JF2000: The Hybrid Turnkey Model with William Robison #SkillsetSunday

William is a returning guest from one of our very first episodes, JF09. William has been focusing his efforts on growing his Hybrid Turnkey Business and shares some of the benefits of having a successful business that purchases many deals a year including discounts with local contractors, plumbers, electricians, and materials. He also shares how he prepares to negotiate the terms of a bulk deal with a vendor. You would think it would be easy but it takes a lot of work and many no’s before he finds the right partner.

William Robison Real Estate Background:

Best Ever Tweet:

“They get too comfortable with their cushion job, and we have to sometimes rein them back into a good spot or move on to another.” – William Robison


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, William Robison. How are you doing, William?

William Robison: Doing great, how are you?

Joe Fairless: I am doing great, and looking forward to our conversation. Because today is Sunday, we’ve got a special segment for you, Best Ever listeners, called Skillset Sunday. The skillset you’re going to learn is a hybrid turnkey model. We might have talked about it on the show before, but it’s always good to get an additional perspective on this from a different person.

First off, if you recognize William’s name as a loyal Best Ever listeners, props to you, because I interviewed William one other time, and that one other time was episode 9. It was titled “One critical component of building a real estate business.” I have no clue, I do not remember what that critical component is… It’s been five years, so if you wanna know what that is, then go listen to episode number 9.

William has been in real estate for 15 years. He started a brokerage in 2008… Maybe I should listen to that, too. It’s important that I know what that critical component is building a business. He’s helped dozens of investors to purchase hybrid turnkey investments totaling over 500 acquisitions, renovations and daily property management. Based in Kansas City, Missouri. William, do you wanna give the listeners just a refresher of your background? …and then let’s roll right into talking about the hybrid turnkey model.

William Robison: You bet. As you mentioned, 15 years in real estate; that was after two corporate downsizings I decided to jump out of the corporate world and go into the much more exciting and lucrative opportunity of real estate. I have never looked back. It’s been an exciting ride. I’ve worked with investors for the majority of those 15 years. I did a little bit of REO during the debacle and bust in ’08, plus or minus, and for the last 6 years I’ve been working with investors to build out their own personal portfolios.

Joe Fairless: Got it. So what is the hybrid turnkey model?

William Robison: Sure. A lot of people are very familiar with what a turnkey real estate investment is. It’s typically a single-family house, where a company has gone out, acquired the property, done some renovations, got that property leased up, and then selling it out to investors as a passive investment.

What a hybrid turnkey property does is it offers them a little bit more transparency, and it gives them the opportunity to capture that built-in equity that can be built through that process. So what we do is we help an investor capture a property from the open market, whether it be an off-market transaction, from the courthouse steps or MLS, we put them through a renovation process using our construction department, and then finally we put them into the property management for the long-term. So what that does is it gives them transparency of the process, they get to know exactly what’s going on going into that property, and then they get to capture some equity along the way.

Joe Fairless: Yeah, so that’s the ideal model if you’re looking to buy single-family homes… Because if you buy on the MLS and it’s move-in ready, then you’ll be paying a premium, whereas here you can capture some of that equity, as you mentioned, through the renovation process… Assuming that the  renovation process goes according to plan. Yeah, that’s a big variable in this… What are some ways that you’ve seen it go wrong, and then how do you mitigate that from happening?

William Robison: There’s always the hidden items that you’re not going to know when you start. There’s rarely ever going to be the $10,000 [unintelligible [00:04:33].07] against the sheetrock inside the wall that we find on HDTV… But there’s rarely ever a surprise; usually, it’s just a decision-making process of “Hey, this roof has 5-7 years of life left. Do you wanna continue forward and have a cap ex later, or do you wanna take care of it now and have a durable product for a long time?” And there’s several more examples like that…

Joe Fairless: What are some more?

William Robison: Some more might be opening up the flooring and finding the sub-flooring needs to be wiped out, opening up a wall in the shower and we have to replace a shower valve, rather than just retiling the shower out… That’s a couple hundred dollar difference, so it’s never anything that’s just outlandishly going to completely blow a budget. And we do bake in a little bit of  a contingency budget; the majority of the time, that’s going to be covered through that.

Joe Fairless: How do you know what contingency budget to bake in?

William Robison: Typically, just a few percentage points of the overall budget. After going through roughly 10,000 houses in  my career, I have a pretty keen knowledge of what we’re looking for on a property. We typically have a pretty solid understanding of what we’re going to have. Sometimes we’re gonna estimate on the high side and come in a little bit less if we don’t know exactly what we’re going to find; we’re going to make an assumption that it’s failed, and we need to fix it.

For example, buying an REO in the wintertime in Kansas City, where the pipes freeze – I’m gonna assume that the pipes are broken, and we’re gonna plan an expense for that. If we get in there and we like the lines, and the lines hold pressure – fantastic, we’ve just saved $1,500.

Joe Fairless: When did you start doing the hybrid turnkey model?

William Robison: Hybrid turnkey started almost six years ago today.

Joe Fairless: Okay. When you think about the business, six years ago, as far as this business model goes to today, what are some things that have been optimized on your side?

William Robison: Volume pricing. We’re able to capture some volume business from various contractors, from some suppliers… Rather than buying a stainless steel appliance package that is a very good, mid-grade brand, and paying $2,100 on the shelf, I’ve got that negotiated down to $1,400. So there’s just some volume priced in by buying dozens or hundreds of x on the marketplace… Same thing happens with our plumber. We went and looked and saw how much we were spending in plumbing in a given year – it was about 80k – so we were able to go out to a variety of different plumber vendors and say “This is the amount of money that you can capture. Are you willing to give us some volume pricing discounts?” etc. Same thing with our electricians, and our roofers etc.

Joe Fairless: On that plumbing example, you spent 80k a year on plumbing… What’s a reasonable discount to ask for?

William Robison: It depends on exactly what’s it gonna be doing for you. A lot of what we’re doing in that 80k is sump pumps, and line clearing, and water heater change-outs… Small items; nothing that’s ever hugely drastic… But we’re able to capture usually a 30% discount to what we would have paid out in the market.

Joe Fairless: That’s substantial.

William Robison: Yes. Line clearance, for example, costs you $100 to $120 for a main stack; we’re paying $65. So it’s just  cost savings that you  get by doing more than 100 a year.

Joe Fairless: Do you have to go to multiple plumbers before you get one that says “Yes, I’m good with that.”

William Robison: Dozens.

Joe Fairless: Dozens? [laughs]

William Robison: Literally, dozens. Yes.

Joe Fairless: You go through literally dozens, and then you finally find a taker?

William Robison: You know, America has done a fantastic job of bringing STEM (science, technology, engineering and mathematics) to the educational world. It’s been a fantastic thing to help put America on the map, but…

Joe Fairless: Not the trades though.

William Robison: On the flipside, on the trade side we’re stalling a lot. So all of our trades are highly maximized on the amount of business that they have, and the only way that we can go in and capture a discount from them is to offer them an opportunity to have more consistent work, less advertising budget, and find ways to help them save money, so that they can help us save money on the flip.

Joe Fairless: I’m glad we talked through this. So your talking point to them is you have more consistent work, and maybe you ask them “How much do you spend on an advertising budget?” and they say “X amount.” And you say “Well, you’ll spend X amount less, as a result of that.”

William Robison: Right.

Joe Fairless: Any other talking points that you give them?

William Robison: WE try our very best to do the majority of our work Monday through Friday, 8 to 5… So we’re gonna have that rare phone call that’s gonna be Saturday night at midnight with a flooded basement that we need help with, but the majority of the business that we’re gonna be giving them is during their optimal times that they want to have business anyway. So if there’s an emergency type plumber, we can offer them the opportunity to have a little bit more family time at home, and give them some volume during the daytime.

Joe Fairless: I’m glad that we talked about this, because it might be counter-intuitive to some listeners that you had to go through dozens and dozens of plumbers to find one that was qualified, and would accept your deal of “Hey, I want 30% off.” Because on the surface, people might think “Oh, well – yeah, if you give someone a lot of business, then you would get a discount”, and that makes sense, and you just have to go to a plumber, or maybe two, if the first idiot turns you down… But the reality is, as you said, they’re in such high demand – the good ones are, especially – in such high demand… And they don’t need this type of structure, because they can go and be busy Monday through Friday already, and get premium pricing through single-family home primary residence owners.

William Robison: Another good point is that our plumbers rarely stay with us for a very long time. Every once in a while you’re gonna run into somebody that has price creep; they get way too comfortable and they try to increase their prices, and some of the standards that you set in place for a few different items, that you can… The rest of the items start to  have a little bit of price creep, and they get too comfortable with a cushion job. We have to sometimes wrangle them back into a good spot, or move on to another.

And sometimes it becomes very comfortable, they outsource it, they hire somebody else to take on our business, that person doesn’t take care of us well, and we have a staffing issue that we have to correct. And half the time, that means we have to change our vendor.

Joe Fairless: Good info for really anyone working with vendors over the long-term, or contractors and subcontractors… Just to keep a watchful eye for price creep, and just check — if you’re doing the same type of stuff, keep those invoices and check them over time if they are going up… Which I would expect them to go up a certain amount over time, just because of inflation… But make sure that it’s still in line with the market and you’re also still getting whatever discount or agreement that you had agreed upon with them.

William Robison: Exactly. A question that we get often is why don’t we have 3 plumbing bids on the sump pump. And as you can see, if you have a vendor who’s willing to give you really good pricing, and only do it at this amount of volume, if I go and spread that out over three, then I’m gonna get less of a discount. So if I take that 80k and drop it down to 27k per vendor, I’m no gonna get that same level of attention, I’m not gonna get the same level of service, and I’m certainly not gonna get the same level of discount.

So yes, we want to make sure that we’re on point on price, but we also want to make sure that we’re maximizing for the vendor that is giving us the discount for that volume. So it becomes a little bit entrusting, working with a variety of our investors, especially on the property management side, where they’re looking for “Hey, can I get three bids on this?” “Sure. Push comes to shovel, I’ll get you two  more retail bids that are gonna be 30%-40% higher.” But having trust in your vendors if you’ve built a good, solid relationship with those people, have a little bit of faith in what they can do, but also make sure that there’s transparency of what’s happening at the same time.

Joe Fairless: Anything else that we haven’t talked about as it relates to the hybrid turnkey model that you think we should?

William Robison: You know, six years ago when the market was coming out of a big downturn and there was a lot of foreclosure inventory on the market, and people were able to BRRRR and do all kinds of fantastic financing methods, and purchase properties at extreme discounts – that was a fantastic time, and if you bought during that time, kudos to you. I still believe that we’re in a good market; not only Kansas City but several other good markets around the country offer the same… But we don’t have that same discount that we had five years ago.

Recognizing where we’re at in the market is an important factor, and I also still think that we have quite a bit of upside, because we don’t have enough inventory out there to take care of the demand that exists for rentals. We’ve got a new generation coming to the marketplace, looking for rental properties because they don’t wanna be tied down to any particular location… And within that, we’ve gotta be able to provide them with the supply, and get that sent out to them.

Specifically in Kansas City, there’s a lot of class A multifamily built out in the downtown area. Fantastic, great location, close to everything, lots of entertainment… But those same people are now having children, and when they’re 2, 3 and 4 years old, they start thinking “I need to go to the suburbs, where there’s parks and sidewalks and good schools.” And that is where we’ve built our business.

So within that, let’s say that we’ve got a hybrid turnkey property that we’re gonna have an all-in of 150k; that’s gonna be quite a bit more than we had five years ago, but the ability to replace that is still substantially higher. I cannot build a house for less than 190k in the market areas where these houses exist. That means we still have a window of appreciation available for those that are willing to look at  appreciation as part of that investment model.

Joe Fairless: Is that what you look at, the replacement value?

William Robison: That’s just one of the factors. Obviously, we’re looking at cashflow. Cashflow is getting compressed. All across the country we’ve got a large group of the national Wall Street players (like BlackStone) that are buying up thousands and thousands of properties around the country… So we’ve gotta be able to compete with those guys. But the replacements scenario is definitely still a piece of the puzzle.

There’s two different factors to look at in an investment – what’s  your cashflow, whether that’s positive, flat or negative; what is your appreciation historically and what’s expected… And what kind of equity can you gain out of the investment. So there’s two different ways to look at it, and we try to make sure that we’re amplifying that for the particular investor’s needs… And sometimes we need to modify their needs. If they’re thinking “I need cashflow today” and they’re 25 years old, getting ready to go into their prime earning years, they don’t really need that investment to perform for them until years down the road.

So we try to educate them into the direction of looking at IRR, that it’s gonna perform for them much better over the course of the next couple of decades.

Joe Fairless: As long as it’s cash-flowing out the gate though, and you’ve got the right management in place… 2008 hits and if it’s cash-flowing and you have the right management and you have a long-term loan on it, you still should be fine.

William Robison: You’re stable, right. You’re in great shape, and you’ve got more [unintelligible [00:16:45].19] coming into play for those that are unfortunate enough to fall to the next recession.

Joe Fairless: Yup. 3 immutable laws of real estate investing – if you google that, Best Ever listeners, I have a bunch of articles on that. 3 immutable laws of real estate investing, Joe Fairless.

Well, William, I enjoyed our conversation. How can the Best Ever listeners learn more about what you’re doing?

William Robison: They can certainly reach out to us, they can check out our website, which is very long, designed for Google – KansasCityInvestmentRealEstate.com. It’s the best place to find out some information. They can also email me directly at william@kcinvre.com.

Joe Fairless: William, thanks for being on the show, talking about the hybrid turnkey model, talking about the biggest risk in that, which is the execution of the improvements on the property, and then how you mitigate that… And then we got into the weeds on volume pricing and contractors, and I’m glad we did, because that is relevant, as I mentioned earlier, to really anyone who’s looking to negotiate a discount with a vendor.

The three talking points that you have is more consistent work, less advertising budget, and doing the work during the hours that they want to work.

Thanks for being on the show. I hope you have a best ever weekend, and we’ll talk to you again soon.

William Robison: Sounds great. Thanks so much.

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JF1907: Turn Key Deal & A Duplex In Cincinnati, Breaking Down The Numbers with Amanda Cassiday

Amanda is a successful entrepreneur who is still new-ish to real estate investing. We’ll hear about her turn key deal, where she found it, what company manages it, and how much money it’s making. Then we’ll hear about her recent purchase of a duplex in Cincinnati. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“9 months of owning this property, we had put $40,000 into it” – Amanda Cassiday

 

Amanda Cassiday Real Estate Background:

  • Entrepreneur, house-hacker, turn-key investor, and business designer and strategist
  • Recently started investing in real estate long distance and is growing that portfolio
  • Based in Brooklyn, NY
  • Say hi to her at https://www.amandacassiday.com/
  • Best Ever Book: The Alchemist

 


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Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Amanda Cassiday. Hello, Amanda.

Amanda Cassiday: Hi. How are you, Joe?

Joe Fairless: I am doing great, and looking forward to our conversation. A little bit about Amanda – she’s an entrepreneur, house-hacker, turnkey investor and business designer and strategist. Recently started investing in real estate long-distance, and is focused on growing that portfolio. Based in Brooklyn, New York… And we’re gonna be talking about some challenging stuff that she has come across on a property. First though, Amanda, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Amanda Cassiday: Of course. I’ve spent my 20’s living in West Africa, as a Peace Corps volunteer, earning about $8/day, doing a lot of microfinance and health education work. Then I went to grad school and got my MBA, incurred a lot of loans, and eventually got my first job in New York City at 28 years old [unintelligible [00:02:24].03] in the healthcare world. With $70,000 in debt, I had no savings, and by the time I moved to New York I was obviously super-overwhelmed by the cost of living in New York City… So I first started my real estate journey by house-hacking; I rented a two-bedroom apartment and airbnb-ed the second bedroom. It’s been great, I’ve been doing it for years; I earn about $20,000/year, and I’ve met some really incredible people all over the world.

Then I got into turnkey investing, which was a great opportunity for me to leverage these resources that I first started to gain in my job… And put them into something that was earning me more passive income. However, I think it was a little bit too passive for me.

Over the last year-and-a-half I’ve decided to get my hands a bit dirtier and get into real estate investing independently… But the problem was in [unintelligible [00:03:12].25] I live in New York City, and both markets are too expensive for me, so I knew I had to become a master in a market that I could afford, that also had potential to grow.

So through a several month analytical and intuitive process, I landed on Cincinnati. That’s when I first connected with you, Joe, through our mutual friend Carla…

Joe Fairless: Yup.

Amanda Cassiday: And you [unintelligible [00:03:32].07] who became my agent, and my friend and now business partner Jeff and I just bought our first duplex about a year ago, last September.

Joe Fairless: And with turnkey investing, did you buy any properties before you got more hands-on with what you’re currently working on?

Amanda Cassiday: No, I just bought one turnkey property, and as the name suggests, it was very easy; they hold your hand from beginning to end. So for me it was helpful having finally had some savings for myself that I had never really had before, to help me practice the idea of taking a larger amount of my savings and putting it into something else. It was a scary move for me. Even though it was a $17,000 down payment, that was a very big deal for me at the time… So the process I think helped shift my perspective around “Hey, I can do this over and over again. I can choose the market I wanna do this in, I can choose the property, I can choose the approach I wanna take to generate revenue.” So that’s when I ultimately decided to do this on my own.

Joe Fairless: The turnkey rental – what group did you go with?

Amanda Cassiday: I went with a company in Memphis called Mid-South Homebuyers.

Joe Fairless: Mid-South Homebuyers?

Amanda Cassiday: Correct.

Joe Fairless: And what did you buy it for and what does it rent for?

Amanda Cassiday: It was a $64,000 property, so the down payment was around 17k, and I’m getting about $750/month in rent. I’m earning around $330-$350/month.

Joe Fairless: Okay, so you get $300-$350/month in your bank account every month, barring something irregular with the property.

Amanda Cassiday: Correct.

Joe Fairless: Cool. And how long have you owned that?

Amanda Cassiday: Almost three years.

Joe Fairless: Any challenging things that have come up with that property?

Amanda Cassiday: The first year was pretty smooth. After my first tenant moved out we had a new tenant that came in, and they had a lot of trouble paying the rent. Eventually the property manager got them up to speed and I’ve been reimbursed for lost rent over the last month or two, but so far it’s been smooth sailing.

Joe Fairless: So they reimburse you if you don’t have a tenant living there?

Amanda Cassiday: I had only six weeks between tenants, but once they filled it with a new tenant, that’s when they were kind of delinquent in paying rent.

Joe Fairless: Okay, but the property management company didn’t reimburse you for the time lost…

Amanda Cassiday: Correct.

Joe Fairless: Okay, got it. Cool. So if you are making $300-$350/month in profit every month, then why change that approach and go into something where you’re more hands-on?

Amanda Cassiday: I have, I think, in my core, a  bit of an entrepreneurial spirit… So when I enjoy doing something, I typically want to end up doing it myself. I make candles, I now make ceramics… When I see things I enjoy, I take the expensive ownership of “I want to own the process and experiment, and learn more about myself along the way…” And turnkey – you’re right, it was very passive. All I had to do was wait in line every six months and buy a house… But I wasn’t learning about the Memphis market. I wasn’t building relationships with anyone other than my property manager and turnkey company. I wasn’t scaling my reach through knowledge and resources and partnerships, so I wanted to take the leap and really take more ownership of my financial future, and hopefully scale much more quickly.

Joe Fairless: So let’s talk about your most recent acquisition. Tell us about it, please.

Amanda Cassiday: It is a duplex in Cincinnati. The asking price was $115,000. It was positioned as two one-bedroom properties, but both of them had large square-footage and an extra room. So they could quite easily and cheaply be converted into two two-bedrooms. We put in an offer for $100,000 and it was accepted, so we went ahead with the due diligence process. The inspection was great, actually; the inspector said it was the best 100-year-old house he’s ever seen…

Joe Fairless: Wow.

Amanda Cassiday: …with the one caveat — yeah, it was great. It was so great to hear. It was almost too good to be true, which it kind of was, as we’ll see… But the caveat to his inspection was “This is a 100-year-old house. It has 100-year-old clay pipes underground, and I cannot guarantee the quality of those pipes.” Since this was our first purchase in Cincinnati, we paid for a little bit more due diligence. We brought in a plumber to scope the pipes, and the plumber found some clogs and issues. Clay pipes are a little porous, and so over time [unintelligible [00:08:23].22] and create clogs…

So what we ended up doing is we added an addendum to the purchase agreement that said that the seller had to ensure that the drain was clear and there were no faults between the house and the sewage line.

So the seller went ahead and paid what was around $6,000, used the same plumber that we used to scope the pipes, and then in September of last year we closed.

Joe Fairless: Okay. Congratulations on the close.

Amanda Cassiday: Thank you. It was a big day. We were pretty scrappy about — the first few things after that is we did a lot of the repairs ourselves… Since we were in Cincinnati to close, we went ahead and showed the space to tenants… It was a great experience for us, but it certainly could have been done more efficiently with experts. We ultimately got the place filled within ten days.

Joe Fairless: Wow.

Amanda Cassiday: Yeah, it was exciting for us… And the total rent that we’re netting through that  is $1,550.

Joe Fairless: $1,550 is what they’re going for between the two bedrooms?

Amanda Cassiday: Two combined, yeah. Just over $1,500, yeah.

Joe Fairless: Okay.

Amanda Cassiday: It’s between the 1% and 2%, so that checked out.

Joe Fairless: Sure.

Amanda Cassiday: And it wasn’t until the tenant moved in that the turbulence really started. The background for the house is it had been owner-occupied for many years, almost the entire life of the house… And that second unit had been unoccupied for quite some time. So when those tenants moved in, everything was a bit rusty and there were kinks that needed to be worked out.

Joe Fairless: Like what?

Amanda Cassiday: The first thing that happened right out of the gate is there was a gas leak. And I think it’s just those pipes hadn’t been used in such a long time for that unit… We weren’t quite sure what the issue was, but that gas leak ultimately took about two weeks to resolve, because the plumber who came in to identify the leak and fix the leak and the Cincinnati gas company weren’t talking to each other. So they each kept coming out at different times, the leak still hadn’t been resolved, and two weeks later our tenants are obviously upset and frustrated coming out of the situation.

Joe Fairless: How was the gas leak identified in the first place?

Amanda Cassiday: Our tenant smelled gas and called us right away, which was great.

Joe Fairless: And then are they living in the unit during these two weeks?

Amanda Cassiday: So had we known this would have taken two weeks, we would have put them up in a hotel right away. It’s just not a good environment, for the tenants to be in a place without gas… But every day we were told that it would be resolved, and then every day something else happened and prevented that from being resolved… So we ended up giving our tenants a pretty large gift certificate to a restaurant in the area, we sent them heaters, we did everything we could to get them as comfortable as possible once we realized that this would take a bit longer than we expected.

Joe Fairless: Okay. How much was the gift certificate?

Amanda Cassiday: I think over $300.

Joe Fairless: Where was it to?

Amanda Cassiday: It’s The Eagle.

Joe Fairless: The Eagle. I don’t know The Eagle. Okay…

Amanda Cassiday: I think it’s in Over-The-Rhine.

Joe Fairless: Oh, it’s a cool, hip area that I never go to. [laughs]

Amanda Cassiday: Yes.

Joe Fairless: Fair enough. Alright…

Amanda Cassiday: All the young kids are going there.

Joe Fairless: Yes, yes. Okay, so that got resolved…

Amanda Cassiday: That got resolved. The next few issues were appliances shutting down… We actually had some tenants that were a little difficult; it was their first time living in an apartment together… They were very, very young, were accustomed to living at home, and just were fairly disrespectful to the property, disrespectful of the property management, of us… And it just took quite a bit of time and energy.

Ultimately, after we feel like we’ve had our fair share of issues, really the kicker came this past February, where we get a video from our tenants in the bottom unit of sewage literally spewing from the ceiling and getting all over the walls, couch and floor.

Joe Fairless: Oh, my…

Amanda Cassiday: Yeah… It was difficult.

Joe Fairless: Where were you when you received that?

Amanda Cassiday: I was at work, in a meeting. I had to step out of the meeting; my heart sunk… I was really hard on myself for the gas leak and for this. I wanna provide a safe, comfortable living environment for people as a landlord; that is my responsibility… And I felt like this was wildly out of our control. We did everything we could during the due diligence phase to make sure there were no issues, and then suddenly we have issue after issue… And then this was kind of one of the worst possible things that a tenant could live with.

Joe Fairless: Yeah…

Amanda Cassiday: So we brought in the same plumber who fixed the pipe a few months ago, and he stopped the leak immediately. We brought in sewage mitigation, which is a pretty lengthy process. It takes quite a lot of time to sanitize everything and make sure the walls are dry. We had to bring some other folks in to fix the ceiling… And then we kicked off what is a lengthy insurance claim preface to cover the damages.

Then a few weeks later, just as the walls are drying, just as our tenants are feeling more comfortable in the space, we get another leak in the exact same location.

Joe Fairless: Oh…!

Amanda Cassiday: [laughs]

Joe Fairless: At this point tell me you’re not going back to the same plumber.

Amanda Cassiday: I’m not. You’re exactly right. At this point I’m thinking “This is clearly a systemic issue, and we need to look at the entire system. We need a fresh set of eyes to really evaluate what the problem is here.”

Joe Fairless: Right.

Amanda Cassiday: So we bring in Roto-Rooters, and I’m mentioning their name because I’ve had a fantastic experience with them, and I highly recommend them. We bring them in, they do a full scope of the pipe, and they discover what appears to be a separation of the pipe underground, between the house and the main line. And based on what we know about the pipe replacement and the pipe separation, it seems like it is that exact same length of pipe that had been replaced, that has separated from the main line.

Joe Fairless: Oh… Bad plumber.

Amanda Cassiday: [laughs] So… Bad plumber. It seems like negligence… And at this time I’m drinking out of a fire hose. This is my very first issue with plumbing in my entire life. I am not an expert in any way, shape or form, and here I am in the middle of two plumbers. One is Roto-Rooters, and they’re telling me “Here’s my hunch based on a picture I have of inside the pipe.” And on the other side I’m hearing from the original plumber, who is adamantly against the notion that his pipe replacement from a few months ago had anything to do with this problem. He thinks it’s further down the line.

So it was really difficult at first for me to navigate these two conversations not being an expert in the field…

Joe Fairless: Yeah, yeah… How did you do that?

Amanda Cassiday: One thing is I leaned on experts within my network. We use Hemlane to manage our property, and Dana Dunford was calling us probably every week at this point and giving us a lot of very, very sound advice. She was fantastic throughout the entire time. But the other thing I really tried to focus on is, while I might not know anything about plumbing, I know about people, and I know that gut feeling of when I can trust someone and when I can’t. And it was through those conversations with both Roto-Rooters and the original plumber that I realized I cannot trust that original plumber. He is not there to help me as a customer, he is there to save his own butt.

Joe Fairless: Yup.

Amanda Cassiday: So we went ahead with Roto-Rooters, we broke ground… Sure enough, the pipe had been separated. So when you count the repairs of fixing and replacing that pipe, when you count two rounds of sewage mitigation, and when you count vacancy, because at this point [unintelligible [00:16:31].25] “Tenants, you guys have been through the wringer, and we’re not providing a safe, comfortable living environment, and quite frankly at this point we don’t know when we will be able to.” Based on our track record we kept uncovering things, and I wasn’t comfortable yet in assuring them that this would be it.

So they’re out, so we have a vacancy. When you add all of that together, we were at about $20,000, which was the cost of our down payment.

Joe Fairless: Wow. You said that equals your down payment, right?

Amanda Cassiday: Yeah. So basically at this point — all of this happened by April. So nine months of owning this property we had put $40,000 into it.

Joe Fairless: Huh.

Amanda Cassiday: Down payment plus this.

Joe Fairless: And was the original plumber recommended to you by your property management company, or someone else, or how did you get in touch with them originally?

Amanda Cassiday: It was by my agent. And if you look this person up on Yelp, they have 4,5 stars. They are very well-reviewed. Look, people make mistakes; I’m not questioning whether or not he is an expert… But licensed professionals are ensured and sometimes bonded for a reason… And it’s for reasons like this. When there is an issue of negligence, or just a simple honest mistake, you can tap into those resources and pay for the damages done. But in the case of us, he was completely unwilling to tap into those resources.

Joe Fairless: Got it. Well, it’s interesting… I was just talking to a local real estate investor, and he was talking about a contractor who skipped out on a job, and basically took this investor’s $900. Then that investor’s friends reached out to the investor and was like “Hey, would you recommend this contractor? I’ve got this $5,000 job” and he’s like “No, I don’t.” He skipped out on $900, and… What the contractor doesn’t see in the long run is you do what you’re supposed to do or what you’re committed to do, and that $900 will turn into a $5,000 job with that investor, or some other investors…

Amanda Cassiday: Right.

Joe Fairless: But instead, he’s missing out on some larger stuff because he didn’t fulfill his obligation to some smaller stuff.

Amanda Cassiday: Absolutely.

Joe Fairless: But that’s just how the cookie crumbles.

Amanda Cassiday: Absolutely. And there is a happy ending to this… Even though we talked to a number of people and they said “Look, this is going to be a really tough case”, but we ended up getting every single penny of our $20,000 back.

Joe Fairless: What?! How?

Amanda Cassiday: Yeah… I can’t tell you all of the details for legal reasons, but I can share some of the key steps that I took, that I think you and your Best Ever listeners can also take. In the case of this contractor there are tools that we can use to try to get as much as we can out of negative situations like this. Because at the end of the day, we had dropped $20,000, it just didn’t feel like this was over. We might as well try, but spend a little bit more to make the effort and try to get some of that money back.

Joe Fairless: Yeah.

Amanda Cassiday: So there are a few strategies, and I’ll list them in order of magnitude, because at the end of the day you don’t wanna go to litigation. It’s extremely costly from a finance and from a time perspective. So take those steps little by little and build to there if you absolutely have to get there, and decide if it’s even worth your while.

The first thing is have a conversation with your service provider directly. Oftentimes they really care about the quality of their work, and they care about whether or not their customers are happy… So maybe a simple conversation and they’d be willing to tap into their insurance and help cover the work, or maybe if you trust them to go in there and fix what was done improperly. That wasn’t the case for us, so the next step I took was I shouted my experience from the rooftops. Service providers really care about their ratings and reviews on Yelp and other platforms, and I felt like given this experience I had a duty to share my experience with the world.

I also reported him to the Better Business Bureau. They reached out to hum several times, and he never responded. So that complaint through the BBB became public. And again, some people may be willing to bargain with you after that. “Those reviews mean everything to me. Hey, if you take those down, let’s go ahead and work something out.” But that still wasn’t the case for me, so that’s when I decided to get a lawyer, and I’m happy to recommend my lawyer to anyone in the Cincinnati area. He was fantastic. I interviewed a few and I’ve found someone who I felt like really heard me, who was confident but also really curious and passionate about this issue.

The other thing I wanna say here is how important it is to document everything. And I don’t mean document everything once an issue occurs, I mean document everything over the life of the property that you own… Because the minute something comes up, you’ll have the evidence you need to support yourself.

Joe Fairless: What are some things along the way that you can document?

Amanda Cassiday: Inspections… Obviously, all inspection records you wanna hold on to that. When we had that plumber scope the pipe, he actually sent us a video of the original pipe, so we filed that away. When the seller did the work, we got a copy of the invoice of the work that she did, and we filed that. Obviously, pictures of the sewage leak and all the damages done is important… But I would say frankly comparing the original scope video of the clay pipes with the separation of the pipes, it was really clear — you can’t see PCV pipe in this first scope, and you can see a separation between clay pipe and PCV pipe in the second scope. So I think that really helps support our evidence.

The other thing I did in terms of documentation is reach out to local ordinances to find facts. I learned through reaching out to local the local Cincinnati district that the original plumber did not pull a permit to do the work. And had he pulled a permit and had he gotten an inspection, he would have been told that he had to encase that pipe with cement, due to the depth of that pipe cell underground… And he didn’t; and that could have been one of the reasons why the pipe wasn’t supported and dropped.

So it was important for me to get a holistic picture, and I think if Best Ever listeners can — just any receipt, any work done in particular to the house, names of people who did them, contact local counties and ordinances for documentation… You’ll be able to have people who are willing to testify to say “Hey, this is correct. I looked up this person’s name and they didn’t file a permit.” All of those things can help build your case even more.

Joe Fairless: Very helpful. I did not remember — because I think you’ve told me, but I did not remember that you got the $20,000 back… Because we have a mutual friend, and we were hanging out at our mutual friend’s wedding this past summer when you were telling me about this… And I was like “We’ve got to do an interview about this…”

Amanda Cassiday: [laughs]

Joe Fairless: And wow, I’m so glad that we did. Based on your experience as a real estate investor, what is your best real estate investing advice ever?

Amanda Cassiday: I would say you really wanna make sure your incentives are aligned in any deal or partnership that you make. For me it was with the seller. When we had that addendum to the purchase agreement that said the seller had to fix the pipes, they’re not incentivized to do their best possible  job. They wanna spend as little money as possible on the house that they’re selling.

So I think what I would have done had I done it over again is just negotiate the price of the house lower and then use those savings to fix it myself.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Amanda Cassiday: So ready.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:24:49].23] to [00:25:25].22]

Joe Fairless: Best ever book you’ve recently read?

Amanda Cassiday: I would say personally The Alchemist, by Paulo Coelho. For me it was a really transformative book. It helped me understand that you don’t need clarity in your path in life; you just need to stay true to yourself and have faith in yourself to take that next step forward.

Joe Fairless: It’s powerful. What’s the Best Ever way you like to give back to the community?

Amanda Cassiday: I advise entrepreneurs in the U.S. [unintelligible [00:25:44].01] entrepreneurs in Africa, and then I’m actually happily doing my very first Habitat for  Humanity build later this year.

Joe Fairless: And how can the Best Ever listeners learn more about what you’re doing?

Amanda Cassiday: Folks can reach me on my website, which is www.AmandaCassiday.com.

Joe Fairless: Well, Amanda, thank you for being on the show, and my bad earlier on your last name. I just realized that I think I pronounced your last name Cassidy instead of Cassiday… So thank you for bearing with me on that.

Amanda Cassiday: No worries.

Joe Fairless: I really enjoyed our conversation… Such helpful advice. I love talking about case studies, and some case studies go according to plan, some case studies don’t. This one did not. However, there’s a lot of things that you shared with us that I’m sure you’ll be applying in your future career as a real estate investor… But boy, you helped out a lot of people with this advice, especially when we come across a situation that a contractor, a vendor or a subcontractor does not live up to the billing. Here’s a process that we can go through – talk to them directly, shout from the rooftops, report to the Better Business Bureau, get a lawyer, and it’s important to document everything along the way. And then check local ordinances, too.

Thanks again for being on the show. I hope you have a best ever day, and we’ll talk to you again soon.

Amanda Cassiday: Thanks so much, Joe.

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JF1720: Building A High Volume House Flipping And Turnkey Rental Company with Antoine Martel

Antoine has been investing in real estate for four years now, and he’s only 23. Turnkey was not always the business plan, but that is what the company has grown to. Just two years ago, they did 10 houses, last year they did 60, this year they’re on track to complete 100 deals. Learn what he does to grow his business to 100 deals per year in four years. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

“From the networking, I had a pool of people that were interested in turnkey rentals” – Antoine Martel

 

Antoine Martel Real Estate Background:

  • 23 year old real estate investor
  • Does 100 flips per year (turnkey rentals), owns a 20 unit apartment building
  • Based in LA, CA
  • Say hi to him at https://martelturnkey.com/
  • Best Ever Book: The 10X Rule

 


If you’re a passive investor wanting to learn more about questions to ask sponsors in order to qualify the opportunities, sponsors, and the markets opportunities are in, visit BestEverPassiveInvestor.com.

We created this site just for passive investors to have a free resource providing the questions to ask and things to think through. BestEverPassiveInvestor.com


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Antoine Martel. How are you doing, Antoine?

Antoine Martel: Very good, how are you? Thanks for having me.

Joe Fairless: Yeah, my pleasure. I’m doing well, and looking forward to this. Antoine is a 23-year-old real estate investor who owns a 20-unit building and does 100 flips per year that are turnkey rentals. Based in Los Angeles, California. With that being said, Antoine, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Antoine Martel: Sure. This all started four years ago when I was 19 years old. I was in university, I went to Loyola Marymount University down here in Los Angeles. I didn’t wanna get a job after graduating, I wanted to go and do my own thing. I was studying entrepreneurship at LMU, and I wanted to really start my own company out of college.

While I was at university I went to a real estate investing seminar. They were talking about flipping houses, and wholesaling, and all the different ways that you can invest in real estate, and flipping houses was the most interesting to me… So I started to make all these offers in Los Angeles, but I didn’t have much money in the bank account; I was just a college kid, and my parents didn’t wanna fund a full rehab project for a million bucks here in Los Angeles, so after placing 20 offers a month for a number of months and never got anything under contract,  I realized I needed to change my strategy. That’s when I heard about rental properties out of state, and I thought that would be the perfect fit for my parents.

My dad owns his own company, my mom had her own company, so no retirement account, no 401K, but my parents had some money saved up, and I thought that it would be a great way for them to have a plan to retire at least, without having a 401K… So I started researching all these different markets out of state, and found a couple of good ones – Memphis, Cleveland, Birmingham, St. Louis. I went to Memphis, TN, bought a single-family home, renovated it, rented it out, and then did a cash-out refinance (the BRRRR strategy). My dad funded that first deal. We bought that first house in my last semester at university. Then I graduated in May and told them, “Hey, I can keep buying these properties out of state and keep growing the family portfolio”, so that’s what I did.

My dad paid for my living expenses for a couple of months so that I can grow the family portfolio, and by the end of that year we had ten single-family homes in Memphis. Then after that friends and family started reaching out to us to invest out of state as well, because they had never heard of people buying properties halfway across the country.

We started selling properties out of our portfolio to our friends and family, which led us to the company we have today, which is a turnkey company. So that’s what started it. We were like, “Oh, okay, we don’t’ have to refinance every single property. We can also sell it and make a profit, and then use that cash to keep growing the family portfolio.” Now we’ve built that company up the last couple of years to where we are today, and in 2019 we’ll do over 100 single-families and duplexes.

Joe Fairless: How many did you do last year?

Antoine Martel: Last year we did 60, and the year before that we did those 10.

Joe Fairless: Wow. Okay – 10, 60, 100. How did you go from 10 to 60?

Antoine Martel: Great question. I raised a lot of money here in L.A. So I was not only working on building teams on the ground in all these different markets, and researching markets, and finding the right projects, but then also we had run out of money, so we kind of started this whole thing with just $50,000. That first house – we bought it with $40,000, renovated for 10k, then did a refinance, and then my dad had all this money back because of the refinance and the way that we financed it. So we were able to pull all our money out and that’s how we grew our portfolio to ten properties.

Then after that I kind of built all these different case studies based on those ten projects, to show people that I knew what I was doing, and that I had rapport, and that I’ve done similar projects and similar project types in those neighborhoods… And then I would just network all day, every day, on Bigger Pockets, and go take people to coffee, or lunch, or dinner, and just share with people what I was doing. That in turn helped me grow my list, and grow my network from zero to 100 people, and those people started funding our deals then. They were equity investors on the turnkey flips.

We would buy a property, renovate it, rent it out and then resell it on our website, and people would fund those projects, they would fund 80%-90% of the project and then get a percentage of the profits. That allowed me to scale; with my $50,000, now I can just put $5,000 or $10,000 into each project, so it allowed me to go from one deal to ten deals really fast.

Joe Fairless: How much did you raise to the best of your recollection that year, from investors?

Antoine Martel: That year… So 60 projects, times $50,000 each, would be around how much I raised.

Joe Fairless: I will do that. Three million. Yup. You raised three million dollars. Approximately how many investors did that comprise of?

Antoine Martel: And again, people repeated their money, because these projects are very quick; they’re two or three-month projects in and out, renovations and reselling… Because we don’t have to list them on the market. So I had the investors — again, from that networking I also built a pool of people who wanted to buy turnkey rentals, so it was great. No matter what, I would walk into those networking meetings, or the coffee, or whatever it was, and I would get something out of it – either an investor, or somebody who wanted to invest in turnkey rentals. So it was perfect for me, because I got both ends of the spectrum.

The amount of investors – it was probably close to 50 investors, but the investors would keep reinvesting their cash over and over, because they would invest 50k, then they would get their money back plus the profit in 2-3 months, and then they were like “Oh wow, this is actually working” and then they would invest 150k. So it helped scale up very quickly the dollar amount that I was able to raise.

Joe Fairless: What were the terms?

Antoine Martel: It was a joint venture. Our LLC would buy the property, they would invest in that project and partner with us on that project, with our LLC, they would fund 80%-90% of the total cost, which is purchase price plus the rehab, and they would get close to 50% of the profits, sometimes a little bit less. So the annualized returns were incredible, because they were making a 10% return, but they were making it in 2-3 months.

I think it was worth giving that return at the very beginning, because then people kept doubling down their money and it helped me really scale the whole company.

Joe Fairless: And that’s why I said “were” those terms… What are the terms now?

Antoine Martel: [laughs] Yes, that’s something, too. We looked at those 60 projects at the end of the year and we were like “Here’s our profit, and here’s the payout to investors”, and it was literally like 50% of the payout. And then we had a little bit of overhead for other things that we don’t really put on a per-project basis.

We changed our model now… We still do joint ventures here and there to those people who are kind of grandfathered in and still have money with us, but we’ve kind of converted everybody to just being private money lenders, where people just lend money and they make 1% a month for a six-month project or less… So 12% annualized return is what we pay out to the investors, and first lien position, and all that kind of stuff.

Joe Fairless: Any points at closing?

Antoine Martel: No points at closing.

Joe Fairless: Okay, so just nice and clean, make 1% a month.

Antoine Martel: Easy. Right to their bank account, too. We just get their ACH, and then every single month they’re paid out. At the end of the project they get their principle back, hopefully they don’t want it back, and they just keep it with us and we keep growing their money.

Joe Fairless: What’s a deal that went backwards/sideways, just terrible on you?

Antoine Martel: I’m lucky enough to not have had a terrible deal yet. We’ve had some deals that have been pretty close to breaking even. We were lucky that we didn’t have any investors in those deals. That’s something else, too – we started doing more and more deals with our own cash, which helps expedite our growth of our own money as well. Raising private money, paying them 1% a month, but then also using our cash more and more to fund these transactions.

A deal that did go south – there’s a couple on the top of my head. One of them was stuff being stolen. We bought a house, and the day we closed, the furnace and all the ductwork was stolen out of the basement of this property in Cleveland. So I went and filed an insurance claim etc. They denied it. Then I replaced the furnace, I paid for it… The renovation was completed, and we were listing it on the market for rent, so whoever was watching the house knew it was vacant, because the contractors had left. Somebody goes back to the house and steals the brand new furnace again.

Joe Fairless: Ooh…

Antoine Martel: [laughs] So they must have been watching this thing, because… I don’t know. They timed it so perfectly. That eats your profits… A couple thousand bucks we had to pay out, times two, and our projects are pretty slim on the profit… There’s a big margin, but the profit dollar-wise is pretty small… So yeah, two furnaces and all the ductwork being stolen out can take a heavy hit on your profit… But we were able to probably break even on that deal still, even though we got all that stuff stolen from us.

Joe Fairless: Did you put another furnace in it?

Antoine Martel: Yeah, we had to, because there was tenants moving in.

Joe Fairless: Do you do anything to try and protect it?

Antoine Martel: We can do that with HVAC units. We can put cages around them etc. What we actually ended up doing was we waited for a tenant to set a move-in date, and then 24 hours before the move-in date we went and installed the furnace. These people who do this, who are stealing it, could be contractors, or contractors’ friends, or somebody who has a lockbox code… But they really watch the property and they check to see if the properties are vacant. They don’t wanna do it when somebody’s living there. Most of the time that doesn’t happen, so… We decided to just install the unit as soon as the tenant moved in.

Joe Fairless: How were they getting in?

Antoine Martel: There was a basement, and then from the backyard there was kind of a  barn door that would open with a left wing and a right wing, and they went and just popped off that lock every single time, because it was a piece of crap. So they just kept popping it off and breaking in through that little door in the back.

Joe Fairless: Isn’t there some video or security system, like maybe Simply for something like that, that you could install relatively inexpensively?

Antoine Martel: Yeah, we’ve never thought of that, because this doesn’t happen very often. We’ve done probably close to 100 projects now over the last couple of years and it’s happened twice where stuff has been stolen and restolen. Most of the times the insurance company will cover it, up to like a $10,000 a personal property… It just so happened that this time the insurance didn’t wanna cover it. Normally, we’re protected with that insurance company, just this time, for whatever reason –  it was the timing, or something – they didn’t wanna cover it.

Joe Fairless: Alright, we’ll move on. Contractors – I’m sure contractors are challenging. Do  you live in Los Angeles?

Antoine Martel: Yeah, I live in Los Angeles.

Joe Fairless: Alright, you live in Los Angeles. Your projects are not in Los Angeles. How do you navigate contractors, what are some tips you have?

Antoine Martel: Great question. I get this question all the time too, from people who are looking to invest out of state. One thing that I do where I haven’t had too much of an issue with contractors – I had only started having issues with contractors when I got into multifamilies. Again, I bought a 20-unit building back in December, a couple months ago, and we’ve only had troubles with contractors who are doing special things – HVAC, or electrical, or plumbing; just those contractors, the special contractors have been hard for us to find and navigate.

The general contractors have generally been – knock on wood – pretty good to us thus far. I think the reason why is just the method that I have used to find and vet those contractors. What I mean by that is I never picked up the phone and called a bunch of contractors and vetted them over the phone. I never went and visited, or shook hands with contractors, or personally chose a contractor for my project. The reason why is I’ve set up my teams on the ground to have a project manager (you can call it) for every single market, and those project managers have been people who have been doing real estate and renovation projects for many years in these markets, so they already have the contractors that they really love and like on speed dial.

I have been hiring these people to manage those projects, manage the contractors, and choose the contractors for me. I think that by doing that I haven’t had too many issues with general contractors, because I have that person who already has those pre-existing relationships with contractors on the ground actually manage the team. Some of these people – they go for beers after work, and they’re friends, and they hang out, and their families know each other… So if I just come in, the guy from California, and meet that guy from an ad, or calling him off of HomeAdvisor.com, or something like that, he may not trust me as much; but I think that putting that buffer in place – now it’s John’s project, and they’re friends with each other, but it’s unrelated to me, and they already have that pre-existing relationship.

Joe Fairless: How do you find the project managers?

Antoine Martel: There’s a couple of ways. Most of my project managers are either realtors, or they work in some fashion with the property management company. The most important thing for me, having a turnkey company and having rentals out of state, is the property management company. They play an integral part in the renovations, in taking the photos, in getting the properties rented… So a lot of these property management companies will have people already; a lot of them are required to have agents on board on their staff and on their team, in order to sign the lease agreements and all that kind of stuff. Many of those people also buy and sell real estate on the side…

So when I first go into a market, I try to find the best property management company that I can find; I don’t need it to be a huge property management company, with 3,000 doors. I’m fine if they have 300-500 doors or less; 200 doors is fine with me as well, as long as they can have somebody on staff who can help me grow my business, which therefore will help them grow their business. So if I can pay somebody off the property management staff, or just an outside realtor to manage my project, and then once that renovation is done, they help me take the photos, and then the property management company comes in and they’ll rent that property out… And they’ll be able to grow their property management business all because they helped me get the project from point A, which was unrenovated and not tenantable, to rented out. Now the property management company gets to grow their business by helping me take the project from unrenovated to renovated and rented out.

Joe Fairless: What fees do the property management charge you?

Antoine Martel: All of my property management companies charge first month’s rent as a lease-up fee, and then they charge 10% of collected rents on an ongoing basis.

Joe Fairless: Let’s talk about that 20-unit apartment building… When did you buy it, what are the numbers, where is it?

Antoine Martel: Sure. The apartment building is in Memphis, Tennessee. 20 units. We bought it in December of 2018. We bought it for a million dollars, so $50,000 per unit. The renovations entailed of full exterior renovations – painting, removing the bars off the windows, renovating the courtyard, installing all new doors, all new lighting, all that kind of stuff, and then also renovating the interior.

The rents when we bought the property were $550/unit. This is a B class, B- neighborhood. It’s in between a hospital district and a bunch of hipster upcoming hot spots. There’s a lot of young millennials, young professionals moving into the neighborhood.

Joe Fairless: What area of Memphis is it, for anyone familiar with it?

Antoine Martel: It’s in Midtown Memphis. The rents were $550/unit when we bought it. Our initial underwriting was we can renovate the units, renovate the exterior and increase the rents to $725. It turns out that we  were actually able to raise the rents — we spent a couple thousand dollars more per unit to get stainless steel, and granite countertops, and all this kind of stuff, and we were able to get the rents from $550 all the way up to $850, and we’re about halfway done with all of the units now, and just slowly as tenants leave we’re renovating the units and re-leasing them up for a much higher rent than we thought.

Joe Fairless: How much are you investing per unit?

Antoine Martel: Per unit it’s gonna be around $7,500.

Joe Fairless: That’s a 48% return. That’s pretty good.

Antoine Martel: Yup. [laughter] Yeah, it’s very good. And then the goal is to do a cash-out refinance with Freddie Mac at the end of the year, and just like we started with the single-family homes, do the same thing for the apartment building. We’re expecting to be able to pull out all our money at the end of the year, when we get long-term Freddie Mac financing.

Joe Fairless: A 20-unit last December, that is  a value-add deal… How did you find it?

Antoine Martel: Great question. For about nine months last year I built a list of brokers on LoopNet, and others methods, just collecting as many brokers in the multifamily space as I could, who are doing apartment buildings or multifamily in Memphis, Cleveland, Birmingham, all of my markets. And I collected this list of brokers and called them first, and told them who I was, what I was trying to do, what I was looking for, my criteria, and then every two weeks I set it up on just a calendar thing – every two weeks I would either call or e-mail these people, reach back out to them, ask them if they have any deals available, if they have anything that fits my criteria.

So every two weeks for about nine months I did that, and then it just so happened I emailed one of those brokers on a Thursday night, and he said “Oh yeah, I just got a deal that fits these criteria perfectly. I’ll send it to you in the morning.” Friday morning he sends me a little  jenky email with a couple of sentences and he says “Hey, you’ve gotta make an offer before we send you the financials.” I was like, “Okay, well, my offer is a million bucks then. There’s nothing else I can do.” The numbers worked at a million bucks based on the tiny information that I was given.

Joe Fairless: What info did they give you?

Antoine Martel: He told me 20 units, one-bedroom/one-bath units. He told me what the average rents were; he just wrote “Average rent – $550.” And then he told me the operating expenses, whatever the dollar amount was, and then like a taxes dollar amount, insurance dollar amount. And the last sentence – “You need to submit an LOI before we give you any other information.” I was like, “Okay…” He left me between a rock and a hard place.

So I just did a super-simple back-of-the-napkin thing, and the price per unit made sense, the rents definitely needed to be increased, so based on that we just submitted the LOI. And I wrote in the LOI that due diligence doesn’t begin until I get all the financials. I wanted to make sure that they actually had some financials, because trust me, there’s some landlords who just don’t even keep records, and they just keep it on a napkin as well.

Joe Fairless: Let’s go back in time – we don’t have to go back too far, because it was fairly recent, but… You said you did that for nine months. You made a list first, and then you called or e-mailed brokers from your list, every two weeks, and you followed up with them. Let’s travel back in time to month eight. So you still haven’t got a deal, but you’ve been doing this for eight months. What internal thoughts do you have at that point in time?

Antoine Martel: That’s hard… You just have to keep going, and I just kept listening to podcasts like this; people just kept saying “Yeah, just keep following up with the brokers, keep following up with the brokers.” So what I would do is I would just kind of keep changing my e-mail, and… I analyzed a lot of deals in those nine months, so I knew that it was working. It wasn’t like I wasn’t getting any replies, or I wasn’t getting any deals. Every time I would email, I would get a deal; maybe something on the market, or whatever… But sometimes I would get these off-market deals, I would run the numbers and go back to the broker and tell them “Hey, this deal is just way too overpriced. I can’t make this make sense at this price, but keep sending me stuff that you have.”

So there was this relationship that I was building, because I was replying to these people’s e-mails, giving them feedback on their listing from an investor’s perspective… So throughout those eight months – yeah, it was hard to keep going and to keep analyzing deal after deal after deal after deal, but I just knew that the break had to come eventually, and there had to be some landlord or some owner who was distressed, and it just so happened to be one month later, after those eight months of e-mailing and underwriting probably a hundred deals, that I was able to find the deal that made sense.

Joe Fairless: How many brokers were on the list?

Antoine Martel: I think 20, in a bunch of different markets, too.

Joe Fairless: How long does that take you to go through and follow up with 20 brokers?

Antoine Martel: Probably 30 minutes.

Joe Fairless: That’s it?

Antoine Martel: Yeah, because I had a template email just in my notes…

Joe Fairless: What did it say?

Antoine Martel: It was “Hey, my name is Antoine Martel. I’m a real estate investor, I own a turnkey company called Martel Turnkey. We buy, rehab and resell 100 homes a year.” And then I would say “Hey, I’m looking for apartment buildings in (whatever the market is) Memphis, Cleveland etc. I’m looking for 20 units or greater, less than 3 million dollars, cap rate between 7% and 8%, and I’m looking for 90%  occupancy or higher.” That’s kind of what the template said.

The last couple of sentences would be — I would change it up every single time. I would say something like “I just did a huge cash-out refinance…” I had a four-unit building last year that I bought as well, so I had done a cash-out refinance, so I would just include that little two-cent change in there as well. So I would say “Hey, I just did a cash-out refinance, and was able to pull out $250,000, and I’m ready to go. I just got the check from the bank.”

Every time that I would email, or every month I would kind of change up that last final sentence, to kind of tell them why I had cash and why I would be able to close, and that I just sold something, or I just refinanced something and got the money to be able to close.

Joe Fairless: And that’s the first email, because you’re not gonna introduce yourself to the same broker every two weeks, or else you’re gonna get in the spam folder, in his or her e-mail… So what were the follow-up e-mails?

Antoine Martel: The follow-up e-mails were very similar. Instead of introducing myself, I would just say “Hey, by the way, I’m still looking for apartment buildings. Here’s my criteria”, and then “By the way, I just did a cash-out refinance and I have funds available, ready to close.”

Joe Fairless: Every couple of weeks you’d just mix up the talking point. Sometimes you requalify yourself with “I just got a refinance”, sometimes it’s just other things about your criteria, or whatever else… Okay.

Antoine Martel: Yeah. And then let’s say I had a ton of cash in the bank one month, or one day – I would just take a screenshot of it and I would include that in the e-mail, too. Because I think a lot of these brokers get e-mails from California people all the time, and then they don’t really know that the people have actual money and they’re actually looking to close… So I think that showing them the bank account and showing them the number that I had… I kind of made it urgent, like “Hey, I need to get rid of this money. You’d better sell me something.”

Joe Fairless: [laughs] Oh, I love it. And how much was enough? How much would you be like “Okay, now I think I should send this” versus “Oh, they might laugh at me. I don’t know if this is enough.”

Antoine Martel: Since I was looking for 20 units, anything over 500k-600k I would just take a screenshot of it and send it. I think the first time I did it there was a million dollars in an account, and I just took a screenshot and I was like “I’m gonna use this for months.” [laughs]

Joe Fairless: Yeah, forever… [laughs]

Antoine Martel: So I took a screenshot of that, and then for a couple of weeks I would e-mail that and be like “This is urgent. I need to buy something. I need to get rid of this money.” So… yeah.

Joe Fairless: Wow. So smart. Thank you for sharing all of your stuff. I’ll summarize some lessons learned in just a moment, but first, what’s your best real estate investing advice ever?

Antoine Martel: Best real estate investing advice ever is to match your resources to the best strategy that makes sense for your resources. What I mean with that is a lot of people will do all this homework, and study all these different ways to invest in real estate, and buying 20 million dollar apartment buildings may be the most sexy or most attractive to you, but then look at your resources – how much time do you have? How much money do you have? What’s your experience level? Match those three things with the best strategy that makes sense today, that you can get started today… Because trust me, if you have $10,000 in the bank account and your end goal is to buy 100 million dollar or 20 million dollar apartment buildings, you’re gonna have to take a lot of steps to get there. Start with step one. That may not be even related to apartment buildings. It may be single-family, it may be Airbnb etc. But at least get your foot in the door and match the strategy today that makes the most sense for your resources that you have today.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Antoine Martel: Let’s do it!

Joe Fairless: Alright, let’s do it! First, a quick word from our Best Ever partners.

Break: [00:25:36].08] to [00:26:38].20]

Joe Fairless: Best ever book you’ve recently read?

Antoine Martel: Best ever book I’ve recently read was The 10x Rule by Grant Cardone.

Joe Fairless: What’s a mistake you’ve made on a transaction that we haven’t talked about?

Antoine Martel: In Cleveland we have this thing called “Point of sale inspections”. When you buy a property, you have to put pretty much a hold, which the escrow company holds until the renovations are completed, and I just realized yesterday that I sold two properties a couple of months ago and didn’t ask for the POS hold money back.

Joe Fairless: Best ever deal you’ve done?

Antoine Martel: The 20-unit apartment building.

Joe Fairless: Best ever way you like to give back to the community?

Antoine Martel: I sometimes go to the Los Angeles National Forest and we plant trees and clean up the shrubs, and brush and replant new trees, and also clean up the existing trees in the forest.

Joe Fairless: And how can the Best Ever listeners learn more about what you’re doing?

Antoine Martel: I post a lot on Instagram. My Instagram handle is @martelantoine. If anybody wants to reach out to me, all my contact info is on my website, MartelTurnkey.com.

Joe Fairless: I thoroughly enjoyed our conversation. I learned a lot. You’re very wise, and have some great perspective and resourcefulness. Just making a list of brokers from LoopNet, calling them every two weeks, or e-mail them, and doing it for nine months, and giving them feedback along the way when they do send you deals, and then ultimately sending deals and switching up the follow-up process. That’s just great.

And then I loved the “Match your resources to the best strategy to utilize those resources.” I might have butchered that a little bit, but…

Antoine Martel: No, that’s good.

Joe Fairless: That’s the paraphrased version. And also just how you got out of the gate, senior in college, and started the company with your family, and then have grown it from there… So thanks for being on the show; I enjoyed our conversation. I hope you have a best ever day, and we’ll talk to you again soon.

Antoine Martel: Absolutely. Thanks so much for having me.

 

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Al Beahn and Joe Fairless

JF1201: Turn Key Real Estate Investing In Detroit with Al Beahn

Al runs a business that finds cash flowing properties for other investors in Detroit. He’ll tell us that most of the negativity associated with Detroit is exaggerated media driven information. About 90% of the clients that come to Detroit to see some properties are surprised ina  good way and end up investing with Al. Find out how to set yourself apart from other turn-key providers. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

Al Beahn Real Estate Background:

– Founder and CEO of Pioneer Homes, the leading source for cash flow rental properties

– Past seven years, he has closed more than 1,000 deals, valued in excess of $50 million

– Has clients across six continents

– Based in Detroit, Michigan

– Say hi to him at: https://www.pioneerhomesus.com

– Best Ever Book: Profit First

 


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TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluff.

With us today, Al Beahn. How are you doing, Al?

Al Beahn: I’m doing great, Joe. How are you?

Joe Fairless: I’m doing great as well, nice to have you on the show. Al is the founder and CEO of Pioneer Homes, which is a leading source for cash flow rental properties. Over the past seven years he’s closed more than 1,000 deals valued in excess of 50 million buckaroos. He has clients all across six continents, which almost is all of the continents; is Antarctica a continent? I think it is.

Al Beahn: I haven’t done anything there.

Joe Fairless: I figured that would be the one continent that you don’t have — this is where my board game risk background comes into play; I know my continents. And Al is based in Detroit, Michigan. His website is PioneerHomesUS.com, which is also in the show notes page.

With that being said, Al, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Al Beahn: Yeah, absolutely. Thanks a lot for having me, Joe; I’ve been looking forward to it. I actually got into real estate in 2009. I graduated college, CMU [unintelligible [00:03:31].16], and I was living in my parents’ basement. My dad was not the kind of guy that liked having that going on, so I think I was home for about three or four months and he just sat down and said “Look, man, you’ve gotta figure something out.”

I had always wanted to get into real estate, I just never really understood how or what to do, so I just kind of took a plunge and went out and I raised some funds, and I bought my first fix and flip. I did that back in 2009. Bought my first property for $27,000, I did all the work myself – I guess you could say I learned the hard way doing that. I flipped it, I think we sold it about four months after we purchased it. It was a 90-day renovation, and about 30 days to sell.

At the time I think I was 22 years old and we cleared about $16,000, and I said “Man, this is kind of cool.” I was kind of like my own boss, I was doing whatever I wanted to do, and that’s kind of where I got into the business. That kind of transitioned us into the turnkey model, which kind of developed in about 2010 for us.

We were just kind of in the market; I always say we got lucky. It was just good timing, and being local Detroit guys, that model just kind of fell into our lap, and the rest is history, really.

Joe Fairless: Are your turnkeys in Detroit?

Al Beahn: Yes, about 90% of what we do is in Detroit. We were doing a lot more in the suburbs a few  years back, but the markets kind of shifted and we don’t see as much value there anymore, but yeah, we about 90%-95% now is in Detroit.

Joe Fairless: Pros and cons of investing in Detroit.

Al Beahn: Pros and cons… Pros is definitely going to be the price points. The ROI’s are significantly higher than the rest of the country. I think there’s a ton of value still to be had. Last week we were walking through properties that we could be all in at 40k-50k that will appraise in today’s market for 80k-100k, so… I think there’s a lot of opportunity for instant equity in certain parts of the city. I think there’s obviously the high ROI as well.

Cons – I think if you’re not careful with where you are, you’re definitely gonna be liable for some vandalism and theft like that, because that’s a real thing in Detroit if you’re not careful where you are. I’d say probably that’s the biggest con.

Joe Fairless: Where do you need to be? What areas?

Al Beahn: We try to stay in the North-West side of Detroit. We hone in on about six or seven different zip codes. East side there’s a couple small pockets; we like East English Village… That’s one of those areas I was talking about last week. It’s one of the few areas on the East side that we invest in. So between that and the West side, we try to stick to the West side for the most part.

Joe Fairless: When you talk to potential clients who have only heard about Detroit through probably negative means, what does that conversation sound like? And when they do invest, why do they ultimately invest?

Al Beahn: It’s really just media-driven negativity. This isn’t something that they’ve experienced themselves, so it’s just like a false image that they have, and I’d say 90% of the people that come here end up investing. I don’t think people expect to see what they see when they get here, and I think that’s one thing that kind of makes them get over that hurdle. But I don’t know, I guess we [unintelligible [00:06:46].01] They really take the time to educate the people that don’t wanna come visit. The sales cycle is extremely long – 60 to 90 days is pretty common, so I think they’re just comfortable that we spend that much time with them over the phone and educate them about the city as much as possible.

We like to share info about the market as well, so there’s just a lot of things I think that go into that, but ultimately the easiest sale is when they come here. They come and  we show them certain parts of the city, and they just… A lot of people that have never been here are shocked to see what they see in certain parts. We’ll show them the good and the bad. I’m not gonna sit here and say there’s not bad parts in Detroit because there are, but we just try to avoid those areas.

Joe Fairless: Let’s talk about your business – how do you stand out from other turnkey providers?

Al Beahn: Great question. There’s definitely some competition here. I think it’s just the time that we spend with our clients. I’m not gonna bash any of the clients or competitors because I think they’re all great in their own ways, but I think that some people just wanna be educated a lot before they decide to make this decision. I’d argue that our sales guys are pretty thorough with our clients, and then obviously our product is definitely top tier to our competitors. We know where to be in Detroit.

So I think just a communication thing, and obviously, after the sale too, we really try to stay in contact with our clients. If they have any issues, or sometimes there might be some paperwork [unintelligible [00:08:16].03] with the property management, so we try to help them get through those hurdles as well. I think those are a handful of those issues why we kind of stand apart.

Joe Fairless: And how do you make money on the business?

Al Beahn: Our profit is built into the purchase price of a property. We buy it for X, we put X into it, and then we sell it with our profit built in.

Joe Fairless: Do you manage it, too?

Al Beahn: No, we have a third party. I actually did property management for the first five years we were in business, and then I realized it’s not profitable. It was really more of a quality control for our clients, but it just kind of became a drag and it was really just kind of a money pit for the company, so I got out of that about four years ago, and now we just refer it all to a third party.

Joe Fairless: Do you have one third party you work with?

Al Beahn: There’s a couple we work with. If we have a really big month, I try not to shift too many properties at one company at any given time, just to ensure that everything is handled properly. Nobody will tell you that they can’t handle it, but we’ve kind of learned that there is a breaking point for sure on what they can take in at any given point.

Joe Fairless: On that note, on the breaking point for what a property management company can take in, what were some things that you noticed slipping through the cracks that normally wouldn’t if you didn’t inundate them with a bunch of properties that they’re bringing on for the month?

Al Beahn: I’d say the number one thing is just getting in contact with the tenants on a timely basis. A lot of the companies that we’ve screened, they would get really hung up on the paperwork and they wouldn’t wanna contact anybody until the paperwork assignment. Sometimes when we sell a house, we have clients that work 70 hours a week, they travel to different countries or out of the country or out of state, and sometimes they can’t get to that, so we were seeing a property management agreement (PMA) not be signed for 30 days, and the next thing you know we have a tenant who hasn’t been contacted in 30-45 days. So I think the biggest thing for me – and I’m not sure about you guys in your market, but here my most important part of this whole process is the transfer… So when we give a file to the manager, my number one thing is to get in contact with the tenants right away, and I think for us at least — because we also buy properties that are already turnkey… So we might buy property from a landlord that’s retiring, or something like that, so for me I think it’s really the contact with the tenant, to make sure that [unintelligible [00:10:33].07] with everything.

Joe Fairless: Yeah, I’d say that would be from a business owner standpoint. That’s the huge variable for you and growing your business, because if your client has a poor experience with the third-party management company, the house could be great, but then the management company just totally blows it on who they put into the property, or how they retain that person, or how they screen the future person, or they don’t address certain maintenance issues… That just seems like that could be a big headache for you and that could cost you some business.

Al Beahn: Right, absolutely. This is our screening conversation when we’re looking for new managers – “The number one thing that we need is that when we give you a file, you need to contact these tenants within 24/48 hours”, because a week goes by, two weeks go by, they have some maintenance issues, rent’s due and then they try to call somebody and they can’t get a hold of anybody, then red flags start going up. We’ve had tenants leave on us just for that simple little thing… So yeah, when you’re doing volume, there’s gonna be that little tiny percentage of issues, and that’s usually the number one issue – the lack in the management process. We’ve really tried to hone it and tried to perfect it. We’re not perfect, but I’d say we do as good as we possibly can with that part.

Joe Fairless: How many deals are you selling a year?

Al Beahn: We’re pacing probably to do about 250 this year. I try to hit between 15 and 20 a month, that’s our goal. Obviously, we have months where we succeed that and then other months that we don’t, but we’re pacing to do about 250 this year.

Joe Fairless: That’s a whole lot of deals, and you’re talking about you’re buying, renovating and selling them as turnkeys, about 20 a month or so?

Al Beahn: Yeah, we do about — I’d say 60% is already turnkey; we buy a lot of property as is, and then the rest would be the turnkey renovations, correct.

Joe Fairless: What type of process do you have – if any – with your clients who purchase the property and then after the purchase hand then off to the third-party management company. Do you have some sort of process to follow up with them later?

Al Beahn: Well, our sales guy is known to keep in touch with them, and a lot of our clients are long-time clients, so I wouldn’t call it a specific process; it’s more of just a relationship thing, because we’ve learned that if you maintain these relationships with these people, and you don’t just sell them a house and say “Hey, it’s great to meet you. Good luck”, there’s always that repeat business.
We had a guy who bought a house from us early in the year last year, and my sales guy just kept a relationship with him. Not trying to sell him anything, just “Hey, checking in… How are you doing? How’s your family?” I think they had a similar interest in sports, so they kind of chatted about that, and the next thing you know the guy had saved up some cash and bought another property. So it’s really not a specific process per se, I think it’s more about building relationships with your clients, and for me that’s always been the best way to do business… So I’d say that’s what we do with that.

Joe Fairless: The biggest challenge that you have right now is what?

Al Beahn: The biggest challenge… I’d like to say inventory, but it’s usually not inventory; Detroit is a really big place. I think really it’s just some of the people in Detroit, some of our competitors – I don’t wanna call them competitors, but… They’re in every market. The guys that think they’re wholesalers and they market properties at just crazy prices. When we’re selling houses at 45k-50k, these guys are sending lists out with properties for 25k-30k, and it’s just a real struggle because people see that and they just think that’s the market, so they want properties for that price, and we just really don’t do that. Yeah, we come across deals from time to time, but I think that’s probably our biggest. If I talk to our team, that’s probably the number one thing, if I had to pick.

Joe Fairless: What do you do to help mitigate the damage that that could have on your listings at the price points you have?

Al Beahn: Well, we cannot pool comparisons. Go look at the Google Maps Street View, go pull up Trulia and look at the surrounding values. I’m never one to use Trulia, but if you pull up a property and there’s houses in the area at 10k-15k, the majority of that, and then you go pull up one of our properties and there’s houses in the 50’s and 70’s, you can just see it’s a totally different property, it’s a totally different asset; it’s not apples to apples.

And the number one thing is to say “Look, I think you should come and look at them both. We’ll take you to that property and we’ll take you to ours and you can just see it for yourself.” And it’s funny, because a lot of people don’t wanna do that. They just wanna buy it site unseen. We turn away a lot of business, Joe. There’s a lot of people and we say “Look, we can’t compete with that. I don’t wanna put our name on that product.” So a lot of times we’ll just let the business walk away, because sometimes it’s a really hard pitch to get them to understand that.

Joe Fairless: Based on your experience as a real estate investor, what is your best real estate investing advice ever?

Al Beahn: Best advice ever, that’s a good one. So the Best Ever listeners will like this, I guess… It’s really basic – I think no matter where you are, you have to do your due diligence. I’ve seen so many investors lose their shirt because they do not do their due diligence. Maybe that’s just a very simple, basic answer, but it’s such a major thing in the process. Obviously, price is one of them, but I think the due diligence part – inspections, title work and all that stuff… That to me, especially if you’re kind of getting into real estate — I know when I first got into it I didn’t even know what due diligence was; I’d walk through a property and think I just need to go to a title company and close. But I think the due diligence, inspections, title work is huge for me. If you’re just getting into it, I think that’s a big deal, for sure.

Joe Fairless: Tell us a story about when due diligence played a major role in the acquisition of a property.

Al Beahn: Yeah, absolutely. Back in the day, before we were good at this, it happened all the time. Buying properties on quitclaim deed… There was a time we bought (I think it was a) five-pack – this had to be in the very beginning, the first year, maybe a year and a half in the business. I found a house on a quitclaim deed. I think at the time the prices were so cheap back then… I wanna say we bought a five-pack for 55k or 60k, and “Hey, there’s back taxes. Hey, there’s water bills. Hey, there’s tax titles”, so you have to either [unintelligible [00:17:00].28] or you did not get title insurance. That happened to us before. I’d say that was probably early on one of the bigger mistakes that we made, just buying a property without understanding the title side of things.

Joe Fairless: Would you say that back taxes and water bills are more prevalent in Detroit that it will come up in due diligence compared to other markets?

Al Beahn: Well, it’s hard to say… I haven’t done much business in other markets, so I’m not sure. I’d say because of what happened in Detroit – there were 140,000 foreclosures when this whole thing hit the fan back in ’07 through ’09, so… To put it into perspective, there were on average 20k to 25k tax-foreclosed properties in the Wayne County auction every year. The most recent tax auction – there were only 6,500 properties. So it’s all getting cycled through.

So I think five years ago – absolutely; probably the number one in the country. But today, it might be more than average; I couldn’t say it’s more than any market, but it’s probably higher than the average.

Joe Fairless: Yeah. It was a poorly worded question. I should have asked you just relative to the properties you’re buying, are there a lot of back taxes and water bills? Because you’re in Detroit, you’ve been investing in Detroit, so you’re not aware of other markets. But you answered it. You made my stupid question into a smart answer, so thank you for that.

Al Beahn: No, it’s all good. I’d say maybe 20% to 30% of our properties that we buy have more than two years delinquent.

Joe Fairless: Okay, got it.

Al Beahn: I’m not sure, it might be different in every market. Here it’s after three years you’re subject to foreclosure, so we rarely see more than that.

Joe Fairless: Are you ready for the Best Ever Lightning Round?

Al Beahn: I’m ready, man.

Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.

Break: [00:18:51].24] to [00:19:44].01]

Joe Fairless: Best ever book you’ve read?

Al Beahn: Profit First, by Mike Michalowicz.

Joe Fairless: Best ever deal you’ve done?

Al Beahn: This is a tough one; there’s two of them. I’m gonna talk about the first one because  it was the first one I really did a creative deal. It was a package of 11 duplex units. In Detroit, a duplex — they’re side by side, and they’re actually two separate parcel ID’s, so you can buy and sell each half individually. There was a package of 11. I believe four of the units were actually side by side, so we actually bought the package, sold off the two buildings that were attached, profited enough to actually pay for the other seven units free and clear, and we had seven free and clear units with cash-flowing tenants basically for free.

I say that’s my best because it was one of the first deals we did that was very creative like that, and to this day I always love that deal.

Joe Fairless: Oh, absolutely. Do you still have those seven?

Al Beahn: No, we sold those probably about two years ago.

Joe Fairless: Okay. And when you sell them for your own personal investing, what’s the reason to sell and what do you do with that cash?

Al Beahn: At the time I think I was trying to get into some better assets at that time, so two years ago. I’d probably just put it back into the turnkey business and use it to basically flip some more properties.

Joe Fairless: And do you currently take some of the profits from the turnkey business and then buy rental properties for your own rental portfolio?

Al Beahn: Yes, I kind of do that model. I like to buy property from some of our profit. So if we flip ten houses, sometimes I might just maybe keep one of them. It’s almost kind of like a “no cash out of pocket”, really. There’s obvious opportunity cost there, but we do that as well for sure.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Al Beahn: In real estate as a whole, still to this day one of the bigger mistakes was selling some of the assets that we owned. Even though it’s duplex units, I’d argue if I would have held on for a few more years, it’d be much more valuable. But mistakes — it’s always probably a due diligence thing. We’re doing so much volume, sometimes something slips through and you’ve kind of gotta eat it. But it’s always usually a due diligence thing. I don’t think there’s a deal that stands out that I’d say was like the worst deal we’ve ever done.

Joe Fairless: What’s the best ever way you like to give back?

Al Beahn: That’s a good question. For me, I don’t really have any formal way of giving back. I like to donate to our church around Christmas time more than average, but… For me, we get a ton of people that reach out to us through our social channels and other ways like that, people that obviously have never done anything in real estate, and I kind of make it a point to at least help a handful of people. I get a lot of kids; I’m a younger guy, so a lot of kids (15, 16, 17) reach out to me through maybe Instagram, and I’ll just be really bold with them if I think they have a crappy sales pitch, or their approach is bad, but I try to make it a point, at least a couple kids a month, just to kind of give them a little bit of advice.

I know back when I was 16, 17, even if I had one little tidbit of advice, it would help me out a long way, so I try to do that as much as I can each month.

Joe Fairless: How can the best ever listeners get in touch with you?

Al Beahn: You can call the office. I’d say the easiest would be through e-mail. The e-mail would be info@pioneerhomesus.com. Check out our website, PioneerHomeUS.com, and all of our social handles – most of them are @pioneerhomesus, so I’d say those are the best ways.

Joe Fairless: Congrats on building such a high volume business, with 250 deals a year that you’re rehabbing and then selling to clients across six continents. I did confirm via Google, while we were talking, that Antarctica is the seventh continent. You’ve gotta work on your Antarcticans. I don’t know about the stats, but maybe I’ve got an Antarctica listener, and they’ll be a new client. If so, then let me know; that way I can claim to cover all seven continents.

Also, the overall approach that you take with the due diligence, lessons learned along the way, the back taxes, the water bills etc., and then knowing where to invest and where not to invest, or at least an area where you need to go in eyes wide open. So perhaps maybe you do invest, but it’s just an area where you go eyes wide open. Where you choose to invest would be the West side and the North-West side in general. It sounds like there are exceptions.

Thanks for being on the show, Al. I hope you have a best ever day, and we’ll talk to you soon.

Al Beahn: Joe, I appreciate it, man. Have a good day as well. Thank you!

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JF935: RECONSIDER Your Partnership for This One Reason #SituationSaturday

Ready to jump into a partnership? Well, hold your horses! Do you both know real estate? Do you have experience? Do you and your partner bring complimentary skills to the table?

Here are some steps to form a great partnership:

– Know the skills needed. Identify skills you bring.
– Identify skills that are lacking. Identify structure.
– Approach someone with skills and offer yours.
– All partnerships end, and it is the responsibility of partners to know how it will end.

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Chris Clothier Real Estate Background:

– Partner of Memphis Invest, one of the largest passive turnkey real estate companies
– Memphis Invest does over $100 million in annual revenue
– They purchase over 600 single-family properties yearly in Memphis, Dallas, and Houston
– He and his family manage over $400 million in asset value for investors from around the country
– Founder of nine different companies in two industries billing over $10 million in annual revenue
– Based in Memphis, Tennessee
– Say hi to him at http://www.memphisinvest.com/ or chris@memphisinvest.com

Click here for a summary of Chris’s Best Ever advice: http://bit.ly/2nFyzii

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real estate partnership advice

 

Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff. I hope you’re having a Best Ever weekend.

Because it’s Saturday, we’re doing a special segment called Situation Saturday where our best ever guest talks about a sticky situation they were in and how they overcame it. How are you doing, Chris Clothier?

Chris Clothier: I’m doing phenomenal, man. How are you?

Joe Fairless: I am doing phenomenal as well, and nice to have you on the show again. Best Ever listeners, if you recognize Chris, that’s because he’s been on the show before. Originally, he was on episode 58, titled Turning Smiles Into Profits, where he talked about his customer service program and how they call every single client of their with this turnkey company every month, and get feedback.
From that interview, I implemented a question that you talked about, Chris. You talked about how you always talk to potential partners about the mistakes that they’ve made, and if they say they haven’t made any, then they either are being dishonest or they haven’t been in the game long enough. I actually ask that on my normal format ever since then, for the last 900 episodes, because of you.

Chris Clothier: Wow! Are you kidding me? 900 episodes – that’s cool! I’m glad I could contribute to that.

Joe Fairless: Yeah, and there have been so many good answers as a result of that. There are so many lessons learned just from you mentioning that one thing. I guess it was 900 days ago, I guess that’s how it works. [laughs] Ain’t that crazy? 900 days ago, whenever we talked.

Well, a little bit about Chris. He is the co-owner of Memphis Invest. It’s one of the largest passive turnkey real estate companies. Memphis Invest does over 100 million in annual revenue. They purchase over 600 single-family homes yearly in Memphis, Dallas and Houston. He’s based in Memphis, Tennessee. With that being said, Chris, do you want to give the Best Ever listeners just a little bit more about your background? And then let’s dive into the tough situation you’re in.

Chris Clothier: Yeah, absolutely. As you said so eloquently, I am a partner in Memphis Invest, and I am partners with my father and my younger brother. My older brother Kent, while maybe not being a partner in the company, obviously had a huge influence on us. He’s got his own real estate company out in California, but what’s important is that my family, all of us have been raised in this very entrepreneurial environment. Ever since we were kids — I started working when I was 11, and everything that we’ve ever done has been really customer service centric, no matter what the industry was, no matter what the particular company was that we started. Each of us has started our own companies, and always based on customer service, no matter what the product was.

For that quick little background, we’re managing, as you said, 4,000 properties for passive investors from around the country. We love real estate, probably more than anything, just being in business in general. We love having clients and vendors and team members and building things… I guess it’s in our blood, it’s in our nature, from doing it for so long to this point.

Joe Fairless: From managing 4,000 properties to buying a whole bunch of properties on an annual basis, to building companies, I know you’ve come across many sticky situations, so you’ve got lots of different stories to choose from. Which one do you wanna talk about?

Chris Clothier: Let’s talk about one that may hit closer to home for many of your listeners. It’s just about doing a deal yourself, and I’m gonna talk about bravery… Being brave enough to go out there and try and take on a challenge on your own, rather than feeling like you have to go with a partnership. It really boils down to… Early on, several deals that I had done went really well, and one went South really fast. But the point of it was that all of it I did with a partner, because I wasn’t brave enough to go on my own.

It’s interesting for me, because I look back on it… I had all the tools, I had everything that I needed, I just didn’t have the confidence and the bravery to go on my own, so I chose a partnership instead [unintelligible [00:06:15].15] but that’s a partnership that no longer exists and it’s a friendship that got hurt because of it, so I’d love to share that.

Joe Fairless: Yes, please do. You’ve piqued my curiosity.

Chris Clothier: Well, I was in Denver, Colorado recently at the Best Ever conference event out there in Denver. It gave me a chance to kind of go back to some of my old stomping grounds, where I got started as a real estate investor. It’s also the place I founded my first company, which was a grocery arbitrage company. I was very successful thanks to having some really good mentors and my family around me that helped me to build my first company successfully. And I was taking my earnings from that company and I began to invest in real estate.

The biggest challenge that I had was the fact that I should have been smart enough to look around me and say, “I’m a smart person, I’ve got good people around me, I’ve paid attention, I’ve got good mentors…” I built a business at the time that was very successful, but I still felt like I needed a partner in order to invest in real estate, the fix and flip kind of stuff. And rather than pick the best partner, I picked — let me just be clear… Great guy, phenomenal person. He was a good friend of mine, but the problem was that neither one of us had any experience in real estate, and the funny thing was we both were scared of losing, and rather than lose alone, we chose to lose together.

That’s what happens so often in partnerships… We made the decision to be partners for all the wrong reasons. Not because he had strengths and I had strengths, but because we both had a weakness, which was lack of faith, lack of bravery, lack of courage to go do it on our own. To be fair to him, he was already a long-term buy and hold landlord that was doing okay, but we were going to do some fix and flip homes.

In the end, we picked a couple of deals and we were doing well. We had no idea that we were spending twice as much as we needed to spend and taking twice as long to do it, but we were selling the houses and making money. And we mistook making money for success, if you know what I mean. We were not doing a good job of anything, we were just spending money.

Joe Fairless: Well, selling houses and making money – on the surface that certainly appears to be asuccess from a business standpoint.

Chris Clothier: I’m glad you said that, because you’re right. But that was our problem… Anybody that is successful over the long term knows that you have to track your progress, you have to know how many dollars you spend in relation to how many dollars you make. You have to know how everything correlates, all the cause and effect of what it is you’re doing.

For us, we were moving so fast… We both had other successful companies that we were making money in. Neither one of us were holding each other accountable to anything. One of the tips I always share [unintelligible [00:09:11].26] is “Inspect what you expect”, which neither of us were doing. We basically were just kind of relying on the other to be the smart one. Looking back, it’s really funny – we were making some money; we could’ve done much better, and what did us in eventually was a home that we chose that… This is how fickle real estate is. It was right there in Denver, and it was a matter of 200 yards – that was the difference between us making money and losing a lot of money. We lost over six figures on this deal, and it broke apart our partnership certainly.

We were just not really friends anymore because of it. There was a lot of animosity towards each other, because neither one of us were holding ourselves accountable, much less the other. The problem is that we purchased a home that was literally two blocks away from where it needed – both school district, taxing district… The way that homes were gonna be appraised and what would be used as comparable sales – it literally was the difference between a home being worth 500,000 and a home being worth 300,000. We owned the home in the four hundreds.

We held the house for a very long time. I continue to write checks for it, and write checks for it, and write checks for it. I tell people on the backside when it’s all said and done that I went into a partnership with someone that I was comfortable with, someone who told me all the right things that I needed to hear, like I was a good businessperson and I was smart, and I was obviously successful; I had money together, we would be able to fix and flip homes.

I did not partner up with someone who had the ability to run good forecasts of as far as what we’re spending, how to budget that money and how to model that money. I didn’t partner with someone who could pull comparable sales and could analyze that 200-yard difference, that two blocks that really sunk us. I didn’t partner with a person that had the right skill set for me, because my skill set was absolutely at my business, and I had money. I had the ability to stay organized and stay on point, but I didn’t know real estate.

My partner, unfortunately, didn’t have money, but also didn’t have the real estate skills that were needed, so he was managing a project that he didn’t know how to do. It ended up being a disaster, and I go back to the very first thing I said… When we’re choosing a partner and we’re choosing a partnership, I did it out of fear, and that is never a good reason to go into any type of  — whether it’s a real estate transaction or a business transaction, you should never enter one out of fear.
Like I said, we were fearful of losing money, so rather than losing money as individuals, we lost it together as a partnership.

Joe Fairless: Based on what you said, it sounds like you need someone who has the right skill set to complement you, or fill in the blank for whoever is the person who is looking for a partnership… But when do you know that you should have a partnership, versus going on your own and doing your own deal?

Chris Clothier: If your choice to go into a partnership is based on your own fear, whether it’s fear of unknowns, whether it’s fear of failure, whether it’s fear of taking on a really big project and being highly successful, which believe it or not, that’s a fear that a lot of people have. When they haven’t done a really big project – they’re perfectly capable of doing it, but the simple fact that they haven’t done it before is a fear that makes them bring on a partner instead.

So when you’re making a decision on whether to bring a partner in based on fear of what could happen, then you’re probably not ready to bring on a partner. It needs to be a partnership – and you nailed it perfectly, Joe… You need to take on a partner when you can look around the landscape and say, “I’m able to bring these particular skills to this project.” Maybe in my case I didn’t have the time or the experience to know how to do comparable sales, so I wasn’t sure how to comp a property properly at the time. I did not have enough experience negotiating with contractors to negotiate pricing. I had been basically a very passive investor up to that point.

If I was gonna partner, I needed to bring someone in that had the experience of negotiating with contractors, getting them hired, keeping them on track, because I knew all those things had to be done, I just hadn’t done them before. If I had just spent a little bit of time sitting down and thinking about it, I would have realized that even though I’d never done it, I negotiated with contractors daily. It was a different kind of contractor, but I’d been negotiating for years; I knew exactly how to negotiate a contract, I knew exactly how to negotiate work to be done… I could have easily contacted one of the top real estate agents in the area, because I knew the things to do, I just didn’t do them. I strictly chose a partner based on fear, rather than probably looking myself in the mirror and saying, “I know how to do this. I’ve been a successful businessperson, I’ve been in the local real estate investors association, I’m surrounded by smart mentors… I can do this.”

I chose to take the easy route, which was “I’ll get a partner instead and let him do these things. I’ll provide the money and make it on the backside.” And the worst part for us, Joe, was that we were successful for the first three or four deals we did. We made money.

Joe Fairless: Yeah, false sense of security.

Chris Clothier: Oh, yes… Absolutely.

Joe Fairless: One question I have… I’m a huge Tony Robbins student and he talks about how emotions like fear and being scared or being maybe depressed, they’re all action signals if we use them in an empowering way. I don’t remember what he said fear is and what that should lead us to, but I suspect it’s something like, “Get prepared.” If we’re fearful about something, then we need to either get educated or more prepared.

The question I have is along those lines… I have entered into partnerships with a good dose of fear, but then also it’s because I know some of the aspects that they’re good at that I’m not will help with the transaction, and it’s gone well. So I am fearful that “Hey, I really don’t wanna do this because I’m not gonna set up the project for success”, so how do you reconcile that with this approach?

Chris Clothier: You said something perfect right there… You are aware of your weaknesses. I’ve got a better way to put it – the things [unintelligible [00:15:49].26] on that particular deal, and it was that awareness that made you fearful to move forward without correcting that. What I’m talking about for me is I guess I had that same mentality, but I just didn’t recognize what I needed in a partner. Instead for me it strictly was “I like this person, I’m good at what I’ve been doing, he’s been good at what he’s doing… It will be fun to be in a partnership with this person. He and I can make some money together. We have done all this stuff together, so we can — whatever it might be… It might be playing softball on Thursday nights together, and we’re gonna meet for a happy hour…” Whatever.

These things that say “Hey, this is what makes us a good partnership, and he’s got time on his hands, he’s got some experience…” I was never asking the questions that you were asking right there – “Does this person bring to the table exactly what I need?” Forget anything else about it, and “Do they bring to the table the specific things that are gonna make me successful in this project?” Being fearful and not moving forward because you don’t have everything you need yet, that’s smart.

I love the way that you said Tony Robbins puts it, in the case of “Get educated, get yourself surrounded by the right pieces, don’t just stop.” But for me, I didn’t do that. I just chose a partner that I thought would be fun to hang out with and I can make some money with, and I thought if I do lose, we’ll both lose together so it’s no big deal, because we’re buddies.

Joe Fairless: Everyone loves losing over a hundred thousand dollars with a friend. You should experience that with all your best friends. I highly recommend it.

Based on listening to you and taking notes, I’ve condensed it into a five-step thought process, and I wanna run it by you to see if there’s anything else that you’d like to add. One is to know the skills that are needed to do what you wanna do. Two is to identify the skills that you bring, three is to identify the skills that are lacking, four is to know how you wanna structure it, and then the fifth would be when you approach someone saying, “Hey, I know skills are needed…” — and you don’t saying it exactly like this, but say, “I know the skills that are needed for this project X, Y, Z. I bring these skills, I think you can bring these other skills. I’d like to structure it as follows. What are your thoughts?” Is that the approach that you would take?

Chris Clothier: Yes. And I will add one asterisk for everybody to understand, and we’ll see if you agree with this. I was told by a very good mentor of mine that all partnerships end, and it’s the responsibility of those entering into the partnership to decide on the frontend how it will end. That includes — as he pointed out, he’s like “Look, at some point debt is chasing us all.” Man, I will not forget what you said up there on stage, that we’re all dying. I remember that when hearing you speak on stage, Joe, and that is true. So from the very beginning, set up how will this look, because it may look like one of you passes away at some point, and what happens next?

So he said, “If you will sit down and decide on the front end if this go good, if things go bad, should there be debt – whatever happens, this is how we’re gonna handle it”, then that partnership has the pieces it needs to get started up on the right foot. If you partner with people because you like hanging out with them, as I did, you very well may end up as I did, and that is no longer with a partnership, and possibly losing money.

Joe Fairless: Yeah, and I can tell you if you bring in investors in a partnership, they’re gonna ask the same question of “What happens if one or both of you die?” I’ve been asked that many times, and we have to make sure that it is written out in the agreement, because then we go, “Oh, good question. Let me show you point three sub. three, or whatever it is.

Chris Clothier: Yeah, “Let me show you exactly what will happen.” That’s good.

Joe Fairless: I love that. This has been great. It’s a very clear theme and story. Is there anything as it relates to identifying the right partners that you wanna mention that we haven’t talked about already?

Chris Clothier: I don’t know about exactly the things you need to look for, because everything is going to be different… But I love what you said earlier, I think clarity is really, really smart. When you recognize that you don’t need to move forward on something without having the right pieces in place – and that might be a partner – let that be a great starting point for you to start defining “What do I need?” I can’t say this is always gonna be the case, but I do believe that there’s no need to be in a hurry. There’s a need to get things done, and there’s a need to have timeframes, but there’s no need to be in a hurry.

When you know that you need to surround yourself with other pieces, get to defining it. Get to learning exactly what it is you need around you, and then go get it.

Joe Fairless: As far as partnerships go, we don’t necessarily have to have partners, we just need to identify the skills that are needed, and then perhaps we hire someone instead of bring on a partner, so maybe we hire a vendor to do that.

Chris Clothier: Well, like I said earlier, sometimes the skill is already in you, you just don’t know it. Maybe it’s just learning a different way to look at something, taking a different approach. Some of that happens when you surround yourself with mentors and you run your ideas past them and what it is you feel like you need to move forward on a project, and they’re able to educate you that you have these particular skills, you just need to hone in on it, you don’t know it yet. Or you don’t need to have a partnership to bring that skill, you’ve already got it. You need to bring it out of you.

Had I been told some of that back in the day, maybe I wouldn’t have moved forward on that partnership… Who knows? Maybe I still would have, because I would have had a different kind of fear, but hopefully you get the point there, that it’s all those steps: surround yourself with good people, know your strengths, know what you need, be clear, and see what happens.

Joe Fairless: Chris, where can the Best Ever listeners get in touch with you?

Chris Clothier: I am always at MemphisInvest.com. They can send me an e-mail, chris@memphisinvest.com, or they can go right there onto our website and take a look around. There’s tons of videos of me, I guess, and they can certainly register to get more information on our company. I’m more than happy to try and help people get educated.

Joe Fairless: I love this conversation. It is about when to find the right partner, or if to bring on a partner at all, and that is first know the skills that are needed for your venture, second, identify the skills you bring, third, identify the skills you need, and like you just said, make sure that you don’t have those skills and you just haven’t uncovered them yet. Lastly, look to structure it as follows for however you wanna structure it and, as you mentioned, having an idea of what the end looks like, because all partnerships end, we’re all gonna die, or it’s gonna go in opposite directions for whatever reason (who knows? life happens) so know how it will be dissolved when the time does come to be dissolved.

Thanks so much for being on the show, Chris. I hope you have a Best Ever weekend, and we’ll talk to you soon.

Chris Clothier: Talk to you soon, man.

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JF814: How He Turned $10,000 into Over $10 MM in Real Estate Developments

Starting with $10,000 in his bank account our guest was able to surround himself by the right people and begin his fix and flip ventures. Developments, fix and flips, and other ventures have built his total net worth above $10 million. Also, find out how he is able to only do a project the year and make it out alive!

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Slava Menn Real Estate Background:

– Principal at Labrador Real Estate & Contributing Writer at Inc. Magazine
– Guest lectures at his alma maters, BU & MIT, and writes for Inc Magazine
– Started with a $10K savings and has developed $10M worth of real estate
– Since 2013, Labrador Real Estate has developed over $6.5MM in real estate
– Based in Boston, Massachusetts
– Say hi to him at http://www.labradorre.com
– Best Ever Book: Unique Ability by Catherine Nomura

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JF560: Why You Need to Consider a Turn-Key Business Model

Think everybody has time to prospect for leads? Wrong! There are millions of people ready to purchase an investment property that rely on professionals to have established cash flowing properties. We call this turn-key. Hear how our guest gets these leads and find buyers for these ready out-of-the-box cash flow homes!

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Chris Erwin real estate background:

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

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JF410: He Lost $25,000, but Learned This Valuable Lesson #situationsaturday

“Measure twice, cut once,” are wise words that our Best Ever guest should have adopted on a particularly sticky deal. He is known as the Real Estate Dingo, Engelo Rumora, and he is back on the show to share an unfavorable situation that could have been avoided. Engelo is a growing investor in the Ohio area with a savvy team, hear what he did wrong and how he made it right!

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Engelo Rumora’s background:

  • Trying to buy back his time doing 100 hr weeks
  • Cincinnati, Toledo, Dayton and Columbus
  • From Australia
  • Known as “The Real Estate Dingo”
  • Works with many investors in Ohio
  • Say hi to http://www.ohiocashflow.com 

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JF289: The Power of Numbers…Why More Investors Can Lead to Cheaper Deals

Bienvenidos, Best Ever listeners! Today, we discuss why buying in numbers may just lead to cheaper deals, which markets YOU should be investing in now, and what to look for in a market. If you apply these simple tips today, YOU will be making all the moola!

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Matt Bowles’s real estate background:

–          Partner at Maverick Investor Group where he and his partners have helped real estate investors buy over $100 million in turnkey rental property

–          Joining us from Spain

–          Personally has bought and sold over $4 million in real estate

–          Lived in 14 countries since 2013

–          Say hi to him at http://www.Maverickinvestorgroup.com

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JF284: How to Speak Chinese…and Of Course, Buy Properties

Today’s Best Ever guest may throw you for a loop with his Chinese/Wisconsin accent, but don’t let him fool you because he shares with some incredibly valuable experience about building and maintaining relationships with out of state investors, and where you need to look to determine whether or not your investment is in a safe neighborhood.

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Mark Shaffer’s real estate background:

–          Purchased 5 turnkey rentals starting in 2010 and currently own 10 units

–          Bought all of them while living in China

–          Based in Madison, Wisconsin at Midwest Equity Partner

–          Today is his 38th birthday

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Made Possible Because of Our Best Ever Sponsor:

Patch of Land – Want to learn more about crowdfunding? Let the leading expert in the crowdfunding space, Patch of Land, give you all the info you need to get started. Grab your FREE copy of Top Ten Answers to the Top Ten Crowdfunding Questions athttp://www.PatchOfLand.com/bestever

The Land Geek – Do you want to build monthly real estate cash flow without the typical headaches? Start learning about investing without all the typical headaches at  http://www.thelandgeek.com/best

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Best Ever Show Real Estate Advice

JF281: How to Build Relationships With Private Lenders to Get More Funds

Today’s Best Ever guest made a massive mistake with hiring a contractor, but now shares with you what to look for in one. We also discuss how he funds his deals, and how to successfully build relationships with private lenders.

Best Ever Tweet:

Darrell Shepherd’s real estate background:

–          Founder of Lone Palm Lending

–          Fulltime investor since 2000 based in Atlanta, Georgia

–          Say hi to him at http://www.lonepalmlending.com/

–          Has a rehab business, a lending business and working on a turnkey rehab real estate brokerage

–          Used to run 3 crews full time and own 50 – 60 units of rental property now focused on doing about 10 rehabs a year

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Made Possible Because of Our Best Ever Sponsor:

Patch of Land – Want to learn more about crowdfunding? Let the leading expert in the crowdfunding space, Patch of Land, give you all the info you need to get started. Grab your FREE copy of Top Ten Answers to the Top Ten Crowdfunding Questions athttp://www.PatchOfLand.com/bestever

1,000 Houses  – Are you tired of being a landlord? Are you tired of headaches? Thousands of investors have felt the same way you do, and have found their solution! Go to http://www.1000houses.com/mitch to find out more.

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JF163: Wanna Raise Money? Here’s How to Do It Properly.

Today’s Best Ever guest shares how to use a turn-key model to raise money and get your paperwork in order. You want to use OPM (other people’s money)? Then, listen up my friend!

Best Ever Tweet:

Douglas Ruark’s real estate background:

–        Principal at Regulation D Resources based in Denver, Colorado

–        Recognized expert in Regulation D offering programs

–        Say hi to him at http://regdresources.com/

–        And…he’s a descendant of Scottish royalty

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Sponsored by Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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JF111: The 10 Rules of Successful Real Estate Investing

Just what the title says, my friend. Today’s Best Ever guest shares with you the 10 Rules of Successful Real Estate Investing. What? You just wanted ONE piece of advice? Sorry Charlie. You get 10 golden nuggets in this episode!

Tweetable quote:

Marco Santarelli’s real estate background:

–        Founder of Norada Real Estate Investments, a nationwide of turnkey property rentals

–        Started business in 2004 and is based in South Orange County, California

–        Been investing in real estate for over 20 years

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Sponsored by: Twenty Four Sound – visit http://www.twentyfoursound.com and mention “bestever” for an exclusive 20% discount on your purchase.

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JF91: Raising Money from International Investors

How do you set up international investors so they can take their money and invest in your deal? Today’s Best Ever guest shares with you the process.

Tweetable quote:

Decide what you want not what you think is possible.

Ben Gray’s real estate background:

–        Founder of American Properties International based in New York City

–        Match up international investors with turnkey American investment properties

–        Say hi to him at http://www.Americanproperties.com.au

–        Experience raising money and working with international investors to invest in United States properties

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Sponsored by: Twenty Four Sound – visit http://www.twentyfoursound.com and mention “bestever” for an exclusive 20% discount on your purchase.

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JF58: Turning Smiles into Profits

Combine a long-term vision with best-in-class customer service and what do you get? A company that Inc. Magazine recognizes as one of the fastest growing in the United States. Today’s Best Ever guest shares with us how he helped turn his company from a transactional operator to an industry leader. You’ll hear about achievements, mistakes and everything in between in this candid conversation about building a company from the ground up.

Tweetable quote:

Chris Clothier’s real estate background:

–        Partner and co-owner of Memphis Invest, a turn-key real estate company (http://www.memphisinvest.com)

–        His company has been recognized by Inc. Magazine as one of the fastest growing private companies in the US for three straight years

–        Memphis Invest has over 2,600 properties under management

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Sponsored by: Door Devil – visit  http://www.doordevil.com  and enter “bestever” to get an exclusive 20% discount on your purchase.

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JF 52: A Different Kind of Due Diligence

We all think about due diligence as research on the property we’re going to buy. But, today’s Best Ever guest talks about the importance of conducting more due diligence on his team than the market or property. And he would know because he has invested in Australia, Kansas City, Upstate New York and Ohio…so he’s implemented this advice successfully many times over.

Tweetable quote:

Do more due diligence on your team than your market.

Engelo Rumora’s real estate background:

–        Started with $40,000 in savings and bought first house in 2011 in Australia

–        Then, 6 months later purchased 7 more in Australia and the U.S.

–        Portfolio is valued over $1,000,000

–        Can be found at http://www.engelorumora.com/

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Sponsored by: Door Devil – visit  http://www.doordevil.com  and enter “bestever” to get an exclusive 20% discount on your purchase.

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JF 49: One…Two…Three…Four…FIVE Keys to Real Estate Success!

From CPA to successful investor, today’s Best Ever Guest shares with you the five keys to success that will help you do more deals and make more moooola.

Tweetable quote:

Matt Owens’s real estate background:

–        Has a portfolio of over 350 homes

–        Founder of OCG Properties (http://www.ocgproperties.com)

–        Currently buying 5 to 10 properties a month in Memphis and Atlanta

–        Started investing 8 years ago and was previous a CPA

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Sponsored by: Door Devil – visit http://www.doordevil.comand enter “bestever” to get an exclusive 20% discount on your purchase.

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JF 48: But It’s Sooo Shiny! Nope. Stick to Your Criteria.

The longer you’re in the game the more opportunities you’ll be exposed to. Listen to Today’s Best Ever Guest as she shares how sticking to her criteria has helped her build a multimillion dollar portfolio in three short years.

Tweetable quote:

Brie Schmidt’s real estate background:

–        Owns and operates 27 units in Chicago and Milwaukee

–        Started investing in 2011 and has built a multimillion dollar portfolio in less than three years

–        Real estate broker for 10 years

–        Founder of BBS Apartments (http://chicagobrie.com/)

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Sponsored by: Door Devil – visit http://www.doordevil.comand enter “bestever” to get an exclusive 20% discount on your purchase.

 

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Joe Fairless