of now and for the foreseeable future, multifamily is our focus. We believe in being pretty tight and focused on what we’re doing. That’s our bread and butter.

John Casmon, thank you so much for joining the show. It’s a pleasure and an honor. I wish you all the success in the world, my friend.

Thank you for having me.

Thank you.

Important Links

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About John Casmon

John Casmon is a real estate entrepreneur, who has partnered with busy professionals to invest in over $100 million worth of apartments. John also consults active multifamily investors to help them start or grow their business. He hosts the Multifamily Insights podcast (formerly Target Market Insights) and is the co-creator of the Midwest Real Estate Networking Summit.

Prior to becoming a full-time investor, John worked in corporate America, overseeing marketing campaigns for General Motors, Nike and Coors Light.