JF2390: Using A Creative Approach When Starting and Scaling A Real Estate Business With Lauren Cohen

Lauren Cohen loves real estate and fills many shoes. She’s an international lawyer, real estate investor, and a coach. She also has a non-profit organization that helps single moms invest in real estate. 

She often works with first-time investors, introducing them to the world of real estate and helping them form a new passive income stream. At the same time, she also works with experienced investors, helping them buy properties not only in their countries but also across borders.

Lauren Cohen  Real Estate Background:

  • Serial entrepreneur, international lawyer, realtor, and cross-border expert
  • 15 years of real estate experience
  • Experience with flips, wholesaling, rentals, and subject-to on hundreds of properties
  • Based in Boca Raton, FL
  • Say hi to her at: www.ecouncilglobal.com/investintheus   
  • Best Ever Book: Take control of your life

 

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Best Ever Tweet:

“You have to unpack the package and look at what is right there in front of you” – Lauren Cohen.


TRANSCRIPTION

Theo Hicks: Hello Best Ever listeners and welcome to The Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today we’ll be speaking with Lauren Cohen. Lauren, how are you today?

Lauren Cohen: I’m great. How are you?

Theo Hicks: I’m doing well, thanks for asking, and thanks for taking the time to speak with us today.

Lauren Cohen: Of course, it’s my pleasure.

Theo Hicks: Let’s go over Lauren’s background really quickly. She’s a serial entrepreneur, international lawyer, realtor, and a cross-border expert. She has 15 years of real estate experience with flips, wholesaling, rentals subject-to’s on hundreds of properties. She is based out of Boca Raton, Florida. Her website is ecouncilglobal.com/investwithus and we’ll put that in the show notes. She’s also going to be doing a free giveaway which we will mention at the end of the show. So make sure you listen all the way to the end. Lauren, do you mind telling us some more about your background and what you’re focused on today?

Lauren Cohen: Sure. So I am an international lawyer and a realtor, and I’ve been investing directly and helping clients invest in real estate for almost two decades now. Mainly in the US, but also in Canada. There are still opportunities there so we do have a lot of clients in Canada. I’m also a real estate coach. So I love investing in real estate and helping others be exposed to it. I actually have a nonprofit that’s focused on helping struggling single moms and mompreneurs to find a way to invest in real estate, because at the end of the day, that’s your ticket. Really, there’s no other ticket that’s better than real estate investment.

Theo Hicks: Awesome. So you help people do investing and you invest yourself. Which one’s your main focus of those two?

Lauren Cohen: It’s kind of a split. It really depends, because I’m often joint venturing with my clients. There’s really not one at any given time. Right now, I think the focus is on helping my clients, but through COVID it was on actually investing, so it just depends on the day, really, and the demand.

Theo Hicks: Do you typically work with people who’ve never done deals before?

Lauren Cohen: Often. That’s going to be more of the non-profit side of what I do, to help people find their way of doing a deal, teaching them how to do a deal. Our coaching program is called Creative Real Estate Academy. My partner is an extraordinarily creative real estate investor from Calgary, Alberta, in Canada. So we work with people literally from all over the world, helping them to create structures. We work with people that are starting and that are moving along the spectrum, some people that are just expanding their investment opportunities across borders. My tagline is helping people invest, live, work, and play across border. So it’s all about just opening doors, really.

Theo Hicks: So based on your experience – this is kind of a two-part question… Based on your experience, what would you say is the biggest obstacle holding people back from –the first part of the question is getting started in general, from no deals to just getting started, and then once you’ve actually started, what’s the biggest obstacle holding them back from scaling and growing?

Lauren Cohen: I think to start, it’s fear. It’s fear of the unknown. It’s fear of taking your money and investing it in a place; no matter how safe it is, there’s still a risk. People that have never invested in real estate before are afraid that they’re getting bad advice, or they’re not going about it the right way, or they don’t know what they’re doing, so why would they invest, or they don’t want to be landlords, so they don’t know what other options are available.

When they’re trying to scale, the challenge is that they did their first investment or two without creating a structure around that that could allow them to scale. So my key focus when working with other investors is to help them from the get-go to create that strategy that’s going to allow them to build a strong foundation from which they can scale, grow, and invest all over their own country, as well as expanding their investments across borders.

Theo Hicks: Could you elaborate on that second point a little bit? So I just got my first deal, and I want to start scaling, and I’m working with you… When you say a creative structure, what specifically would you have me do?

Lauren Cohen: Well, there are eight elements that I look at when I’m creating a success blueprint for each of my clients, from location, to budget, to joint venture, if you want to joint venture or work with partners, to the types of properties you want to invest in… We go through an analysis of where you come from, your own background, how much money you want to invest, how much you have available to risk, and we create a strategy around that structure and we develop a plan. Do you want to invest close to home? Do you want to invest over the border, whatever border that may be? Do you want to invest overseas? What’s your budget for that? Do you want to have a turnkey business? Do you want to run the business? How involved do you want to be? All of those questions are considered when we develop this success blueprint for them.

Theo Hicks: Something else you mentioned too was about your partner, and they are very creative investors. Could you give us some examples of some of the things that they have done in the past or something that they do consistently that’s that creative aspect of the deals?

Lauren Cohen: Well, first, I think you need to have my partner Carolyn on the show. She’s actually in Cabo right now. Her creativity allowed her and our other partner to invest in a development in Cabo. So they are building this out and offering opportunities in Cabo, San Lucas. Her name is Carolin Ricciardi. What makes her so creative is she’s created a model that’s based on agreements for sale, which as I say, are similar to subject-to’s here in the US, where you basically knock on doors, almost, essentially, knock on doors to find opportunities, to take over mortgages before they go to foreclosure. So you don’t have to qualify for the mortgage.

There’s one client that we have, she and her husband both lost their jobs at the beginning of COVID. She’s now eight months pregnant, she was obviously just pregnant at the time… And they now are in their fourth property investment and they netted over six figures already, just in the opportunities that they’ve looked at in the first three. That’s because you have to unpackage the package a little bit and look at what is right there in front of you. Sometimes people are just looking at traditional options, whereas this is a very non-traditional way of going about things, where you create documents and contracts that may potentially have more risk attached to them. But obviously, the more risk, the more reward, right?

Theo Hicks: Thank you for sharing that. Let’s talk about what you do for your investments. As you mentioned, you help people half of your time… What do you invest in? What’s your main focus right now?

Lauren Cohen: It’s on buy and hold and creating that ongoing wealth and cash flow, and eventually selling. So it’s buying distressed properties, buying properties that have mortgages that aren’t being paid, finding those needles in the haystack. Obviously, as a realtor, I have access to pocket listings and opportunities that others may not. Then of course, I bring my legal hat into the mix and make sure that legally everything is kosher, so that we can invest in the property and create that ongoing stream of income. So the key is passive investment and passive opportunities.

I like to find properties that are already tenanted or that are in areas that are going to have very good tenant tenancy and occupancy ratings, because you want to make sure that your property stays tenanted obviously, so that you’re not going to have a headache. That’s the last thing that I want. I like the least headaches for myself and my clients.

Theo Hicks: How many different markets are you in currently?

Lauren Cohen: Well, it depends. If it’s me, personally, I’m in two markets, but if it’s me through my clients, probably about 10.

Theo Hicks: Okay. I’m imagining one of them is in Boca Raton, or are they both out of state?

Lauren Cohen: No, we do invest in South Florida. It’s not Boca specifically. So far Boca doesn’t have many distressed properties, although we did see one the other day, but it was very distressed. But there are a lot of parts of South Florida within a quick drive of where we are. Orlando is a big market and we’re going up there this coming week to look at some opportunities. Tampa, the multifamily opportunities are there… Atlanta, Nevada, Texas, Ohio, obviously, Chicago is one place that we look at as well… And Detroit, the Raleigh-Durham area as well is a big opportunity zone for us.

Theo Hicks: Something that I’ve just thought of… So you said you partner with your clients on a lot of these deals. Is it just anyone you’ll partner with? Or what do you do when you’re screening these people before you decide to partner with them?

Lauren Cohen: They’re going to come in, they’re going to become our clients, they’re going to work with us, we’ll go through our coaching program, learn how to invest in real estate with us. Then if they come to buy a good opportunity, then we are going to offer, if the timing is right, and they have been through our due diligence process, to joint venture with them to give them access to capital to invest in those opportunities. So this way, they can have more volume and we also have access to that volume without it having to be too much of a headache. We have the systems in place so that we can manage the properties and turn them around and rent them out, if needed.

Theo Hicks: Okay. So you said after they’ve gone through the program, as long as the deals good, then you’ll JV?

Lauren Cohen: Yeah, we’ll go through deals with them. We have a deal vetting program that we do within our group coaching and our one on one coaching. We go through each deal and analyze the numbers with them to do the due diligence. I’m going to look at it from a legal perspective and we bring in our numbers person to make sure that deals make sense. It’s not like we just joint venture with everybody that has a deal, or we would be joint venturing a lot. And I also set up a lot of joint ventures, like people that are just getting into the business, for example… I have a client here in the States who is originally from Canada, but he’s just getting into real estate investing. So he really needs a partner to guide him through and make sure that he doesn’t just throw his capital away. And also, the partner that I’ve connected him with has access to financing, so that opens another door too.

So you just have to know — one of my superhero powers is connecting the right people together, and having them go through that process with me, working with me, allows me to vet them and make sure that they’re the right partners for each other, hopefully.

Theo Hicks: Another thing that I get a lot from people who want to get started in real estate, or they have a full-time job, they hate it, and they want to get into real estate investing, and they realize it’s not going to happen instantly, so they want to become a real estate agent to get started. They quit their job, be an agent, then eventually quit that and invest full time. So as a realtor, what are your thoughts on that strategy?

Lauren Cohen: Join my company. [laughs] Okay, so I’ll be honest, I’ve had my real estate license for almost 13 years. I joined a cloud-based brokerage just under a year ago. It’s been life-changing for me, because it’s allowed me to connect with other realtors — I think 30 realtors in my company were on my webinar that I just did an hour ago– and to really build my real estate practice, as opposed to being just a real estate investor.

Being a realtor is definitely going to help you access deals, because you can pull comparables, you can access information that’s not on the market, you can connect with prospective buyers and sellers that you may not otherwise be able to connect with, and you can also earn referral fees from the properties that you buy and sell in other jurisdictions. So there’s a lot of advantages to getting your real estate license when you’re a real estate investor.

Theo Hicks:  Okay, so you’re on the side of “Yes, get that license” and then come work for you.

Lauren Cohen:  And then come talk to me. Exactly.

Theo Hicks: There you go. Alright, Lauren, what is your best real estate investing advice ever?

Lauren Cohen: You asked me to think about this, and the best real estate advice ever that I could give is just do it. It’s kind of like Nike’s swoosh, just do it. Because the longer you wait, the harder it becomes. There are people that are investing starting at 50 starting at 60 and starting at 20. Now, wouldn’t you rather have built your wealth and amass your wealth by the time you’re 50 or 60, rather than having to start investing then? Start when you’re young and don’t hesitate. But make sure you have a mentor. Do not try to just run into it. Have a mentor to guide you through. So I guess that’s two pieces of advice combined, right?

Theo Hicks:  Yeah, Best Ever advices, I guess. Not all people will give multiple pieces of advice, but the more the merrier when it comes to that question.

Lauren Cohen:  I don’t follow instructions well, apparently. [laughter]

Theo Hicks: Well, you ready for the Best Ever lightning round?

Lauren Cohen: I think so…

Theo Hicks: Okay, first, a quick word from our sponsor.

Break: [00:15:52] – [ [00:16:14]

Theo Hicks: Okay, what is the Best Ever book you’ve recently read?

Lauren Cohen: The best book that I recently read was Take Control of Your Life by Mel Robbins.

Theo Hicks: Okay, if you’re business were to collapse today, what would you do next? I guess in your case it would be business-es.

Lauren Cohen: My business did collapse.

Theo Hicks: What did you do next?

Lauren Cohen: Haven’t a lot of our businesses collapsed? My main business did collapse when COVID started, and I pivoted and helped people get money. They call me the Pivoting Queen. I’m not too worried about that.

Theo Hicks: What is the Best Ever deal you’ve done?

Lauren Cohen: I would say the one that we did recently, which was we bought a property and we were renovating it, planning to rent it, and ended up flipping it within 24 hours.

Theo Hicks: How much did you make?

Lauren Cohen: 80k.

Theo Hicks: On the flip side…

Lauren Cohen: The worst?

Theo Hicks: Yeah. The worst deals or a deal that you had lost money on. How much did you lose and what lessons did you learn from that?

Lauren Cohen: Okay, well, I can talk about that. It was my first investment, which was a single-family home. It was too distressed, and I ended up having so many rampant problems… This was before I was a realtor and before I was a lawyer. Well actually, I was a lawyer, just not in the US. I just was trying to get into something and I did it with a partner. The partnership was a disaster, and it was just a disaster all around. I lost about 50,000 in that deal and I also lost a lot of faith in myself, which I had to regain. So that was a harder lesson.

Theo Hicks: What is the Best Ever way you like to give back?

Lauren Cohen: I have a non-profit, as I mentioned, it’s called Find My Silver Lining. I started it a couple of years ago, I haven’t really done very much with it. However, that’s my plan right now, is we are just about to relaunch it and it’s going to lead into Creative Real Estate Academy. So we’re going to bring people into the non-profit and offer them scholarships to use our services and learn how to invest in real estate. So that’s really exciting, because it’s for struggling single moms and mompreneurs that really don’t have the money. I’m a single mom, and not everybody has a law background, and not everybody can go get a degree. Some people are not so privileged and it’s hard. It’s hard even with that, being a single mom; it’s a struggle. So my son just turned 10, and it gets easier, but I really feel very strongly that that’s important, to make a difference and have an impact.

Theo Hicks: I love it. That’s awesome. The last question is what’s the Best Ever place to reach you? And then you can also mention the giveaway that you have for us.

Lauren Cohen: Absolutely, the best place to reach me is LinkedIn. I have a lot of activity going on on Facebook, but LinkedIn is always going to be your best place to reach me. However, my LinkedIn profile is full, so we can’t add any more connections. We might be able to scam in one each day. But you can always find me on Facebook, it’s Lauren ESQ is my handle in most places. My giveaway is – maybe you’re gonna share it in the show notes… It’s how to invest in real estate across borders; it’s going to teach you the eight elements of investing across borders and how to make sure that you cover your, you know what – assets – as you’re investing across borders. That’s super important, and I think that people don’t realize – when you are investing in any other country, even in your own, but in any other country, there’s so much more to think about, and people ignore it. That ends up causing them huge heartache and loss of a huge amount of income. It’s a disaster.

Theo Hicks: Yeah, so we’ll have that in the show notes, the link, and then there’s a coupon code that you can enter. Lauren, thank you so much for joining us today and providing us with your Best Ever advices, as well as walking us through your journey and some other tips as well. We talked about the biggest obstacles holding people back, starting out being fear, scaling, and being in that structure. You gave us some tips on what you do to help people create that structure based off of the eight elements for the success blueprint.

You talked about your partner, who we’ll definitely have to have on the show, and her example for creative investing, which is the agreement of sale, which is essentially knocking on doors to take over mortgages before they go into foreclosure.

You talked about what you invest in, and some of it is fully you, other is partnering with your clients. You talked about how that process works, of due diligence and partnering. You talked about the advantages of getting your license as a real estate agent. You mentioned the cloud-based brokerages… So it sounds like you don’t have to actually have brick and mortar place to be a brokerage. That’s interesting, I didn’t know about that.

And then your Best Ever advice is just do it, because the longer it takes, the harder it is, but also, the less you can benefit from it. As you said, do you wanna start when you’re 20 or when you’re 50? Both are fine, but a 30-year headstart is much better.

And then obviously, have a mentor was your last piece of advice. Again, make sure you go to the show notes everyone and take advantage of that free course. So Lauren, again, thank you so much for joining us today. I really appreciate it. Best Ever listeners, as always, thank you for listening. Have a Best Ever day and we’ll talk to you tomorrow.

Lauren Cohen: Thank you.

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JF2355: The Benefits Of Hosting Real Estate Meetups With Megan Greathouse

After leaving the Marine Corps, Megan used the GI Bill to finance her MBA. With her savings, she and her husband invested in their first house. When they moved into their second home, they rented it out and then sold it. They acquired and flipped several types of properties since then.

A career in real estate gave Megan the flexibility she needed to spend more time with her family. Just a few years into this business, she now has an impressive portfolio. Megan also hosts a local real estate meetup that has awarded her new professional relationships and opportunities.

Megan Greathouse Real Estate Background:

  • Real estate investor and mom
  • In 2019 she left her W2 to focus on family and building her real estate portfolio
  • She started by turning her first home into a rental in 2015 & buying her first outright rental in 2017
  • Portfolio consist of 10 rental units, farmland, 2 flips, & 1 wholesale
  • Based in St. Louis, MO
  • Say hi to her at: www.linkedin.com/in/mkgreathouse/

Click here for more info on groundbreaker.co

Best Ever Tweet:

“There’s a lot of power in having a very strong network” – Megan Greathouse.


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? 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 where we only talk about the best advice ever. We don’t get into any of that fluffy stuff. With us today, Megan Greathouse. How are you doing Megan?

Megan Greathouse: I’m doing awesome, Joe. It is so exciting to be here. Thank you.

Joe Fairless: Well, I’m glad to hear that, and looking forward to our conversation. A little bit about Megan. She’s a real estate investor and mom. In 2019, she left her W2 to focus on family and building her real estate portfolio. She started by turning her first home into a rental in 2015, and then buying her first rental outright in 2017. Now she’s got 10 rental units, she’s got some farmland, she’s done two flips, and one wholesale deal. Based in St. Louis, Missouri. With that being said, Megan, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Megan Greathouse: Sure. To go way back, I grew up as a military kid, and then after college, ended up joining as an officer in the Marine Corps myself. So I did four years of active duty. And while I was there, I was reading a lot of books about personal finance. I was very interested in what do I want to do after the Marine Corps and what do I want to do long term for myself and my future family, and real estate kept coming up. So after leaving the Marine Corps, I actually used my GI bill to get an MBA, and after saving a lot in the Marine Corps, especially during a deployment, and then saving a lot from my nicely paid post MBA job, we felt like we were in a good position, my husband and I, to buy some real estate. I really was interested in educating myself, so I took the lead on that.

We tested the waters, like you said, by turning our first home into a rental for a couple of years when we moved to our second home, and then ultimately sold that because it didn’t cash-flow as well as we’d like. But it was the learning opportunity we needed to move on.

And then after that, I just started buying small multi-families. And the big catalyst for me to actually get started was having our first kid back in 2016. That was what, despite liking my job, liking my career, liking the people I worked with, really motivated me to find a way to create wealth and a career for myself that was completely flexible and on my own terms. Because I wanted more time with these kids.

Joe Fairless: Okay. And first off, thank you for those four years that you spent in the Marine Corps and going overseas to help keep us all safe. I just spoke to an active duty marine gentleman right before you. So I don’t know what the theme is… I’m glad to be talking to you, and I was glad to be talking to him. So let’s talk about something that stood out to me when I introduced you, because it’s in your bio… And we’ll backtrack too, but I just want to ask about this right now. I said 10 rental units, two flips, one wholesale deal. And then what else did I say?

Megan Greathouse: Farmland.

Joe Fairless: Farmland, what is going on with farmland? So tell us about this farmland investment.

Megan Greathouse: This one was a little more of an experiment for us, I guess. We’ve always liked the idea of having some lands that we could use for our family eventually. And my husband likes hunting. So we decided, especially during COVID, when things were kind of shut down, and just working differently, that we were going to look into some of it. And we said, “You know what? We could go in and we could look for some land to flip. We could look for some land where the income from the farming kind of helps out…” Generally, what we’ve seen in our area is that it doesn’t cover everything, but obviously, the farming rent helps. And potentially, we could even find something where we go and spend time with our kids on weekends and such. And what we ended up finding was more of a short to mid-term property, 60 acres, about an hour and a half from St. Louis. And we thought eventually, we could potentially build something here. It’s kind of vacant farmland, so it doesn’t have a house on it for weekends with family or anything. And that would be a way to flip it. Or we happened to meet a great broker who really knew the values and was able to bring us something under market value. So we said, “Or we can test this out and kind of flip it more short term.”

So right now, we’re deciding what we do with that going forward, but that one is a lot more of an experiment and it’s a lifestyle thing, and it’s one of those cool things where you get yourself into real estate, you start to understand how it all works, and you get to try new and interesting things, and you get to do things that also have a lifestyle benefit because you understand the power of the options created by real estate. So that’s what we’re doing with that one right now.

Joe Fairless: So you own it and you’re in the process of trying to flip it?

Megan Greathouse: Yeah. So we’re going back and forth between, do we build on it, and then flip it when we’ve put some more money into it and created more of a getaway kind of place? Or do we go ahead and just flip it pretty much as it is. We did some basic cleanup of the land, because the people who owned it previously had not paid much attention to it recently. So we might end up going with the shorter term option right now, just because we’ve got some other opportunities on the horizon, that using that money more quickly would help with.

Joe Fairless: Got it. Alright. So numbers on that are what?

Megan Greathouse: We bought that in just a handful of months ago, at 240. And it’s one of those things where we could turn around and sell it for probably 270 or 280 if we wanted to, in fairly short order, and it wouldn’t be some huge amount that we’d make back on it after commissions… But we’d get a chunk of money back that we could use for other things. And now we’ve got our foot in the door with understanding buying and selling land.

Joe Fairless: What would you do differently knowing what you know now when you purchase the next farmland?

Megan Greathouse: We really do like the idea of holding farmland a little bit longer term and having some personal use component to it. We bought this one thinking, “Sure we could try building something on it.” And then with how far out it is, we realized that’s a pretty big task with everything else we have going on. So I think a future purchase, we would definitely look for something that already has a property on it. If anything, we’re just improving the existing home, because then there’s a lot more personal utility that we can enjoy while we hold the property in the future.

Joe Fairless: Let’s talk about the two flips that you’ve done. Have you exited both of those?

Megan Greathouse: Yeah, those were somewhat earlier on. I definitely prefer buy and hold over flips. But they were kind of those things where as you learn, you try different things and you take advantage of opportunities when they come.

Joe Fairless: And in order to buy and hold, you need money coming in, obviously, as we all know… So if you’re not flipping and wholesaling actively, where’s the money coming from, since you left your W2 job to continue to build on that 10 unit portfolio?

Megan Greathouse: Right now, fortunately, we’ve been able to renovate properties that we bought for long-term buy and hold, and increase rents. So I’m actually in the process right now of refinancing pretty much everything, because we’ll be able to get cash out of those and have lower monthly payments, thanks to these insanely low-interest rates right now. So it’s a pretty sweet deal there. But yes, I did do a couple of flips, because to your point, if you want to keep building capital for more buy and holds, that’s one way to do it. And you already know real estate, and it can be a fun process, so why not?

Joe Fairless: With the new loans that you’re putting on your 10 rental units, is that a portfolio loan? Or are you getting individual loans? What type of service are you working with?

Megan Greathouse: We’re just working with the same lender that we’ve used since the beginning for the one to four-family space. So everything we have is in that space. And these conventional loans, obviously, have some of the best terms out there. So we’re working with the same people we’ve worked with in the past, we have a great relationship. By the time we’re done with these refinances, we’ll have done probably a dozen loans with them, of different types. So yeah, no portfolio loan. We looked at a line of credit, but with the rates as low as they are right now for conventional loans, and the fact that we were a point and a half higher on our current rates, it made sense to do the full-on refinance.

Joe Fairless: Is that a local lender?

Megan Greathouse: It is, yes.

Joe Fairless: Okay. So it was like a credit union or community bank.

Megan Greathouse: It’s a local mortgage lender, and they actually, on top of having just worked with us for three or four years now, the loan officer that I work with is actually one of the sponsors of my local St. Louis real estate meetup, as well. So we have a relationship that works for both of us in many ways.

Joe Fairless: Why do you host a St. Louis meetup?

Megan Greathouse: I think there’s a lot of power in having a very strong network, and I think that in real estate you really have to create that for yourself. When you’re working a W2 job or you work in an office, it’s around you; people are around you, colleagues around you all the time. That’s not the case with real estate investing most of the time. And I am a very outgoing and relationship-driven person, so pretty quickly – I think it was right after I bought my first four-family, I started posting things on the BiggerPockets forum, I got enough people interested in chatting that I said, “Let’s all get together as a group for a beer and talk.” And it naturally evolved over time. And on top of giving me a great resource of people to work with, it’s offered opportunities for me to help others. I’m just a handful of years into this, and it’s really easy for me to talk to some of the newbies at this point and share what I’ve learned just in the few years and be relatable to them right now. And then it’s also created a bit of, I guess, a reputation for me in the area too, because I’m someone who hosts a fairly well-attended meetup at this point and a fairly well-known meetup. And I think it helps me, and it helps me help others and a lot of different ways.

Joe Fairless: Just to learn a little bit more, for someone who’s thinking about starting a meetup. And during the pandemic, obviously, we’re just going to put an asterisk on this conversation, because we’re not having an in-person meetup; I don’t imagine that you’re having in-person meetups.

Megan Greathouse: No, not right now.

Joe Fairless: But just during a time when there’s no pandemic, what specific cause and effect business benefits that you’ve seen as a result of hosting the meetup?

Megan Greathouse: I’ve had a lot of folks come to me with different deals that they’ve found that they think might fit what I’m looking for. I’ve been able to strengthen relationships with some of the folks that I work with for real estate. So my lender, my contractor, my insurance company, my title company – they’re all sponsors, and I think that keeps me kind of top of mind for them in some ways, and allows me to give back to them in ways that keep our relationship really strong, and that makes things easier on me when I work through my real estate deals. And then I’ve met people who will be potential future partners as well. So it’s done a lot. I could probably name three or four other things too.

Joe Fairless: On the fix and flips, going back to those… Did you make money on both of them?

Megan Greathouse: Yes. One of them I made a whole lot less than I anticipated, and I would say that was my true fix and flip. Like I said, I’m a buy and hold investor. So both of these, they started as rentals that I kind of quickly decided I wasn’t going to keep them long term. They were single-families, and I liked the small multi-family space better. But they had multiple exit options when I got into them, so then I went the fix and flip route pretty quickly after buying them and holding them for a short term as a rental.

Joe Fairless: Can you talk about the one that you made a whole lot less on than you thought?

Megan Greathouse: Oh, yes. I actually love this property and this story. And no regrets, because I learned so much… But it was a two and a half story, 1910 build, in an amazing neighborhood in St. Louis City. Walking distance to one of our major universities, Washington University in St. Louis. And I found it actually on BiggerPockets forums. So it was an off-market deal. Another investor was looking to offload it because he was getting ready to invest in another market. And I reached out to him out of curiosity — even though I kind of prefer duplexes and four-families — because his rent was so high. He mentioned is his rent was so high, and we started talking, and it was because he was renting to students and he had kind of a unique model.

So I knew going into it that I probably didn’t want to do the student rentals, but I figured I’ll buy it, I’ll let these students finish their time in the home, and then I’ll renovate it, because there are so many beautiful homes surrounding it that have been updated and maintained and they’re historic. And I was expecting to make about 40,000 at the end of the day. And by the time we finally sold it, after many many delays, I think I eked out 10,000. And that was with my contractor accepting some of their mistakes and taking a hit on their side.

Joe Fairless: Knowing what you know now, what would you do differently, if you were presented a similar opportunity and you decide to buy it?

Megan Greathouse: Knowing what I know now, I think I would be much, much tighter on my timelines and the way that I set those up. And then much tougher on the management of the contractor as well. And I potentially would have switched contractors halfway through if I needed to. Because the vast majority of what came up was major delays that cost money, and holding costs, and everything. And that’s what really ate into my profit at the end of the day.

Joe Fairless: What are some specific things with the contractor in this case that took place?

Megan Greathouse: The contractor actually went through three different project managers during the time of my project. And every single time we switched over, it was just more delays, and more learning curves, and changing of how things were happening.

They also were not on top of their subcontractors. So there are multiple times when I reached out to them and said, “Hey, where are we? Are we done with XYZ?” And they said, “Well, no, because we’re still waiting on the plumber.” Or, “We’re still waiting on this guy or that guy to come in.” And I’d asked them about that. And it’d take two or three weeks before that person who was supposed to come in a couple of days was finally there and getting done what they needed to do. So it just continued to drag out. And I tried to stay on top of my contractor, but I couldn’t seem to make them stay on top of their subcontractors. So that was something I needed to improve. I need to be better at finding contractors who are more on top of it, and/or being willing to fire and hire someone new when those things come up.

Joe Fairless: 10 rental units. On average, what does a rental unit generate in profit each month?

Megan Greathouse: Each of my units net cash-flows after everything about $300 per month is probably where we’re averaging out at this point.

Joe Fairless: And what’s the average price point for what you purchase, each unit?

Megan Greathouse: Yeah. In St. Louis – it can certainly range by neighborhood, of course – anywhere from 50 to 80,000 per unit at purchase. And it definitely varies by neighborhood.

Joe Fairless: Yeah, I get. Let’s talk specifics. Let’s talk about the very last deal that you bought. How much was it?

Megan Greathouse: This one I bought for $132,500, and it’s a duplex in a really awesome and popular neighborhood of St. Louis called Dogtown.

Joe Fairless: Dogtown. Alright. Is that an artists and hippie area?

Megan Greathouse: It’s actually more of like old Irish pubs and walking distance to Forest Park and all its attractions.

Joe Fairless: Okay. $132,000 for a duplex. And what’s the rent for each of the units?

Megan Greathouse: So one side, the previous owner had done some basic cosmetic updates… And these are one bed one baths, by the way.

Joe Fairless: Okay, thanks.

Megan Greathouse: They did some basic cosmetic updates, it was nothing too special. But we currently have 700 in rent per month on that one. On the other side, I put about 20 to 25 to really open it up and create a bigger kitchen, and a better flow, and nice cosmetic updates… And that one is currently renting for $900 per month, which I think we were filling that one during COVID. I think we could easily get $1,000 for that one next time around.

Joe Fairless: How do you look at ROI when you’re looking at doing a $25,000 renovation? What must you have from a return standpoint, if any, to justify those cap-ex dollars?

Megan Greathouse: For this one, I knew I was going to do it, because while the one side had been kind of updated, the other side was in really rough shape. So for that one, the side that I updated previously had been renting for I right around $500, maybe 550. And I knew I could get 900 maybe more if I updated it. So that monthly is $300 or $350 per month, maybe more, that I would get on top of if I just rented it as it was. So annually, that’s like $4,200. So if I put in $25,000 to get an extra $4,200 per year, that’s like a 16% or 17% return. So my cash on cash return, I like off the bat when I’m buying something to have greater than 10% cash on cash return. And then when I’m putting work in, I hope I’m getting into the mid-teens on cash on cash return, and then eventually able to refinance out a lot of my money and push that return rate even higher on the cash that I have left in, if any.

Joe Fairless: Do you self manage?

Megan Greathouse: I do.

Joe Fairless: Well, you’ve got some interesting stories for us then, from that…

Megan Greathouse: Indeed. [laughter]

Joe Fairless: What’s something that comes to mind?

Megan Greathouse: So I actually just had my first issue with bedbugs recently. That has never happened to me before and it was a little frightening, honestly. Especially because I had just been in the unit not that long ago. I actually do my best to not go to my units personally as much as I can. I have a really great handyman, a great contractor, a great leasing agent, so I outsource the things that require a lot of run around and time physically at units. And they are excellent about reporting back to me on what’s going on. But I just so happened to have been at this unit previously. So of course, I had, first of all, just the heebie-jeebies for about 48 hours after I found out… And then it’s not cheap.

Joe Fairless: You were in the Marine Corps, right?

Megan Greathouse: I was. I was. But I didn’t ever get bedbugs in the room. [laughter]

Joe Fairless: I know a Marine’s kryptonite now. Thank you.

Megan Greathouse: [laughs] Yeah, I’ve got two young kids. And I just was having these horrible images of dealing with bedbugs in my own home, with a four-year-old and a one-year-old… So I think that’s probably been the worst of it honestly… When you’re dealing with things like that, it’s expensive. It’s one of those things that in a single-family, I think it would 100% make sense to bill it back to a tenant. In a four-family, it’s a little harder, because you just don’t quite know for sure how these things could have spread… So we did our best to maintain boundaries with the tenant and make sure they kind of had some responsibility, but that we also took responsibility, and cleared it up before it became a problem for the whole building. And it was cleared up pretty quickly, and we haven’t had any issues since, but that was probably one of the biggest pit in your stomach feeling when you get the call from someone saying, “I’m going crazy. I’m all itchy and I think I have bedbugs.”

Joe Fairless: Yeah, well. Was it [unintelligible [00:21:35].18] treatments? Is that what they did?

Megan Greathouse: They actually did a heat treatment on it.

Joe Fairless: Heat treatment. Okay.

Megan Greathouse: So there are two units top and bottom on the left, two units top and bottom on the right. They inspected the right and saw no issues. On the left side of the building, they did do chemical treatment in the upstairs unit. In the bottom unit they did the full-on heat treatment, and then they went back for two checks after that.

Joe Fairless: How much did it cost?

Megan Greathouse: I think we were at $1,500 for that.

Joe Fairless: For all of it?

Megan Greathouse: Yeah, for all of it. Well, this is in one of the areas where rents are a little bit lower. And even though these are slightly bigger units, that particular tenant only pays $525 per month. So when you look at the amount going into that unit just in one month from bed bugs that, frankly, they probably brought into the unit, it kind of stinks. But you’ve got to do what you got to do. I’m not going to be a slumlord.

Joe Fairless: There’s a pro tip that I came across, and I learned the hard way with bedbugs… If you’re looking at a property, and the owner has a spray bottle, and it kind of smells like rubbing alcohol, and they spray themselves before and after they go into the unit, then there’s probably a bedbug issue. I didn’t pick up on that until later. Fortunately, I didn’t ever get them, but it was missed in an inspection early, early on in my real estate days… And that spray bottle, I was like, “Wait a second.” And I did a Google search. “Yeah, rubbing alcohol, doesn’t take out an infestation, but it kills them.” That’s why he was spraying his legs before and after.

Megan Greathouse: Oh my gosh, wow. Yeah, there’s your sign now, I guess.

Joe Fairless: There’s your sign. Yep. spray bottles. So what’s your approach when you have a unit that is vacant? Do you have any leasing tips that you’ve come across that have been really helpful for you to fill your units quickly?

Megan Greathouse: Yeah, we actually have a pretty solid process with my leasing agent. And this was one of the issues that I had with property management companies. I’ve worked with a few before I took over and self-managed. And none of them were bad, but I always felt like I had vacancies for a little too long. So I found a really awesome leasing agent who’s just kind of a hustler, and he’s willing to do things my way, and not just stick to something that he’s been taught elsewhere.

So I have written into my lease that we’re allowed to enter the unit to do showings within 30 days of a tenant leaving. And generally, this is happening when it’s a solid tenant, and they’re moving on just because they are moving in with a roommate, or moving for work or something. If it’s been a hairy situation with a tenant, you might not want to actually show while they’re still there. But so far we’ve been able to.

So I have files with pictures and descriptions of all my units, and if I haven’t done any major changes to the units, I’ll just use those existing pictures for the leasing agent to get his advertising out there. And he’ll list the unit three to four weeks before my current tenant leaves, and then about two weeks before the current tenant leaves he will usually ask for an hour or two on a Sunday to do a few showings. Usually, he’s done decent enough phone screenings that by the time he’s done with those showings, he is sending me one or two applicants. I will run them through my own application process. It’s all online. It’s very easy. I do it through [unintelligible [00:24:48].24] so they fill everything out online. We do the background and credit checks all online. And oftentimes, I have a new tenant who has been approved, has sent me their security deposit, and is ready to move in within a few days of the old tenant moving out. So they’re usually lined up and ready for it before my old tenant moves out. And then I get my occupancy inspection done and the cleaning done the day after my old tenant moves out. And a day or two later, the new tenant comes in. So my vacancy is a few days.

Joe Fairless: I’m glad I asked you that question. Thank you for sharing that.

Megan Greathouse: Yeah, sure thing.

Joe Fairless: Taking a step back, what’s your best real estate investing advice ever?

Megan Greathouse: I think use time to your advantage. And with that one, I actually mean, not moving super fast, but the amount of time that you have to build with real estate is always helpful. So for instance, a property that I bought four years ago, just by naturally taking care of it and increasing rents as tenants turned over is now worth almost 50% more than it was when I bought it, thanks to buying in kind of an up and coming area, taking care of it, and increasing rents. So all of a sudden, even though cash flows were maybe early on $100 per door per month, and then $200 and then $300 – the cash flow has grown, but my value has also grown and I’m able to refinance and take cash back out and put that into other rentals. And it’s just amazing, the snowball effect that you have over time with real estate. It’s not “get rich quick,” but it’s quicker than just throwing money in a savings account forever. And there’s a lot of power behind it. You make money in a lot of different ways. So time is actually very helpful in real estate.

Joe Fairless: We’re going to do a lightning round. Are you ready for the Best Ever lightning round?

Megan Greathouse: Very ready.

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

Break: [00:26:37][00:27:24]

Joe Fairless: Best Ever book you’ve recently read.

Megan Greathouse: I feel like every other book I read, I’m like, “That’s my favorite book ever.” But I just read Twelve Pillars by Jim Rohn. It was something someone gave to me years ago and I put it on the bookshelf and just recently found it. And it was really great; just mindset and mentality for a successful well-lived life.

Joe Fairless: Best Ever way you like to give back to the community.

Megan Greathouse: I really like to be a networker. Someone who can connect people, someone who can also teach and help others… So I run my real estate meetup, I try to answer all the questions that I get from people who are starting out in this game, or who are pivoting in some way in the field… And then I also co-host a podcast with Josiah Smelser called Multi-family Mavericks. As we’re both looking to scale into larger multi-family, we are taking others who are in the same place along with us and interviewing a bunch of multi-family investors to give everyone a leg up.

Joe Fairless: What’s a bad piece of advice you’ve gotten or heard?

Megan Greathouse: I think anybody who tries to tell you there’s one way to do something is giving you bad advice. Generally speaking, there are many ways to do almost everything in real estate. There are very few black and whites in real estate. And if someone who’s talking to you isn’t giving you the perception that this is what works for them and here’s why, they’re just telling you this is right and that’s wrong, it’s probably bad advice.

Joe Fairless:  I love that. So, so true. Not just real estate, right?

Megan Greathouse: True.

Joe Fairless: Just life in general.

Megan Greathouse: Everything.

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

Megan Greathouse: I am kind of all over the place, but I have an Instagram called @parttimeempire where I really chronicle what I’m doing with real estate. My goal here is not to scale the biggest, fastest. I do want to scale and grow big, but it’s about the lifestyle for me. So @parttimeempire is where you can see how I balance being a mother, being an entrepreneur, being a real estate investor, and having fun along the way.

Joe Fairless: Well, thank you for being on the show. We talked a little bit about farmland, which I was really curious about, so thanks for talking about that. Will you be writing about the exit of that whenever it happens? In Instagram or wherever else?

Megan Greathouse: Yeah, I’ll need to share it. Like I said, we’re still getting the details nailed down, but I’ll have to share it for sure.

Joe Fairless: And then the flips as well as the reasons why you do a meetup, the benefits, some specifics on the duplex that you’ve recently purchased, and why one of the flips didn’t make as much as you wanted because of some management optimization that has since taken place for future deals… So thanks for being on the show. I hope you have a Best Ever day. Talk to you again soon.

Megan Greathouse: Thanks, Joe. You too.

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JF2324: 4,000 Wholesales With Ron Walraven

Ron is a full-time wholesaler with 20 years of experience with a portfolio consisting of 10 rentals and has completed over 4,000 deals since 1999. Prior to finding his calling as a wholesaler he was an auto mechanic and ended up hurting his back. While he was recovering from his back surgery he started to look into real estate and now the rest is history.

Ron Walraven Real Estate Background:

  • Full-time wholesaler
  • 20 years of real estate investing experience
  • Portfolio consist of 10 rentals and has completed over 4,000 deals since 1999
  • Currently wholesales 150+ a year
  • Based in Troy, MI
  • Say hi to him at https://waymarkhomes.com/

Click here for more info on groundbreaker.co

Best Ever Tweet:

“To be diligent and not to give up” – Ron Walraven


TRANSCRIPTION

Joe Fairless: Best Ever listeners, how are you doing? 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 where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Ron Walraven. How are you doing, Ron?

Ron Walraven: I’m doing great. How about you, Joe?

Joe Fairless: Well, I’m doing great as well, and grateful to have you on the show. A little bit about Ron – he’s a full-time wholesaler. He’s got 20 years of experience. He has a portfolio consisting of 10 rentals and has completed over 4,000 deals since 1999. 4,000 deals since 1999. He currently wholesales 150+ deals a year. He’s an active guy. He’s based in Troy, Michigan. So with that being said, Ron, do you want to give the Best Ever listeners a little bit more about your background and your current focus?

Ron Walraven: Yes. I started out as an auto mechanic straight out of high school. I worked that job for 17-18 years. And then I hurt my back really severely in 1998 and had some surgery, and when I came out of surgery, the doctor told me that I couldn’t work on cars anymore. And during that time of working on vehicles, I was always a hustler. We always got paid by the job, so nobody ever handed me a paycheck. So when I was sitting around recouping, I thought, “You know what, I always liked to do real estate.” So I took the class, took the test, and then fell into a local broker that was doing lots of foreclosures with banks, around 1999-2000. I ended up with 2 million accounts from lenders that were doing what we call B and C paper, which would be investor type loans… And then of course the market started imploding in the Detroit area. I became a high volume REO broker, which is where those transactions of 4,000 plus came from doing three 400 deals a year for the banks.

And then as the market turned in ’08, ’09, I got out of the REO business and started doing wholesaling, which is what I’m doing today. Our company is generally strictly a wholesale company, but we do have a few flips here and there, which just makes sense, and then we’ll keep a few of them as rentals at the end of the day.

Joe Fairless: Let’s go back a little bit… 18 years of one occupation, and then something happens and you are no longer able to do that. After 18 years; you were doing it since high school?

Ron Walraven: Yes.

Joe Fairless: What type of feelings does that bring up? And then how did you have those feelings and move towards some positive results?

Ron Walraven: Well, at the end of the day, of course, I lost my income, and I was making six figures a year working on cars, which is very unusual. Of course, I grew up in Detroit, where all the cars were made, so it was kind of easy to get to that volume. But I’d been always interested in real estate, because I was just a hustler; I was always trying to do stuff. I would flip a car too, because I’d come across cars where people didn’t want to complete the repairs; I buy it from them, and then fix that car and resell it. So I already kind of had a mentality of sales in a sense.

And then, of course, just liking real estate, you watch those info commercials – because I’m certainly sitting around watching TV at night – and I thought “Hey, let’s just do that.” And then, of course, along the way, I was losing my house, because obviously, I lost my income… So I became almost my first REO client, in a sense. I managed to get out of that, with my father who loaning me some money to pay the realtors commission, of all things… So in the last 20 plus years, the only house I haven’t closed and gotten paid was the one that I almost lost in 1999.

And then the rest is history from there, because I kind of fell into that broker — the guy that I ended up being [unintelligible [00:06:49].05] agent with at the beginning – him and I got along so well, and he did a lot of REOs, and it just kind of fit my personality.

Joe Fairless: You almost lost the house; your dad loaned you money to help get that transaction to the finish line. What type of impact does that experience have on your career as a real estate professional?

Ron Walraven: Well, for sure, the part of the process that a real estate agent that works for banks does is he has to contact that homeowner. So of course, I had already bits of built-in empathy for the process, knowing what it’s like to get beat up by the bank, bombarded with notifications, and then you’ve got this guy standing on your porch going, “Hey, the bank wants to know when you’re leaving.” So having that empathy already in place has afforded me that ability to read into them and to understand their pain, so that obviously I could facilitate it to the best of the ability. Now, obviously, my fiduciary was to the bank… But at the same time, people are human.

Incidentally, fast-forward about 2010 and 2011, as things imploded again in regards to the market that we all know that crashed, I did actually lose two houses in that crisis, a primary and a rental. But by that time, I already knew how the system worked in regards to how the banks process that particular side of it, so I milked it for every penny I could get for cash for keys, because I knew what was going to happen and what that contact was.

And incidentally, one of those brokers that contacted me for my primary was a very good friend of mine at the end of the day… So it was kind of interesting how you get humbled, and also use those types of things to your advantage, in a sense, because you can take advantage of it in a good way. So the answer to your question is I just had the empathy walking in the door with people at the very beginning, and I knew what that felt like to almost do that.

Joe Fairless: So you had built a business up until 2011, and then there is hard times locally, especially… Looking back on it now – we’re now in 2020, about to be 21 – what are some things that you’ve learned from that 2011 experience?

Ron Walraven: Well, I think that now as a wholesaler, since the COVID thing has certainly turned us upside down again, I was a little more prepared mentally this time around as things have obviously kind of declined, for sure… But I think that learning how to build a team – because prior to that I didn’t really have a team per see, because roughly until about 2008, early ’09, I had a team of nine people working. I had two buyer agents, three admins, a bookkeeper, and a contractor to do all of that REO business, because we were doing three 400 deals a year. And to do that kind of volume, you really have to have processes in place to make that happen. So once it imploded, I revamped both times. I didn’t file bankruptcy in ’99, nor did I in ’09 or ’10. I just kind of pushed through it. I just worked with the vendors that were calling me, just kind of did the best I could to keep it moving and floating… And then as I dwindled everything in 2010, through ’11, [unintelligible [00:10:19].12] down to myself, that’s when I just repositioned myself, “You know what, I’ve got a database of about 500 or 600 guys that bought those 4,000 houses. I’m just going to use that and leverage it.” Because I was asked a million times at closing with REOs, “Ron, why don’t you invest?” My answer was always “Well, I’m too busy doing this. I don’t have time to do that.” Well, of course, the good Lord chose to push me to the ground… And I just picked myself back up and said “Hey, I guess I’ll wholesale and invest.” Right?

So I didn’t fumble my way through it. I knew how to do contracts, because I had read so many of them, I knew how to maneuver through that minutia of the practical side. But what I’m not good at, and I’m still not good at today is marketing. So driving those leads into my system is what was a challenge for me when I first started wholesaling.

Joe Fairless: Let’s talk about that. You wholesale 150+ deals a year; you’re getting leads, clearly. How are you getting the leads now?

Ron Walraven: Well, we’re realizing that that was my weakness and that my strength was deal-making. I just went looking for that guy that wanted to partner up and to do the marketing side of that, and know how to do that. So I hooked up with another local guy, a younger guy. I’m in my upper 50s, he’s right now about 30-ish. So I hooked up with him, he was very good at the detail side of driving leads in… So we just kind of figured out that the lead sources are all the stressed-out people. So who is that? That’s probates, that’s inherited houses, that’s landlords that are tired, that’s tax problems, that’s foreclosures, which I already knew… So we just kind of figured out how to find those stressors. And then we joined a group called Collective Genius back in late 2016, and that really catapulted us up into the direct mail side of things.

We ran direct mail campaigns in Google and Facebook up until October of ’19, which was driving in 4,000 or 5,000 leads a year. We hit those 150 actual closings. Our first niche was really doing probates. My partner and I actually wrote a book. [unintelligible [00:12:37].08] estate in Michigan, so we wrote this little book that we use as our marketing piece initially, and sent those out to the 150, 200 probate cases that were opened up in Oakland County, Michigan, and just sent them the book with an empathetic letter. And that worked. Once we started doing the direct mail, that’s when things really exploded in regards to the responses. So the first couple of years we might have done 50 or 60 deals, which would have been late ’13, ’14, first part of ’15. And then when we started doing the rest of it, that’s when it just kind of took off and we did 80 deals, and then 130, and then 150 last year. We have systems in place on the back end to do all that too.

Joe Fairless: I think I heard you say you were doing direct mail campaigns up until October 2019. That was bringing in 4,000 to 5,000 leads a year. If I heard that correct, that is past tense. So why did you stop?

Ron Walraven: Well, the direct mail just seemed to dwindle in his responses back to us… And then there were a lot of people — because obviously the Collective Genius is a group of the top guys in the country, and everybody was saying…. Well, not everybody, but a lot of people were saying how much it was different. And then Google and Facebook were kind of even dwindling there, too. So we just couldn’t spend the money for the return anymore. So we just shut it down slowly. We were sending out 100,000 postcards a month from roughly mid 18 until September of 19. So we were doing that consistently, because people leave those postcards on their table, right? Even today, we still get calls from those postcards that we sent. And then just recently, we actually did a TV commercial that we started running. We actually shot that commercial in late February, and then we ran it March 31st. Now, everybody knows what was going on on March 31st of 2020, it’s called COVID. Right? So most of the United States was shut down. So guess where everybody is sitting during COVID? In front of their television. We pulled in 600 leads in 30 days with that TV commercial.

Joe Fairless: Wow. Where did it air?

Ron Walraven: It was on two local TV stations in Detroit. We ran that spot roughly about 15 times a day for 30 days in a row, and our CRM system will text me when somebody goes online and sends in a form fill. I could always tell when that commercial was running, because my phone would just blow up with text coming in. But of course, that was me kind of keeping track of my intake guy. And then I would give him some feedback if an address that looked particularly juicy to me; I would just say, “Hey, you need to work on this one pretty good.”

But we stopped that commercial at the end of April, just because we had so many leads… So we started working those. And today we’ve probably closed just under 20 of those, with about 120,000 in return on a 30,000 spend, just for that one particular lead generation.

And then we started up that commercial again in August, because we had shut it down just because we needed to work those leads we had. So we did it again, and we didn’t work as well through August through September, because obviously not as many people sitting at home. But we just pulled down a $40,000 assignment off of one of those TV ads just the other day. So it does work.

And then just talking with some of the guys across the US, the direct mails actually started to kind of be better again, because I think COVID has weeded out a lot of the newbie type wholesalers that just couldn’t afford to keep moving. So we’re going to proudly start the direct mail and more texting. Because right now, TV, texting and cold calling is where we’re at for the most part… Because we had a mailing list of about 25,000 people that we got from a data source where we skip traced all 24,000 of those names and just started cold calling them and texting them. And texting and cold calls are not quite as — because it’s very intrusive, in a sense… So the texting people – there are some mean people out there. When you text them something trying to get them to call you back, they are very, very… I call them angry birds. That’s what I call them, angry birds.

Joe Fairless: [laughs] Well, you are interrupting their day by texting. I get texts on some of the homes that… I don’t own any homes anymore. I do all apartments. I sold my homes in October of 2019, right when you stopped your direct mail… And I get text messages from wholesalers asking me if I’m looking to sell my home, they’d love to have a conversation with me. I’m not an angry bird, I just block their number. But there’s been a couple of times where — if I was ever really bored and I got a text message like that, I’d just mess with them. I would just keep going back and forth of ” Oh yeah, I’d love to sell it to you.” And I think that might be illegal to sell a home that’s not yours, so maybe I shouldn’t go down that route.

Ron Walraven: [laughs] For sure.

Joe Fairless: So TV, texting, cold calling… And then you’ve got a list, so you’re skip tracing to get those numbers. And you said it was $30,000 spent on the TV commercial, it got you 600 leads approximately in 30 days. How much to produce the commercial?

Ron Walraven: It was about 5,000 bucks after the actual production. It was like $3,500 for actual commercial production, and then the management part of that production. So it was pretty cool. It’s a 30-second spot that basically says the website nine times. It’s typical… I’m not going to say it’s cheesy, but it’s just typical commercial stuff, where it just beats it into you. And I think, of course, that’s why it works so well during COVID, is because there were so many people sitting there, as opposed to the normal day-to-day life of people, right? And a lot of those were Detroit leads. In other words — because I live in a Northern suburb, and we generally get better deals out in the suburbs as opposed to the city… But I have a really good quality lead referral for Detroit properties. And we have a deal set up where we just basically hand it to him, he gets the deal done, and it gives us half of whatever he collects. So it’s a pretty sweet deal for us.

He had a day job up until about six months ago; he quit his day job and started wholesaling full time. So we figure we pulled in 600 leads, we gave him roughly about 250 of those just to work. And of course, they’re not high-quality stuff, because of the television generation part of that, but he’s a good follow up person, which is really our claim to fame on our end, is just the follow-up. We can talk to them initially, for sure, to kind of get their motivation. But then my intake guy, he’s just a bird dog guy. He loves to have a reason to call you, so that he can kind of have another conversation with you about your house, or whatever, right? And we use Podio for our CRM. And we’ve got it all set up to drip, and to text, and do all of those things that we all do. And it’s very methodical and very system-oriented. It’s the same thing every time. And he’s good on the phones. He used to be an insurance salesman and a car wholesaler, so he’s got a lot of drive, like a real guy would, and to dig to the bottom to get the best deal.

Joe Fairless: Is there anywhere that maybe I’m not looking to look at your TV commercial? Or maybe on YouTube or somewhere?

Ron Walraven: YouTube? Yes.

Joe Fairless: What do we search?

Ron Walraven: Go to Waymark Homes, the YouTube channel.

Joe Fairless: We’ll find if we go to your YouTube channel.

Ron Walraven: Yeah.

Joe Fairless: Alright, cool. Taking a step back, real quick, what’s your best real estate investing advice ever?

Ron Walraven: Just be diligent. Not to give up. I think I get so many calls in a day where a guy that’s frustrated with his day job, he calls me and says, “Hey, how do I get into wholesaling?” Well, there’s the million-dollar question, right? How do you do that? Well, you and I just talked about it. It’s really all about lead generation. Most people can buy a house at the right price. And to find that buyer is not that difficult if it’s a deal, because there are Facebook pages all over the place… But guys on there will buy that house all day if it’s a deal, right? So the lead generation is always the key. So I just tell them just to keep plugging away, and you get that first deal. You’re going to raise the bar in your mind of how that actually went. And if you need some help, call me. I’m more than happy to talk with you on the phone. Not a problem.

Joe Fairless: We’re going to do a lightning round. Are you ready for the Best Ever lightning round?

Ron Walraven: Yes, sir.

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

Break: [00:21:21][00:22:01]

Joe Fairless: Okay, Best Ever way you like to give back to the community?

Ron Walraven: I like helping local investors get deals, kind of just what I talked about. I am part of a local REIA Group that I’m the vice-president of. I do the haves and wants in front of that crowd, and I always give out my cell phone and say, “Hey, if you’ve got a deal that you’re having trouble with, text me.” And I give them my cell phone and I always ask them to text me first, because calling me is probably not going to get me, because I’m usually talking to somebody who’s texted me.” So text me, and I’ll help you if you’ve got a deal, and maybe I’ll buy that deal from you. Or at least I’ll help you dispose of it. So the long story short is I just like helping people, local guys, to do that. Even though maybe I’m creating my own competition. But I can’t buy all the houses, so let’s just help each other do deals.

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

Ron Walraven: Well, if you go to that website, which is waymarkhomes.com. We’re local wholesalers. Or you go to my Facebook page which is simply just Ron Walraven, and you can see who I am as a believer in Christ. I’m very dedicated to that. And integrity and transparency is really what I’m all about. We tell the truth and we do what we’re going to say we’re going to do at the end of the day, every time.

Joe Fairless: Ron, I appreciate you being on the show. And on the integrity part, I noticed on your website, it links to the Better Business Bureau profile of your company. People who are on your website can go there, which is really smart. So that’s something I noticed and wanted to call out.

I enjoyed our conversation, I enjoyed learning how you’re getting leads, getting into the specifics, and lo and behold, TV was very effective for you, and then some of the other things that you’re doing, too. I hope you have a Best Ever day and we’ll talk to you again soon.

Ron Walraven: Thanks Joe.

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This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

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JF2306: Starting With 130k With Will Clark

Will Clark is a full-time student at Vanderbilt University and has recently started in real estate focusing on wholesale and flipping properties. In the past 12 months he has earned $130,000 from 7 properties and today he will be sharing how he got started.

Will Clark Real Estate Background: 

  • Full-time student at Vanderbilt University
  • Recently started his real estate journey with 12 months of experience
  • Has grossed $130,000 in wholesale & flipping profits from 7 properties
  • Based in  Nashville, TN
  • Say hi to him at willclarkbusiness@gmail.com 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Quit procrastinating and organizing, trying to make things perfect, don’t be afraid to make mistakes” – Will Clark

 

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JF2289: Shifting Focus to Turnkey With Alexander Cruz

Alexander aka “Xander” is a full-time real estate investor with 7 years of experience. He is also the director of CR of Maryland where they have 350 single-family properties in Baltimore owned and under management and will currently rehab and sell 140+ turnkeys in 2020. 

Alexander Cruz Real Estate Background:

  • Full-time real estate investor for 7 years
  • Partner of CR of Maryland a real estate company
  • CR of Maryland Portfolio consists of 350 single-family owned and under management, sell 140+ turnkeys in 2020,  completed 400+ flips, and 400+ wholesales
  • Based in Baltimore, MD
  • Say hi to him at: https://crofmaryland.com/ 
  • Best Ever Book: Relentless

 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Focus and stick to one area” – Alexander Cruz


TRANSCRIPTION

Theo Hicks: Hello Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today we’ll be speaking with Xander Cruz. Xander, how are you doing today?

Alexander Cruz: I’m doing great Theo, how are you?

Theo Hicks: I am well, thanks for asking, and thanks for joining us today. A little bit about Xander. He is a full-time real estate investor and has been for seven years. And he’s a partner of CR of Maryland, which has a portfolio of 350 single-family homes that are owned and under management. They also project to sell over a hundred and forty turn-keys in 2020, and they’ve also completed over 400 flips and over 400 wholesales. He is based in Baltimore, and you can say hi to him and learn more about his company at crofmaryland.com. So Xander, do you mind telling us some more about your background and what you’re focused on today?

Alexander Cruz: Sure. I’ll take you all the way back, I’ll keep it brief. I got into real estate back in 2011; I actually was hired by chance as an admin position for a broker. Quickly found out I wasn’t cut out for admin work, but I fell in love with real estate really fast. I did that for about a year and then I was an independent agent for about two years. And then that’s when I met my current business partner, who I still work with today. At the time that I met him, he was creating a new company in Maryland to be known as CR of Maryland, which is where we’re both from, we’re both Baltimore residents. At the time, our focus was just fix and flip. So at that time, it was me, Craig, and a project manager, and we were going out trying to buy homes, get them rehabbed, and then sell them.

So that grew a lot over time, we evolved a lot along the way. We went from being just a fix and flip company to focusing heavily on buying and renovating rental properties that we would keep for ourselves, so we built a pretty substantial rental portfolio here in Baltimore, and then of course also grew our property management team to oversee and manage it. And then that led us to last year, where we were reaching our intended limit of how many rentals we would personally have… And somebody said to us, “Well, why don’t you keep buying and renovating them, but instead of keeping them you can turn-key them? So you’re selling the property to another investor, but you retain the management.”

So it kind of clicked in our head and we made a big shift in our company, and that became our main focus. So probably about 90% of our time and energy is put into what we call our turn-key business. And like you said, we’ll deliver over 140 single-family properties this year in 2020 to turn-key investors from around the country, that we will buy ourselves, renovate ourselves and then continue to manage for many years to come. So it’s a really exciting part of the business… And we cover a lot of other aspects, we have a wholesale division, we have a retail real estate team… But our primary focus really is the turn-key business and property management.

Theo Hicks: How did you meet your business partner?

Alexander Cruz: Good question. Also a little by chance. So taking one step back again to the beginning… When I was in the admin role, I wasn’t good at it, but I worked hard and I maintained the relationship with my broker. So she’s the one that about two years later or whatever it was, that introduced me to Craig… Because I maintain a good relationship with her even though at that time I was no longer working for her; I was an agent in her office and she said, “Hey, I’ve got a guy coming in. I want you to meet him.” She had known him for years and she said, “I think you guys will work well together. I want you guys just to meet and talk and see what happens.”

And then over seven years, we became business partners, and depending on the day, our relationship can vary from best friend, to father-son, to business partner, and everything in between. But we have a really good relationship and it was all because of that introduction.

Theo Hicks: If you don’t mind diving deeper into that… So he obviously was doing his thing and you’re doing your thing, you guys came together, how did you decide how to structure the partnership in regards to compensation, and roles or responsibilities and things like that?

Alexander Cruz: Yeah, I would compare it to — not to sound weird, but let’s compare it to dating. So we didn’t go straight to a marriage. So in the beginning, our relationship was almost exclusively like agent and investor. Although we were working very closely together, I would get paid a commission when we would buy something and sell something. That’s how it started. So eventually it evolved, and we quickly figured out which of us was good at what. Again he’s a little bit older than I am, so he already had a pretty good base knowledge, but needed boots on the ground. We really had to hit the streets and find homes, and deal with contractors, and just do all the stuff that happens along the way. I was doing more of, I’ll say, that kind of heavy lifting, and I was the front-facing person, so I would deal with customers, agents etc, and he was more on the back end, building the business. So it was relatively easy for us to kind of define the roles, and then from there it just grew into a partnership, and we re-arranged pay and ownership and everything like that at the time.

Theo Hicks: So you were admin, and then you were a broker, and then you were a part of this company. And that’s when you started buying deals, right? So how does CR fund their deals? Maybe walk us through the evolution of that, so how you were doing it at first, and then what you’re doing now, and then how you got from A to Z.

Alexander Cruz: In total honesty, the blessing of my partner was that he had come from the business world already, and we had a pretty big amount of capital to work with. So for us, raising capital wasn’t the issue, it was more so how to use it and how to use it successfully. So that’s where the challenge of finding deals and having the right strategy in place to profit off of the deals – that was honestly the biggest challenge, because we’re in a competitive market and it has always been that way for as long as I’ve been in it.

Theo Hicks: So when you partnered up, he had a big book of people that he could just reach out to whenever he needed money?

Alexander Cruz: Correct. So I actually — and part of what I skipped in this story was he already had built and was running and owned a successful flipping company in Pennsylvania; even though he was from Baltimore he worked up there, because that’s where his previous business life was. So he was basically coming down here to recreate the same company, and already had a person in place, a PA that was running it day to day. So he didn’t have to be there every day, he spent all his time here, and wanted to do it in Baltimore. So that’s where it got grounded and started. So fortunately for us, the funding was in place.

Theo Hicks: Okay. So the harder part was finding deals to place that capital in. And so what is the best way to find deals, in your opinion?

Alexander Cruz: Yeah. And one thing that just caught my eye as you said that – the hard part was finding deals, but then also just growing, it’s really hard. We went from me, him, and one project manager, and today we have about 28 employees and team members. So this growth is super challenging; you hit that wall over and over again, and you have to revamp and adjust systems, and improve and implement systems. So in the beginning we had no systems.

Aside from that, the question was how do we find deals… So when we first started it was a lot easier, you could still find deals on the MLS pretty regularly. That quickly changed I’d say in 2014 or 2015; that’s when we started doing our off-market marketing is what we call it, so direct to seller marketing. The best strategy I can say is to cast a wide net. There are some months where certain things work better than others, and obviously, if you have the ability to market, you’re going to have to spend money on marketing. If you’re going to do that, I would talk to people who are already doing it and find out what’s working for them and what their strategies are. Don’t try to reinvent the wheel. There’s plenty of guys doing it and probably talking about it in podcasts or wherever else, so you don’t have to start from scratch. But we still do some mail, we still do some skip tracing, we do some outbound calls and texts, we have SEO, we have Pay-Per-Click, we have a Facebook page… Facebook you don’t really get many more seller leads from, but you can still create some awareness. So you have to cast a wide net and then constantly be evaluating your numbers. We look at numbers every single week, so we can tell what’s working, what’s not working and we can tinker and adjust. But you have to be consistent, you can’t just do something for a month and then give up.

Theo Hicks: Have you seen an increase or decrease in leads over the past six months?

Alexander Cruz: It’s been a bit of a wave. When COVID hit in March – I’m sure everybody talked about this, but it got pretty quiet for a few weeks to a month. And then right after that it, seemingly just started to spike back to normal again. I mean, it’s been very consistent for us for the past few months.

Theo Hicks: So out of all things you’ve mentioned over the past, say, six months, what’s been the number one source of deals?

Alexander Cruz: I think we’re getting our best value out of outbound right now. And when I say outbound, that’s calling and texting people. It seems to get the best response. We still do get a response from mail, and what’s interesting is actually some of our best overall deals sources back to mail. And I think a lot of that has to do with that we’re a legitimate operation. So it sounds silly, but our postcard has the Better Business Bureau logo on it, because we’re registered, or affiliated, or whatever it is… And that makes a difference to some sellers. And then they google us and they can see it, “Okay, they are a real company. They have 200 reviews and a website and everything else.” And at that point, there is a comfort level that you don’t always get out of everybody else.

Theo Hicks: Do you think that people can still replicate this professional persona without having to have a full-fledged company? Like what are some things they can do to gain that credibility if they don’t have a company like yours?

Alexander Cruz: Yes, sure. The biggest thing is just professionalism. We’ve talked to so many people over the years that say they called three other investors that never called them back. If you’re going to pay for leads, you’ve got to answer the phone and call people back. And then on top of that, you have to create a follow-up system. There is a local wholesaler we know well that he’s doing a ton of deals right now, and he doesn’t have a big operation; it’s like him and two other guys. But they are meticulous and I would say obsessive about their follow up. That is the biggest part of success, especially in the competitive market. Because half of it is just timing and luck. It’s when does the seller answers the phone, and then once you have them on the phone, are you doing a good job with them?

So you don’t have to have a big operation to establish legitimacy; you just have to treat people right, know what you’re talking about, and pick up the phone and call people back. If you say you’re going to call somebody, you’ve got to call them.

Theo Hicks: Is selling the turn-key deal in the back end a challenge at all, or is it pretty smooth?

Alexander Cruz: I’d say it’s pretty smooth. I don’t want to say that the product sells itself, but the combination of the product. So we have a really good market, the rent to sale price ratios are great, the returns are really high. And then on top of that, we go really crazy on our renovations. So we target homes that need everything, and then we do everything. So it’s as close to new construction as you’re going to get. These are full rewires, they have all new ductwork, brand new roof, windows, plumbing, and then of course kitchens and bathrooms are always brand new. So you have good numbers, you have a really solid product, and then the last part of it is you have us that’s going to properly manage it, and we’re local, we already own and manage well over 300 properties, we understand what has to happen, we have the systems in place, and we have the people in place.

Theo Hicks: What type of returns are these people who are buying these… If I want to buy a turn-key house from you, what should I expect to pay? And then what ROI should I expect?

Alexander Cruz: Our typical price point for a renovated house is going to be between $140,000 and $200,000. And then in that price point — when we build out our portfolio we actually show a 5% vacancy and a 5% maintenance and reserves. So we’re taking 10% off the returns off the top. Even after that, our cash on cash returns is typically 12% to 14%. So they’re pretty strong numbers, and I’m told consistently by potential buyers that our numbers are pretty much on the top that they see as they shop in different markets around the country.

Then the other nice thing is our market actually does have some appreciation. It’s nothing crazy like Dallas and Tampa and some of these other really hot markets; we’re pretty modest, 3% to 6%, but it’s a good number to have in addition to your cash flow.

Theo Hicks: Do most people, most of your clients, are they in Baltimore, or do they just buy it, it’s sight unsee, and they never even see the property and just kind of [unintelligible [15:04]

Alexander Cruz: Yes. Most of our clients come from outside of town. We’re involved in a couple of networks now that that’s kind of what they do, is educate and produce these buyers that are seeking renovated turn-key product and they’re considering areas all around the country. A lot of times they live in California, or Atlanta, New Jersey, just more expensive areas where they wouldn’t buy a rental locally, because it’s so expensive it doesn’t make sense. So we do get a lot of those. We have some local investors, too.

Theo Hicks: Alright, Xander, what is your best real estate investing advice ever?

Alexander Cruz: The best advice ever, and something that we’ve at times struggled with, is to stick with and focus on one area that you’re good at or can be good at, and not get distracted and try to do too much. We’ve all done it as we fall for like the shiny object, and you start getting away from what you’re really good at. So for us, it’s buying and renovating, it’s really what we’re good at. So to spend a lot of time – and I’m sorry if anybody from the retail team is listening, but to spend 80% of our time on the retail team, that’s not where we get our best return on investment, and it’s honestly not what we’re great at. We’re good enough and we have a team in place and it provides us an extra outlet for leads and can take care of people in different ways there, but the vast majority of our energy is spent where we make our most money and can get our best return.

Theo Hicks: Awesome. So are you ready for the Best Ever lightning round?

Alexander Cruz: I’m ready.

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:16:33][00:17:14]

Theo Hicks: Okay, Xander, what is the Best Ever book you’ve recently read?

Alexander Cruz: I always go back to Relentless by Tim Grover. He was the trainer of Michael Jordan for many, many, many years, and then Dwayne Wade and several other amazing athletes. It’s all about mentality and your mental approach. And it’s applicable in sports of course, but also in business and life. I remember that book a lot, I love that one.

Theo Hicks: If your business were to collapse today, what would you do next?

Alexander Cruz: I would probably, honestly, hop right into real estate sales. It’s the one thing that no matter what the economy is doing, is still happening. And you have the most control over your own success and you determine how much you work, how many leads you get, you can create that on your own… You really have the most control of your destiny there. So that’s probably where I would head.

Theo Hicks: Out of all the deals your company has done, what’s been the Best Ever deal?

Alexander Cruz: The Best Ever deal… It’s been a couple of homes that we have flipped… We actually have one this year, we just got a really good deal on it, off-market, in the wintertime. And there was an older couple, they needed seven months to move… They didn’t need that long originally, but then COVID, hit so the settlement got pushed out months while they were waiting to move into their retirement home… And we had a good price — they were ecstatic, because they got to be flexible when they moved. The house also had [unintelligible [00:18:27].25] So we then finally got them moved out, but the house was meticulous; so we literally just cleaned it up and put it back on the market, fixed the septic, and the market is stupid hot right now. So we actually made six figures on that. That’s one of our best deals ever.

Theo Hicks: On the flip side, of all the deals your company has done, tell us about a time that you lost money on a deal and then what lessons you learned.

Alexander Cruz: Ah, which ones? This actually ties back to what I said earlier… There’s an infamous street named Allendale, and I bought a house in Allendale that had, I kid you not, a hole in the roof that was probably about seven feet in diameter. And actually, the guy was still living in the house like this for years. So when we finally took possession, the hole and the water damage went all the way down to the basement. So we said, “Well, let’s tear the house down”, it was a rancher, “and we’ll build a two-story house on the foundation.” We’re good at rehab, we’re not good at building.

So really long story short, this dragged on for over a year. By the time we were ready to go, we had to tear the foundation out and build a new one. Then we decided to try and get a variance for the building’s set back lines so we could add a garage; we spent months and thousands on attorneys to do that, and the variance got denied. So we have no house, we have a hole in the ground, we are way upside down at this point, and we still have nothing after a year. Neighbors hate us, “What are you doing with the lot?” and finally, we’re like, “Let’s just sell the lot. We sell to a builder that knows what the heck they’re doing.”

So we finally did, and that nice profit I just talked about on the other deal, is about what we lost on this deal. It was just a total disaster. The lesson is, like I said earlier, stick to what you’re good at. If you don’t know how to build homes, don’t go and try to build a house, especially when it’s going to be expensive. Or if you’re going to do it, find somebody that knows what they’re doing, and you need to partner with them or pay them to guide you through it. Don’t try to reinvent the wheel; find an expert, and rely on them.

Theo Hicks: What is the Best Ever way you like to give back?

Alexander Cruz: Sure. So my girlfriend is a school counselor at a title one school locally, and they have a lot of underprivileged kids. So we partnered with a local charity called Baltimore Hunger Project, and they serve kids in elementary school all over the Baltimore area that are what they call food insecure. These are kids that go home from school and might not have dinner that night at all, and might not have breakfast until they get to school the next day. So what Baltimore Hunger Project does is provide meals to these kids every week, and they’ll send them home on the weekends with a big pack of food, so that they’ll have food through the weekend, and hopefully gets them until Monday.

When the pandemic hit and schools closed, the Baltimore Hunger Project, I forget — the number is crazy; they went from serving 600 kids a week to over 2,000 kids a week, and they continue to grow. Because now they’re not going to school, they have no way to get this food. So it’s been a huge operation to expand it, and we’re really honored to say that we’ve been able to help them financially and also with time, so that I can still, in a way, get back to the kids at my girlfriend’s school, and then also other kids in the Baltimore area.

And then recently we also partnered with them to purchase 30 laptops for kids at an elementary school nearby that didn’t have them. It’s a small private school, so they weren’t given like they were at the public schools. These kids just didn’t have laptops, so we were able to provide 30 laptops to them. So that’s an ongoing thing for us. We really are huge in giving back to the kids in the community here.

Theo Hicks: And then lastly, what is the Best Ever place to reach you?

Alexander Cruz: Sure. So the easiest way is to go to crofmaryland.com. There’s a Contact Us tab that’s super easy, you can just do that. Or you can click the turn-key tab and click over to that page, there’s a Sign-Up link there was well that’s specific to the turn-key properties. You can always reach us there. You can sign up on the page to automatically get dumped into our system, and then we’ll reach out to you to schedule a call and discuss things further.

Theo Hicks: Perfect Xander. Well, thanks for joining us. Lots of solid advice given in this episode. A few of the takeaways that I got was how you make a business partner and the importance of not, I guess, burning bridges at any…

Alexander Cruz: That’s it.

Theo Hicks: …any job that you do in the past…

Alexander Cruz: It’s huge.

Theo Hicks: Because you never really know when some relationship that you created will result in, for you, a massive business.

Alexander Cruz: Yup.

Theo Hicks: And then you also talked about how you are finding deals. That at first it was in the MLS, and then now you do off-market marketing. And why it’s important to cast a wide net, because what works one month or one year might not work the next month or the next year. Results are what’s important also – track, and then not try to reinvent the wheel and just kind of see what other people are doing that works for them and do the exact same thing.

So you do mailing, skip tracing, hop on calls, SEO and Pay-Per-Click. And you get the most deals from the outbound call and texts. But the best deals come from the mail. And you talked about why it’s important to be a professional, right? You’re a professionally run company, so you got the Better Business Bureau logo on the mailers and then they look you up and they see all the reviews on your website… So they know they’re working with a professional company, but you don’t have to necessarily be a company to still have these same professionals. And you gave the example of the wholesalers – they’re a small crew, but because they’re meticulous in their follow-up, they’re still able to do a lot of deals. And so follow up is key here.

And then your Best Ever advice was to not fall on the shiny object syndrome, and you mentioned that everyone does it and you gave us an example of your worst deal. But to focus on what you are good at. And then when you’ve got your business and you’re doing the one thing you’re good at, you are kind of studying further within that to focus on the areas that result in the greatest ROI.

So you’ve talked about in the podcast before, a dollar an hour, 10 dollars an hour, a hundred dollars an hour, and a thousand dollars an hour job, and making sure you as a CEO are focusing on those higher dollars per hour jobs, and contracting up everything else. So Xander, I appreciate it. Thanks for joining us. Best Ever listeners, as always, thank you for listening. Have a Best Ever day and we’ll talk to you tomorrow.

Alexander Cruz: Thanks, Theo.

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JF2244: Wholesaling Made Easy With David Dodge

David is the Founder of House Sold Easy, a full-time investor and Author of “The Ultimate Guide to Wholesale Real Estate”. He is a St. Louis Real Estate Investor with over 15 years of experience. He first started investing in Real Estate when he was in college, at the age of 20 while attending the University of Missouri-Columbia. David specializes in wholesaling real estate as well as teaching others how easy it is to learn how they too can wholesale real estate for profits.

David Dodge Real Estate Background:

  • Founder of House Sold Easy, full-time investor, & Author of “The Ultimate Guide to Wholesale Real Estate”
  • 15 years of real estate experience
  • His team has wholesaled over 500 houses & he personally owns 60 rentals
  • Based in St. Louis, MO
  • Say hi to him on his podcast at Discount Property Investor
  • Best Ever Book: Relentless 

 

 

 

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Best Ever Tweet:

“Doing deals doesn’t cost anything if you do it right but getting leads does, it either cost time or money” – David Dodge


TRANSCRIPTION

Theo Hicks: Hello best ever listeners and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today I’m speaking with David Dodge.

David, how are you doing today?

David Dodge: Hey, Theo, I’m doing great, man. Thank you for having me. I’m grateful for your time and let’s talk some real estate, buddy. Let’s do it.

Theo Hicks: Let’s do it. I appreciate you joining us, looking forward to it. So before we talk real estate, let me give your biographical information really quickly. So he’s the founder of House Sold Easy. He’s a full-time investor and author of The Ultimate Guide to Wholesaling Real Estate. He has 15 years of real estate experience and his team has wholesaled over 500 houses and he personally owns 60 rentals. He is based in the St. Louis and you can say hi to him at his podcast, which is Discount Property Investor.

So, David, do you mind telling us a little bit more about your background and what you’re focused on today?

David Dodge: I would be happy to. So my background is in sales and marketing. Basically out of college, I had sales and marketing jobs. I started investing in real estate when I was really young. I was about 20; but for the first 10 years—I have 15 years of experience, right? The first 10, I was very passively investing. I was paying retail for houses, I was getting loans, putting down 20%, getting them on the MLS, and I was just renting them out. Basically, just a way for me to park cash. I’ve never really been good at saving money, Theo, so I just figured this is going to be a good way for me to basically put savings on autopilot. So I would save a little bit to be able to buy something. And again over the first 10 years, I maybe bought one house a year or one every other year and got about nine houses in the first 10 years, all these rentals, paid retail for all of them, had loans… The first couple I didn’t even have the money to buy it. I would borrow the 20% from family or friends and then even get co-signers,  just to get in the game, and to pay people back over time.

So to speed things up and not bore everybody, basically, about five years ago, I learned this thing called wholesaling. And I learned that there’s these people out there that are motivated to sell. Who would have ever thought, right? And that you don’t have to pay retail for properties. And you can do all this creative stuff to control properties and flip houses, with none of your own money. Sounds crazy, and like an infomercial and like, “You can do it with none of your money! You can do it!” But that’s the case, it’s so true.

Now the catch and the caveat that nobody wants to tell you until they’re ready to sell you their $30,000 program, is that it costs money to get the leads. But doing the deal is actually none of your own money typically, right? But the leads don’t come free. They don’t just fall in your lap. So you have to spend money to get these leads. But if you can create a business that markets well to find these people, these leads are very, very lucrative. So that’s basically what I’ve been up to the last five years. When I learned about wholesaling and started doing deals, I quit all my jobs doing sales and marketing and I went full time. In the last 15 to 18 months, we took our portfolio from about 15 to 65 using a method called the BRRR method.

So what we do is we do a lot of marketing. And then we keep the best deals for ourselves and we flip them as fix and flips, or add them to our portfolio. And we just wholesale everything else that either doesn’t make sense for us or maybe has a quick 10-15 K to help fund other projects. So we do a lot of all of it. So currently, we’ve got about 65 rentals, wholesaling eight to 10 a month on average, sometimes more, sometimes less, and we have anywhere from eight to 15 projects going on. Some of those are fixing flips, some of those are fix, rent, refi, repeats, so the BRRRs. We still have to fix them in order to do that process.

So that’s kind of what I do, I’m full time at it. I love helping people and teaching people that this is possible that you can flip houses with little to no money. I do make it very direct and transparent though that you have to spend time or money to get these leads though. Those cost time or money, and that’s it, period; or both. But once you get them, you can get really creative.

And like you said, I wrote a book called The Ultimate Guide to Wholesaling Real Estate, which really teaches everything you need to know about wholesaling and how it works. We just published our second book, Theo, called The BRRR Method. It’s about building a rental empire with nothing out of pocket. We’ve essentially added 100 doors to our portfolio. I count properties when I say 65, but we’ve had about 100 doors to our portfolio in the last 15 months, and we’ve averaged about $1,200 a property, so maybe about 40 to 45 properties in total. And our averages are getting lower and lower to where hopefully they’ll be at a zero, a net zero soon, when we’re buying these properties.

So that’s kind of who I am and what I do and stand for, my man. Thanks for having me.

Theo Hicks: Thanks for sharing that. A lot of different directions we can go. The first thing I want to ask you… So when you’re wholesaling, are you doing the assigning the contract or do you do the double close?

David Dodge: Whatever makes the most sense. To me, it doesn’t matter, because you’ve got to close it regardless to get paid. So ideally, we’ll assign, but then again if there’s a large spread in there, and we think that that may deter the buyer or cause any problems, then we’ll double close. We have a really good relationship with three or four title companies in town and they dry-fund our deals for us, so we don’t even need to bring money to the table to purchase. But you don’t have to either. There’s ways around it. Some title companies and states and attorneys or whatnot, they may require transactional funding, but you don’t even need it if you know the right people. So just make a relationship with those people; that’s kind of how we do it. So we do both, to answer your question.

Theo Hicks: So you’re saying that assigning a contract, obviously, you don’t need to bring any money. But if you double close, the title company will front you the money to close and then you pay them back once you sell the property?

David Dodge: You never even get the money. You never even get the money, they hold it. But they’ll use the end buyers money to purchase it, and then transfer the title simultaneously, and then give you the difference. So yes, that’s called a double closed dry-fund. That’s what we refer to it as.

Theo Hicks: And you mentioned that—

David Dodge: If you double closed and you need the money, then you’d have to bring your own money or get a transactional lender to come in for an hour or a day or whatever it is. But again, you don’t need it. We can do these dry-funded double closes. That’s correct. Pretty cool.

Theo Hicks:  Okay. Yeah, that’s cool. So you said that ideally, you do the assigning the contract. So when would you have to do a double close, as opposed to assigning?

David Dodge: When selling it to a buyer that can’t buy it on assignment, because of their lender. Sometimes the lenders want to see the seller take possession and not wholesale. So that happens sometimes. Other times, if we have a large spread – let’s say I buy a property for 20k and I sell it for 40k. Well, it’s okay to pay the extra $800 in closing fees – that’s the total basically – to not let the seller know that you’re making that amount of money because it may deter them and make them not want to execute that thing. So assignments are great; you don’t have any costs. But there’s pros and cons with both ways.

So the pros with the double close would be that you can conceal the profits, at least for a couple of weeks. And it also helps your top line – not your bottom line, your top line – on your taxes if you can show large amounts of money coming in and out of your business, which helps later in the process of getting loans, which you may need for the BRRR method, right? So all this kind of ties together.

So double closes actually help my financials and my tax statements, because they can see $5 million, $7 million or $10 million worth of real estate come into my wholesale business and then go out the very same day with profits on it.

So those are some of the advantages of a double close.

The cons are just the cost; anywhere from 800 to two grand typically, to double close a deal. Hopefully, you can do it for less. In assignment, you have pros of no costs. That’s basically the only pro, right? You have to disclose your entire agreement. And that assignee has to step into your shoes to fulfill whatever you agreed with the seller; great option. Pro is no cost. But the con with an assignment is that you have to be 100% transparent right away and let them know. If I buy a property for two grand and sell it for 20k, do you think that the buyer is going to be cool with me getting 18 grand? Not typically. So just pay 800 bucks to hide it. It’s good. As long as they see the deal at the closing table, it doesn’t matter what your profits are. And that’s really the reason why we have the option and we choose what works best at the current time.

You know, more money isn’t always better, especially when it comes to real estate deals. More money isn’t better. People say, “Well, Dave, how do you choose what you do with the deals that come in?” We do tons of marketing and I keep the best and sell the rest as I said earlier, but the best doesn’t necessarily mean that I’m going to make 60 grand if it takes me eight months. If I can make 23,000 next Tuesday, hey, that’s best right now. So it’s not always biggest, it’s best. So we keep the best deals for ourselves and we just wholesale everything else out. So that’s kind of the difference in what we do.

Theo Hicks: First of all, I never heard a wholesaler talk about the top line that you mentioned before. That was an interesting thing.

David Dodge: That’s because most wholesalers don’t have 65 rental properties, and have studied the BRRR method and mastered it. In order to do the BRRR method, there’s two things that you have to have that are really, really, really important. You have to be bankable for one, because you can’t refi out. If you can’t refi out, the strategy is totally broken. You’re going to end up getting stuck with properties that you bought, using harder private money at a high interest rate and you’re going to be stuck with them if you can’t pay those people back. So you’ve got to be bankable.

And the second thing is you have to add the value. And you do so by buying at a discount and increasing the value by rehabbing. Basically, three things. But those three things are needed to do it.

So yes, adding to the top line helps your financial statement. It’s going to help you be bankable. Most people don’t think of that at all, right? Because it’s not really doing anything but just creating a little bit more work of having to manage that. The profits are the same, but you can actually use that to your advantage to show that your business is creating millions of dollars of revenue, when in fact you’re not even using any of your own money to do it.

So there’s so many advantages. But yes, absolutely. I love that you touched on that, because that’s not really talked about.

Theo Hicks: It’s not. It’s not. Yeah, so even if I don’t use my own money to do the double closes, whether it’s the title company funding those funds, it still counts as if I did that transaction.

David Dodge: 100%. Last year we wholesaled a deal, it was 700 grand, we made 30,000 on it. We put $100 into escrow as earnest money. So our total cost was $100. It came back too, and then we had credit of buying and selling the house at 700,000.

Theo Hicks: Okay.

David Dodge: Yeah, absolutely. Now that’s top line. It’s a 700 grand cost and then you have the income of 730 in this example. So 30 grand is the bottom line either way. Even if it’s an assignment, you still get 30 grand at the bottom, basically. So why not add those numbers to the top and help your business look like a professional business that it is?

Theo Hicks: Yeah. All right. So you mentioned in the beginning, you’ve mentioned multiple times the importance of the leads… So maybe tell us, as I’m sure you’re doing a bunch of other things – you said you’re doing 8 to 10 deals per month, on average; what would be the number one lead source for those deals? So what lead generating strategy do you use that results in the most closed deals?

David Dodge: So this is crazy, because I actually give this all away for people and I tell people exactly what I do. And I’ve even built a course on it that I’d love to give to the people for free. But it’s so simple, and I have several students right now that are crushing it with the same approach. So we use PropStream and we drive for dollars. So we build our own lists and we purchase lists. We go after vacants, we go after absentee owns, we go after high equities… We analyze our market though. We’re not just blanket marketing. We’re looking for deals in areas that could be great fix and flips or they could be great rentals, because that’s basically what you wholesale to, right? You wholesale to an investor that’s going to do one of those two things.

So we find the areas and analyze via PropStream how to find those areas. And then we pull those lists. Or we’ll drive for dollars. Our best three deals came from driving for dollars at this point, one over six figures. And then what we do is we cold call and we cold text these individuals. Occasionally, we’ll send mail, but that’s it. That’s the whole system; we cold call and we cold text. Occasionally, we’ll send mail. And that’s basically all of the list-dependent marketing that we do. We also do some non-list dependent marketing, which is just a small radio budget of two grand a month. That’s it, nothing crazy. But we are on the radio, which brings in a wide net as well. So just another approach. And then we’ll do bandit sign campaigns from time to time, but typically, that’s like once a quarter, and we’ll put out 600 of them. So it’s like enough to get out to where they stick around in some places for a couple weeks. But that’s about it, right?

So most of it, 80/20 principle here, Theo, is skip tracing from lists that we create or we export out of our system, and cold call or cold text those individuals. And we’re relentless. That’s really what it comes down to. If they tell us to quit calling them, we will. But if we can’t get a hold of them, then we’re going to keep trying, we’re going to call them we’re going to text them, we’re going to eventually maybe send a letter to them. We do a lot of driving to people’s houses and knocking on their doors, if there’s a huge spread on a deal that we see that’s just ready to be grabbed.

Theo Hicks: And what about your buyers’ list? How do you source your buyers’ list?

David Dodge: So the buyers list – we have a buyers list, but lately, we’ve been pivoting kind of more of listing as many deals as we can on the MLS. We’re finding that we can get those deals sold for more. So we have a pretty adequate list here in St. Louis where we do our investing; it’s maybe four or five thousand buyers. At one time it was 14k, but we’ve just kind of tried to clean it up and get the junk off of there. I’d like to cut it in half even more, because just less is more. We want the real buyers, not the tire kickers. But honestly, having a buyer’s list is great and all, but nowadays with Facebook marketplace and Facebook groups, you can sell deals just as easily by posting in there if you’re active, as you can blasting out to an entire list via email or text message. Obviously, these are strategies that we use on both sides. We do all of this. But ideally, we’ll have three or four buyers in a zip code that we know either want rentals or rehabs. And then when we get a deal, we can call that individual person and not have to mess with entire blasts. I’d like to get away from the blasts, because it just creates more work when you sell a deal right away, and then you have 35 people that want to see it, and it’s sold. So it just depends on what you’re doing.

But if you’re new – Craigslist, Facebook Marketplace, local Facebook groups will get deals sold. Having a buyers list is obviously going to help as well, but it’s not anything that you can’t create. I have students right now that are finding deals by downloading lists from PropStream, cold calling or cold texting them, and then once they get them under contract, they’re going into PropStream and they’re pulling cash buyers list in that zip code and cold calling and cold texting the cash buyers, that they don’t even know, cold, saying, “Hey, I just got a property under contract. I see bought one down the street last year. Do you have any interest?” He’s done to date, made about 17 grand just doing that strategy right there. That’s it. That’s exactly what he’s doing.

So I like to look at it this way – wholesaling is so incredibly simple. But it’s not easy. Those are two different things. It’s hard, because you got to trade time or money to get these leads. You’ve got to trade time by operating the cold calling, dialers or the texting platforms and searching the leads and skip tracing them and going and looking at them, or you have to spend money to pay someone else to do that… And/or do marketing like direct mail or the radio or just kind of an automated process, but the calls start coming to you.

So really the difference is, is it outbound marketing or is it inbound? Of course, we like to do both. But our monthly budget for marketing isn’t crazy. It used to be like 12 to 15 grand. I know people that are spending 30,000, 50,000 or 60,000 a month. It’s awesome if they’re crushing it, but we were able to scale our marketing back to maybe 4000 a month, sometimes less, sometimes 3500, and the amount of deals that we are still doing compared to when we were spending 10, 12, 15 is about 60% to 70% with a fourth, a fifth of the ad spend. So sometimes again, bigger isn’t better. And when I say ‘best’, it doesn’t mean that’s the biggest or the biggest spread. It just means what is more efficient, what is needed now. So that’s just kind of where I come from.

So yeah, inbound marketing, outbound marketing… I think your question was about cash buyers. We can pull those lists. We generate these things in real-time on every deal that we’re selling. Whenever people see our marketing, we watermark our photos and we have a website, so they come in and we’re getting opt-ins to that list every day, sometimes every hour. But typically, if you’re new – and that’s the thing, most people listening to these podcasts don’t own 65 rental properties and have wholesaled 500 deals. They’re looking to do their first deal, so it’s so incredibly simple – you’ve just got to put in the time, right? So doing deals doesn’t cost any money if you do it right, and I love teaching it, but getting the leads does. It costs time or money, one of the two, and most of the time both. If you’re willing to put in the time or the money to get these leads, you can make a tremendous amount of money doing it.

Theo Hicks: Alright, David, are you ready for the best ever lightning round?

David Dodge: Let’s go!

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:20:46] to [00:21:39]

Theo Hicks: Okay, David, what is the best ever book you’ve recently read?

David Dodge: The best ever book I’ve recently read is Relentless by Tim Grover. I’m not even into sports, but that book just kind of gives you the mindset of those who are ultra successful, and what they do to earn it and get it. And they earn it. So Relentless by Tim Grover. It’s a great book, motivational book, mindset book.

Theo Hicks: If your business were to collapse today, what would you do next?

David Dodge: Start another one that does the exact same thing I do now. I would get PropStream, I would get a dialer and maybe a texting service and I would just start searching for motivated sellers. And I would be back in business in 15 hours.

Theo Hicks: Tell us about the best deal you’ve done. Remember, best, as you said, doesn’t mean the most money… But it could be.

David Dodge: Yeah, I’d say the best deal we did was we bought a house for $2,000 driving for dollars. And we sold it for $132,000 to the city. It took us about 18 months to do the deal, because we were basically working with FEMA and the city. And it was a flooded house that had a [unintelligible [00:22:41].17] but the seller was motivated and didn’t want to wait. They knew that that money was coming, but they needed the money today and they took $2,500. They didn’t think it was gonna be worth 120k, and neither did we, but it ended up appraising, and yeah, we made about 118 grand on that deal. It was awesome. Invested $2,500.

So again, we had a little bit in it, but we had to actually close on this one. That’s why there was money invested, versus having to double close or assign. We took possession, but it was a wholesale the whole way. We had no intentions of keeping it or waiting it out.

Theo Hicks: What is the best ever way you like to give back?

David Dodge: Man, I have free courses that I give people for free. So if you want to learn how to wholesale real estate, go to http://freewholesalecourse.com/. If you want to learn how to become a landlord and use the BRRR method, go to https://www.freelandlordcourse.com/. These courses are probably between four and six hours in length, and it’s everything I do in my business, and I give it away. People charge a thousand bucks for courses like this. Mine’s free, https://www.freelandlordcourse.com/ and https://www.freewholesalecourse.com/.

On top of that, I do a podcast which as you guys know, you’re hearing me on one. That’s the Discount Property Investor Podcast. And again, we just talk about our business, the deals that we’re doing, the creative things that we do daily, the houses that we’re buying with the BRRR strategy and how that whole process works. We love giving back, Theo, and I want to thank you for having me on today, just so I can have the opportunity to teach people how amazing real estate investing really is.

Theo Hicks: Yeah, we appreciate you coming on the show as well. And I guess you answered my last lightning round question, which was—

David Dodge: What was it?

Theo Hicks: Where is the ever place to reach you? You gave us your two websites, the free courses, as well as your podcast.

David Dodge: Guys, if you go on the free course, either one, you can actually reach out to me via text. There’s numbers that are on those pages directly and I answer those questions throughout the day. I probably have about 1200 people at this point that I’m in communication with, and it’s not necessarily coaching, but I send out tips and tricks. And if you have a specific question that it only takes me a minute to answer, I got you.

Theo Hicks: Well, David, thank you for coming on the show today and telling us about your wholesaling process. So I think the biggest takeaway for me and something I had not heard of before was, as I’ve already mentioned, the adding to your top line by doing a double close that allows you to be more attractive to banks.

David Dodge:    Yeah, just give your HUDs to your accountant. That’s all you got to do, so they can show the money flow. It doesn’t have to be in your account or not, though. It’s in your business name. And there’s a title showing the transfer of title with you on it, like in the chain of title. So yeah, absolutely. Just give that to your accountant and boom, you’ll be getting loans in no time, guys.

Theo Hicks: Yeah. And then we also talked about how you create leads, you mentioned PropStream. And that wasn’t just on the front end, but you also mentioned the back end, you’ve got some of your clients who—

David Dodge: Isn’t that awesome, Theo? Obviously, we know that they do motivated seller leads, we know they do cash buyers, but one of my students literally has that in a dialer and that’s it. It’s all he’s doing. And he got a deal in just a couple of days from cold calling some people. He found a motivated seller in a neighborhood and just never even went to the property and said, “Hey, I can’t pay you what you’re asking, but I can give you x,” and he said, “I’ll do it.” And then he literally went in the same day on PropStream, exported some cash buyers in that area, made four or five phone call… People were looking at the property that day, and the next morning he had a contract on it. I think he made seven grand on that deal.

Theo Hicks: Yeah, well—

David Dodge: And that is just one approach. Obviously, there’s lots of approaches, but why I mentioned that and highlighted it a second time, and I’m glad you brought it, up is because it really is that simple. Didn’t say easy, though, guys. Simple. He put in a lot of time making all those calls and prospecting, and he sent the offer. Did you send an offer today? Probably not. Travis, how many offers did you send today? Two? I’ve sent three. That’s how you get deals done. You’ve got to send offers! But he did it, and then that’s how it works.

So yeah. Theo, thank you for having me again, man. I really appreciate you.

Theo Hicks: Absolutely. We appreciate you as well. And best ever listeners, make sure you check out those free trainings, make sure you check out his podcast, and until tomorrow, have the best ever day.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2239: Real Estate Is Not My Passion With Stephen Davis

Stephen is the Founder of Real Wealth Academy LLC, and started investing at 27 with wholesaling. He has experienced flipping, buying rentals, and now holds over 4,000 apartment units. He now focuses on consulting and mentoring people to help them begin in real estate, and today he shares advice, lessons, and what he believes people should have before looking for assistance.

Stephen Davis Real Estate Background:

 

 

 

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Best Ever Tweet:

“I love my real estate, but I don’t like managing it” – Stephen Davis


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the Best Real Estate Investing Advice Ever show. I’m Theo Hicks and today, we are speaking with Steve Davis.

Steve, how are you doing today?

Stephen Davis: Excellent. Thank you so much for having me.

Theo Hicks: Thanks for joining us. Looking forward to our conversation. A little bit about Steve – he is the founder of Real Wealth Academy. He started investing at 27 with wholesaling. He also has experience in flipping and rental properties and now holds over 4,000 apartment units. He is based in Houston, Texas and you can say hi to him at his website, which is https://getrealwealth.com/.

Stephen, do you mind telling us a little bit more about your background and what you’re focused on today?

Stephen Davis: Well, I’m really focused on consulting at this point. That’s where I spend all of my time. I love my real estate, but I don’t like managing it. People are shocked when I say I don’t like real estate… But that’s just managing. It’s not my passion. Would I ever sell my real estate? No, only under one circumstance – to start another business or to buy more real estate. I love having a second stream of income. But my passion is teaching.

The last 30 years or so, I’ve been a consultant and teaching people how to do what I did. The motivation came from the suffering that I went through when I was working 60 hours a week and struggling… And I won a national sales contest; my reward was they cut my pay by 20 grand a year. That pain of realizing that having a job is the highest risk position you can possibly be in, and that you have absolutely no control. I understand that people are suffering. I understand that people don’t understand money, because it’s not taught in high school or college. That is my mission, is to help ease the pain by teaching people how to use real estate to build wealth, to build passive income, to build that second stream of income, and I love it. That’s where I spend all my time.

Theo Hicks: Perfect. Let’s focus on the consulting. How long have you been doing this consulting for?

Stephen Davis: I’ve actually been mentoring and consulting for 30 plus years.

Theo Hicks: Okay. Do you have a program, or it’s a one on one type situation? Is it the group mentoring?

Stephen Davis: I do a combination. I start people off in group mentoring. But some people, that’s not enough for them. It wasn’t enough for me. I had to get mentors one on one to drive me towards my goals. I do a tremendous amount of one on one. I don’t like to work more than 40 hours a week. But I would say that I’ve done 25 hours of consulting and I love it. It’s not even like work. It’s just sitting with people and seeing their eyes light up when they realize there is hope, that there is something that they can do differently to make a difference financially for them and their family.

Theo Hicks: Do you think people need a requirement to have a mentor or a coach of some sort in order to be successful?

Stephen Davis: Yes, because if you want to learn it on your own, in other words, you say, “Look, I’m not going to pay somebody, I can figure this out on my own” it can take five to 10 years to learn what I can teach them literally in a one eight hour session. And not just me, there’s a tremendous number of great mentors and consultants out there. But I can cut 5 to 10 years off the learning process for people in a one-day class.

Theo Hicks: We did a blog post about mentorship, and one of the things that we focus on is making sure that you’re in the right position or you’re actually prepared to have a mentor… So what are some of the things that you found of people who maybe come into your program and end up not being successful? Is there a thread or a common theme with these individuals? Can they just get a mentor whenever, or are there things that they need to do first  in order to set themselves up for success?

Stephen Davis: I think that there is something that they have to have first. It’s got to be a burning desire to change, because building a second stream of income is work, just like your job is work. If you don’t have that burning desire to do it, a clear understanding that you have to do it, then the mentor can’t instill that. They can share all the facts, they can show you the mechanics of investing, they can show you the mechanics of building that second stream of income, but it’s up to the individual to decide and make a strong commitment that they want it.

For me it was the pay cut. That pay cut was the impetus. When I saw the guy who gave me that pay cut, I wanted to hug him, because it changed my life. If he had not cut my pay, I might still be working 60 hours a week broke. We call it our ‘Why’. Why do you want to do this? Is it more time with the family, more time for romance, more time for travel, more time—and he goes, “Man, here’s my why. My wife of the last 20 years has come down with dementia, which will eventually lead to Alzheimer’s.” He said, “I’ve got to leave her enough money that she will be taken care of.” There’s his burning desire.

Other people, it’s just they want a better life for their children. You’d be amazed how many people enroll in my group because they want to teach their kids this material so that their kids don’t suffer with the same fears and insecurities that they did about money. So they’ve got to have a big enough ‘why’.

I actually turned down a guy who wanted to buy a program from me. I sent him home, because all he talked about was money. Money, money, money, money, money. I’m like, ‘Money’s not going to change your life, unless you have a plan for that money.” I sent him home with my goal setting workshop and said, “Fill this out. Come back next week, and we’ll talk about it.”

You’ve got to have a huge burning desire.

Theo Hicks: I’m not sure what your structure is, but let’s just say you do an hour a week with someone for a year. How much is that talking about the actual mechanics of, “Hey, here’s how you find a deal, here’s how you negotiate, here’s how you underwrite, here’s how you manage it” versus mindset, focusing on having the right mindset to actually go out and do these things?

Stephen Davis: That is the best question I’ve ever gotten in an interview. And you know, the answer is probably 60/40. 60% of the time I’m working on their mentality and 40% or less on the mechanics, because real estate is easy. I was hard. It was hard for me to get myself to do it. I had read multiple books on real estate investing, and guess how much real estate own? None. Because I couldn’t get myself to take action. Then when that pay cut came and I ended up with bad credit and no money, that motivated me. I just wish everybody would be smarter than me. Don’t wait for a financial catastrophe. Do it before the financial catastrophe.

Theo Hicks: What’s the most common mindset block you’ve seen that people have from—maybe let’s not even say getting started, but—well, it could be getting started. I guess I’ll let you answer that any way you want. What’s the biggest mental obstacle you found in the people you’ve consulted?

Stephen Davis: Self doubt is the number one. A lot of times, people have tried other things. I’ll pick on multi-level marketing, even though multi-level marketing works for certain people. They tried multi-level marketing and they failed. They tried maybe even a franchise and failed. As Anthony Robbins says, “What people start believing is that the past equals the future.” It doesn’t. You just haven’t found the right consultant, you haven’t gotten the right support. They doubt themselves because of past failures.

My lesson is that that is not failure, it’s simply a result, and what you do is you analyze your results, and change or modify your behaviors so that the next result is different. It may not be perfect, but it’s going to be better than the first result. It’s got to be self doubt. That breaks my heart, when people who I know are smarter than me, better looking to me, better built than me, and I’m like, “You think you can’t do it and I did it? Come on.” I was a dumb 27 year old kid, bad credit, no money. If I can do it, you can do it.

Theo Hicks: I know a lot of people I’ve talked to who are consultants/mentors, or have consultants and mentors – really, if you kind of break down really anything, it comes down to what you’re doing every single day.  So what is one of the most important habits you think people need to have or successful people have? What’s that one thing that people do every single day that you’ve found common between everyone who’s successful? And on the other hand, something that people who aren’t successful aren’t doing.

Stephen Davis: I think that successful people wake up every day and they either have their goals written down or they have their goals memorized in such a way that it’s the forefront of their thought, when they wake up in the morning. It’s at the forefront of their thought when they go to bed.

I’ve got to refer to Stephen Covey. He talks about one of the habits is, “Put first things first, and put the big rocks in your life first, then the pebbles,” if you’ve seen that video. The successful people put the big rocks in first. They put their family, their romance, their travel, their work. I like to break finance into two parts of a balanced life. There’s career and there’s wealth, and they’re two different things. But those are both big rocks, they go in first. They don’t watch a lot of TV, they don’t waste time. They’re constantly focused on those big rocks. Then people who I see fail are focused on the pebbles. They’re focused on television, they’re focused on anything to distract them from getting to the first things.

I borrow again from Stephen Covey – people get caught up in the thick of thin things. They’re wasting their time. People who succeed don’t let that minutiae get in the way of their big rocks, their big goals and their focus is on those every single day.

Theo Hicks: What’s something that someone can do before they have it memorized, before it’s become a habit, a routine, to have that momentum? What’s something they can start doing to remind themselves of this? I know some people use Post-it notes, and some people have vision boards. What have you found to be the best way to remind themselves of this every single day?

Stephen Davis: I kept a journal. I have to admit that I don’t anymore. But when I was between 27 and probably 40, I had a journal with my goals written down. When I first wrote them down, I would review them every morning. That was probably for six months or longer. And then I would review them about once a week. And I’m not sure how long that was – it wasn’t very long, maybe a year or two – before they became ingrained, and I knew exactly what I wanted and what was important. I think writing your goals down is paramount to beginning this process.

Theo Hicks: I liked your rock and pebble analogy. When you were explaining that, I just thought of  having a massive five foot stone in my house with whatever my goal is written on it and every time when I wake up, I look at this massive rock with my goal on it, and maybe like little pebbles that have the words TV and Netflix or whatever on it. I wonder if anyone does that.

Stephen Davis: I wouldn’t doubt it. If you go to YouTube and look up Stephen Covey on the big rocks, there’s a video in there where what he does is he pours all these pebbles into the bucket and then says, put all the big rocks in. Well, they won’t fit, because there’s so many pebbles. He says, “But what if you changed your paradigm; started with an empty bucket and put the big rocks in first and then poured the pebbles in?”

See there is time for TV. There is time for movies and entertainment and all that. But not if you put those in first; those are secondary. I actually like your idea. It’d be cool to have lined up the eight big rocks; family, fitness, relationships and romance, travel, career, right on your sideboard or chest of drawers right as you’re walking out the door every day. That’s a pretty neat idea.

Theo Hicks: Yeah, I know people learn in different ways, but that visual you were talking about, with the cup and the rocks – I’ve definitely seen that before. That’s a really good analogy.

Alright, Steve, what is your best real estate investing advice ever?

Stephen Davis: Man, you told me that and you gave me a good warning and I’m not prepared. I’m going to have to go with, “Never give up”. That’s the best advice that I can give you. When you get to your first two or three rental houses or you invest in your first two or three apartment complexes or strip shopping centers or whatever you choose, don’t stop.

I met a guy the other day and he goes, “Well, I’ve had two rent houses for 10 years.” He bought both those rent houses the first year that he started investing. What happened? He stopped. He lost his vision. He didn’t pay attention to his goals. Never give up. Keep moving forward.

Theo Hicks: Alright, Stephen, are you ready for the best ever lightning round?

Stephen Davis: Yeah, you told me about this, but I’m not sure what it is.

Theo Hicks: Well, you’re about to find out after this quick break from our sponsor.

Stephen Davis: Okay.

Break: [00:17:02] to [00:17:55]

Theo Hicks: Okay, Steve, what is the best ever book you’ve recently read?

Stephen Davis: Okay, it’s got to be the Seven Habits of Highly Effective People by Dr. Stephen Covey. That is not a real estate book. It’s a mindset book. But when I finished reading that book, my life was different. It’s an amazing book.

Theo Hicks: If your business, whether it be your consulting business or your real estate business, were to collapse today, what would you do next?

Stephen Davis: What would I do next? I’m not allowed to do either of those, huh? Probably teaching.

Theo Hicks: No, you can choose to do one of those again. There’s that option.

Stephen Davis: I’d go right back to it. Yeah, I would go right back to it.

Theo Hicks: What is the best ever way you’d like to give back?

Stephen Davis: Teaching is my favorite way. I honestly feel proud that I give more than I charge for. The second way is just financial. It’s getting that 10% or more of your earned income out to charities that you believe in.

Theo Hicks: Lastly, what’s the best ever place to reach you?

Stephen Davis: I love email, asksteve [at] getrealwealth.com.  And you can email me any questions 24 hours a day, I’ll get back with you.

Theo Hicks: Perfect. Well, I really enjoyed our conversation, Steve. I don’t get to have these types of mindset conversations a lot on the show, so they’re always very enjoyable.

Just to kind of summarize some of my biggest takeaways… The first one was, why do people need a mentor, and you said very succinctly that if you do something on your own, it’s going to take you a year, five years, 10 years to learn a specific trade… Whereas if you have a mentor, they can teach you that in one session or in one week or in one month or however long it takes, but it’s not going to be as long as it would have taken for you to do it on your own. So a huge time saver.

We talked about when is the right time to get a mentor or what type of preparation you need before you have a mentor, and you said that people need to have a burning desire to change, and that comes down to having a strong why. You gave a couple of examples of your why, which was when you got your pay cut, you gave an examples of someone’s wife who was sick, and people who want better their lives for their children. And then you also mentioned what a bad ‘why’ is, what a weak ‘why’ is, which is just wanting money.

You mentioned that when you’re teaching your clients real estate, it’s actually 60% mentality and 40% mechanics. I really liked what you said, “Real estate is easy. I am hard.” That was a really good quote.

Stephen Davis: Thanks.

Theo Hicks: You talked about the biggest obstacle being self-doubt. You talked about the best habit being putting the big goals first which you said were finance being broken into the career and the wealth, as opposed to the small things, like basic things that are kind of a distraction. And then you gave your best ever advice, which was never give up. Once you start, do not stop.

Again, Steve, I really enjoyed this conversation. Best Ever listeners, I’m sure you enjoyed this conversation as well. Make sure you take advantage of him providing you with his email address. Thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Website disclaimer

This website, including the podcasts and other content herein, are made available by Joesta PF LLC solely for informational purposes. The information, statements, comments, views and opinions expressed in this website do not constitute and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. Neither Joe Fairless nor Joesta PF LLC are providing or undertaking to provide any financial, economic, legal, accounting, tax or other advice in or by virtue of this website. The information, statements, comments, views and opinions provided in this website are general in nature, and such information, statements, comments, views and opinions are not intended to be and should not be construed as the provision of investment advice by Joe Fairless or Joesta PF LLC to that listener or generally, and do not result in any listener being considered a client or customer of Joe Fairless or Joesta PF LLC.

The information, statements, comments, views, and opinions expressed or provided in this website (including by speakers who are not officers, employees, or agents of Joe Fairless or Joesta PF LLC) are not necessarily those of Joe Fairless or Joesta PF LLC, and may not be current. Neither Joe Fairless nor Joesta PF LLC make any representation or warranty as to the accuracy or completeness of any of the information, statements, comments, views or opinions contained in this website, and any liability therefor (including in respect of direct, indirect or consequential loss or damage of any kind whatsoever) is expressly disclaimed. Neither Joe Fairless nor Joesta PF LLC undertake any obligation whatsoever to provide any form of update, amendment, change or correction to any of the information, statements, comments, views or opinions set forth in this podcast.

No part of this podcast may, without Joesta PF LLC’s prior written consent, be reproduced, redistributed, published, copied or duplicated in any form, by any means.

Joe Fairless serves as director of investor relations with Ashcroft Capital, a real estate investment firm. Ashcroft Capital is not affiliated with Joesta PF LLC or this website, and is not responsible for any of the content herein.

Oral Disclaimer

The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action. For more information, go to www.bestevershow.com.

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JF2229: Wholesaling Deals With Emilio Basa

Emilio Basa is a full-time investor with 6 years of real estate investing experience who started off by wholesaling his first property within 4 months of learning how to wholesale. He consistently will wholesale about 3-5 a month and with this experience, he shares how he goes about growing his business so you can take the same steps.

 

Emilio Basa Real Estate Background:

  • Full-time investor
  • 6 years of real estate investing experience
  • Portfolio consists of 5 rentals, 2 flips, and over 30+ wholesales
  • Based in Detroit, MI
  • Say hi to him at: www.quickpropertysolutions.co 
  • Best Ever Book: Traction

 

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Best Ever Tweet:

 

“I network with other wholesalers to share deals and grow my business” – Emilio Basa


TRANSCRIPTION

Theo Hicks: Hello, best ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, we’ll be speaking with Emilio Basa.

Emilio, how you doing today?

Emilio Basa: I’m good, Theo. How are you doing?

Theo Hicks: I’m doing good as well. Thanks for asking and thanks for joining us. Looking forward to our conversation. A little about Emilio; he is a full-time real estate investor with six years of experience. He has five rentals, two flips and over 30 wholesales under his belt. He is based in Detroit, Michigan, and his website is http://www.quickpropertysolutions.co/.

Emilio, do you mind telling us a little bit more about your background and what you’re focused on today?

Emilio Basa: Absolutely. I’ve been doing it for six years. When I started, I primarily was strictly wholesaling. When I first started, I say six years, but to be honest, the first two to three years, I was doing it part-time because I was always doing other businesses. I did web design. I was also a musician in the Detroit area, so I was still doing gigs and things like that. I really was doing wholesaling just to try it out and just to do it part-time.

And then just over the years, I just started realizing that—I kind of took to it really quickly. I think I did my first deal in—after learning wholesaling, I did my first deal in four to five months. It wasn’t like a big deal. For me at a time, it was a lot. It was a $1,000 assignment. I started doing wholesaling. And then what I started doing was I started gradually trying other investing methods like rentals and flips, and I’m actually doing my first note this year, and just trying different strategies. But the core of everything has always been wholesaling for me.

Theo Hicks: How many wholesales are you doing per year or per month or whatever frequency is you wanna say?

Emilio Basa: It really depends. Consistently, I’m doing three or four a month right now. I think in December and January, I think I did six a month. It comes and goes. I think with the COVID thing too, we kind of slowed down a little bit.

Theo Hicks: Sure. What’s your preferred method for finding these deals to wholesale?

Emilio Basa: Funny enough, 70% to 80% of my business was actually joint ventures. In my market, you’ve got to be careful with some wholesalers, because some of them are kind of shady and they kind of try and steal the contract from underneath you. But I’ve always been somebody really easy to do business with and I always worked really hard to get a deal sold. A lot of the times people just started bringing me deals, and then more and more, I guess word got out because people just started reaching out to me.

I wanted to say, the last two quarters of last year, almost all my deals were joint ventures. I focus on [unintelligible [00:05:48].21], joint ventures, direct mail… That’s been trailing off. I don’t really do cold calling. And then Lately, I’ve been doing text blasting, which has been working phenomenal, actually.

Theo Hicks: I definitely want to talk about the texting, but I want to circle back to the JV. You said that people are bringing you deals.

Emilio Basa: Yeah.

Theo Hicks: What does that look like? They’re coming to your house? They’re calling you up? How do they know who you are?

Emilio Basa: They just call me up. Yeah, they just call me up. What I do is, whenever I have a deal, I put it on every social media platform you can think of, and then people reach out to me. When people reach out to me, I’ll just ask; are you a cash buyer? Are you a wholesaler? Most of the time people will say, “I’m a wholesaler looking for deals for my client.” And then I really just kick it with them, and just talk about their business and how their wholesale deals are going. And then I just pretty much say, “Hey, I’m growing my buyers list and I’m very transparent. I’m fair.  I’m easy to do deals with.” And then I really just pitch the pros of doing deals with me, which that’s pretty much it. Everybody works hard together to get the deal done, and people just like doing deals with me. So people just started bringing me deals.

To this day — the one deal that we’re closing on now, it’s three houses, online contracts; that came to me from another investor that I did a wholesale deal with. They’re actually his houses, and we’re doing that deal together right now.

A tip for a lot of people too is if you’re trying to build your wholesaling business, whenever you see, “We Buy Houses” signs in the road,—I read somewhere some people take those signs and they take them out, they throw them in the trash. I call all those signs and then I just say, “Hey, are you a wholesaler? Because I’m a wholesaler and a buyer.” I call all those signs. And then a lot of the times you find some really good people.

Theo Hicks: Nice. Basically, you’re networking with other wholesalers, so that a wholesaler brings you a deal. And then you’ll put it on social media and then another wholesaler will reach out, and you’ll kind of JV together to sell that deal.

Emilio Basa: Yes.

Theo Hicks: Okay, I just wanted to make sure I had that right. Is it just a 50/50 split of the assignment fee?

Emilio Basa: It depends on what the deal is. That’s the thing. It’s like, when you’re doing a deal, you just wanna be transparent with everybody. Whoever has it in the first position, you say, “Hey, how much do you have it under contract for?” If they trust you and they want to do deals with you, they’ll tell you. At the end of the day, I’ll tell them, “I don’t care how much you make. You can make 20 grand, 30 grand. If I make two, then I make two. But if it’s a good deal, and I could find a buyer, then that’s what it is.” Because some people won’t tell me and then some people are like “I want 10k, and I’ll take nothing less.” I’m like, “Okay, that’s fine. Well, I’ll try and do this. And I’ll try and work the deal this way.” And then what I do is I have a JV agreement.

What I used to do was either splits, or I had two contracts; one was a 50/50 split, and the other one would be where I’d add my fees on top. And usually, that worked out pretty well, until sometimes with some deals, I’ve had up to six wholesalers on one deal. It was definitely—it was a daisy chain, that’s for sure, because one guy had it, and then another guy told me about it, so he wanted to cut… And then I told another guy about it, who told somebody else and that somebody else brought the buyer.

Theo Hicks: Oh, man.

Emilio Basa: I know, it was a big mess. The way I work out in my JV contract, I literally have six blank lines. And then I put down everyone’s LLC, and then next to the LLC, you write the amount down, and then at the bottom, it says ‘total’ and then everyone has to sign it. So then when you take that agreement, you send it to the title company. There’s two ways you could do it – everyone could get paid straight out of the settlement statement, or one person can take the lump sum check, and then pay everybody out. But that takes a lot of trust. A lot of people won’t do that. They rather would be on the settlement statement, on the HUD, and get paid out that way.

Particularly, I don’t like doing daisy chains, but sometimes some deals that’s what happens. It just unfolds that way. If you have a deal and no one else is buying, but this one guy found a buyer, but it’s not his buyer and it’s another one’s buyer, at the end of the day I’m like, “Dude, let’s work it out.”

Theo Hicks: Yeah, so it sounds like it’s pretty negotiable, right? It’s kind of like what people want.

Emilio Basa: It is. Yeah, yeah.

Theo Hicks: Okay.

Emilio Basa: The tricky thing is that when you’re dealing with two people like me and another wholesaler, our values pretty much match up. Everybody just wants to do a smooth deal. No one gets too greedy, things like that. And then the more people you add, the more personalities you add. So sometimes somebody actually might get really greedy. If you get one person that kind of messes up and messes up the deal, then that’s where it could kind of derail the deal. But for the most part, especially when they start finding out how many people are involved, there’s not a lot of meat on the bone, but everyone wants to get a deal done, so let’s get it done.

Theo Hicks: Sure. Let’s transition to talking about the mass texting you do. Walk us through that.

Emilio Basa: I just started doing it. I’ve probably been doing it for two months now. I’m not going to lie, I pay about $3.50 a bandit sign, and I used to put them up myself. But now I’ve got one guy that delivers them for me, so I pay him three bucks. So my cost per bandit sign is usually $6.50 or $7 a sign.

My response rate was, let’s say 10-15 percent, and sometimes I get some pretty good deals. But with text blasting, it’s 20 cents a text and you could send out 1,000 texts. If you just get one deal, the cost per lead is extremely, extremely low. You’re spending $200 to close out on a contract as opposed to doing like a bandit sign or direct mail. Let’s see, I’m closing one today and that was from a text blast from four weeks ago. I closed one, two weeks ago, that was also from a text.

Theo Hicks: Are these text to wholesalers or are these to the actual sellers?

Emilio Basa: The tricky thing is for text blasting wholesalers, a lot of them are already on my email blast. If ever I need a deal, I’ll either just send out an email blast and just say, “Hey, wholesalers, anybody got a deal that you’re looking to sell, reach out to me,” or when I call people on the bandit signs, I’ll say, “Hey, what’s your name,” and then his name’s Jason. I’ll put in Jason-wholesaler. So whenever I need a deal, I’ll literally go on my iPhone, type in wholesaler, and maybe like 50 wholesalers pop up, and I just text them all the same message. I just copy and paste it and I say, “Hey, I need a deal, what do you got?” And then I paste it to the 50 wholesalers, and you’ll get a deal by the end of the day for sure.

Theo Hicks: Nice.  So for the 20 cents per text, though—

Emilion Basa: That’s to the seller.

Theo Hicks: Because you’re going to find a deal to put under contract. How are you getting their numbers? Is there like a service that does it all for you, who you’re targeting? Walk us through that.

Emilio Basa: I just started using Prop Stream.

Theo Hicks: Sorry, what’s it called?

Emilio Basa: Prop Stream.

Theo Hicks: Prop Stream. Okay.

Emilio Basa: Yeah. Prop Stream is a software where you can look up different lists. As a wholesaler or as an investor, your best deals come from motivated sellers. What you want to do, instead of targeting a blanket area, let’s say you’ve figured out one county’s got 80,000 leads or 80,000 people that own homes. But then what you want to do is you want to find the motivated list out of there. There’s either pre-foreclosures, there’s bankruptcies, divorces, things like that.

With Prop Stream, what you could do is you could type in a county or a city and then you could start adding different attributes to filter down to your criteria of what you’re looking for. You could target specific lists, so you could target — absentee owners is a really popular one. You could do absentee owners. And then what you could do is you could filter down by—if you only buy three bedrooms and up, so you could filter that.

An important one that I do is I get rid of all the LLCs. I do individual owners only. So that filters out a lot of LLCs. And then what you’ll do is you’ll get a list at the end of it. What you could do is you could export that list. What I do is I take that list, and you can either skip trace it in Prop Stream, but whatever text blasting service you use, and there’s a ton of them. I think there’s one called Roar, there’s one called Sherpa, there’s Batch Leads… You could take that list, and then you could put it in your text blasting software, and then you just start sending it out and then see who’s interested.

Theo Hicks: So you’re having a lot of success with that. You’ve done two deals so far. What was the assignment fees in those?

Emilio Basa: One was 15 and this other one that was a double close, it’s a five.

Theo Hicks: How quickly are you able to get these deals under contracts after someone reaches out to you? Is it pretty quick? Is it that day? Or does it need a little bit more work?

Emilio Basa: No, it depends on their motivation and it depends on their situation. Ideally, I would love to get it under contract after the first call. But a lot of the times the sellers – some of them might be motivated, but they’re not really motivated to close that day. A lot of the times, you really have to work a lead by just following up with them, and then just building that rapport.

I’ve got a deal right now – it’s in Moore, Michigan. The lady, I probably called her four or five times. Really all it is, is just like you catching up with her to see how things are going. One thing that I’ve changed this year is I actually learned wholesaling from a few people, but the one that it’s honestly is like my mentor and my largest influencer is Sean Terry. A lot of people that know Sean Terry – that’s the Flip to Freedom students… With Sean Terry, he’s a really good salesman. I don’t want to say it’s the hard sell, but when he goes into an appointment, he’s leaving with a signed contract. That’s the goal. A lot of the times if somebody isn’t terribly motivated, or they’re in a situation where they’re kind of getting to that point, there’s no point in trying to do a hard sell.

What I’m doing lately is I’m actually not trying to do a hard sell. If listing it with an agent might be better for them. I actually don’t think I’m the right buyer for you. I actually think an agent is better for you. Have you tried being an agent? Have you tried doing this? Have you tried doing that? What happens is is that whenever you start suggesting them other options than you buying it—because they’re on pre-foreclosure list, they’re used to people bombarding them trying to really pitch him to sell that day. When they talk to somebody that honestly says, “I don’t think I’m the right buyer for you,” it kind of puts their guard down, and they could start talking to you as if you’re not trying to sell the house, you’re really just giving them your honest opinion.

They appreciate the transparency more than somebody that’s just looking for that person that’s truly motivated, because I think some wholesalers – if they’re not truly motivated, they’ll really probably just walk away from the deal. But a lot of the times, if you just build that rapport, and you’re there, and you call them up and just see how things are going, they appreciate that more than somebody that’s just trying to buy their house.

Theo Hicks: Okay, Emilio, what is your best real estate investing advice ever?

Emilio Basa: I would say be uncomfortable, which means I talked to a lot of newer investors, and a lot of them, they’re making that first call or they’re doing their first walkthrough, and sometimes — I know a ton of them that have a bunch of calls that they have to make and they just stare at the phone… Or bandit signs. They have to put up a bandit sign. I was just talking to somebody the other day. They ordered 50 bandit signs and they were ready to go and then they went out that night and literally they didn’t do it. A month later, the bandit signs are still in their garage, just sitting there. That’s the thing – be comfortable with being uncomfortable. Because when you start off with one thing like wholesaling, wholesaling is to me the—I don’t wanna say kindergarten. It’s like elementary. It’s like the basics of real estate investing.

What you’re going to do is you get out of your comfort zone and then when you start graduating up to other things, like when you start doing your first flip, or doing your first rental, you’re going to do things that are very uncomfortable, and you have to get used to that, because by you being uncomfortable, you’re stretching out and you’re growing as a person, as an investor.

Theo Hicks: Okay, are you ready for the best ever lightning round?

Emilio Basa: Sure, do it.

Theo Hicks: Okay.

Break: [00:16:48] to [00:17:39]

Theo Hicks: Okay, Emilio, what is the best book you’ve recently read?

Emilio Basa: A book by Gino Wickman called Traction. That’s a really, really good book. I just started it, I haven’t finished it, but it’s a really good book about scaling out your business and trying to put a team together and creating a vision for your business. It’s just been a great book so far.

Theo Hicks: If your business were to collapse today, what would you do next?

Emilio Basa: I’ll be honest, I’d probably would start the same business. I’d just starting another same business. That, or — I was a musician before. If I could try and make money as a musician, then I might go back to that.

Theo Hicks: Tell me about your best wholesale deal, your biggest assignment fee. Kind of walk us through how you found it, who you sold it to, things like that.

Emilio Basa: Well, I got two that are tied. My biggest one was in Detroit. It was a double close. We made about 26k on that one. That came off of a bandit sign lead. That was an amazing deal because I didn’t even have to negotiate the price. He said his price and I was like, “Holy crap, that’s a really good price.” I was like, “I’ll meet you there tomorrow,” and he met me up there. I built the rapport… It took them a week to sign it, but that was a pretty good one.

But I think honestly one of my favorite deals, my best deal that I remember was – I do virtual wholesaling too, and I was doing deals out in Washington, out in Seattle. I wasn’t doing houses, I was doing vacant land. I remember I just bought the course on how to do virtual wholesaling land, and then three months later, this deal pops up and that one was a $20,000 assignment off of virtual wholesaling.

Theo Hicks:  What is the best way you like to give back?

Emilio Basa: I give a lot of advice over the phone. I don’t really mentor, but I get a lot of wholesalers that are new to the industry, and I love to just talk to them about how to grow their business. Any advice I could give. Oh plus, I also have a YouTube channel where I cover Detroit real estate investing. It’s https://www.youtube.com/quickpropertysolutions. I also look out for out of state investors that are buying in Detroit, because a lot of them get burned or get their money stolen or something like that. I created a YouTube channel where I’m starting to give advice on that channel as well.

Theo Hicks: And then lastly, what’s the best ever place to reach you probably just reach you?

Emilio Basa: Probably just reach out to me — I think the YouTube. I’m very active on YouTube. If anybody was interested, they could go on there and leave a comment, or just go to my website, http://www.quickpropertysolutions.co/, or the YouTube, which is https://www.youtube.com/quickpropertysolutions. I’m on Instagram too and Facebook, so they could pretty much find me anywhere.

Theo Hicks: Well, thanks for joining us, Emilio. I really enjoyed our conversation; lots of interesting takeaways. I definitely like your mindset. It seems like you go against what most other wholesalers do, which is helping you be successful.

A few of the things I hold from this was I liked how you mentioned how some wholesalers see a bandit sign, they want to yank it out of the ground and throw in the trash, light it on fire.

Emilio Basa: Oh my God…

Theo Hicks: Whereas for you, you actually call them up because you found a lot of success doing joint ventures with wholesalers. It’s kind of like 70% to 80% of your deals have been JVs, you put your deals on social media, and you’ll have people reaching out to you that actually happen to be wholesalers, and those are people that will do deals with.

You also mentioned that you do text blasting, so you kind of walked us through that and why it is kind of a much lower cost per lead.

You said if you use a Prop Stream as a software, you talked about how to create the list, make sure you’re targeting a specific county, find motivated sellers list, like pre-foreclosures, delinquencies, divorces, absentee owners; you can filter by the number of bedrooms. You’ve personally filtered out all the LLCs, you only want to target individual users. Then you export that list into the text processing software that will send text messages to all those people.

I also liked how you said whenever a wholesaler calls you from a bandit signs or whatever, you’ll save their name in your phone as wholesaler. So whenever you need a deal or you have a deal, you just have your own kind of customized text blasts with your cell phone, you just blast all the wholesalers in your phone.

You also mentioned that when you’re talking to them, you don’t do the hard sale. Instead, you kind of just build a rapport and be honest, even if that means that you believe you don’t have the best option for them. By doing that, you found that they open up a lot more and are willing to work with you a lot more.

Lastly, your best ever advice, which was to be uncomfortable and you gave a lot of examples about that.

Emilio, again, thank you so much for joining us today. Best Ever listeners, as always, thank you for listening, have a best ever day and we’ll talk to you tomorrow.

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JF2193: How To Go From Navy Pilot to Owner Of Two Businesses With Bill Allen

Bill is a former Navy Pilot and Founder of BlackJack Real Estate and CEO/Owner of 7 Figure Flipping. He initially started flipping one house a year and as he started to gain the confidence he then went full-time. He recently bought a new real estate company called 7 Figure Flipping. Today he shares how he has been able to grow from Full-time Navy Pilot to business owner.

 

Bill Allen Real Estate Background: October 15th air date

  • Navy pilot, Founder of BlackJack Real Estate and CEO/Owner of 7 Figure Flipping
  • He and his team at BlackJack RE currently flip and wholesale 200+ deals per year
  • Based in Nashville, TN
  • Say hi to him at: www.blackjackre.com 
  • Episode JF905 – May 2017
  • Best Ever Book: Extreme ownership

 

 

 

 

Click here for more info on PropStream

Best Ever Tweet:

“Listen to a podcast that is educational, and surround yourself around people who are strong where you are weak” – Bill Allen


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, we’ll be speaking with Bill Allen. Bill, how are you doing today?

Bill Allen: I’m doing good, Theo. How are you?

Theo Hicks: I’m well. Thanks for asking and thanks for joining us again. So Bill was a guest all the way back in May of 2017, on Episode 905. So make sure you check that episode out. We’ll be talking about what Bill’s been up to since then. But before we get into that, a little bit about Bill – he’s a Navy pilot as well as the founder of Blackjack Real Estate, and CEO and owner of 7 Figure Flipping. He and his team at Blackjack currently flip and wholesale over 200 deals per year. He is based in Nashville, Tennessee, and his website is blackjackre.com. So Bill, do you mind telling us a little bit more about your background and what you’ve been up to since we last had you on the show?

Bill Allen: Yeah, you told me May 2017, so I can’t believe it’s been that long; over three years now. So I have a Navy background. I was an engineer and went through as a Navy pilot, and I thought that’s what I would be doing my whole career. I bought a couple of houses as rental properties. I moved around 15 times in 18 years that I have been a Navy so far, and just bought a house everywhere I went. I started to expand into doing a flip on the side; made a bunch of money. You make $45,000 in a couple of months, it starts to feel really good, and you figure out how you can do more of that. So I did one a year before I started scaling up a business, and then eventually I was able to leave the Navy full time and I’m a reservist now. So I fly part-time.

Over the past four or five years, we’ve been able to do over 100 deals a year. I have a team of about 15 or 16 people in that company, and it’s pretty nice. I’ve got to the point where — I talk about passive income a lot. I don’t really do a lot in that business anymore in Blackjack Real Estate, so my COO runs the company. He does the day to day ops. I spend two hours a week with him on a call and he does the magic, and the team’s awesome. It’s really incredible to get to that point. So that’s my background.

We primarily wholesale houses in the southeast. So Nashville, Chattanooga, Pensacola. We do some deals in Atlanta, Birmingham. If something pops up, we might do some marketing in some different areas. It’s pretty much all virtual now. COVID pushed us into a virtual world. So we’re closing everything over the phone. We’ve got a system set up where we don’t actually have to go see the house anymore. So it’s been a great journey. I don’t know — last three years, my COO’s got up and running, and I’ve been able to remove myself, and then I bought another business and I’m running that now. So that’s where I spend my world in that 7 Figure Flipping company you’re talking about now. It’s where I spend about sometimes 80 hours a week doing that.

Theo Hicks: Perfect. So the Blackjack is a machine that’s running on its own. Well, not on its own, but you’re not running it, and then your focus now is on 7 Figure Flipping.

Bill Allen: Yeah, I spend all my time in that mastermind company for single-family wholesaling, flipping. Blackjack’s great because I have a phenomenal team. We have a great leadership team. I don’t have to look over their shoulder. They hold each other accountable. We operate off with a system called EOS, so the Traction by Gino Wickman, that system… And everything runs. I can just pop in there, look at the scorecard, see how they’re doing. I show up every month and give them a meeting over some rah-rah, talk about how amazing things are doing. The Inc. 5000 list just came out yesterday and we were number 206 in growth from 2016 to 2019, which is amazing to see that. So I can celebrate those things with them and do something else. My passion moved somewhere else, and to be able to do that and build another company and put the right people in place has been fun.

Theo Hicks: So in my notes here, this is from your first episode, is that in 2016, you had flipped 13 houses and wholesaled 54 while you were working full time, and now you’re telling us that you’re spending a few hours on that business. You’re doing over 200 deals a year. So double, triple what you were doing at the time. What are the two or three things that you’ve done that have allowed you to not only increase the amount of deals you’re doing, but decrease the time investment on your end involved in doing those deals?

Bill Allen: Well, I think the first thing is listen to podcasts like this. Understand that it’s possible. When you hear somebody that you can relate to and realize that they’re just a normal person doing things like this, it’s possible for anybody to figure out how to do it… And then surround yourself with the right people. I brought in staff members and team members that were better in areas that I was bad at.

A lot of people say strengthen your weaknesses, and I really believe in that work on your strengths, know what your strengths are, and then surround yourself with the people who are strong where you’re weak, and that’s what I was able to do. I was able to put this team together that when I’m sitting at the conference table and I’m talking about marketing, I’m not the know it all at marketing. Somebody else knows a lot more than me. So when I started listening to other CEOs, other business owners to figure out how they got to the place that they got, it was mostly about the fact that every decision doesn’t have to go through them.

So putting the right people in the team, and — you guys have that here, right? You guys have a great relationship here with your team, with Joe and you, and it’s really cool to see that. So when you can bring the right people in on your team to do the things that you’re not very good at or don’t want to do, it frees you up to do the other thing. So first of all, a little bit of education and just really honestly, it’s all pretty much mindset. Believing that you can actually do it, that’s the first step. And if somebody else can do it, so can you. Lots of different people have been able to do this. It’s possible. It’s real. There’s a lot of people out there doing it. And then finding the right people. Those are the big things. We talked about systems and automation and process. It’s the people that are involved that are most important. Whether it’s the people in the deal, the people on the team and staff, that’s the important part in business as far as I go.

Theo Hicks: How did you find the team members? Did you just post a job listing? Did you get a recruiter? Are they people that you knew previously? Where did you find them? And then how do you know that they are the right fit? You mentioned that you want to find people who are good at what you aren’t good at or don’t like doing, but I guess tactically, how do you know that this person is actually good at these things?

Bill Allen: I think the first step is knowing yourself. So once you know yourself and what you’re good at — because people ask me all the time, who should I hire first? The answer to that question is it depends. I can tell you who I hired first, but who you hire first might be somebody totally different. It might be a project manager, it might be a bookkeeper, it might be a salesperson.. It’s really where are you weak and what do you not good at; that should be the first person that comes in. So knowing yourself, get to know yourself, your personality, what you’re good at, what you’re not good at and be honest with yourself. And then you interviewed me in 2017; 2016 is when I started hiring people, in early 2016, and it was like a Craigslist posting. We don’t do that style anymore. You can still do that…

The thing that I think you need to do is you need to cast your vision. You need to know where you’re going. Because that first person that comes in when you have no company and you have no track record, why should they leave another job or believe that coming to work for you is a stable way for them to do what they want to do? Casting the vision for them is the most important thing. Getting them on board and getting him to believe and buy into your vision. So what we do now is we hire off Indeed. That’s the only place we post, and we have ads running all the time. We look at the personality profile that we want somebody to have. So you can use a free resource like the DISC test. Kolbe is another one, Myers-Briggs is another one. We use a paid service called Culture Index. They cost anywhere from $6,000 to $10,000 a year depending on the size of company that you have. But I have two companies, we have about 50 people that work for the two companies combined. So it’s a great resource for us. I actually pay two licenses, one for each company. It’s that valuable to me.

So we set the personality profile that we’re looking for, and that’s who we are. What’s in your DNA? From the time that you’re 12 years old, you have these characteristics and traits that are in you. It might not show up, you might be able to work through it sometimes, but when you get stressed out, and things are going wrong and everything happens, you go back to that natural state that you’re in, and we’re constantly under stress as a real estate business. I think it’s safe to say that 70% or 80% of the time, there’s problems and things are blowing up. So I want the people that show up that can naturally go back to being salespeople or naturally going back to being admin people or naturally being good at bookkeeping at that point in time, and they’re not going to miss the details. So we look at that personality profile, and then we look at skillset. So a lot of people do it backwards. They look at skillset and they look at the resume, and then they hire somebody.

So I want to know who you are as a person, what your core values are, what you believe in, and if you can fit in with the team. I have a team member of mine, she’s amazing. She said one time, “They’ve got to pass the beach test. Would you go to the beach and sit on the beach and hang out with them for a little bit, especially as a small company?” I’ve hired some people before, they just don’t really fit the culture and it’s just the wrong fit. They can be great at that position, but they got to fit into the culture, the core values and all that stuff that we believe in, who we are.

So we post on Indeed, we create the personality profile that we’re looking for, and then we write the job ad on Indeed based on attracting that personality profile. So we use adjectives that when somebody reads it, they’re like, “That’s me, that’s me, that’s me.” Instead of talking about what the job is, we talk about who the person is that would be interested in this, and then we look at the resume.

So it’s like a funnel, just like your leads are. If you look at hiring just like you do going out and looking for leads for houses or for buyers or for raising money, whatever that is – same thing with hiring. And then we ask the same questions, we compare apples to apples. We write down the questions that we’re going to ask. We don’t change them, because a lot of times, you’ll go one way with the candidate on an interview and you’ll go another way on a different candidate on an interview, and you can’t compare apples to apples that way. So we ask them the same question. It’s very clear, it’s very obvious that we’re just being systematic about our approach. So that’s a short answer on hiring. There’s a lot involved in this stuff, but if your gut says no, don’t do it.. If your gut says this might not be the right person, but they have the resume… I’ve gone against my gut a couple times, big mistake.

Theo Hicks: That’s something I wanted to ask too, is how do you know when it’s time to fire someone, and then how does that approach work? Is it just one day it’s done? Is there a warning system? How much time do you give them to turn it around? I’m just curious of how that works.

Bill Allen: Yeah. That’s the answer again – it depends. For me, the problem is, I know that I’m an emotional decision maker, so I’ll hold on to people longer than I should. When my confidence runs out in somebody or it’s in question, it’s very hard to climb back up and get back on the good side of me and the company. Once I lose a little bit of trust and confidence in them because of their performance or what they’re saying or it doesn’t line up and my gut starts telling me this is the wrong fit, that’s the time that I should be letting somebody go, or having that first conversation. Usually what I do is I’ll have a basic conversation with them. I’ll give them some time to turn it around, and it’s never worked out for me. So from the HR side, I’ll say yes, we’ll give people a couple chances.

We use EOS. So we use something called the people analyzer as a tool inside of this EOS system that we use, and when they get below the bar on the core values or the Get it, Want it, and the Capacity, that’s when we go to them and say, “Hey, you’re below the bar. This happened, this happened, this happened.” So what I do is I give them three different times of things that they did in the past that highlights this core value being below the bar, and then I say, “You’ve got the opportunity to get back up, but this is what you need to do. You have two weeks or one week or three weeks or whatever we put a plan in place to get above the bar.” Because if it’s one instance, they say, “Oh yeah, but this happened,” or, “Oh, it was because of this.” But if it’s three times, they really can’t defend the fact that three times, they’re not showing up. And for us, it’s extreme ownership, stewardship, hard-working, integrity and personal professional development.

So if they’re not showing up with integrity, for me, you’re pretty much gone. There’s not going to be a warning for integrity. But if there’s some hard-working, maybe they had something going on with their family, they’re just not working as hard as they should be or showing up the way that they should, then that’s something that’s coachable. Personal professional development, if they’re not putting enough time into developing themselves professionally, then we can have a conversation and try to start to talk through some of that stuff.

Ownership, if they show up to that and go, “Yeah, but that was this person’s fault or this person’s fault or this person’s fault,” then they’re not even going to get through that meeting. We’re just gonna fire them right there. So it just depends on who the person is. But when your gut tells you that it’s time for somebody to go, it’s probably too late. Don’t be afraid to fire somebody in the first couple weeks, the first month, the first two months. You pour a lot of time and effort and energy into these folks, but there’s a lot of opportunity cost lost by holding on to the wrong person for too long.

We just had a quarterly meeting. One of our teammates was below the bar, and we had the opportunity to coach her, but she just wasn’t coachable and it was time to go, and we just parted ways on good terms. I’ll tell you, every single person that we let go so far, pretty much every single person, has written me back a year later. Every person I let go, I said, “Look, this is the best thing that I could possibly do for you. You don’t understand that this is not the right fit, you’re not in the right seat, this isn’t for you. You’re going to go find your dream job. Believe me that you’re going to be happier somewhere else. Here’s a couple of recommendations I have based on your personality profile, what I’ve seen; maybe go try this,” and I’ll get an email or a phone call six months, a year later, and somebody will say, “You know what? You were right. I found the incredible job. I love my job. I love what I do now. Thank you. Thank you for firing me. Thank you for letting me go. Thank you for caring about me that I’m actually not doing what fills me up.”

I think it’s pretty rare that employers actually look at their staff to see if they’re happy, if they fit the culture, if they’re enjoying what they do, and looking out for them. That’s the way I look at it is if they’re not happy, we’re not happy; they’re just working for a paycheck. Let me figure out where to put them and move them somewhere else, and if they can’t fit inside of our team, then what can I recommend for them?

Theo Hicks: That’s probably even more rare, is not only looking out for what’s best for them and for you, but also saying, “Hey, here’s what you probably can do based off of your personality profiles. So I wanted to ask a quick question about 7 Figure Flipping, the mastermind group. Is that traditionally an in-person event or is it online?

Bill Allen: Yeah, it’s traditionally in-person. So we have a big event every year in October called Flip Hacking Live, and last year, we had over 600 people there. We were planning on having it in Orlando this October. And then it’s traditionally quarterly meetings in person that we have, mastermind meetings, that we have transitioned to virtual meetings recently. So it’s been quite a challenge. We even just had one here in Nashville. I live in Nashville. We had it scheduled in Chicago. About a month before, we said, “Nashville is opening on July 1st. Let’s move it to Nashville because Chicago’s a no…” and it was in the middle of July. Two weeks before the event, we moved it into Nashville, got the contract in place, and then sure enough, July 3rd, they were just like, “Shut down Nashville, too.” We had to plan three events in a month. It was crazy.

Theo Hicks: Well, I wanna ask you, what are some of the things you’re doing for these virtual events to engage with people through their computer? What are some of the things you’re doing to engage with people?

Bill Allen: Well, you’re looking at some of it right now. So you can’t see, but I have four computer screens here. So when I’m presenting at these events, I’ve got a professional camera, lighting, set up my studio, I’ll move things around, and I can see every single face that’s at the event. I got the standing desk because of this. I got a lot of different new tech and things like that. I invested a ton of money into figuring out how we could deliver an experience to them. We learned a ton of things in Zoom. We do Zoom breakout sessions. We gamify some of the stuff. The biggest thing for me was to be able to see everybody, look at their reactions, and make sure that the content that I’m delivering is strong, and also coach up some of our other team and saying, “Hey, I need you professionally dressed. I need you with a nice background. I need you in a quiet place. Make sure that your internet is strong.”

We’ve put on probably six virtual events that we have learned how to do things. You can do a lot of cool stuff with zoom. You can do breakout sessions where you can send them to breakout sessions and then bring them back into a general session.

We’ve run two simultaneous events in the same weekend with six breakout sessions with different speakers and people running the room. So we’ve had to get lots of different licenses, do things like that. It’s been interesting. This October event that we have, we have the same event planner that does Tony Robbins’ event. He just did this Unleash the Power From Within; it had over 40,000 people. At his event, he had a 360-degree monitor. So what we’re doing for October is we’re building out a studio in Charlotte, where I’m gonna be there, I’m gonna fly the speakers out, and we’re gonna present a live event from stage to everybody and stream it to them.

We’re sending boxes ahead of time, we’re sending all the stuff that you would normally get at an event like that to their house ahead of time. We’re giving them point systems to gamify it, win some prizes and stuff, using private Facebook groups to get them interested and excited and network ahead of time. Networking sessions, breakouts, bringing keynote speakers in that we couldn’t afford before, all that stuff. Just taking it–  elevating it to a point where it’s not just a Zoom call or another webinar, because people are tired of that right now. I’ll tell you – a three-day Zoom call, they’re just not gonna be interested.

Theo Hicks: Okay Bill, what is your best real estate investing advice ever?

Bill Allen: Best real estate advice ever. I would say looking back, build the foundation and the mindset of what you want to do. I usually say take action, but I feel like that’s so played out. I really feel like when I look back, my success is because of what I tell myself in my mind all the time. So your mindset and the way that you show up with failure, with loss, with issues, with problems and the stories that you tell yourself in your head, that’s the most important thing. So if you can start with that and understand that you’re building the foundation on rock instead of sand with your mindset and where you’re going, you’ll be unstoppable.

Theo Hicks: Okay Bill, are you ready for the Best Ever lightning round?

Bill Allen: Ready.

Break [00:19:26]:04] to [00:20:28]:03]

Theo Hicks: Okay Bill, what is the best ever book you’ve recently read?

Bill Allen: Extreme Ownership by Jocko Willink and Leif Babin. Absolutely amazing book. It will change your life. Make sure your entire team, your family, your friends all read that book. It’s amazing.

Theo Hicks: If your business were to collapse today, and we’ll say Blackjack, what would you do next?

Bill Allen: I’d keep doing what I’m doing. I’ll tell you what I would do if Blackjack fell apart. I would probably look at what the marketplace looks like and figure out how to pivot the people that I have inside that business to something else. If it was because of the fact that we’re wholesaling real estate and that started to tighten up or close down, I have phenomenal people that we could have a rockstar donut shop right here in Spring Hill, Tennessee if we needed to. So look at the marketplace and look for opportunity and figure out how to pivot.

Theo Hicks: What is the best ever way you like to give back?

Bill Allen: I’m actually the Tennessee Director for Operation Underground Railroad. So I absolutely love giving my time and money and raising awareness for that. That’s an organization that frees trafficked kids from sex trafficking, sex slavery. In the US, about 500,000 sex slaves here in the US that are kids and almost 2 million total, so over 1.5 million abroad. So it’s a pandemic, it’s an issue. We’re fueling the problem as Americans and that’s it. Operation Underground Railroad, ourrescue.org. You can check it out. It’s absolutely amazing. It’s changed my life, opened my eyes to something I had no idea was a problem.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Bill Allen: Well, that event, Flip Hacking LIVE, absolutely amazing. I recommend anybody to check it out. But 7figureflipping.com, you can reach me there.

Theo Hicks: Alright Bill, thanks for coming on the show again. I really appreciate you catching us up on what you’ve been up to, and congratulations on such massive growth since we launched talk. Again, went from 13 houses flips, 54 wholesales, full-time to working a few hours and having a self-generating machine of 200+ deals a year.

So we talked mostly about team. So we talked about the two main reasons why you’re able to scale – one was education and mindset; the other one was, surround yourself with the right people, complementary skill sets. You mentioned that you’ll post a job on Indeed, and rather than looking at the resume first, you’ll focus on the type of person, the values that you want, the personality you want for that job.

And then as you create the job listing based off of that, they’ll take the personality test, then you’ll look at the resume and then when you interview them, you’ll ask them all the exact same questions so you can compare apples to apples, and then ultimately, it comes down to your gut. If your gut tells you no, well, it’s probably not gonna be a good fit. We talked about the process of firing someone and your three examples of if they weren’t aligned with specific values. But again, if your gut tells you it’s not working out… You said that you’ve never had a time where you’ve lost confidence in someone, and then they’ve been able to turn it around. But I really liked what you said that when you do fire someone, you don’t just say, “Good luck.” You actually will try to give them advice on what might be a good career field based off of their personality test. You gave us a lot of advice on how to effectively do virtual events, whether it’s a meetup group as you’re doing every single month or a one-time yearly conference, and that would be your 7 Figure Flipping.

You talked about investing in a studio and making sure your team also has a nice camera, lighting, background. You said you use Zoom a lot for the breakout sessions. You get point systems, games, private Facebook groups to get people excited. And then something else you said that I thought was interesting was you can get bigger name speakers to talk. So you don’t have to fly them out, pay for their hotel. They don’t have to do an in-person event and spend a full day or full weekend. Now they can spend an hour at their computer doing it. So that was also interesting. And then your best ever advice was to build a foundation and a mindset first before you go out there to start taking action. So Bill, thanks again for joining us. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Bill Allen: Thanks, Theo.

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JF2183: The Texas Property Manager With Danny Webbers

Danny is a real estate broker, and owner of The Texas Property Manager and The Texas Builder. Danny shares his expertise in purchasing notes and how he plans to continue to grow his personal business. 

 

Danny Webber Real Estate Background:

  • Real estate broker, owner of The Texas Property Manager, and The Texas Builder
  • 15 years of real estate experience
  • Flipped approximately 150 flips, wholesale 40+ , 30+notes
  • Based in Austin, TX
  • Say hi to him at: www.myhomesimple.com  
  • Best Ever Book: Minimalism

 

Click here for more info on PropStream

Best Ever Tweet:

“Find a mentor, and pay him if needed. You need someone you can call anytime you have a question” – Danny Webber


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners and welcome to the best real estate investing advice ever show. My name is Theo Hicks and today, I’ll be speaking with Danny Webber. Danny, how are you doing today?

Danny Webber: I’m doing great.

Theo Hicks: Great. Thanks for joining us; looking forward to our conversation. A little bit about Danny – he is a real estate broker, the owner of The Texas Property Manager and The Texas Builder, he has 15 years of real estate experience and he’s done approximately 150 flips, over 40 wholesales and over 30 notes. He’s based in Austin, Texas, and you can say hi to him at myhomesimple.com. So Danny, do you mind telling us a little bit more about your background and what you’re focused on today?

Danny Webber: Sure. Background going way back in military and law enforcement. I’ve got an MBA in Business Management and Finance, lots of hands-on experience. I believe in getting dirty on job sites, learning how to do all the trades, which is one of the reasons I started the construction company. My focus today primarily though, is I’ve been liquidating a lot of rentals and getting cash-heavy, just with all the craziness going on in the world. I really have a lot of dry powder on the side, ready to deploy as deals become available. So focus for me right now is macro and micro economics and trying to take the big macro picture and drill down to how it specifically is going to manifest itself in Austin’s market because we’re a little bit of a strange market comparatively speaking to most other places in the US.

Theo Hicks: Let’s talk about that a little bit. So you said you have a lot of money and you’re in the researching, educational phase right now.

Danny Webber: Mm-hm.

Theo Hicks: Okay, perfect. So what are some of the things you discovered particularly about your market?

Danny Webber: Well, there’s a lot of dynamics going on, and obviously with what we’re going through with the pandemic and everything, and so what I’m doing right now is I’m following the macroeconomic picture, meaning the Fed money printing the financial stimulus and incentives from the government, and then how that’s affecting current mortgage market and real estate market, both nationally and locally. So for instance, in normal times, in a nondistorted macroeconomic market, when the Fed prints trillions and trillions of dollars, and then they’re deployed to the folks on the ground, typically you would see some type of inflation, or typically you would see some type of devaluing our currency, but we’re not seeing that because there’s such a shortage of dollars in the world, which is counterintuitive to a normal macro investor or even a real estate guy… Because as a real estate guy, when our currency devalues and you’re in fixed long term debt, that’s good for you. When a loaf of bread goes to $10 and the house that you paid $100,000 for five years ago, now costs a lot more just because of the devaluation of our dollar – it’s good for you, especially if you’ve got long term low-interest rate debt. So throw that in the mix with the deferments of the evictions, the foreclosures, and then add on top of that the fact that a lot of the lenders that did that are going to want three months plus one when the deferments are over.

The increased delinquency rates on both autos and home loans– I can go over 100 other macro and micro indicators, but you take all that information and you’re like, “How is that going to affect Austin?” because Austin’s one of the strongest real estate markets in the country. It’s been that way for probably a decade, and there’s no signs of that slowing. So some of the problems that we face in Austin, for instance, is our rental prices have not kept up with our purchase prices and sales prices. In addition to Austin not having state income taxes, we’ve got a high property tax rate. So if you looked on the MLS right now in Austin and specifically looked at single-family residents, and you were looking, “Hey, I want to buy a rental, I’ve got the traditional 25% down, going conventional. Let’s just say, four, four and a quarter percent interest rate”, you’re not going to find probably more than five properties in the entire MLS that would cash flow with their traditional 25% down investor purchase, which is a big problem for us. So we end up having to go further and further out in the concentric ring theory until we’re outside of Travis County proper, we’re outside of Williamson County. Although you can still get some deals in farfetched Travis, farfetched Williamson, but you need to go into two or three counties away to get deals that make sense for monthly cash flow.

Now, the flip side of that is that the appreciation often is pretty substantial compared to a lot of other places in the country. So some of the strategies the investors’ using this area is they’re okay breaking even every month or not making any money or even being upside every month because the appreciation rates are so high. I don’t necessarily agree with that, but that’s what a lot of folks are doing. The other thing we’re doing a lot down here, and we have been for years, but we’re really, really trying to acquire properties through non-qualified loan assumption strategies, and then doing mortgage drafts on them so that we’re carrying notes and not rentals. Does that make sense?

Theo Hicks: Yeah. Do you mind expanding on that? So you said, instead of buying the property, you’re buying the notes on those properties?

Danny Webber: Typically what we’re doing – I’ll give you generic numbers here – if we find a distressed home seller or even a non-distressed home seller, and they’ve got a $100,000 property, which is nonexistent in Austin, but we’ll just use that for simple math, and you do the research on the tax database and you find out that their payoff is approximately $87,000. So they’ve got $13,000 equity minus closing costs, commissions and everything. You would go to that person and say, “Hey, I want to take over your note, non-qualified loan assumption for five years. I’m going to give you $10,000 at closing and I’ll have the note paid off or refinanced in five years.” So what that allows you to do is it allows, number one, a quick closing, assuming title work and the property checks out. It allows a quick closing, no banks are involved, no approvals are involved, and you can put that property in whatever entity you want it to be in, so you can avoid the debt to income ratio hit on your normal credit. You’ve still gotta do the tax thing at the end of the year; there’s no tax implications, but you can at least avoid the debt to income ratio hit on your credit. So from there, say I have acquired a property in Company A, non-qualified loan assumption; I could then put it on the MLS the following week and sell it to Buyer B at $110,000, $115,000 because people are going to pay a premium for owner financed properties. I’m going to hold the note to the end buyer and I may have an underlying lien from the person I bought it from at for 4%, 4.5%. I’m telling it to the end buyer at 7%, 8%, 9%, 10%, 12%, whatever the negotiated interest rate’s going to be, and I’m pocketing the interest rate spread from the underlying lien to the rep note to Buyer B every month, and I’m avoiding the maintenance, late rent and all this other crazy stuff that I have to deal with. And if the person never stops paying, then I just foreclose on the property versus evict him.

Theo Hicks: Let me just say this back to make sure I’m grasping this properly. So you find out someone who owns a home and when you say they’re stressed, that means they’re delinquent on their taxes, they’re delinquent on their mortgage payments…

Danny Webber: It could be any and all the above. It could be notes, taxes, they got HOA liens, or the other thing we’re going to do a lot down here is people just want to sell the property quick. They don’t want people in their house checking it out, kicking the tires, nickel and dime; they don’t want negotiations. So they’ll just say, “If you bought my house today, how much would you give me and can I live with that?”

Theo Hicks: Okay. So you need to determine how much debt they have in the property. So in your example, you said a $100,000 house with $87,000 debt, and so you’ll go to them and you’ll say you’ll take over their note, you’ll give them some down payment, and then you’ll pay that note off in five years. So I guess one thing I have a question on is, are you just paying them, and then they’re paying their mortgage? Or are you actually paying the bank directly?

Danny Webber: No, I make it sound simple, but there’s a few moving parts. So when we sign the agreement and we’re at closing, we get obviously some really tight POAs and borrow authorizations to communicate with their bank. We typically want the login for their bank system, and then we change the address for all correspondences with the underlying lien and bank; and then from there, typically, what we’re doing in my operation is we’ll just set up the payments going out auto-draft every month so we don’t have to worry about them. But if we can’t set up auto-draft, then we’re just gonna hit a local branch every month. We’ve got a few that we do that with. We don’t like [unintelligible [00:10:46].04] reality. And we make the payments directly every month, and then the person that we sell it to, they pay us. So the selling point for the underlying lien holder borrower is that we’re going to help your credit. We’re going to have 100% on-time payments for the next 16 months.

Theo Hicks: Perfect. So you have some agreement with them paying you something on top of the mortgage payments? So the mortgages plus 4.5%, you said?

Danny Webber: Yeah, it’s gonna be a negotiated rate. Back in the day when QM came out, Dodd Frank and all that other stuff, there was a max overage for lending rate; I think was 3.5 APOR, which is the average rate of the day, and so you were locked into that. And then as Dodd Frank lost his teeth in the QM standards, they didn’t go away, but they’re just not enforced right now at all. So the last three to five years – not a specific time, but there’s a lot of national lenders that have non QM products, non Dodd Frank compliant products, and so everybody just went in that direction now, where if you ask somebody about Dodd Frank, QM compliant, it’s really not an issue, whereas before when it first came out, the world was ending, the sky was falling, and you couldn’t do owner-financed deals, you couldn’t do adjustable rate mortgages, you couldn’t do this over five years… So there was a lot of issues, people were scared, but that’s gone away now. I’m actually a mortgage broker in our [unintelligible [00:12:04].00], so I do a lot of the compliance side. If I get an industry that says, “Hey Danny, I know I don’t need to do this, but I want to make sure that this is as close to QM, Dodd Frank compliant as I can get,” and what we focus a lot on is focusing on the end buyers’ ability to repay the loan and making sure that if at some point you’re saying, “Hey, we didn’t take advantage of this,” but it wasn’t like the old days in California where they had the option arms and you could put out $300,000 yearly salary working at Walmart. So we actually dig deep, we verify income, verify assets, pull credit and look at atleast one or two years tax returns, and that gets the ball as close to Dodd Frank QM compliant as you can get, even if you are charging over the 3.5 APOR on an interest rate. I’ve got some investors I know that have done 12% interest with an underlying lien of 4%. So they’re pocketing 3%, 4%, 5%, up to 8% in interest per month in a note, versus $150 to $300 per month in rental income, minus vacancies, minus maintenance. So it’s a much stronger strategy to use. It’s a lot more hands-off, and to date – I’ve been doing this for about a decade – to date, I’ve had to take back probably three properties, and all three of them have gone the route of cash for keys. So here’s a couple thousand dollars, here’s a deed to sign the property back over to me.

I think the biggest part of the strategy that’s the most exciting for investors is you don’t stay out of pocket. On that same scenario, the $100,000 current value,  $87,000, let’s say that I give the underlying — so the $10,000 and then I’ve got another $3,500 in closing costs. So I’m out of pocket $13,000, let’s just say $14,000 for easy math. Typically, when I’m reselling that property on the MLS or [unintelligible [00:13:52].20] there’s a bunch of agents that do nothing but owner finance deals and so they’ve got buyers lined up… I will get back about 80% to 90%, sometimes 100%+ of my cash out of pocket on the deal.

So if I’m doing a $20,000 down payment – follow me on this – to the Buyer B, I’ve got to pay a commission out of that. So I’m a few thousand dollars out on a commission. I’m a broker, so I don’t have to pay sellers; they get commissions. But long story short – it’s about you pay a commission, I get all the money back that I put into the deal, meaning the first $14,000, I paid a $3,000 commission, and then I’ve got $1,500 in closing and I’m up to $18,000, $19,000 at the second closing. Well theoretically, I’m completely whole out of any dollars out of pocket, plus I’m a $1,000 above. I’ve made $1,000 plus, and I’m getting monthly cash flow in the form of a note versus rental income. So that happens less than 50% of the time, but it still happens where you’re made completely whole at the end of the transaction, the second sale, and the other time that it’s not [unintelligible [00:14:48].00] you’re out of pocket $3,000, $5,000, $7,000, $10,000, but the benefit is if I bought this property traditionally, I’d be out of pocket 25 grand upfront, just for the 25% down, plus closing costs.

Theo Hicks: I was gonna ask you, how do I find these types of properties to buy the notes off of?

Danny Webber: It’s the same process that you use to find properties in distress – delinquency lists, foreclosure lists, tax delinquent lists, and also what I consider a pretty advanced investor market compared to other areas that I have talked to folks in, is they’re still doing the door knocking and they’re still sending mass letters to areas, and one of the tricks is just to get on the MLS, and then there’s statistics out there that say people sell their homes an average of five to seven years after buying them, in most instances; some large number over, 50%. So if you just do a search on the MLS, the very neighborhood specific properties and areas that you want to be in, that property and just not the blanket, the whole city. Pick out a few areas, few neighborhoods, few zip codes, and just focus on those and just be the king of that area. So that’s what I’ve done.

I’ve got a few neighborhoods around where I live, really within walking distance of where I live, that I focus on, because it’s easy to reproduce success if it’s close. So you can just send out mailers, you can go bang on the door. As a traditional real estate agent, one of the big things I see in the industry is most people are just lazy. So if I walk to my neighborhood and just bang on every door on my street, just my street alone and said, “Hey, I’m Danny Webber. I’m a broker, I live down the street. I want to be the guy you call if you sell your house or you’re looking to buy another one. And oh, by the way, do you know what your house is worth?” 90% of people are never going to turn down an offer just to get a house value, because they’re gonna go to bed at night feeling better. “Oh, I guess that I’ve got $20,000 in equity or $30,000 in equity.”

Long story short is you’re just starting conversations, you’re building relationships. But at that point, once they say, “Wow, I would sell if I had $50,000 in equity,” and then you’re like, “Okay, let me run the numbers and see if you can walk away,” and long story short is you can’t walk away with $50,000 if we go traditional sales, because you’re paying 6% commissions, you’re paying closing costs, you’re paying that which is going to decrease– you’re gonna be 12%, 14%, 15% out of pocket at closing. But if you go on to finance, do a non-qualified loan assumption, I can give you $45,000, which is a net to you of $7,000, $8,000, $9,000 that you wouldn’t have in a traditional sales cycle. Does that make sense?

Theo Hicks: 100%. So it sounds like they don’t actually have to be distressed, either.

Danny Webber: They don’t.

Theo Hicks: So even without them being distressed, you just have to figure out how much cash they want to walk away with, and then see if it makes more sense for them to do–

Danny Webber: If you can make the deal work, yeah.

Theo Hicks: Yeah, exactly. This is very interesting, because I like the whole note idea. It sounds very, very complicated, and I think it actually is, but it sounds like once you do it a few times and you understand the process, you definitely talked about why it’s a lot more beneficial than going the traditional rental route.

Danny Webber: Yeah… And two things on that. So once you get used to doing these – number one, there’s additional disclosures, there’s additional paperwork. You have to go to a very specific title company that’s used to do these transactions, because most of your corporate title companies, if you brought them, they’ll say, “Hey dude, you’re crazy; you can’t do that,” and the reality is you can. You violate the due on sale clause, but there’s some disclosures that you sign from the seller that says, “Hey, we’re violating your due on sale clause because the property is changing hands,” and it’s really a who cares type thing, because at this point, it could change in the future. But at this point, banks are not calling notes due that are performing. They’ve got a performing Wells Fargo note that they’re paying on time every month at 4%. You’re not going to spend the $10,000, $12,000, $15,000 to foreclose on that property because you’re getting your money every month and there’s no delinquencies. So should that ever occur, there’s a couple of workarounds, because at that point there’s a defect on title, and the defect on title can be cured just by transferring the property back into the original seller’s names and Wells Fargo to approve, and then they go away, and then you can put it right back into your name. Again, I’m getting a little bit deep into this, but there’s a whole strategy and process behind it. It’s simple once you do it a few times and you see it laid out, but to wrap your head around it, the first time, you’re gonna have a million questions on how this actually works.

I’ve been doing it for a long time. I’ve got attorneys down here that do the transactions and they manage the transactions, they have their title companies, and it’s all pretty flawless. Mistakes are still made, but as long as you’ve got a good relationship with the seller, anything you need to get defined later or get done later, you’re not gonna have a problem.

Theo Hicks: Yeah. Okay Danny, what is your best real estate investing advice ever?

Danny Webber: Best advice is to not think you are Superman because you went through a two-day or one-week course. One of the biggest problems I’ve seen – and it’s been that way for a long time – is somebody getting some business cards made that say, “I’m an investor”, they take a weekend course, they could take a one-week course that costs them $50,000, and then they fail. Being a real estate investors – it’s not equivalent to putting a band-aid on your kid’s finger because he’s got a cut and you’re a doctor. That’s not the way it works; it’s in-depth. So I think people fail to do proper planning, proper homework and proper preparation before they become an investor. They think it’s easy and it’s really not. Statistically, I think 60% or 70% of investors lose money the first year or two because they just don’t know what they’re doing and they just don’t have the right team of people around them.

I absolutely believe in mentorship. I think it’s the best money you can spend, I believe in finding a local mentor that’s in your market, that is doing the same strategies that you want to do, meaning if you’ve got a real estate investor that doesn’t do a lot of non-qualified loan assumptions, mortgage wraps, but they do a lot of flips and you want to do flips, well stick with the guy. But if you’re a long term investor and you want more cash flow, more notes, payments coming in, and you’ve got a ten year game versus a one year “I need cash” game, then you need to find that specific mentor and pay him. Mentors do not come free. If you want him to pay attention to what you got going on, then you’re going to have to pay him something whether it’s $100 bucks or $10,000, who knows? But you need a paid mentor that’ll answer your phone and answer your questions when you have them.

Theo Hicks: Okay, are you ready for the Best Ever lightning round?

Danny Webber: Let’s go.

Break [00:20:41]:04] to [00:21:53]:03]

Theo Hicks: Okay, what is the best ever book you’ve recently read?

Danny Webber: I don’t have a best ever book, because I get a little bit of greatness from all the books that I have. I’d say a topic that I’ve been reading a lot about lately around last year is minimalism and how to filter out all the non-productive, the non-value added tasks and things from your day so that you can work less, but be a lot more effective and efficient while you’re working. So that’s a big body of knowledge that I’m really into right now and it’s already paid off, in my opinion.

Theo Hicks: What is the best ever deal you’ve done?

Danny Webber: Well, in dollars, it’s probably going to a flip. I made a couple of times $100,000+ on flips, but what I think is a cool transaction, I did three wholesale assignments in one day at one time, and I made $20,000 per assignment. So this was back in the day when in Texas you could do an A to B, B to C, but the C buyer was paying off to A’s lien, a double closing. The title company just got away from those in Texas, but I made $60,000 sitting at a table with the title company, same title company, in probably about an hour and a half. That’s as long as it took me to buy three properties and sell three properties at the same table. I made 60 grand, without thought. It’s just a neat thing.

Theo Hicks:  And then lastly, what is the best ever place to reach you?

Danny Webber: Probably my email. The danny.webber@gmail.com is probably going to be the most efficient place, because I’m on that every day. danny.weber@gmail.com.

Theo Hicks: Perfect. Well, thanks for sharing your email address and also sharing your in-depth explanation of how to do note buying. I’m not gonna try to explain it again. I’m probably gonna have to listen to it again, just to make sure I fully understand it, because it’s one strategy that I personally haven’t talked to people about a lot. So I think this is gonna be a very valuable episode for Best Ever listeners, especially as you mentioned during these strange times. So Danny, I really appreciate you coming on the show and speaking with us today. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Danny Webber: Yes, sir. Thank you.

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JF2181: Don’t Ignore Low Hanging Fruit With Andrea Weule

Andrea is a real estate investor, author, and educator. She has completed 100’s of deals across the United States and continually shares her knowledge with new investors. She has completed numerous wholesale deals, rehabs, lease-option deals, private money lending deals, and owns a number of rental properties. Andrea always has constant new deals in the pipeline. She is always growing their retirement money through deals with other investor partners. Even living in Colorado, she has completed deals in twelve other states.

 

Andrea Weule Real Estate Background:

  • Full time real estate investor and President of Archway Investment Corp 
  • 13 years of investing experience
  • Currently holds 24 rental properties and has completed over 500 deals; wholesale, flip, lease options, etc.
  • Based in Englewood, CO
  • Say hi to her at: https://wealthhealthgrowth.com/ 
  • Best Ever Book: Doing Good Better

 

 

Click here for more info on PropStream

Best Ever Tweet:

“One good thing about being a wholesaler is you get to keep the really great deals for yourself and pass the good deals to others” – Andrea Weule


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. I’m Theo Hicks and today, I’m speaking with Andrea Weule. Andrea, how are you doing today?

Andrea Weule: I’m doing awesome. How are you, Theo?

Theo Hicks: I’m doing great as well. Thanks for asking and thanks for joining us, and looking forward to our conversation. Before we jump into that, a little bit about Andrea’s backgrounds – she’s a full time real estate investor and the president of Archway Investment Corp, she has 13 years of investing experience, she currently holds 24 rental properties and has completed over 500 deals; these are wholesale, flips and lease option deals. She’s based in Englewood, Colorado, and her website is wealthhealthgrowth.com. So Andrea, do you mind telling us a little bit more about your background and what you’re focused on today?

Andrea Weule: Absolutely. I actually started out in real estate for the homebuilders. I got a traditional job out of college, worked in every department of the homebuilding industry, from warranty to construction to sales and marketing, and I definitely enjoyed that, and then decided that I should be making a lot more money myself if I’m doing this much work. So my husband and I dove into real estate full time. Actually, I guess part time, while I was still working our day job and all that, but really just loved taking communities, neighborhoods houses and fixing them up and improving them and helping people grow their wealth through real estate including ourselves, and it’s been quite a journey. It’s been awesome. I live here in the Englewood, Colorado area, south of Denver, but we’ve invested in 16 different states now. So we’ve been able to take our business on the road, if you will.

Theo Hicks: Perfect. So based on what you’re saying, it sounds like right now you’re doing a real estate yourself, but you also have a coaching or consulting type program as well?

Andrea Weule: Correct. Yep. I focus real estate wise, mainly on wholesaling and rentals right now mainly because I think they’re the ones that I enjoyed the most, and I think the market is prime for both of them right now for sure. And then I love helping other people find their niche in real estate, helping them grow their real estate or their wealth through passive income, if that’s their strategy, or if they’re more creative and like doing flips and different things like that, helping them find their passion and their future profitability through real estate.

Theo Hicks: So let’s base our conversation on those two categories. Let’s first talk about your portfolio, and then let’s talk about your consulting coaching program. So you said you focus on wholesaling and rentals right now, you said that you have 24 rental properties?

Andrea Weule: Yep.

Theo Hicks: How many wholesales are you doing per month right now and how many rental property deals are you trying to do per month? Or it can be per year too, whatever time frame you want to use.

Andrea Weule: Well, I like to always keep things as real as possible. So in the wholesale world, we are doing one every month for sure. Some months are great. I’ve done a couple of months where I’ve had eight different closings, and then again, some months, things just don’t stack up the way that you want them to, and that’s just how real estate world works; we only get one. But I do a lot of investing here in the local market with helping people find fix and flips and projects that way, and then I do a lot of wholesaling in the Midwest, helping people in more expensive markets like Denver, Seattle, California, find cash flowing rentals and wholesale them deals in the Midwest. So that’s where I focus a lot on that.

And then for rentals, we’re averaging one a quarter. We’ve been a little slower the last couple of years just because I felt like the market was hitting the top of the market. I still wanted to grow our portfolio, but definitely wanted to not be too aggressive and buy something that I’m banking on appreciation that’s not going to happen for 10, 15 years. And then we also took some of our properties and did a lot of evaluation in the last six to nine months. So we bought a handful of properties, which is why we’re down to 24, because we wanted to make sure that the properties we’re holding long term are the properties that we want to hold forever. And so those properties that were good, but not maybe amazing are the ones that we wanted to liquidate for now, while the market was up, take that cash and then be able to have that cash available to capitalize on maybe slower or lower price point market over the next couple of years and continue to build up that rental portfolio.

Theo Hicks: Is your wholesaling business the lead pipeline for your rental business or are those two separate things? Are you getting leads for your wholesaling business and buying some of those, or you’re getting leads, wholesaling all of those, and then getting leads separately for the properties you’re buying as rentals?

Andrea Weule: Both. So in Denver, I’m not interested in buying properties here as much, just because our price point is so high. So the wholesaling that I do in Denver is a lot more for a fix and flips type investor. Whereas again, in the Midwest, all the properties I’m seeking out, I’m always going to consider myself. And I think that’s the beautiful thing about being a wholesaler – I think you can always focus on finding great deals, passing them along, but keeping the really great deals for yourself. So that’s definitely been our strategy in the Midwest.

Theo Hicks: Yeah, that [unintelligible [00:07:50].27]. It sounds like a good way to– because as you mentioned, you’re buying every quarter. So when you’re not buying rentals, you’re wholesaling, and then you’ve also got a continuous lead of deals coming in that you can always find a way to make money off of. That’s what I was getting at.

Andrea Weule: Absolutely, absolutely, and it just definitely keeps bringing the funds so that I have a reserve of cash to buy properties when the great ones appear.

Theo Hicks: Can you tell us a little bit about your lead generation strategies? Maybe more specifically, just talk about– it sounds like you’re wholesaling the deals in Denver, and then in the Midwest, you’re wholesaling and then also considering buying those, but you don’t live there.

Andrea Weule: Correct.

Theo Hicks: So let’s talk about that. What’s your lead generation strategy for these deals that are out of state?

Andrea Weule: So any market that I love, I always have a good agent sending me deals at all times, because I feel like when you ignore the MLS, you are ignoring the low hanging fruit. If somebody lists their house for sale, they want to sell it. So I try not to ever ignore that. Yes, there’s a lot of competition. Yes, they might want to sell it retail, but it seems silly to me to ignore it. So I’m always making offers via the MLS. But I would say my favorite off-market strategy is getting lists. I usually use ListSource, I pull lists. Most of my listings, I’m focused on active adults. So I look at 55 or better, people who have lived in their house for 20+ years that may be considering downsizing, maybe moving to more of a assisted living or low maintenance living, and I focus my mailers on those leads. So a lot of the verbiage that I’ll use in those mailers will be “Are you looking for your next adventure? Are you looking for less stress?” things like that, so I’m hopefully talking to them more directly. And then in addition to sending the mailers to them, and I always do at least three mailers for every address that I call, I also try to do bandit signs. I get people in those remote markets to put out bandit signs in areas that I’m focusing on. I just post ads via Craigslist under the Gigs category, hire somebody, have signs shipped to their house and they can put up signs for me. I use a couple of different programs to have them- -make sure that I get the signs out there. They take pictures with them and I can see the geotag on where the bandit signs are. I can pay them very easily through PayPal. Sometimes I have people that will continue to put out signs forever for me, I have people that they do it once or they don’t ever do it, and maybe it cost me the amount of signs, but I get boots on the ground without me flying out there. And then lastly, I also take that same list and I put each of the addresses and people’s, individuals’ information into Spokeo, and I look up phone numbers and emails and I cold call and shoot emails to them.

So I figured if I approach them three times, I have a better conversion rate and I’ve been fairly successful that way, and then I found once I get somebody talking to me and interested, it’s pretty easy to do things remote. With technology these days, people can take pictures with their phone and text it to me, we can get on a Zoom call, a Skype call, a FaceTime call, and they can walk me through the house and I can get a good feel for the condition of the house right there, and have all the data that I need just from what’s on the internet and my conversations and pictures that I get from those leads.

Theo Hicks: Well, thank you for sharing that. I don’t have any follow up questions. You answered every question; you gave us a step by step process, so I appreciate that. Let’s transition into the other part of your business, which is your consulting coaching business. So your website, which I’m assuming this is the website of your coaching business, wealthhealthgrowth.com. So you already mentioned that you help people find the niche that they want to do, help them grow their wealth, but what about the health aspect of that? What’s your approach with that?

Andrea Weule: My husband is obsessed with biohacking, and again, I’m actually listening to the book Superhuman, which is all about biohacking right now. But really, the healthier you are, the more that you can accomplish, the more you can grow, the more you can learn, the more money you can make. I found people that take good care of their bodies, their minds and their spirituality, they can accomplish so much more. They have more energy, they have more focus, they have more drive and can get more done for themselves, for their family, for their businesses.

So again, it’s more whole approach to investing in real estate because I find when I’m working with people, a lot of their struggles, it’s not really real estate based. It might be time management based, it might be struggling with objections with their family, it might be they’re exhausted all the time, whatever that may be. So we can incorporate just small tweaks. We don’t have to completely upheave somebody’s life, but we can make small tweaks to their life, to their daily schedules, to how they approach things to help them be more successful with their real estate business, and actually live a more fulfilled life.

Theo Hicks: What is the most unique or interesting biohack that your husband’s done?

Andrea Weule: You know, that’s a fun thing. He loves cryotherapy, he loves infrared saunas. We have grounding mats all over our house. So you plug in these mats to the ground in your house so that when you’re just sitting on the couch watching TV, you’re getting the benefits of grounding like you’re standing on the soil outside. We have a Trusii machine which hydrogenates water. So you can get hydrogen in your water which is supposed to help with clarity, your skin, energy, all kinds of different things. We have a daily calendar. He’s got me meditating, which I’m very type A personality, so meditating has been a struggle. So we’ve compromised on I will work on my meditation practice, but we’ve moved on to doing yoga which has a lot of the benefits of meditation, but I actually get to move and do something. So it’s definitely been a journey to learn all that our bodies can do and our minds can do if we hold ourselves accountable.

Theo Hicks: Alright Andrea, what is your best real estate investing advice ever?

Andrea Weule: My best real estate investing advice ever is pick a swim lane. Especially when you’re new to investing in real estate, everybody wants to try everything. They want to try the latest, greatest strategy, they want to try whatever it may be, and the struggle with that is you never get to the other side of the pool. If you’re changing lanes all the time, you’re never going to get the results that you want. So I always, especially when I’m working with people, have them take some time to think about what got them excited about real estate in the first place, have them spend a lot of time going through what their actual current resources are, what do they have and how does that apply to what they want to do in real estate, what resources do they need to potentially plan for or partner up with somebody for to focus their real estate investing, and then to truly set that goal and work it daily.

I think people struggle so often with coming up with what is the latest, greatest and they have all these big plans, but their day to day activities are not aligned with their goals. Their day to day activities are not getting them the results that they need to moving themselves forward. So ensuring that they have the right passion, they have the right resources and they have the right goal, and then they’re working it every single day. And I truly believe in creativity and that’s why we’ve done so many deals. I believe creativity is amazing and there’s all kinds of different options, but the baseline end goal strategy should be defined, and then you can add perks to it if you will. So you can add a kickboard, you can add water wings, you can add some flippers if you want, but stay in your swim lane until you get the results that you need, and then branch out from there.

Theo Hicks: Perfect. Okay, are you ready for the Best Ever lightning round?

Andrea Weule: I am.

Break [00:15:33]:09] to [00:16:45]:02]

Theo Hicks: Okay Andrea, what is the best ever book you’ve recently read?

Andrea Weule: The best ever book that I recently read was Doing Good Better by William MacAskill. It’s a data-driven book about how to be more effective with your altruism. So how to give better if you will, and it’s just is very Malcolm Gladwell-esque and it’s a lot of statistical data, but it really definitely opened my eyes about how to be more effective and more efficient with almost everything I do.

Theo Hicks: Yeah, I think I remember seeing him on Joe Rogan’s podcast a few years ago. Okay, if your business were to collapse today, what would you do next?

Andrea Weule: What would I do next? That is definitely a scary thought. I think I would focus a lot more on personal development. I think I would go into more coaching with helping other people build their business. We’ve built up our business very successfully, and I think I have so many tools and life experiences to help others grow their business with whatever that may be, breaking through a lot of the things that I talked about earlier – time management, what are your fears, obstacles and moving yourself forward.

Theo Hicks: What is the best ever deal you’ve done?

Andrea Weule: Best ever deal we’ve done. It was probably a lease option we did here in the greater Denver area. My father in law’s one of my best bird dogs. He met somebody at his office that got a new job, was trying to sell this house, and this is in the 2009, 2010 downturn of the market, and the guy called his realtor and his realtor said, “You’re going to have to this, this, this, this, this,” and just listed off all the negatives about him selling his house right now and all the costs that it was going to take. So the guy was just like, “I don’t care, I’ll just let the bank have it.” So he’s venting to my father in law. My father in law says, “I don’t know what Andrea does, but can she call you?”. So I called him, I offered to buy his house on a lease option. So in three years, we’ll buy your house, we’ll pay your mortgage, and I think I even gave him an extra 50 bucks a month; taxes, insurance, all that plus an extra 50 bucks a month, but the option price was what he owed at the time we purchased the house. So he wouldn’t make any money at the end. So he just gets to walk away and that’s that. We leased it for two years, and then sold it for about two and a half years in and made $35,000 on the closing costs of it, and it really cost us nothing. We had never put anything into it because we cash flowed about $250 to $300 every single month after paying him his fees, and again, it was in great condition. So it was a long term lease option deal that was a homerun for us.

Theo Hicks: Nice. And on the flip side, tell me about a deal that you lost the most money on, how much you lost, and then what lesson you learned.

Andrea Weule: So I would say it’s probably one of the rentals that we have right now is probably our least favorite deal. It’s one of those deals that I trusted, but I didn’t verify. So I had this deal brought to me by an investor friend and all the numbers looked right on paper, and we’ve done a couple of other deals in the market, so we didn’t think much of it, so we moved forward.

The issue was when we looked at the tax rate for this rental, the tax rate that had been paid for the last several years had been homesteaded. So it was a much lesser rate than the actual tax rate for an investor like myself. So that was a shocker, but then also at the same time, they were passing a large mill levy in that area. So the taxes went from what I thought was going to be somewhere around $40 a month to $260 a month. So our cash flow pretty much went down to negative $10 a month for the property. Granted, it’s appreciated and we’ve just used this property with our other properties that are in that same LLC to float it out. So it’s definitely worth more equity [unintelligible [00:20:37].11], but it definitely was a shocker when I didn’t pay enough attention, I didn’t do the research. So again, you can trust, but always verify.

Theo Hicks: What is the best ever way you like to give back?

Andrea Weule: I love service organizations. They’re a dying breed in today’s world, but I’m actually starting my fifth year as Kiwanis Club president. We sponsor key clubs, do all kinds of different service work throughout our communities, and I think being involved with service organizations is huge, and that’s really what I do with Archway as well. I am the president of their investment corp, which is– Archway is an affordable housing nonprofit here in Denver that has over 600 units of affordable housing. We work with the VA to get veterans off the streets and into housing, and have services there to provide food banks for them. Also, I do career education. We have after school activities for parents that have kids. So the parents can work longer and make sure the kids are getting their homework done and staying out of trouble. So again, just being involved in your community, and a simple way to do that is to get involved with a service organization. Kiwanis, Lions, Rotary, Optimists – any of those are great organizations that are always doing amazing things in the community that people are not really joining anymore due to lack of time and different priorities, but service organizations are amazing.

Theo Hicks: And then lastly, what is the best ever place to reach you?

Andrea Weule: Through my website, wealthhealthgrowth.com or you can shoot me an email directly at info@wealthhealthgrowth.com.

Theo Hicks: Alright Andrea, thanks for joining us today and walking us through your business. We talked about your three main focuses – wholesaling, rentals, and then coaching.

Andrea Weule: Yep.

Theo Hicks: So from a rental perspective, you told us how you do an average of one per quarter, and that you recently sold some of those properties, and then you’ve got your wholesaling business where the goal is to do at least one every month, but some months, more than one; other months, just one. And that you focus on, for the wholesaling at least, out of state, finding really good deals, and then always trying to hand pick out the best ones to buy yourself and then wholesale the rest, and then you’ve gone into a lot of specifics on how you generate your out of state leads.

You mentioned that first and foremost, you don’t want to ignore the MLS. So you always have good agents in those markets who are sending you MLS leads, because  there’s a lot of low hanging fruit on there. And then you said for your off-market strategy, you get a list from ListSource and you focus on 55 or older, people that have lived in their house for 20 or more years. So people who are most likely looking to potentially move out to a retirement home or some vacation home or something. And you talked about you send those people mailers. First of all, you do three mailers per address, and you said that you direct your verbiage toward that target market, which is saying things like, “Are you looking for your next adventure? Are you looking for less stress?”, you talk them more directly.

You also post ads in the gig section on Craigslist to have people post bandit signs. They have to take pictures and prove that they actually did it. You got trackers on the signs, and then you pay them through PayPal, and then you also use Spokeo to find the phone numbers of the people from your list to do cold calling. And then you also mentioned that once you’ve got a lead and you’re trying to work your way through the deal with them, it’s not that difficult with the technology because you can do FaceTime or Zoom calls, do property tours, they can send you pictures, so you have a pretty good idea of what you’re getting into.

We also talked about your consulting business. We focused mostly on the health and how your husband is into biohacking. You mentioned that you have a more holistic approach to real estate investing and that the healthier you are, the more money, more energy, the more you’re gonna accomplish, and then you gave us some examples of some biohacks like cryotherapy, grounding mat, hydrogenating your water, meditating, doing yoga.

Then you also mentioned that with some your clients, something that you realized is that people’s issues aren’t really real estate related, like not knowing how to do a deal, but it’s something else, like a relationship problem or a personal problem or a mindset problem. So I thought that was also interesting.

I also really liked your best advice, which was to pick a swim lane, because if you’re trying to swim across the pool, the fastest way is to stay in one lane and go as opposed to keep changing lanes constantly, going back and forth. So what that means is that when you’re new, there’s a lot going on, there’s a lot of different niches, strategies, people. You need to find the one that makes you the most excited, and you said, then you figure out what resources that you currently have, it’ll help you do that specific niche, and then figure out what resources you don’t have that you need to outsource, so you can be successful in that specific niche. And then you need to go out there and set a goal and work towards it daily.

So that’s everything we talked about on the show today. I appreciate you coming on, Andrea. I’ve really enjoyed the conversation. Best Ever listeners, as always, thank you for listening. Have a best ever day and I will talk to you tomorrow.

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JF2085: Fake it Till You Make it With Aaron Fragnito

Aaron is the Co-Founder of Peoples Capital Group and the Host of New Jersey Real Estate Network. Aaron is someone who developed a plan to become a real estate investor and went after it right away. He shares his journey from no experience to a realtor, wholesaler, flipper, and now syndicator. He shares some of the mistakes he made with management companies and how he is able to keep his 4 core investors even when he was making mistakes to now 30 investors.

 

Aaron Fragnito  Real Estate Background:

  • Co-Founder of Peoples Capital Group (PCG)
  • The host of New Jersey Real Estate Network
  • A Licensed NJ Realtor and a Full-time real estate investor.
  • He has Completed over 250 real estate transactions, totaling more than $40M, Fixed & Flipped over 50 houses, wholesale 100+ properties, and Manages an 8 Figure Portfolio of Private Real Estate holdings
  • PCG Works with qualified investors to create passive returns through local commercial real estate.
  • Say hi to him at: https://www.peoplescapitalgroup.com/
  • Best Ever Book: Mel Robbins books

 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“I am always educating” – Aaron Fragnito


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, today’s host, and today we are speaking with Aaron Fragnito. Aaron, how are you doing today?

Aaron Fragnito: Very good, Theo. How are you doing today?

Theo Hicks: I’m doing great, thanks for joining us. Looking forward to learning more about what you’ve got going on. Before we get into that, let’s talk about Aaron’s background. So he’s a co-founder of Peoples Capital Group, PCG. He’s the host of New Jersey Real Estate Network and is a licensed realtor in New Jersey as well as a full-time real estate investor. He has completed over 250 real estate transactions totaling more than $40 million. This is included over 50 fix and flips, over 100 wholesales, and he currently manages an eight-figure portfolio of private real estate holdings. PCG also works with qualified investors to create passive returns through local, commercial real estate. You can learn more about his company at peoplescapitalgroup.com. So Aaron, do you mind telling us a little bit more about your background and what you’re focused on today?

Aaron Fragnito: Sure. So I got started in real estate about ten years ago. Initially I was turned on to do it by Rich Dad, Poor Dad, of course. I’m sure everyone says that same story. I hear it all the time. So I read Rich Dad, Poor Dad around senior year of high school. I was an entrepreneur, major at Rowan University, wasn’t exactly sure what I wanted to do with my life, but I figured I did have a passion for real estate, and after reading that book, I recognized that the tax code is actually in favor of people who pay themselves through ownership of real estate. So I figured that out, and then I started reading David Lindell and Trump University, and I think I even looked into some Joe Fairless stuff at the time.

About ten years ago, Joe was getting started, the syndication space was really new then as well. So I knew I want to own a lot of real estate and want to make passive cash flow throughout, but just didn’t know how to get there. So I made a list and I said, “Okay, I want to own $10 million real estate and have a net worth of a million with $100,000 passive cash flow in ten years.” So that was about ten years ago; that was my goal. I wrote it down, and I said, “Okay, well, I’m gonna work backwards from here. I need to make connections, learn the industry, save some money, figure out how real estate syndication is created and run… And to do that – maybe I’ll get my real estate license to start.”

At the time, I actually moved out to Colorado to teach kids how to ski for six months after I graduated college, read a bunch of books on how to start a real estate investment company, they all made it look so easy, moved back to Jersey, got my real estate license and started executing on that plan.

I made a lot of mistakes, teamed up with the wrong people for my first fix and flip, lost a little money, did a lot of the wrong things, didn’t do the right due diligence, hired the wrong contractors – I got tons of stories – hired the wrong management companies getting started, ended up having to develop our own management company… But a couple years into the business, working as a realtor, you learn short sales and start to make some money.

I started working with Seth Martinez who is my business partner today, and we really complement each other’s strengths and weaknesses. So he’s great at operations and management of the real estate and improving our systems and strategies here in our business, and I’m more on the branding and fundraiser investor relationship side. So we work really well together. We bought a six family from a We Buy Houses sign that used to work really well, that I would staple on telephone poles in a suit and tie in the middle of summer. I’d get a bunch of listings and deals with those We Buy Houses signs. So we’ve had a six family back in 2013 or so, I bought it for about $220,000, put $50,000 into it, bought, renovated, refinanced out, it appraised for well over $400,000, got our money back and a little bit on top, and raised some capital and built on to the next level and got up to about 100 units over five years, all while flipping a lot of houses as well, and wholesaling at the same time with our residential division. So pretty busy and engaged so far.

Theo Hicks: That’s great to hear, and we do apartment syndications, so we’ve got a lot in common and I’ve got a lot of questions for you. Let’s talk about your first syndication deal. So did you syndicate that six-unit deal?

Aaron Fragnito: We didn’t actually syndicate it. Our first syndication deal was a 25-unit in South Jersey, and we put together four investors who all brought in $100,000 each, and we bought a 25-unit for below market value. We took the cash flow from it, put it back into the building, hired a few management companies. One was stealing money from us, it was a disaster, we had to take them to court. Another one just really over promised and under delivered. So by doing that 25-unit, we learned that sometimes you want something done right, and if you’re going to build a big portfolio in one central location, it makes sense to actually have your own management company.

So we developed our own management company through necessity with that first 25-unit, because like I said, the two management companies we hired, one was bad, the other one was worse. So we were like, “Well, if we switched to a third management company and they screw us too, we’re going to look really bad to our tenants in this building, and we’ll go downhill.”

So we developed our own management company about seven years ago, and that is our competitive edge now today that allows us to really reposition these buildings like a fine-tooth comb. So many moving pieces when you buy a mismanaged apartment building, and you’ve got to really knock it out of the park for your investors. So relying on other management companies was a risk I found and a flaw in the overall syndication model. So we tried to correct that with developing our own management company here. It does limit where we can buy, but we love this North Jersey market, and we do very well here with this North Jersey market.

Theo Hicks: You’re really good at proactively answering my questions. I was gonna say, “Oh, what are some of the pros and cons of having a management company?” but you answered all those for me. So we’ll talk about the investors instead. So your first 25-unit deal, you said you had four investors. Who were they and how did you get them to invest?

Aaron Fragnito: Well, let’s see. One of our first investors– great story. Well, the first monies I raised in real estate was actually for fix and flips, but those investors, I rolled them into buying the apartment buildings over time… Because in the fix and flips, we weren’t successful. I would like fail at a fix and flip, and be like, “Here’s what I did wrong. Here’s how I corrected and I got rid of that partner etc” They would reinvest me, so I salvaged those relationships. I also wrote checks to the closing table to make sure no one ever lost money as I was learning the business… But what I did is I went to real estate networking event and I made a beeline for the owner of the event, and I said, “Let me talk about what I’m doing. I’m learning short sales, I’m getting into a fix and flip, and my topic is going to be Fake It Till You Make It.” So I literally did a presentation called Fake It Till You Make It, and it was probably not a very good presentation. By the way, my wife today was in the crowd. I met her that night, ended up marrying her few years later. So just a wild story. The first presentation I did in real estate ended up being about how I met my wife, but different story…

So there were some people in the crowd that were intrigued with what I was doing, and I always enjoyed public speaking. They saw my passion for this industry and they decided to invest, and that was how I got one investor around $100,000 and another investor was from Seth’s network, actually. He knew a very wealthy individual in New York City that owns his own real estate, that he had worked with before in the medical building industry. So Seth had sold a medical building company, and he knew this doctor. Yeah, it’s great business to meet doctors. So just because Seth knew him through medical building and that relationship, it didn’t mean he couldn’t convert that trust into investing in us in real estate. Even though it was our first syndication and we, really looking back now, didn’t really know what we’re doing and had a lot of challenges in front of us.

So again, one investor I had messed up with a flip and made good on it, and she decided to reinvest in me. Another guy was a doctor I knew from a whole other industry, and doing business with years earlier, and just cultivated that relationship into investing them, and then one was actually some people on Seth’s family as well, and then just another investor, but I think it was actually one of Seth’s aunts. So luckily, Seth was a little older and had a little more capital and had good resources there. So I think, actually, three out of the four investors were from his network and I brought in one investor as well. That’s why it’s so important to have partners that have great networks and complement what you’re doing so that you can make sure you raise the capital and have those resources of private investors that Seth brings in and I bring in as well.

Theo Hicks: So for your first deal, you had about four investors, you said, and you mentioned how you found them. That was five years ago, you said?

Aaron Fragnito: That was back in 2013.

Theo Hicks: Okay. So six, seven years ago. How many investors do you have now?

Aaron Fragnito: Over 30.

Theo Hicks: Over 30 investors. So do you wanna talk about how you grew from 4 to 30?

Aaron Fragnito: Sure. Well, it was quite a journey; a lot of hard work behind the scenes. Just recently, I have really, in the last two years, made a conscious transition in my business to not only just stop working so much in my business and more on my business, because as any entrepreneur, I get really caught up answering emails, moving deals, and I’ve really got to focus on my systems overall, and what’s my main goal five years down the road… So in the last two years we really redeveloped our branding system into being more of a thought leader, more polished and professional, but also aimed at just high net-worth individuals, people in this area in North Jersey here. There’s a lot of wealth, and we do events in our office.

I have an office here in Berkeley Heights, and I used to throw a lot of money into fundraising. I’d go into the Hyatts, fancy hotels; I’d put down $3,000, get everyone dinner, and I would do a lot of networking events in there, and that was great; we raised a lot of capital that way. So we started a real estate networking event. We went on meetup.com, we started New Jersey Real Estate Network, and this was about eight years ago or so as well, and I started raising capital that way.

So I would do dinners every month at a hotel and people would come, and I don’t think I made any money on the events. I would charge money to get in, I’d have some sponsors, and at certain times, it felt like I was more of an event planner than a real estate investor, but those events really helped us build our brands. I would then go out and speak in other REIAs. Again, I would go to networking events, I’d make a beeline for the owner of that group, and a lot these guys, they need investors, they need people to come in and speak. They want people to speak at the events, they need a new speaker every month. So even if you’re starting, that could be a great story. Talk about your first fix and flip or whatever it is, your first gig you’re doing, and that’s how I would also meet investors. So I’d speak at events, I’d be honest, I’d talk about my starting points and then my struggles there, but how I powered through them and made good to my investors, and I built the brand that way.

I’d get people to come to my event, I’d feed them dinner, I’d tell them about what we’re doing, and I’d raise capital, and quite frankly, it was very easy to raise capital for fix and flips. So I kind of got off track for about three or four years with Seth, and we did about 50 fix and flips. We had some crazy projects going on, and we got off track with that, but it was a great way to bring in a lot of investors, because people love the idea of getting a first lien position, getting a 12% interest rate and getting their money back in a year or they could take the property back. It’s a pretty good position and it’s pretty quick turnover for investors.

So we raised a lot of capital that way and flipped a lot of houses and made some money and lost some money, and around 2016 or so, we started to recognize that scaling up a house flipping business is, in my opinion, really not all that profitable. It’s not the most profitable part of the business. What’s the most profitable part of real estate is being a listing agent or owning apartment buildings, in my opinion. So we realized that and about two to three years we focused on our apartment building syndication business. As we sold that 25-unit, we made a nice profit, our investors were very happy, and we said, “Wait a minute. It’s actually easier to buy and reposition a 25-unit than it is to flip a dozen houses in a year, and we make the same amount.”

So what we figured out was we want to really double down on that, and then I changed our brand a little bit to attract longer-term investors who were looking for a passive investment, and that’s really a different person than the house flipping individuals you meet at REIAs and such. They’re looking to be more hands-on, and they’re looking to really do a quick investment, get in and out, maybe make an interest rate. What works better for us are individuals that are busy working nine to five, maybe they’re a doctor or a banker or just a high net worth earner, or they just have an IRA with $30,000, they can self-direct into a syndication with us, and they’re looking more for a longer-term passive investment. It’s a different type of investor than the ones you might find in a real estate networking event.

So I had to consciously convert my fundraising brand and my fundraising message to attract the right type of investor over the last two years, which has been one of the bigger challenges for me, not only raising capital, but figuring out who I want to get in front of, what’s that ideal investor I want, and then getting in front of them, whatever that means. Facebook ads, marketing ads, whatever it takes to get in front of that person in the right professional manner, and then know what to say when you finally meet with them.

Theo Hicks: So for the fix and flipper investors, you’d find those at the meetup groups like in-person events, and then for these longer-term passive investors, you’re finding them through online ads?

Aaron Fragnito: Correct. Facebook marketing. I do four seminars a month here in my office in Berkeley Heights. I do six webinars a month as well. I teach how to self-direct your IRA, I go over case studies, I go over current offerings we have on buildings, I have realtor events, I have luncheons, I have evening events, we feed you here as well. So I do roughly the same seminar twice a week or so, but I get all new people coming in to see it, I put different spins on it, but I am just always, always educating. Fundraiser in the syndication space is really just an educator. Now we don’t sell education, we don’t sell books or CDs, we focus on just selling one product we have here which is a turnkey investment into New Jersey apartment buildings, but I’m always educating and it’s all free, and that’s how we raise capital. We build relationships with investors, they come to our events, they see us here, they see another 12 or 15 investors here at the luncheons and whatnot, and it’s chance to ask a lot of questions, listen to a 60 minutes seminar, and about half the crowd usually decides to fill out a form to move to the next step, and that’s a great turnaround, I think, as far as sales goes.

Theo Hicks: Yeah, thanks for sharing that. So we focused a lot on the raising money. The other thing I wanted to talk about a little bit more was the property management company. So I’m going to merge that together with the money question. So what is the best ever advice you have for– well, I guess, a little more context. I know a lot of syndicators will do third party, and you mentioned why you don’t do third party, but now I want to talk about the how to start your own management company. So what’s your best ever advice to an apartment syndicator for starting their own in-house property management company?

Aaron Fragnito: That’s tough; there’s so many moving pieces to a management company. I’d say, the first thing is working with good technology. We do work with AppFolio, which is a very helpful technology, and there’s tons of things like that. We feel like AppFolio is one of the best, so we went with that, and that really helped organize our business and it  allows us to scale up to managing 100 units without having to staff up. It’s almost like bringing on a staff member. Secondly, I have a phenomenal property manager. I have a phenomenal employee, A. Delgado, who does all of our property management, and she’s one of those individuals who, I think, was born to be a property manager. She’s so organized, she’s so good with the tenants, she’s so patient. I couldn’t do what she does. It’s really hard to be a property manager, it’s a thankless job, and there’s so much little nitty-gritty detail to it, and of course, tenants are going to lie to you and break your heart and it’s a tough gig. Same like working with contractors; Seth’s really good with that and I’m not.

So a good system overall also, just not only working with AppFolio, but working with our systems here in office. When work orders come in, working with the right contractors – that took years. I used to have a really good contractor, then I’d put him on payroll and started paying him hourly, and all of a sudden, the jobs took twice as long and cost me twice as much. So I realized you’re actually better off having the contractors as independent contractors, get multiple quotes, make sure they understand they’re not always going to have a job here, they’ve got to give us good production, good service and show up on time and get the job done properly. So we have a lot of good boots in the ground, great contractor relationships here. We’ve got the right small handymen, mid-level handymen, plumber, electrician etc, the right people for the right things… And then just the small guys too that bring out the garbage and clean the hallways. When you have enough units in one place, you have economies to scale, so I can have someone do all that, shovel our walkways when there’s snow, for a lower price, because we have a bunch of units in one area, and these individuals will work for us for a better price because of that.

Theo Hicks: Alright, Aaron. Are you ready for the Best Ever lightning round?

Aaron Fragnito: I think so.

Theo Hicks: Let’s do it. First, a quick word from our sponsor.

Break: [00:19:32]:04] to [00:20:18]:04]

Theo Hicks: Alright Aaron, what is the best ever book you’ve recently read?

Aaron Fragnito: That’s a tough one. I get that a lot on podcasts. I never really have a good answer. The book I’m reading right now is by Mel Robbins. My wife actually turned me on to her. She dragged me to a thing in the city that she was doing the other week, and I actually enjoyed it and got the book and I’ve been reading it a little bit. So Mel Robbins is a self-help coach, and her thing is when you’re grounded by anxiety or stress– and there’s a lot of stress and pressure being an operator, being a syndicator, having to raise the money in time, find the right deal and execute on your projection, so it’s a stressful gig; it’s not for everyone. She does this thing where you count down five, four, three, two, one to get yourself moving in the morning or get yourself not thinking about an issue and just move on. So it’s a lot about just motivating yourself to take action.

One thing I loved about what she said, you’ll never feel like doing it. “If it’s the right thing, you’ll love it every day and you’ll always feel like doing it.” Well, no, that’s not it. I love real estate, I love what I do, but there are days that I don’t want to be here. It’s a tough job. I work 60 hours a week, I got a luncheon on Sunday. I don’t want to be here on a Sunday. I want to go be with my family and friends, but I work hard at it, and I have a passion for it. So not every day’s fun, and that’s what she’s saying. You just got to go for it, get yourself moving, and just keep that mental focus, and she’s like just count down from five, four, three, two, one whenever you’re in a spot and you’re stagnant to get going.

Theo Hicks: If your business were to collapse today, what would you do next?

Aaron Fragnito: Well, first of all, I have a ton of real estate equity. So we do stress tests here. How much can the market drop? What if rents just stopped growing? What if this deal didn’t work out? So I have a good amount of real estate equity. So everyone’s like, well what if the market drops out? Well, we just buckle down the hatches and keep collecting cash flow. Our business is based on actual holdings of real estate, so I could slow down now and still be okay. The North Jersey real estate market is strong, the demand is strong. If there is such an economic collapse or New York City gets nuked or something and disappears, then we have bigger problems than our real estate values.

So whenever people say worst-case scenario, what if there’s no demand to live around Manhattan anymore? Then I say, well, honestly, where would your stock market be then? What’s this terrible, terrible scenario where no one has any money anymore and no one can live around Manhattan? So we do think we’re pretty recession-resistant. I’m not sure what will cause our business to fall, but we don’t have to sell any widgets. We have the buildings with the cash flow. We’re not selling coaching, we’re not selling anything else. So really, at the end of the day, we just have to keep raising capital and buying buildings, and if we decided to stop doing that, we could just maintain our holdings and maintain our rent growth there through time.

Theo Hicks: What is the best ever way you like to give back?

Aaron Fragnito: We give back in a lot of ways. I personally donate about 10% of my income between my church and different things like World Vision and Compassion International, which is great. If you go to their website, you can actually sponsor specific kids in third world countries. It’s really crazy stuff. So I love it. It’s such a great feeling. I have almost a dozen kids I sponsor between those two things. And there’s also in general here at Peoples Capital Group, we give back to Mission Clean Water, which brings clean water to Africa, and we are a member of three different Rotary clubs, donate to all the Rotary clubs and different events they have going on, and we sponsor lots of Rotary events, things like that locally. So big Rotarian here.

Theo Hicks: Then lastly, what is the best place to reach you?

Aaron Fragnito: Our website is peoplescapitalgroup.com, and you can check us out there. I have a podcast myself called The Passive Cashflow Podcast, but our website peoplescapitalgroup.com has information about our business. You can apply to qualify for an upcoming investment opportunity. We actually have buildings people can invest in in the next 30 days. So again, that’s our website, peoplescapitalgroup.com to qualify for that investment.

Theo Hicks: Perfect. Alright, Aaron. You’re [unintelligible [00:24:14].26] full of knowledge. I’m gonna try to summarize it, but I’m not going to look at everything because you said so much, and just a lot of solid advice. Everyone who’s listening should definitely relisten to this podcast. We talked about raising money and we talked about private management companies, but we first talked about how you got to where you are today; started off with Rich Dad, Poor Dad, you had made a list of what your goals were – own $10 million with the real estate, $1 million net worth, $100,000 passive income, and then made your plan of action to get that. You started with your real estate license and fix and flipping, and then moved into syndications. We talked about your first syndication – a 25-unit with the four investors and how you’ve had issues with your management company and eventually started your own.

You found your first investors from your fix and flips. So this is your first syndication – from your fix and flips, and then your business partner had a doctor and then this aunt or someone in the family invested, and then one of them came from your Fake It Till You Make It seminar, which also resulted in your wife. That’s awesome. Then we talked about how you grew from four to 30 investors, and you talked about the differences between raising money for fix and flips and raising money for syndications, and you realized that the type of person who’s interested in investing in fix and flips is different from the kind of person who’s investing in syndications. So you had to redevelop your brand in order to start targeting those people who are interested in longer-term, more passive investments, as opposed to the fix and flip investors who are more interested in higher returns, being active and getting their money back early quickly.

So you said that going to meetup groups, and REIA meetings was good to get fix and flip investors, whereas doing something more personal seminars and webinars and lunch and dinner events, Facebook ads and marketing ads to get the passive investment leads.

One thing you did say that was interesting was that these meetup groups and REIAs are always looking for a new speaker. They need a new speaker every single month or week or however often they’re doing it. So just because you haven’t done a ton of deals doesn’t mean you can’t speak at these events. If you’ve done one fix and flip offer, talk about your fix and flip, and then that will help you get the ball rolling on your brand.

You talked about your management company, which you started six-seven years ago, and your four pieces of advice on starting on time management company was one, make sure you’re focusing on technology. So you use the app Appfolio. AppFolio helps you scale without having to bring in a bunch of team members. Number two is have a great property management company, and the characteristics were organized patient and works well with tenants, and your property management company, you said, was born to be a property manager. You talked about having independent contractors as opposed to having one GC on staff, and then you talked about the advantages of having a scale by having a lot of units in one area. So you could have one handyman apply to all properties, one person shoveling snow and raking leaves and things like that. So again, jam-packed with information, definitely worth a relisten for Best Ever listeners. Aaron, thank you again for joining us today. Best Ever listeners, as always, thanks for listening. Have a best ever day and we’ll talk to you soon.

Aaron Fragnito: Thank you.

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JF2041: Wholesale Fail to Rental Success With Michael Glaspie

Michael served in the US Army Special Operations and is a commercial real estate broker who also invests in real estate holding over 35 rental properties, with over $1.5M assets under management. He started out house hacking his first property and gradually went into wholesaling where he actually lost money. This lesson helped him grow and pivot into focusing more on rental properties which led to him getting his license and partnering with a realtor.

 

Michael Glaspie Real Estate Background:

 

Best Ever Tweet:

“There are many creative ways to acquire real estate.” – Michael Glaspie


TRANSCRIPT

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, Michael Glaspie. How are you doing, Michael?

Michael Glaspie: I’m doing great, Joe. How about yourself?

Joe Fairless: I’m doing great as well, and looking forward to our conversation. A little bit about Michael – he’s a commercial real estate broker, also served in the U.S. special operations; thank you, sir, for keeping us all safe when you were in the Army, and a thank you to your colleagues as well. He invests in real estate himself too, and in fact, holds over 35 rental properties, with over 1.5 million assets under management. Based in Fayetteville, NC.

First, Michael, how about you give the Best Ever listeners a little bit more about your background and your current focus? Then we’ll go from there.

Michael Glaspie: Absolutely. I am based out here in Fayetteville, NC. I’ve been active duty military for a little over 11 years. When I first started investing, it was in 2014, and I purchased a standard single-family home, 3-bedroom/2-bath, 1,200 sqft. Now, I know many people listening are thinking “That’s not an investment, that’s a liability.” Well, at that time – single soldier, I was young, I rented out each one of the rooms to other people in my unit. And I didn’t know it at the time, but obviously I was house-hacking.

During that period I was looking for many different ways to create revenue, so MLMs, Uber driving, Lyft driving, whatever the case may be… But as I began to do  more research, I saw that real estate was a common denominator in many people’s success stories. So I just dove all in and I started to wholesale during that time, because from all the research, it seemed like just the natural progression. Well, the first two wholesales I completely bombed, lost a lot of money on those. I learned a lot of good lessons…

Joe Fairless: How do you lose money on wholesale?

Michael Glaspie: I’m gonna tell you how. Here in the market, now working with wholesalers – they exchange money upon the signing of the initial contract with the seller. And as long as they put down any type of money, it’s considered a valid contract. Here, they’ll put down a dollar. But me, being so anxious getting started, I’d put down $500, $1,000 on a home that I obviously had under contract for way more than I should have, because I couldn’t pay a buyer to take if off me.

And it actually ended up being pretty bad, because not only did I lose the money during the contract, but I had asked the seller to force her brother who was living in the property out of the property to make it more marketable. So I’ve learned a lot, and I apologized profusely to her back then. Hopefully she’s not still mad at me many years later.

Joe Fairless: So you’ve lost money AND karma points.

Michael Glaspie: And karma points. A lot of karma points. So I stuck with it a little bit longer and I ended up doing (I think) two more successful deals where collectively I made a little over 5k… But ultimately, I realized that the reason that I got into real estate in the first place was to create that passive income, and ultimately I wanted to do that through buy and holds. So I really started to focus on “Okay, the wholesaling thing – that’s fine. But if I’m gonna continue this energy and this focus here, then that needs to be my primary objective”, so I decided to just go ahead and focus on buy and hold.

At that point in time I didn’t have capital, so I started to research more creative ways to acquire real estate. Luckily enough, being here in a military town, we have something where the military forces you to move from location to location. We call it a PCS (permanent change of station), and there was a couple who bought  a house one year, the next year they refinanced it, and the third year the military forced them to move, so they had zero equity on the property. If they were to sell it, they would have to pay somewhere around 10k in closing costs, realtor commissions etc. So I decided to go ahead and approach them with a subject to, or a deed in lieu of… And it worked out in our favor.

Joe Fairless: How did you know about subject-to’s at that time?

Michael Glaspie: Just research. When I started, I read a lot of blogs, read a lot of books, but I went to a lot of local real estate investor meetups… And there was one person who mentioned it at one of the meetups, and he said “Have you ever thought about subject to?” And as soon as he said that, I just deep-dived into it [unintelligible [00:04:50].09] was my best friend then; Bigger Pockets was instrumental in that development as well, and… It kind of worked out.

Now, the way it really worked out was I had an attorney. I knew that I couldn’t really figure this out by myself throughout the whole process, so I found a local attorney who practiced subject to regularly, and I had him actually carry me  and the client (the seller) at the time through the entire process. So it worked out in all of our favors. But once I’d accomplished that, I said “This is a no-brainer. There’s many creative ways to continue to acquire real estate.”

So I continued to go forward. I do multiple – subject to, owner finance deals… I did a VA live-in-flip. Essentially, I used my VA loan to purchase a foreclosure. I fixed it up while I lived in there, and I sold it in less than a year. At that time I made a pretty decent net profit; a little over 20k. But when I looked at the closing disclosure, I noticed that I paid my friend and my realtor at the time very close to $12,000. That was the time that I decided to go ahead and get licensed.

I got licensed as an agent, so I continued to invest myself, but I actually partnered with my current business partner now. She was a dominant real estate agent in the area, that focused primarily on investors. So once we kind of joined forces, we decided to go ahead and build the team as it stands now to cater to not only investors, but to fellow veterans to kind of educate them on the whole mindset of passive income.

Joe Fairless: So you’ve got 1.5 million in assets under management. 35 rental properties. What property is worth the most in that portfolio?

Michael Glaspie: I would say it’s probably an 8-unit that we have. It’s a little over $500,000. Right around $550,000. But when we purchased it, we purchased it collectively in a 21-unit portfolio. It was two 8-units and a 5-unit that we collected all at once, from the same seller. But I would say that that one eight-unit property is probably the most expensive.

Joe Fairless: And how much is that worth?

Michael Glaspie: That’s a little over $500,000. I think last it appraised for $535,000.

Joe Fairless: And will you talk to us about how  you came across that deal and what the business plan is with it?

Michael Glaspie: Yeah, absolutely. We started off cold-calling. We all come from a background of being investors first… So I actually drove by a beautiful little 5-unit in a small subdivision that I constantly drove by throughout my time here in the area… And I decided one day I’m just gonna cold-call them.

I cold-called. Nice, elderly lady, who was just going through a situation where her husband had just passed. She wanted to let go of the property, she didn’t really know how to go about it, she didn’t really trust realtors in the area… So we kind of just — over the course of about six months we continued the negotiations until she was finally ready to accept our offer. Once we got that property under contract–

Joe Fairless: How do you continue the negotiations over that period of time, and not be a pest, but also still be relevant?

Michael Glaspie: Yeah, so I found a good medium of about every 2-3 weeks we’d follow up, but every time I followed up, I tried to provide a solution for her. As I mentioned, her husband had just passed; she was trying to go through some of the tax liabilities involved with that, and getting next to her daughter who lived in California, which is across the country… And there’s so many different things going on that every time I called her, I tried to provide her with a new solution. I gave her contact information for CPAs, I gave her contact information for 1031 specialists. I offered to help her move some of the equipment from one of her properties to another one of her properties… And I just continued to provide as much value as possible.

Over time, I believe that that rapport was built up enough that she just wanted to continue the conversation… And then she became accepting or trusting in me and what my intentions were.

Joe Fairless: That’s a great tip. That’s really good. So I interrupted you… You were negotiating and staying in touch with her in a relevant way by providing a solution every time you talked to her, every 2-3 weeks… And then what happened?

Michael Glaspie: From there, once we got it under contract, I made sure that I took the burden to handle everything – coordinating with the tenants, getting the inspectors in there, getting the attorneys on both sides on board… I coordinated everything, and I ended up making it so easy for her, and so smooth, that she actually came to me and said “Hey, I have more properties that I’d be interested in selling.” And she actually owned quite a few, but we were only interested in a select few of them.

So we identified those other two 8-units, and once we started the process with the first 5-units, we just continued forward and closed them all up. Now, how we financed them – that’s a different story. We did find a commercial lender who was willing to do 25% down, 30-year amortization, so that was good. Interest rates were a little under 6%, so a little higher than normal, but not all too bad… And collectively between me and my partners – there’s four partners – we just raised the money any way we could, because we still didn’t have the money when we were starting to acquire those.

So we took lines of credit, depending on which partner’s approach — some of us took out lines of credit, some of us just had personal money from friends or family… Whatever we needed to do to raise that 25% down payment, and the reserve requirements… And we closed.

Joe Fairless: How did you divide and conquer the responsibilities among four partners?

Michael Glaspie: That’s a really good question. It actually came through some headaches in the beginning. As I’m sure everybody out there knows, once you work with other individuals there’s a lot of opinions that may go around. But what we decided to do was we highlighted everybody’s strengths. Then we just essentially made an organizational chart. And I have to thank the military for that, because that’s how we were groomed, and all four of us are all from the military, so we understood this very well.

Once we divided those tasks based off of our strengths,  we made that organizational chart. We then had monthly follow-ups where that individual was ultimately in charge for that section. For example, when it comes to the accounting and the bookkeeping, that’s my realm. So I talk specifically to the bookkeeper and the accountant about these properties, and I report back to my partners about the results. And so on and so forth.

We have another individual that’s specifically in charge of coordinating with the property management company, and so forth and so on.

Joe Fairless: What do the other two do?

Michael Glaspie: We call that investment relations, and the reason why is because we’re looking at bringing in more investors to invest in that specific LLC. So we currently have 21 properties in that LLC and we’re looking to acquire. I’m sorry, we have 24 properties now in that LLC. It was a 21 acquisition just that time. So he’s constantly bringing in more and more investors to potentially partner with that. And the second one is just capital. He was the only one that was extremely liquid, and we used him. [laughter]

Joe Fairless: Well, did I hear you correct, that you have over 20 properties — I think you said 21 properties owned by one LLC?

Michael Glaspie: Let me rephrase that – it’s 24 doors.

Joe Fairless: Owned by one LLC.

Michael Glaspie: That is correct.

Joe Fairless: Why not have one LLC own one property?

Michael Glaspie: We’ve thought about this long and hard.

Joe Fairless: I bet you have, yeah.

Michael Glaspie: Individually, we have our own portfolios as well, so those are divided up however those individuals chose to divide it up. The reason we wanted to keep it all under one LLC is because our strategy is not to hold these indefinitely. We’re actually looking at repositioning a few of them and then selling them.

We didn’t really see the necessity to do that with such a short turnaround. We’re looking over the next 3-5 years to sell off at least two of the four; because they’re four different locations. So we’re looking at selling off at least two of them. And then from there, we gave the option for some of our partners to actually be bought out as well. That’s built into our operating agreement.

So because we really wanted the flexibility of how we can kind of move around, we wanted to keep it under one roof, because we don’t expect them to stay there that long. We do understand the risk involved in that, and that now all doors are subject to any sort of lawsuit or claims against us or whatever the case may be… But it was a collective decision where we sat down and said “Maybe it won’t be too bad.”

Joe Fairless: What’s been the most profitable property to date?

Michael Glaspie: Actually, for me in my personal portfolio is was one straight off the MLS. It was priced at 60k. I got the seller to pay all the closing costs. It was turnkey, for all intents and purposes. I bought it for 15% down using a regional lender, and I rented it out in less than three weeks at $975/month. That’s been my best cashflow.

Joe Fairless: Do you still own it?

Michael Glaspie: Yeah, I still own that one.

Joe Fairless: Is that in Fayetteville?

Michael Glaspie: Yes, it is.

Joe Fairless: What about the least profitable, other than the two wholesale deals?

Michael Glaspie: The least profitable would still be that first property that I purchased originally. It’s still, to this day, the least profitable. I used a VA loan on it, so there’s still barely any equity in it, back in 2014, and it rents out now for $1,100/month. The mortgage is somewhere around $900, so it’s a very low cashflow margin.

Joe Fairless: What’s a part of your process that you’ve optimized over the last year or so?

Michael Glaspie: For me, I’ve really learned how to optimize the leverage. There’s many different things going on – still active duty currently; I’m on my way out the door, but that’s still an obligation. We do have the business that we’re running as real estate brokers, we have our portfolios that we’re overseeing, and I’m also currently working on my MBA…

Joe Fairless: Dang.

Michael Glaspie: So there’s a lot of different — hands are in the bucket everywhere. So what I’ve learned is you have to leverage and you have to lean on others for support. I would not have been able to accomplish anything up to this point without my partners, without finding key individuals. And yes, that comes at a premium. I do pay for my leverage. But ultimately, when you double down on your strengths and you leverage out your weaknesses, you find that you become ten times more productive and efficient.

Joe Fairless: Based on your experience, what’s your best real estate investing advice ever?

Michael Glaspie: Best advice ever is that there is no such thing as no. If I would just accept no at face value from somebody who said “No, that’s not possible. We can’t do that. That’s not within the scope of our work” etc. then nothing would ever get accomplished. I’m a firm believer that there’s always a how to anything. So yes, we may not be able to go directly with the standard approach of  a transaction, but there’s always a workaround. And if you’re willing to do the work and the research, there’s always a how. Don’t take no for face value.

Joe Fairless: Will you give an example of how you’ve applied that in your life?

Michael Glaspie: Absolutely. Wholesaling – here’s a great example. We had actually switched firms. As I’d mentioned, we’re investors first, and we work primarily with investors, so we have a lot of internal wholesalers on our team, we have a lot of other attorneys and things like that who specifically know these investing strategies of subject-to’s, owner financing, auction properties, you name it.

The last firm that we were at, they actually  pulled us in the office and they said that we couldn’t do wholesaling, because wholesaling is illegal. Obviously, we know that wholesaling isn’t illegal; it’s just about how you perform it. Especially as a real estate professional, we have to disclose what our current position is.

So that right there was a simple no, and if we had just accepted that no at face value and said “No, we cannot do a wholesale”, or the way specifically they said “As a realtor, you cannot conduct a wholesale” – we know that to be false. But if we had accepted it as a no, then we would have stopped all production in that part of our business and we would have lost a lot of business… Because that’s a large chunk of our revenue.

Instead, what we did was we went to many different attorneys until we found a local attorney who was very well-versed in wholesaling specifically. And he knew all of the documents that were necessary, all of the rules and regulations involved around it in the state of North Carolina, and then we developed and designed that portion of our business based off of his insight. That’s more so what I mean by “Don’t take No’s.”

And then we also switched firms… Because obviously, that broker in charge was just not willing to evolve with the times. So we switched firms to somebody who could understand it, we explained it to them, we partnered up with an excellent real estate attorney, and so forth and so on. That’s just kind of an example.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the best ever lightning round? Let’s do it. First, a quick word from our Best Ever partners.

Break: [00:17:04].29] to [00:17:49].27]

Joe Fairless: Alright, best ever book that you’ve recently read?

Michael Glaspie: The Go-Giver by Bob Burg.

Joe Fairless: What’s the best ever resource that you use in your investing business, that you think might be helpful for others to know about?

Michael Glaspie: Bigger Pockets. The calculators in the forums are paramount.

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

Michael Glaspie: Two ways. We do have a local investor meetup, that we call Pints and Properties. We do that once a month, and that’s really to share and support any of the local real estate professionals. The second way is any time we do a charitable benefit, our charity of choice is the Green Beret Foundation. It’s a military foundation specifically for the special forces operators out there in the world.

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

Michael Glaspie: You can reach me on Instagram at @michael.s.glaspie, or you can go directly to the Five Pillars Website and you can get in contact with me, or anybody else on my team.

Joe Fairless: Michael, thank you for being on the show, thanks for talking about the large deal that you have, as well as how you structure that partnership, where you highlight the strengths, and based on those strengths everyone has certain tasks. Then there’s monthly follow-ups. Such a simple, but effective process. I’m a simple-minded person, so I like simple processes… And especially if they’re effective, even better. So thank you for that, and thank you for talking about how you’ve built a portfolio with partners, as well as your personal portfolio.

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

Michael Glaspie: Thank you very much, Joe.

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JF2030 : Property Management and Wholesaling With Isaac Barrow

Isaac is the general manager of Parrot Property Group. He started in real estate in the back half of 2015 when his brother needed help managing a few rentals then slowly he started to go into wholesaling, getting his licenses in real estate, and managing bigger property groups.

Isaac Barrow Real Estate Background:

 

Best Ever Tweet:

“Maintain your relationship with people and eventually you’ll look up and see you have a great reputation.” – Isaac Barrow


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, Isaac Barrow. How are you doing, Isaac?

Isaac Barrow: I’m doing great, how are you?

Joe Fairless: I am doing well, and glad to hear that. A little bit about Isaac – he’s the general manager of Parrot Property Group. Parrot Property Group is a family-owned business with 80 years of combined real estate and construction experience. They help investors find properties and manage properties in the Indianapolis area. With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Isaac Barrow: Sure. I started in real estate in late 2015. It wasn’t at all my background, but I got started just — my brother needed somebody to manage a few rentals. He had at the time only a few rentals. I started managing those, and then it just sort of springboarded into a bunch of other different things, like wholesaling, and managing at a higher level, managing more properties, since I obviously got my real estate license… So yeah, I’ve been doing it for about four years, and now I’m doing it full-time, obviously. Full-time wholesaling, full-time management, brokering, and lots of partnerships… Yeah, that’s pretty much how it’s all come full-circle.

Joe Fairless: Okay. Let’s talk about Parrot Property Group. What do you all do exactly?

Isaac Barrow: We try to be sort of a one-stop-shop. Primarily, our focus is wholesaling. We started really jumping into that after I started… And we try to find houses for investors, we do a lot of marketing for that… So we primarily focus on wholesaling, but we’ve done management, we’ve actually done some private lending… We have our own brokerage, so we do some on-market brokering transactions as well…

So we try to do a little bit of everything, but anytime people ask what exactly we do, it’s always gonna be focused around the wholesale off market. That’s primarily what we focus on and try to hammer down on. We network with competitors, and stuff like that. So primarily wholesaling, but a lot management and brokering and stuff like that.

Joe Fairless: Tell us about your lead generation system for getting wholesale deals.

Isaac Barrow: Well, we try to canvas everything. We have done some stuff on the MLS. It’s a little harder to find a good wholesale price on the market, but we’ve done some of that. What we’ll also do – obviously, we do a lot of the direct mail marketing that a lot of people do, whether it be postcards, whether it be letters… We’ve also done email campaigns, we’ve done social media marketing… We try to do pretty much everything we can to get leads. I would say most people would probably tell you that most of the leads come from the postcards and the letters, because there’s just so much of it… There’s really an unlimited amount of direct mail marketing you can do at one time.

So direct mail marketing, social media, driving for dollars is definitely something we’ve done in the past, where we see a “For sale by owner” sign… Or sometimes we just meet people… There was a time – I think about two years ago – I met this guy in a little Deli and he told me he wanted to sell his house. We ended up buying it, and selling it, and doing pretty well on it. So I try to do a little bit of everything, but I think everybody else who does this will probably tell you that the most successful route is either skip-tracing or direct mail marketing.

Joe Fairless: Let’s talk about skip-tracing, and then we’ll go from there. For anyone who’s not familiar with skip-tracing, what is it, and then how do you implement it in your business?

Isaac Barrow: Well, skip-tracing is basically, for example — there’s all kinds of databases you can use, where if you’re looking for somebody who owns a house… Let’s say you look at a house across the street, in a  nice area, but the house is dilapidated, nobody lives there, and you wanna just find out who owns the house… The best way to go about it – you could just enter all the information you have. It’s not that hard to find out who owns the house, but you can just enter all the information you have, and some database will spit out a bunch of possible phone numbers, a bunch of possible emails… And then you could just start hitting the phones and  calling people.

Now, in a lot of cases it is kind of difficult to find a really reliable batch of data for one person who you don’t really know where they are, you don’t really know where they’re living, if they’re even alive… So it’s just a good method, and a lot of people don’t do it. I think it’s picked up in popularity, especially over the last couple of years… But it’s basically just a way to cold-calling. You can cold-call. There are all kinds of databases you can pick out, with people who own rentals, people who own stuff free and clear, and you can just call them. You can have a VA do it, you can have an assistant do it… It’s definitely something we’ve utilized, especially in the last year or two.

Joe Fairless: Where do you hire your VAs?

Isaac Barrow: Honestly, we haven’t actually done it yet. We’re looking into it; we actually haven’t had a VA at any point, so we haven’t done it. We have hired an assistant before, and she was doing a lot of that for us. That was her primary role; she would just come in and just make calls. The list was so long… You could spend a year just calling that list. A lot of people wouldn’t answer, but even if  your success rate is low, if you hit one, that’s a good deal. Obviously, just cold-calling people doesn’t cost anywhere near as much as sending out postcards, or even doing driving for dollars. You might think “Well, that doesn’t cost anything”, but it does cost a lot of time, and driving around, and spending money on gas, and all that.  So it’s just a very cost-effective way. Now, it is work, for sure, but it’s a very cost-effective way of finding new leads.

Joe Fairless: Now, you mentioned you had an assistant, so that leads me to believe that you no longer have one… Is that correct?

Isaac Barrow: Yes.

Joe Fairless: Why not, if it was working?

Isaac Barrow: Well, we’re just looking for different things. We’re probably looking for something a little more full-time. It was just one of those things where we just weren’t getting enough time, and we wanna get somebody more full-time.

Joe Fairless: Okay. So it’s not that the responsibilities are not being undertaken in the future, it’s just a different vision for what the person wanted versus what you wanted.

Isaac Barrow: Basically… The calling was going well. The whole week she would just be calling people, and it seems to be something more people are doing… Because honestly, I get calls all the time from wholesalers, saying “Hey, I saw you have this house on Main Street” or whatever. And they’ll ask “Do you wanna sell it? Are you interested in maybe seller financing?” And obviously, I’ll say no, because I’m not interested, but it definitely shows me that other people are doing it, too.

Joe Fairless: Is that all you say, is no, and that’s it, or is there something else you do?

Isaac Barrow: Sometimes I’ll ask how they got my number and they won’t really give a great answer… They’ll sort of say the same thing I’ll say, which is “I got it from a database. We’re just calling people who we saw own houses in Indianapolis.” So usually I’ll just say “No, I’m not interested”, or “No, I’m an investor too, so I’m not really interested in selling at a wholesale price.” Usually, I don’t really entertain it too much. And I also noticed that it’s kind of the same 3-4 people, so they kind of know that I’m not interested anyway… So I think I’ve been taken off some of those people’s lists already.

Joe Fairless: Okay. I was wondering if you had a way to flip that, so that you would then partner up with that wholesaler on other deals… Because you mentioned earlier that you network with other wholesalers.

Isaac Barrow: Yeah, I sure said that. I also will tell them “Hey, I’m a buyer, so put me on your list on any deals you have.” I haven’t really gotten anything from those particular ones… But yeah, I’ve definitely done a lot of networking over the last four years, with local wholesalers of varying levels of experience.

Joe Fairless: What’s a deal you’ve lost money on?

Isaac Barrow: One of the first deals I did. It was little one bed double, in a pretty marginal, suspect area. I just wanted the deal. I was so convinced that we can make money on it. We didn’t even pay much, and we didn’t lose much either, but… We paid 14k, and I should have just held strong at 11k, but we went up a little bit, and then we sold it for 12k. So it’s not like we lost a ton of money… We still had to pay broker’s fees, and all that, and we had to sit on it for a long,  long time. Longer than I thought. I thought it would move pretty quickly… But it was just a rookie mistake.

Joe Fairless: How long did it take to move?

Isaac Barrow: I wanna say it took like 3,5 months, something like that. I thought it would go in 2, 3, 4 weeks tops… Because it was an area that at that time was moving pretty good, but it was just not the best part. And again, it was a one-bed double…

Joe Fairless: What’s a double?

Isaac Barrow: Just a duplex.

Joe Fairless: Oh, a duplex. Okay. It was one side of a duplex?

Isaac Barrow: No, it was a full duplex, but there’s only one bed on–

Joe Fairless: A full duplex, $14,000?

Isaac Barrow: Yup.

Joe Fairless: For a duplex that has a one-bedroom on each of the sides?

Isaac Barrow: Yeah, on each side.

Joe Fairless: Huh. Okay.

Isaac Barrow: People are always amazed when I tell them stuff like that, what the prices are… But if you showed it to people around here, they’d be like “Oh yeah, that makes sense.” Because it’s just a one-bed double. Just not that attractive. The rent’s low, the houses are small, the resale value is pretty marginal… Best-case scenario you fix it up really nice and then you could sell it to a house-hacker for 60k… But that  house needed everything. That house probably needed to be gutted, to be honest with you. So we just didn’t negotiate that well on that deal, and we learned from that.

So that’s the one I can think of where we lost money. I think we’ve only had 2-3 where we lost 1k or 2k. Nothing crazy.

Joe Fairless: So the most you’ve lost on any deal is about 2k?

Isaac Barrow: Yeah, I think so. There’s like one or two that come to mind, but I think even on those we broke even. And those were all really cheap deals, where we bought a gutted house, pretty shortly before that deal, for $9,000 and we sold it for $9,800, and then I think after broker’s fees I think our net was $9,200, so I think we made $200. [laughs] But yeah, that double is the one that sort of sticks out as the one that we lost money on.

Joe Fairless: Any common theme among the handful that you have lost or broke even on?

Isaac Barrow: Just wanting the house a little too much, thinking “Oh, this is gonna work. I like this house. I think it’s worth it.” I  think the one thing I’ve learned from this is it’s just not about you, it’s not about what you would pay for the house if it was in good shape. You have to take a numbers perspective to it and just remove the opinion from it. You have to look at “Okay, well, what are houses actually going for? What’s a realistic way of looking at it?” I liked that house – that double that I mentioned – because I thought the rent would actually be a little bit higher, and I thought the area was coming up… But when you actually looked at the numbers, you would come to the conclusion  that even at 11k that’s probably pretty topped out for that spot.

So the common theme I would say is — I would sometimes see competitors getting in and looking at it, and I would say “Well, I wanna get it, because if competitors are offering  similar prices, then it’s probably worth more, because that’s what they’re gonna do. They’re gonna try to sell it.” So just not thinking enough about “Okay, what are the actual numbers?” And that was, like I said, very early on, and I’ve learned from that by now… But I think that was a mistake I’ve made, just looking at it too much like speculative, and sort of projecting, as opposed to looking at the actual hard data at the time, as opposed to what I feel the hard data could become. So just projecting too much.

Joe Fairless: When you look at that hard data, what are the key things that you’re looking for, and where are you finding for?

Isaac Barrow: Well, I’m an agent, so I have access to all kinds of ways to pull comps… So I’ll jsut look at comps, and if it’s a two-bed in good condition, I’ll look at two-beds in good condition. I try to look at houses that were sold in the last 360, sometimes 540 days… Because sometimes you have areas that just aren’t moving, and that could mean one of two things. That could mean either the area is just low turnover, and people buy there, and then they don’t move, so it’s a homeowner area, which is good… But it could also mean people don’t wanna buy there.

So I try to look over the last year and a half what’s happening, how have prices changed, what are houses that are really dumpy and need a lot of work done for, what are houses that are kind of rental-grade going for, and what are houses that are at least close to or at least at homeowner-grade, what are those going for… So I try to look at those things and then I’ll make an evaluation based on that.

Joe Fairless: What’s something that you’ve changed in your process as a business over the last 12 months?

Isaac Barrow: I’ve been doing this now four years… I think I need a lot less in terms of asking people “What’s your opinion of this? What’s your opinion of that?” I just have a lot more confidence now about just the knowledge perspective of things… But in terms of the actual business, I would say before I was running less of the sales side of the things, and now I’m running that pretty much by myself… So I’m running more things now from the day-to-day perspective, and my brother is still helping me out with the day-to-day big-picture strategy-type stuff. I’m doing more of the operational systems and stuff like that.

Joe Fairless: Based on your experience, what’s your best real estate investing advice ever?

Isaac Barrow: My advice would probably be to just stay adaptable, don’t get set in your ways, and just look at the market and look at what that’s telling you. One example I would have of that is in the beginning, when I started doing this, the whole goal was “We’re just gonna buy rentals.” Our goal was to get 50 rentals, 100 rentals, and just go from there… And we’ll sell some of them obviously, but that was the goal. But as prices began to rise, we started doing wholesaling, and then wholesaling took off and has done really well for us; we sort of stepped away from rentals… We still have rentals, but we sold off some of them, and wholesaling has been our focus.

So just staying adaptable I think has been huge. And I guess I can’t give two snippets of advice, because that would defeat the purpose, but…

Joe Fairless: Why not? Let’s do another. One more.

Isaac Barrow: Another would be just leverage  your relationships with people. Instead of just working with people and doing these one-off type deals, try to have partnerships with people. We have a relationship with a group here where at first we were just selling houses to them here and there, and then as they began to trust us and vice-versa, we sort of launched a partnership with them. So just start partnerships and maintain your relationships with people, so you’ll look up and then eventually you’ll have a great reputation. So just making sure you’re working with people and having good rapport with everybody you work with.

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

Isaac Barrow: I am.

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

Break: [00:15:42].24] to [00:16:33].22]

Joe Fairless: Alright, best ever book you’ve recently read?

Isaac Barrow: I recently read  a book called Traction, which is just a book about how to make your business really sustainable. I’m forgetting the author, but it’s a great book. It was a recommendation. I actually went to a meetup and talked to a  guy who has been doing business for 10-11 years, and every once in a while I just go to him for advice; he actually had the book at the meeting, so I didn’t really have to ask him anything… But I was just asking general business questions, because I’m more of  a hands-on person.

I actually asked him “When you started your business, how long did it take you before you really started delegating things?” and he just recommended the book. He gave me a few nuggets, just saying “If your goal is to stay in the business, then stay in the business. But if you wanna delegate, do that.” And he gave me the book and I’ve enjoyed reading it. I haven’t read all of it, but I’ve read most of it.

Joe Fairless: Best ever deal you’ve done?

Isaac Barrow: Best ever deal I’ve done… I would probably say — there’s a suburban house we bought not too long ago (three months ago). We bought it, and our goal was “We’re gonna buy it, we’re gonna paint it, we’re gonna put some carpet in it, clean it up a little bit and sell it.” And it sold to a fund within two days, all cash. It was the easiest deal we’ve ever done by far, because we painted it in carpet, and within two days we had to hold the house for a total of ten days, I think… And we made really good money on it. So that was definitely the best one.

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

Isaac Barrow: A mistake I’ve made on a transaction… I had an MLS deal a year ago; I had some lease addendum with a tenant, and I just totally forgot about it, until a few days before closing. I didn’t even tell the buyer, because I didn’t even remember… And the lease addendum really said nothing. It was basically just like “Oh, well if the tenant gets a job in another state, he can give notice.” And it didn’t kill the deal, but it could have been a huge mistake, because it could have killed the deal. If the buyer wasn’t cool with it, he would have been totally reasonable to just say “I don’t want any part of that.”

That’s the first one that comes to mind. I’m sure there’s some other mistakes I’ve made, but that’s the first one I can think of.

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

Isaac Barrow: You can visit our website, which is ParrotPG.com. Or if any of your listeners wanna just give me a call and talk, my phone number is 317-204-2900.

Joe Fairless: Isaac, I enjoyed our conversation, I enjoyed learning about how your position has evolved, how your role in the business has evolved, the challenges on the couple deals that you’ve lost a little bit of money or broke even, and wanting the house too much on those, and now really focusing on looking at the hard data… As well as learning about the success that you’ve had too, and the different lead generation touch points that you have, with skip-tracing, postcards, meeting people at Delis, and getting deals, and all sorts of other things.

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

Isaac Barrow: Thanks for having me on.

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JF2016: Sacrificing Short-Term Satisfaction For Long-Term Happiness With Mark Owens

Mark Owens is from Baltimore and has been an active full-time real estate investor for the past 14 years, owns over 100 units, 200 wholesales, and self manages all of his units. Mark believes his secret to having success and having more options than most investors is all due to the way he views decision making. He shares some great examples of how he has been able to separate himself from the heard of real estate investors when it comes to making decisions. 

Mark Owens Real Estate Background:

  • Active full-time real estate investor for 17 years
  • Owns over 100 units, has done around 200 wholesales, self manages all units
  • Units comprised of single families and 7-18 unit multifamilies
  • Based in Baltimore, MD
  • Say hi to him at https://markowens.com/

Best Ever Tweet:

“Manage your properties like a business, not a hobby. ” – Mark Owens


TRANSCRIPTION

Theo Hicks: Hello Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, and I’ll be hosting the show today. Today we are speaking with Mark Owens. Mark, how are you doing today?

Mark Owens: Good, Theo. Thank you for asking. Thank you very much.

Theo Hicks: Absolutely. Before we begin, a little bit about Mark – he is an active real estate investor and has been full-time for 14 years. He owns over 100 units, has done around 200 wholesales, and he self-manages all of his units… So we’ll definitely be talking about strategies on how to self-manage your properties.

His units range from single-family homes, all the way up to 18-units and everywhere in between. He’s based out of Baltimore, Maryland and you can say hi to him at MarkOwens.com.

Mark, before we get started, can you tell us a little bit more about your background and what you’re focused on now?

Mark Owens: Sure. Thank you for the introduction. I was actually in the IT field when I started buying rentals in 2002. I made a bunch of money in that, and I wanted to invest it, and I wasn’t really sure where. I just knew that the stock market wasn’t a good fit for my personality type. It was more like a casino than anything else… And real estate just seemed like a much safer, controllable investment, where worst comes to worst, I’ve always got the house. I can go live in the house if I have to, and you really can’t say that with the stock market or most other investments.

So that was my life before the rental properties. When I first started buying them, I really had no intention of getting to where I’m at now. The original intention was I wanted to make enough money off some rentals so that in the event that something happened to me and I couldn’t work, that I would have enough money coming in to pay my minimum bills – the mortgage on my home, my utilities, put food on the table… Just like the minimal amount. And once I’d hit that point, I realized that “Man, if I just keep doing what I’m doing, in a few more years I’ll be able to quit this job. I’ll be able to get out of the rat race.” That was even before Kiyosaki and Rich Dad, Poor Dad and all that. I knew I was in the rat race, but I didn’t really know that that’s what it was called at the time; I just knew that I depended on other people to put food on my table, and I didn’t like that feeling. And that is kind of how things got started.

The second part to your question was — let me ask you, what was the second part, Theo?

Theo Hicks: The second part is what are you focused on now?

Mark Owens: Yeah, what am I focused on now… Sorry, I get so caught up with the excitement of talking about the business that it’s easy to lose that stuff. What I’m focused on right now – it’s an interesting thing, because at this stage I’m thinking about downsizing some of my stuff, and I just had an opportunity across my desk yesterday, and it’s something that could significantly add to the number of units that I have, and I can’t really say a whole lot about it right now, because I have agreed to a non-disclosure agreement, so I can’t really give any details about it… But right now I’m just enjoying myself. I’m just keeping the guys that work for me busy full-time, managing my tenants… Right now I’m just happy where I’m at.

I’ve realized recently, and I think most people get caught up in this – that you say “I’ll be happy when this happens. I’ll be happy when that happens.” Well, by the time those things happen, you’re always pushing your happiness into the future, thinking that “Once I accomplish some magical, then I’ll be happy.” I’ve realized that just recently, and I try to put a lot more focus on where I’m at today, and it seems like it’s lifted a big weight off my shoulders. Right now I’m just trying to focus my attention on what I have, and how grateful that I am that I have what I have… And that’s it. I know it’s not really a directly real estate related question, but that’s where I’m at right now with my mindset.

Theo Hicks: I think that’s very wise advice, always pushing your happiness to the future… So you said you were thinking about downsizing… I understand that you’re happy where you’re at right now, and you’re gonna continue to manage your properties, manage your employees, and kind of just enjoy your current situation, but what do you mean by downsizing, and why are you considering downsizing? What does that mean? Are you still gonna have your properties, are you selling the business and moving to the beach?

Mark Owens: The thoughts were — my wife and I, we bought a condominium in the Cayman Islands last year. We’ve got like 3-4 more years and our son will be out of school; my wife works, she’s gonna retire from her job, so we’re thinking in a few years possibly buying another house on the Gulf Coast of Florida… And the plan is to spend four months in Cayman, four months in Florida, and the other four months just kind of bumming around the planet, just seeing what also is out there… And part of that would be to sell maybe two-thirds of my portfolio, own a third free and clear, have a bunch of money in the bank, let somebody else manage the ones that I own free and clear… And it’s really just to get stuff off my plate, to give myself more freedom to do everything that I wanna do. So that’s kind of the goal.

Of course, that’s always subject to change. Any time I make a decision about something, I always give myself the option to change my mind at any point in the future, because the decision that I make today is based on the information I have today. I can get an information tomorrow that doesn’t fit into the goals that I’ve laid out for myself, so I always give myself the flexibility to change my mind about anything, at any time.

Theo Hicks: That is interesting. When you first started out back in 2002, did you have the goal set to do this, to sell a portion of the portfolio, to hold the rest free and clear, and kind of just do whatever you wanna do? Or did you plan on just doing it forever? And to give a little context for my question – some people obviously have the plan to eventually quit their job and then do real estate full time… But then what happens after that? It sounds like you’ve got a plan right now that is gonna come to fruition in a little bit, so I was wondering if you could explain a little bit about the thought process of when to know when it’s the right time to step away from your portfolio and have the freedom to do what you wanna do?

Mark Owens: I think the answer to that question is different for everyone. There’s no right or wrong answer. I met a guy for lunch yesterday that’s a pretty well-known local guy that’s 71 years old. I don’t wanna put too much information out there, because I don’t want people to identify him, but he owns a significant portfolio size, and he has no plans of selling anything any time soon. He’s 71 years old… And I’m significantly younger than that, and I just have a different plan.

As far as how long I’ve had these plans, I guess it’s always been — since I became full-time a few years into the business, I always knew that eventually I wasn’t gonna wanna do this; I wasn’t gonna wanna be 80 years old, taking people to rent court. So I always knew that at some point things were gonna change… And I welcome that change, and the thing that I did that was smart was I ran a really good business that gave me a lot of options.

There are some people that could be 50 years old and they have to keep their properties for another 30 years, because they cash-out-refied, spent all the money, and now they’re upside down. I never made those types of mistakes. I always ran my business smart, I always ran it looking towards the long run, instead of the short-term gratification… And as a result of doing that, 17 years into the business I’m lucky to have a lot of options available to me. And again, as I’ve said before, these things are always subject to change. I could have some deals land in my lap where I just say “Man, I love this business. I don’t wanna go anywhere”, and then I’m gonna be fighting with my wife for five years…

This is one of the things in this business that can drive people crazy – it’s kind of like going to Baskin-Robbins. Sometimes you just want chocolate ice cream, and then you’re going to Baskin-Robbins and they’ve got 32 or 33 flavors and you go crazy; you’re sitting there, trying to figure out which one you want. I kind of like those options.

One of the great things about real estate in my mind is that I can look at any deal or any scenario and I can see 15 different ways to do it. That thing drives some people nuts. Some people just wanna go in, they know how it’s gonna happen, and then they walk away. I like to have options.

And when you have a career like I have, with those options, just about every scenario that I can think of, when I reach a point where I have to make a decision on those options, just about all the time I’m looking for what’s in my best interest for the long-run, not the short-run. If you get caught up with the short-run thing, then you’re always chasing the next shiny object, and it’s really difficult to get ahead. If you think more long-term and you do things that are better for you in the long-run, then in the long-run you’re gonna have a lot more options at the end of the day… I’m approaching the end of the day, and it’s good to have those options.

So again, to answer your question, there’s really no concrete black or white answer, because everyone’s situation and goals and dreams are different. For me, mine worked out well, mostly because of the emphasis I’ve placed on making the best decisions for the long run.

Theo Hicks: Can you go into more specifics on what you mean by this long-term thinking versus short-term thinking? Maybe give some specific examples of things that you should do if you wanted to be thinking long-term, and then things you shouldn’t do, which are more short-term thinking… Because I know you’ve mentioned a few, but could you go through a list of examples?

Mark Owens: Sure. A great example would be if you’ve got a bunch of equity in a property, some people will say “Man, you should refi that out, pull $50,000 out and do whatever you wanna do. Go on vacation, buy the watch and the car, and all that stuff.” My philosophy is if I’m gonna pull $50,000 out in a cash-out refi, I’m gonna take that money and invest it in another cash-producing asset. I’m not gonna take it and spend it on consumer goods. So that’s one thing where I think in the long-run I’ve done very well. I’ve done several cash-out refi’s where I’ve literally walked away with several hundred thousand dollars, but I immediately took that money and bought other properties that made me even more money.

Some of my friends don’t have that type of discipline all the time. It’s very easy to fall into the trap of “I’m gonna go on vacation for a month, and I’m gonna buy the new Tesla”, and all that stuff. I think that that’s one example of something that I’ve done that has enabled me to have the success I’ve had.

Another great example would be my friends are shocked when they find out that I still live in a townhouse. My wife and I bought a townhouse 23-24 years ago. I paid it off 15 years ago. A lot of people think “Man, why do you live in there? You could go buy a $700,000 house.” I could, but then that’s gonna put me in a cashflow crunch some months, because I’ve got this fat mortgage… And the happiness that you get from buying that big house or that expensive car – it doesn’t last. Anytime you go buy a consumer good, whether it’s a house or a car or a watch or a pair of shoes, you get that initial happiness from it, but then in the long-run, a few months later, six months later you’re not any happier than you were before you ever bought that thing.

So one of the things that I’ve done that’s enabled me to have this kind of success is by being able to ignore that need for immediate gratification where you say “Man, I want it now, I want it now”, and I’ve been able to look at that and say that that’s my enemy right there. That is my long-term enemy, having to have it right now.

So that’s a discipline issue. A lot of people don’t have it. But if you sit down and you look at the numbers and you look at what’s in your long-term best interest and you make decisions, whether it’s a cash-out refi, or buying the big house, or buying the expensive car, if you look  to see what’s in your best interest in the long-run, then you’ll probably make similar decisions to what I’ve made, that are gonna give you a much better chance of having long-term success and financial independence.

Theo Hicks: Another piece of very wise advice. Alright, so the money question, which is what is your best real estate investing advice ever – but I did wanna ask you about self-managing, so maybe you can answer the question “What is your best real estate investing advice ever for self-managing your own properties?”

Mark Owens: Oh, man… That’s a loaded question there, because I could answer both questions with some good information. My best real estate investing advice for managing your own properties would be to manage your properties like a business, not a hobby. This your livelihood, this is how you make a living, and sometimes that means making tough decisions. That means taking people rent court that you don’t wanna take to rent court, it might mean selling a house that you like, but it’s not in your financial best interest to keep it… So that would probably be it. But there’s a lot more to it than that.

One of the things as far as self-managing that has made it really easy for me is that everybody that knows me trusts me 100%. If I’m in the Cayman Islands on vacation and I have a furnace that breaks in the middle of the winter, and my HVAC guy goes over there and he knows that “Man, I’ve gotta replace this furnace. It’s gonna cost $2,500”, and he knows I’m not gonna be back in town for two weeks, he won’t hesitate to replace that furnace on his dime, knowing that I’m gonna pay him; the day I get back he’s gonna get a check in the mail.

So building these relationships with  your contractors, with your tenants, with everybody in the business, where they know if you’re not in town, the day you get back they’re gonna get paid – that’s one of the things that has really made it easy for me… Because I do like to travel a lot… So having those relationships gives me the peace of mind knowing that if the crap hits the fan when I’m not around, I have a lot of people who are gonna have my back, because they know I’m gonna have their back as soon as I get home.

So there’s a lot of different pieces of advice I can give as far as the best advice ever for self-management… Those are a couple of them that I’d like to touch on.

Theo Hicks: Okay, Mark, are you ready for the Best Ever Lightning Round?

Mark Owens: Man, bring it on!

Theo Hicks: Alrighty. First, a quick word from our Best Ever sponsor.

Break: [00:14:33].22] to [00:15:27].27]

Theo Hicks: Alright, Mark, what is the best ever book you’ve recently read?

Mark Owens: The best ever book I’ve recently read… It would have to be Rocket Fuel.

Theo Hicks: If your business were to collapse today, what  would you do next?

Mark Owens: [laughs] [unintelligible [00:15:35].18]

Theo Hicks: What deal did you lose the most money on?

Mark Owens: This is gonna be hard for people to believe, but it is true. I have only lost money on one deal; I lost $5,000. It was a 15-unit building. 13 apartments, 3 commercial spaces. I partnered up with someone that had no idea what they were doing. They wouldn’t let me buy them out of the deal, and after 9-10 months I told the guy I wanted to auction it. I auctioned the property, absolute auction. We ended up losing $10,000 on it. I lost 5k, he lost 5k. I walked away happy, and he walked away pissed, but… He only saw the building twice; I was doing all the work, and  he wasn’t doing anything. I was getting tired of it. So that’s the only real estate deal that I’ve ever done that I lost money on.

Theo Hicks: What types of things did you implement in your business to make sure that never happened again?

Mark Owens: Great partnerships.

Theo Hicks: Simple. So let’s go on the other side of the coin – what is the best ever deal you’ve done?

Mark Owens: The best ever deal I ever did was I bought a ten-unit vacant building. It was a listed property. I was gonna keep it as a rental… I renovated the property, and this was at the top of the market, around 2007… And I decided that the property was too far from my house, and I just got this gut feeling of like “You know what – I don’t want this property.” I really couldn’t put it into words, but it was just my gut talking to me.

I listened to my gut, I sold the property to a DC investor that was doing a 1031 exchange. I made 195k on it, and I delivered the property vacant. That 195k paid off my house, paid off my car, paid off my credit card… I saved 50k and went on vacation. That was probably the best deal I’ve done.

Theo Hicks: What’s the best ever way you like to give back?

Mark Owens: Helping other people.

Theo Hicks: And then lastly, what’s the best ever place to reach you?

Mark Owens: Probably my website, because if people go there, then they can find me on Facebook, they can get my email address, all that stuff. It’s kind of like a one-stop-shop. There’s not a lot of information on there, but I think there’s buttons — I’ve got a coaching page… Mark Owens REI  on Facebook. I’m easy to find; I’m on Bigger Pockets, LinkedIn, all the other stuff. My website is probably the easiest way to find me.

Theo Hicks: Perfect. Alright, Mark. I really enjoyed the conversation, lots of wise advice. The two big takeaways for me was when you talked about you’re happy where you’re at now, because you see a lot of people always pushing their happiness in the future and saying “Once I do this, I’ll be happy.”And then when they do that–

Mark Owens: Yeah, I’ve been guilty of that myself.

Theo Hicks: We all are, but just knowing that definitely helps us get over that a lot faster. And then the second thing that I really liked was when you talked about immediate gratification being your biggest enemy… And the reason why – you’re at the point where you could potentially sell a large portion of your portfolio, own the rest free and clear, and then use some money that you have saved up, the cashflow from those properties, and have the freedom to do whatever you want – it’s just because you’ve defeated that enemy more that it’s defeated you throughout your business career.

You gave some specific examples of things you can do to have long-term thinking for your business, versus short-term thinking. The two examples are if you have equity in your property and you decide to pull it out, don’t spend it on personal things like vacations or cars. Instead, invest that into another cash-flowing asset.

The other example was that you live in a townhouse that you bought 20+ years ago, paid off quickly… Sure, you could buy a massive, million-dollar house, but again, going back to that immediate gratification and realizing that happiness is typically not going to last when you’re buying a consumer good.

And then lastly, you gave your best ever advice on self-managing, which is 1) make sure you’re managing your properties like a business and not a hobby, which requires making tough decisions, taking people to rent court, selling a house that you like that’s not cash-flowing… And then also number two was to focus on relationships. In your business everyone trusts you 100%, so if something were to go wrong at your property, for example, the contractor won’t wait for you to get back from vacation to fix a really big leak because they don’t know if you’re gonna pay them or not. Instead, they’ll go ahead and take care of that issue, knowing that once you get back, you will pay them in full.

Again, I really appreciate the conversation. If you guys wanna say hello to Mark, his website again is MarkOwens.com. Have a best ever day, and we’ll talk to  you tomorrow.

Mark Owens: Thanks, Theo!

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JF2004: 2000 Deals a Week With Zack Boothe

Zack Boothe owned a window cleaning business and use to listen to our show while working and now is on our show! Zack shares his marketing strategy to find deals that you can wholesale, flip, or hold for the long-term. He uses a unique system that helps him find 2,000 distressed property every week with just one 30 hr part-time driver who is driving for dollars. 

Zack Boothe Real Estate Background:

  • Left his window cleaning business in 2017 to become a real estate investor
  • On track to do over $1 Million in 2019, teaches others how to find properties for $.50 on the dollar
  • Based in Salt Lake City, Utah
  • Say hi to him at www.DFDmastery.com

Best Ever Tweet:

“The difference that I have with the systems and the software that we’re using is, you can go with one part time guy and find thousands of distressed properties every single week.” – Zack Boothe


TRANSCRIPTION

Theo Hicks: Hello Best Ever listeners, and welcome to the best real estate investing advice ever show. I’m Theo Hicks, I’ll be the host today, and today we’re speaking with Zack Boothe. Zach, how are you doing today?

Zack Boothe: I’m doing awesome. Super-awesome to be here.

Theo Hicks: Yep, I’m excited to have you and looking forward to finding a little bit more about you. So Zack left his window cleaning business in 2017 to become a real estate investor. He’s on track to do over $1 million in 2019, and he also teaches others how to find properties for 50 cents on the dollar. So you better believe we’re going to talk about how to do that. Zach is based in Salt Lake City, Utah, and you can say hi to him at dfdmastery.com. So Zack, before we get started, can you tell us a little bit more about your background and what you’re focused on now?

Zack Boothe: Yeah. So like you said, I was a window cleaner, and it’s actually surreal to be on this podcast because as a window cleaner, I would listen to this podcast all the time. So it’s pretty weird how life happens and it takes you in certain directions.

But like you said, I was on that window cleaning business, and I ran that for almost 10 years, and towards the end of it, that was 2016, I was just burnout in the industry; not something I aspire to do anymore, even though I had had a ton of success there. I had YouTube videos with over a million views. One of my YouTube videos got used on the History channel, so I ended up on the history channel because of window cleaning, and had a great business that I’d worked so many years on… But I wanted to be in real estate and I had dabbled in it, done a couple deals – some amazing, some I lost money, but I needed a change of pace. So I hired a coach who’s actually the second coach I had hired, but I really got traction with this coach back in 2017, the very beginning of it.

The coach is Tom Krol and Cody Hofhine, and they taught me about something known as wholesaling. I believe some of your people are familiar with the process, I’ve heard it on your podcast a few times… So for those that don’t know what it is, essentially you’re finding properties at a discount, people that want to sell for speed and convenience, you put those properties under contract, and those contracts are assignable, meaning I can sell that purchase agreement to a flipper or to another investor and they close on that contract and pay you a fee to sign the contract to them. So I started learning that strategy, and I actually sold my business. At the time I actually just told my partner, “I quit, you can buy me out, but I’m done. I have to move on.” And that was March 2017, I had just purchased their course…

I went as hard as I could and did my very first wholesale assignment fee in April of 2017. I made $10,000 on that first deal. So that was a mind-blowing proof of concept. From there, I worked really hard that year and did a little over $100,000 by the end of 2017. By the end of 2017 I knew I needed to do something different as far as marketing. I wanted to have a business that profit margins on $100,000 — I wasn’t netting, I wasn’t bringing in $100,000, not even half that. So I was making much less than the window cleaning, and I didn’t quite know where to take it or how to grow it, and I read a book called Multifamily Millions… Not sure if you’re familiar with that book, Theo. Have you seen that book before?

Theo Hicks: It sounds familiar, but I’ve not read it myself.

Zack Boothe: It’s a great one, and he said something in there that really caught my attention. So he’s talking about doing large syndications, a lot of what Joe talks about, and something that I aspire to do. He said that you are not in the business of real estate, your business is not real estate. You’re in the business of marketing and your product is real estate. It really got me thinking how important my marketing was and how I really needed to change things up a little bit.

So I started doing what’s called driving for dollars. It was