JF1299: Finding A Niche, Creating & Executing A Business Plan with Nathan Tabor

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Nathan enjoys helping investors with their businesses and lives. He is also a multifamily flipper. He has a specific niche that he sticks to and credits having a niche to his success. We’ll get advice on how to find a niche and stick to it, which will bring us success. Nathan also tells us about what to look for in multifamily building and communities. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Nathan Tabor Real Estate Background:

  • Has purchased, renovated and sold over $52m dollars worth of real estate
  • Enjoys helping others find their niche, understand the processes and achieve their goals.
  • Has founded and operated more than two dozen businesses since 1999, grossing over $150 million in sales
  • Based in Winston Salem, NC
  • Say hi to him at  apartments.nathantabor.com

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TRANSCRIPTION

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

Nathan Tabor: Good, Joe. Doing well.

Joe Fairless: Nice to have you on the show, and glad to hear you’re doing well. A little bit about Nathan – he has purchased, renovated and sold over 52 million dollars worth of real estate. He has founded and operated more than two dozen businesses since 1999, grossing over 150 million in sales; that’s a whole lot of money. He is based in Winston-Salem, North Carolina. With that being said, Nathan, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Nathan Tabor: Yeah, sure, Joe, and I appreciate you having me on your podcast. I enjoy the information that you give to people and all the stuff that you’ve got going on. I’m involved now — I still do real estate investing, I do real estate coaching a little bit, helping folks who are getting started; I do a lot of work/life balance seminars… My main focus at 44 years old – I kind of got it upside down in life; if you become too focused on money and that is all you’re focused on, you’ll wake up and you might have a lot of money, but no one wants to be around you, right?

I really like to go in and talk to investors, especially if they’re getting started out, or in the middle or at the top… What’s your niche? What are you going after? What type of real estate investor are you?

Joe Fairless: What’s a good answer to that question?

Nathan Tabor: Well, the good answer is do you find that you want to do raw land? Do you wanna be a futures buyer? Do you wanna flip $50,000 houses or $500,000 houses or do you wanna flip duplexes or apartments? Because as you know, you’ve raised a ton of money… How much have you raised at this point?

Joe Fairless: A lot. Probably 100 million, or something like that. I haven’t counted.

Nathan Tabor: When you go to your investors, you don’t go and say “I need to raise a million dollars for a real estate deal”, because they would be like —

Joe Fairless: “So what?”

Nathan Tabor: Yes, but under normal circumstances, the normal person would be like “Well, where is it? What kind of deal is it?” They would ask 50 questions. So to find your niche, “Hey, I wanna go in the South side of town, I found this property over there… Here’s the address. It’s gonna need $100,000 to purchase it, $50,000 to renovate it, and we can flip it and make $50,000.” You go with a plan, not just “Oh, I need money.” Most people get told no once, and they quit and they say “Well, that didn’t work out.” Well, it didn’t work out because you didn’t plan well. You didn’t know your niche, you didn’t have your business plan put together…

It’s amazing when I go out and talk with various folks just in any business just how many people don’t have a business plan. They have in their mind, but they don’t know where they’re going. And then they’re confused and upset why they don’t get to where they want to go, but they don’t have it mapped out.

Joe Fairless: So a niche that would be specific would be “I want to buy $50,000 homes in the South side of my town, fix them and flip them, and then continue to do that.” Is that specific enough?

Nathan Tabor: Yes, split the profit with the investor, 50/50. Or for me, my niche is I only flip multifamily apartment complexes in the Piedmont triad, which is Winston-Salem, Greensboro, High Point, North Carolina. They range in size from 20 units to 120 units, they’re all class C, they all have high deferred maintenance, high occupancy issues, so lots of renovations, lots of management things to be done. I’m looking for a lot of meat on the bone. 0% occupancy or 20%… Basically, the worse, the better. That is my niche.

I don’t look for other real estate, really; I don’t do other deals, I don’t spend my time trying to do other deals or learn other systems. I’ve been doing this for 11 years now, that’s what I focus on. I can [unintelligible [00:06:26].15] on other people and help them find their niche or any questions on that, but that’s what I do.

A lot of times, if you don’t even find that niche, you can never get off the ground. I know a ton of people who’ve been trying to be “a real estate investor” for 2, 3, 4, 5 years and they’ve never done one deal. But they work hard all the time trying to do it, they just never get off the ground.

The other is someone’s at that level where they’ve done 20 hundred-thousand-dollar deals, and now they wanna get into the next level. Well, to get into that next level you’ve got to plan for the next level. So at any point, whether somebody’s getting started or they’re wanting to double what they’re flipping, or buying and holding, or they wanna go from two million dollar deals to five million dollar deals – on paper that’s not a lot, but you’ve gotta plan a lot out for your banker, for your investors, how you’re gonna manage that… There’s a lot of things that need to be filled in, one so you can succeed if you can do it, but two, to find the people that can help you do that.

Joe Fairless: It makes sense. With your niche, the flipping apartment complexes, within the Piedmont triad, 20 to 120-units, the lower occupancy the better (the worse occupancy, the better), how did you plan to get into that business? Because that’s different and it’s really interesting; I’d love to talk about that.

Nathan Tabor: Ten years ago I had never — outside of two homes… I bought one, sold one, bought the one I currently live in… A gentleman walked into a Buy Here Pay Here car lot that I owned at the time and said if I don’t sell this 18-unit complex in 30 days, the bank is gonna take it.

My dad was a painter and a contractor, so I knew a little bit about doing things, but not flipping anything. I went to five different bankers; the first five said “No, we’re not giving you a loan for that.” I found a sixth banker who I went in and they gave me 100% financing and 100% renovation loan, which doesn’t happen these days… And Joe, I bought that 18-unit, and 30 days later I bought the 12-unit that was beside it, and in eight and a half months I had renovated it, leased it up and sold it on LoopNet and made $252,000. And I didn’t know what a cap rate was. [laughter]

A friend of mine, they’ve developed 54 grocery store facilities over the last 20 years, and she asked me “Do you know what a cap rate is?” and I’m thinking in my mind, “A cap rate… That’s gotta be on top of the roof. It’s that little vent area up there, right?” [laughter] She looked at me and she said “Please tell me you didn’t just go and do a $500,000 loan and not know what a cap rate is?” and I was like “Unfortunately, I did.”

The second unit I bought was a 12-unit, and I thought “Here I am now, my head’s big and my breeches are big, and I just know all what I’m doing”, and my second deal I bought I didn’t check the zoning — well, an attorney checked the zoning, a surveyor checked the zoning and told me it was grandfathered in, but I didn’t call the zoning department. A five-minute phone call. Well, I come to find out that the property had been split a number of years earlier. The setback had not been discovered because the property had not been sold. So when the property sold, on my second deal, I was faced with tearing down half of the complex, or buying a tenth of an acre that had a building on it that had asbestos in it.

Joe Fairless: Why was that your other option?

Nathan Tabor: Well, I had to cure the setback. When the buildings were built, the setback was 25 feet. The current code, since the line was split, was 40 feet, and the only way to cure the setback — and then the apartment spaces… So since that wasn’t grandfathered in, I didn’t have enough parking spaces. It cost me $150,000 and 18 months, and every day, week, month I didn’t know if I was ever gonna get through, because I didn’t know where the end of it was.

Joe Fairless: Just to be clear, you bought it, it had a setback that was — it was discovered, but you thought it would be grandfathered in, but you didn’t call… And then there was a building there, so it had to be removed. Is that correct?

Nathan Tabor: I went to pull my building permits the day after I closed, and they said “Oh, we can’t give you your building permits because this building is too close to your other building, it’s a fire hazard. You either have to get that building removed, or you have to tear down enough of your units to be set back from that–”

Joe Fairless: Oh, okay.

Nathan Tabor: In the end, the option on tearing down part of the building didn’t work, because I still didn’t have enough parking spaces, so to get enough parking spaces, I had to tear down half the building… So I paid a local church actually $75,000 for a tenth of an acre; I’d only paid $200,000 for the entire complex, and they were supposed to tear their building down and they didn’t. So one mistake, one issue led to another, because I didn’t know what I was doing.

Joe Fairless: You paid $75,000 for a tenth of an acre from a church, and then what happened?

Nathan Tabor: And then they took the money and didn’t tear the building down.

Joe Fairless: Because if they had torn that building down, then what…?

Nathan Tabor: Well, so if they had torn it down, I would have been out of my issue.

Joe Fairless: How would that remedy the problem? Because you have two buildings that are close to each other.

Nathan Tabor: So when I paid them $75,000, part of it was for them to demo their building. So they owned the building next to mine.

Joe Fairless: Oh, okay. So you couldn’t have demo-ed it anyway, because it was their building.

Nathan Tabor: It was theirs. I only bought one building… There was a building that was on their land, not on mine, but it was standing too close to my building in the current setback laws.

Joe Fairless: Okay, I’m with you.

Nathan Tabor: So my next thing I’m really passionate about these days is helping people understand due diligence… Because a lot of people are like “Oh, just check the rent rolls, check this…” The number one thing I tell people… Before you buy anything, go to the zoning department yourself, on their letterhead, signed by them that your – whatever it is, $5,000 house, or 50 million dollar piece of property meets the current zoning laws, and you have that on hand. Because if an attorney tells you that or a surveyor tells you that and they miss it, you can try to file a complaint against your title insurance, which I was going to do, and an attorney told me, he said “Yes, I’ll file the complaint. Write me a check up-front for $25,000 and you’ve got a 50/50 chance of winning.”

Joe Fairless: Yup. That’s a great piece of advice, for sure. With the local church, going back to that example… You paid them 75k; regardless of your levels of expertise, I know you had a contract with them. You wouldn’t just give them $75,000 cash and say “Hey, go make it happen, I trust you. Here’s a handshake”, right? So what happened?

Nathan Tabor: When you get into a buying and you’re operating from “I have to solve this problem”, sometimes you have to do things that put you in a further buying. So I paid them $75,000 and I wanted to put $40,000 of it into an escrow account to pay the contractor to take the building down. They said, “No, the only way we’ll do this is you pay us the $75,000 and then we’ll pay to have the building torn down.” So here are my two options – tear half of the complex down (the building that I own), so tear out six units, and spend almost $200,000 to take the units down, convert the other ones and add the parking spaces that are needed… Or I could pay $75,000 and take a chance that this church would actually do what they said they were going to do, and tear their building down. Because once they tore their building down, I owned a tenth of an acre that their building sat on. So I bought enough land to cure my setback issue once their building was torn down.

Joe Fairless: Right.

Nathan Tabor: But they didn’t. They took the $75,000 and actually the pastor moved to Atlanta, Georgia and took my money. And I sued him, and I got a $278,000 judgment against him for unfair trade and deceptive practices. I paid my attorney $28,000 and I never —

Joe Fairless: You didn’t get that money. You never collected it. [laughter]

Nathan Tabor: Don’t spend good money on chasing bad money, right?

Joe Fairless: And what religion — no, I’m kidding. [laughs]

Nathan Tabor: You wanna make half of America mad? Do you wanna talk about politics [unintelligible [00:14:51].22]

Joe Fairless: [laughs] Alright… Due diligence – one piece of advice that you have is go to the zoning department yourself and get something on letterhead, written from them, that says the property meets the current zoning laws. What are some other things in due diligence that you do that perhaps others wouldn’t?

Nathan Tabor: Some other things… Rent rolls. The third complex I ever bought, I was under the impression that when you’ve got a rent roll that was “certified”, that that by law, real estate standards, that was the amount of money that’s being collected.

Joe Fairless: Oh…

Nathan Tabor: And actually, in all 50 continental United States, a rent roll is only a reverification of what the terms of the lease says, and does not mean that’s actually what they’re paying. So you buy a complex from someone that says it’s collecting $28,000 a month, and you close on it, and the next month you collect $7,000 and you go “What?!” You come to find out some of the tenants there hadn’t paid in six months, and the landlord had been telling them “Look, don’t say anything about this. I’m selling the complex. The new owner will deal with it.” So he committed fraud, but then it’s a civil matter, because it’s a contract.

The only way that I have found to verify actual moneys is bank statements. If they say they’re collecting $10,000/month at this complex and they won’t give you their bank statements, or they give you their bank statements and it doesn’t say $10,000, you need to find out what’s the discrepancy. Why are they not collecting that amount of money?

Now, if you’re doing bigger deals and you’re dealing with major companies, you’re probably not gonna run into a lot of that, because there’s a lot [unintelligible [00:16:39].20] But if you’re buying a $500,000 apartment complex or two million and it’s already financially struggling, and that owner just wants to get out of it, you never know what they’re gonna say or do on that.

So if someone won’t give you their bank statements to verify how much they say on their income and expense and their rent roll, you’ve really gotta kind of figure in that a lot of that money they might not be collecting.

Joe Fairless: One thing I’ve come across before on apartment communities is when you ask for those banks statements, the owner might say “Well, I can’t provide it to you because it’s a bank account that has all my other stuff incorporated in it as well”, and you just have to push through and say “Well, I need these. Don’t worry, I’ll have a professional accountant look over it”, and if you want, maybe agree to them with having their accountant send over blacked out information from their other stuff; whatever it is, but get those bank statements.

Nathan Tabor: Yeah. Man, I’ve had so much happen to me that — I mean, I’ve had a lot of good things happen to me, but you can go out and buy a rent receipt book from staples for $10 and sit down and make up the 12-month.

Joe Fairless: [laughs] Yup.

Nathan Tabor: So if that’s the verification that you’re relying on… And I did. I found myself in a precarious buying because I bought an almost three million dollar piece of property that instead of collecting 28k a month it was collecting 7k.

Joe Fairless: What do you do? Let’s go back in that situation, and I’ll hold my breath for you so that you’re not stressing out too much over it… But if you could relive that – you thought it was gonna bring in 28k, it’s bringing in 7k; now what do you do that helped remedy that?

Nathan Tabor: The initial thing is immediately we started filing evictions. We started moving as quick as possible to stabilize the property… Because there was no reason at that point to wait on anything. If a tenant is not paying, evict him, get rid of him so you can have the ability to renovate the unit and lease it back up.

Of course, we got a lawyer involved, looked at the contract, looked at what they had done, went after them… But again, hindsight 20/20. I don’t think I’ve ever had a lawyer involved where I actually won. I mean, I won a lot, but I didn’t actually win.

Joe Fairless: Of course. We all lose, most of the time.

Nathan Tabor: Most of the time, because I got money back out of the guy, but by the time, what I had paid my attorney and the 12 months it took and the stress and the worrying and the back and forth, I’d just have been better to have licked my wounds, learned from that mistake and dealt with it. Of course, I went to the bank, and we had built reserves, so by this time I had learned due diligence-wise and planning, always have (at least in my books) six months of full operating cost and reserves in case you buy something and it’s not going the way it’s supposed to, or you find complexes and every unit has bed bugs in it. No one during the walkthrough, during the due diligence period mentioned that they had bed bugs. Treating 40 units at almost $800 a pop for bed bugs is expensive.

Joe Fairless: $800 a pop?

Nathan Tabor: $800. There were 3-bedroom 2-bath, 1400 square foot units. It’s $800.

Joe Fairless: Wow, that’s pricey. I’ve done the bed bug thing and it was about $75 a treatment, times three treatments; there were 2-bedroom apartments, around 700 square feet.

Nathan Tabor: We tried smaller bombs, and these were so bad, Joe, they had to bring these big heater units in…

Joe Fairless: Oh, we didn’t get to that point. Fortunately, I haven’t seen those heaters.

Nathan Tabor: Well, if you get to that point where it’s like they’re embedded in the baseboards, and… Again, I buy stuff that really foundationally is solid, but a case could be made just to bring in a bulldozer and just go ahead and level it. So you plan for that, right? In your due diligence period you plan for the things that you can’t see. You plan for the things — but there’s a lot of things you can control… Checking the finances.

Another one on the due diligence is always plumbing and electrical. I always check every plug. In every apartment complex I ever buy, myself or somebody that works for me buys one of those little $5 plug testers from Lowe’s or Home Depot, and we check the top and bottom plug on every wall.

Joe Fairless: Okay… Why so detail-oriented with that?

Nathan Tabor: Well, because in the process of buying complexes I would find that after we closed there would be three or four units where on the left side or the right side of the complex the plugs weren’t working, and the tenants had just ran extension cords from around the other side of the wall… And when we did our due diligence and we came in and said “What was wrong with your unit? Why didn’t you say the power doesn’t work on that side of the unit?” “Oh, well…”, and they come up with different excuses. So I started finding the only way — you know, we turn on every water spec and we check underneath every sink for water leaks, we sit down on every toilet and rock back and forth to see if it’s rotten underneath the toilet, because you can spend $200 to $2,000 for a rotted out flooring, if it’s got mold and stuff in it.

So it just came down to the point that really don’t trust anybody else unless there’s somebody that really works for you and you know. It would take us an extra couple hours to test all of those, but you can spend $2,500 to $4,000 rewiring a two or three-bedroom apartment complex or house, whereas it could take you ten minutes to walk around and check all the plugs. So the return on it, time vs. money, paid off really well for us.

What would happen then – I did this immense due diligence, so if I had a property under contract for a million dollars and I went back and I sat down, I said “Okay look, these 40 units, I’ve found seven units where they’re gonna have to be completely rewired, because half of it doesn’t work.” So I go the high-end, I need the $4,000, so I need $28,000 credit here. I’d go back to the owner and say “This million dollars – I need $100,000, $150,000, $200,000 credit, and here’s why”, and gave him specific units, the specific things that were done, with a quote from my contractor to fix it. Every complex I’ve bought, I’ve gotten 10%, 15%, 20%, 25% discount off the contract price because of the due diligence process we did.

If you go to try and argue with someone and say “Oh, I just don’t think this complex is as great as we thought it was, and I want $100,000 credit off a million”, that’s kind of hard to get. But if you can go and show them that there’s actually $100,000 worth of work to be done, then you can negotiate.

Joe Fairless: What are some common things that you’ve negotiated, where you know when you buy a distressed property most likely you’re going to be renegotiating X, Y, Z?

Nathan Tabor: Roof is one of the big issues, and a lot of times they’ll go in and put shingles up on the roof. Every time I buy a complex, I get my roofer to get on every roof, both sides, walk it front to back… Because the shingles can be brand new, but every decking board underneath it can be rotten. So you buy this complex and then six months later you start getting dips in your roof, because the shingles are good, but the under-decking is not. That’s probably one of the biggest areas we have negotiated price.

Parking lots, that alligatoring where it starts to break apart… Well, eventually, that’s gonna have to be replaced. Plumbing and electrical can be some of your more expensive one-offs, because rewiring one unit is not bad… Have you run into aluminum wiring much in your area?

Joe Fairless: I have not purchased a property with aluminum, but we’ve looked at them.

Nathan Tabor: I’ve done one, and I don’t think I will ever do a complex again that has aluminum wiring.

Joe Fairless: That says a lot, coming from you who buys distressed properties.

Nathan Tabor: Yeah, well the aluminum wiring you pigtail, which is expensive to put those little 6-inch, 8-inch copper on, but insurance these days — I have found the ones I’ve looked at with aluminum, insurance is two to three times higher on the insurance premiums, versus copper wiring, because of the fire risk, even with pigtails.

Now, I’m looking at 35, 45-year-old properties. I would be really cautious at looking at aluminum wiring on properties. Make sure you get a quote from your insurance carrier, that they know that it’s aluminum wiring, and make sure that you’re covering yourself on that.

The other biggest area in the due diligence process – talking to the managers and the maintenance folks. Most owners, if they don’t want you to talk to their staff – why? Why are they always lingering around? I have found you can learn a lot of information by just casually talking to those folks.

When I get into what I’m doing, especially on the due diligence side, I make my money when I buy the property, not when I sell it. Because if I don’t cover my due diligence right, especially if you’re going in to flip a property, you can lose your shirt in a split second if you don’t know what you’re getting into.

Joe Fairless: What’s an example of a property that has gone wrong for you? You talked about the one with the church, but maybe one more example.

Nathan Tabor: I’ve got many of them, so I will go down here of HVAC systems. I am not an HVAC expert, but it seems like about every 10-12 years congress or EPA or someone is changing the freon, and the current freon is — [unintelligible [00:27:00].09] What’s the freon that has been — that just changed? It’s like L40, or something…?

Joe Fairless: Something like that, yeah. I’d be able to pick it from a multiple-choice test, but I can’t recall it off the top of my head.

Nathan Tabor: Yeah, I could pick it out, too. So in buying the latest complex I’ve purchased, in the due diligence I caught that some of the heat pumps were out inside and were gonna need to be replaced, or some of the compressors were out… So parts of the unit were out. And in the past, that would have cost $100, $300, $500, $800 to fix. Come out, replace that little copper wire, put a new compressor in… But now it’s getting really hard; the freon per pound, where it used to be $4-$7 a pound, now it’s $40, $80, $100 a pound. Most compressors have five pounds, so all of a sudden what used to be a $200, $300 repair can cost $1,200-$1,300. Well, eventually it’s gonna come to the point you’re not gonna be able to repair those because you’re not gonna be able to get the freon. So a lot of the older units in a lot of the older houses that I work with on people is to make sure what type of system is in that HVAC.

A very specific for me in dealing with a due diligence nightmare was water leaks in old bathrooms, behind the wall. So it’s grandma old’s tub, it’s the one-piece bathtub and shower insert, and there’s no panel access behind the wall, there’s no way to get to it, and water has just sat there for how many ever years, and why it didn’t show in the upper ceiling? It’s ran down the little wall, and then it’s ran across the floor, and it’s ran down.

I bought a 40-unit complex in Winston, it didn’t have central heating and air, so we were gonna put HVAC into it. We never got to install the HVAC because we found so much rotten flooring, mold and milldew, and issues that we couldn’t see. You couldn’t feel it when you walked… The tub was secure, the faucet metals were secure… That was like the fifth or sixth deal I did.

Now in due diligence when we’re buying a complex – of course, all the ones I’m buying are 35-40 years old – I tell the owner “We’ve gotta have a panel access to look into that faucet system in that shower to see has it been leaking for quite some time, or is it good?”

Joe Fairless: What if you don’t have the panel access to look in to see it?

Nathan Tabor: If I don’t have the panel access, I basically say to the owner, “Okay, look, I know this is gonna cost me about $1,500/unit. You’ve got 40 of them, so I’m gonna need a $60,000 credit.”

Joe Fairless: But that’s assuming that there is a problem.

Nathan Tabor: If he/she won’t let me cut a few holes to see…

Joe Fairless: Okay.

Nathan Tabor: If there’s 40 units, I wanna check 20% of them. And I’ll buy the little plastic inserts from Lowe’s, they’re $10. I wanna cut a little 20×20-inch hole, and we’ll put the panel in there, but I’ve gotta see if there’s a problem there.

Joe Fairless: Got it.

Nathan Tabor: And if they won’t let me look at that problem, then I’m gonna assume that all 40 of them have the problem and I’m gonna ask for that credit.

Joe Fairless: Got it.

Nathan Tabor: Do you know what they let me do then?

Joe Fairless: They let you put it in.

Nathan Tabor: They let you cut eight holes.

Joe Fairless: Yeah. This is great stuff, I’m soaking up every example that you’re talking about, and boy, am I grateful that you’re on the show… What is your best real estate investing advice ever?

Nathan Tabor: The best real estate investing advice ever – and this i gonna go against most… I don’t think it necessarily goes against yours, because I’ve read a lot of your stuff, but most people out there do real estate investing to make money, but don’t do it just for the money. If a deal is not right, walk away from it. Don’t force it. That little God-given internal stomach mind is like “You know, something’s not right here. Something doesn’t add up. This, and this…”, and instead of going “Oh man, I can make $500,000 on this deal” (and I’ve done this) and you ignore all the red flags, you don’t make $500,000. You’re lucky if you don’t lose 500k.

So my advice is do deals that make sense. All of them are gonna have risk. There’s gonna be certain things that you’re gonna have to absorb, get your arms around and do it, but if there’s just that feeling — I don’t really know how to describe it, Joe, but I’m sure you’ve felt it before when you’re doing a deal…

Joe Fairless: Sure.

Nathan Tabor: That broker or that owner, or something — I don’t wanna say that they’re liars, but something doesn’t add up. And if you can’t get past that feeling, it’s better to walk.

Joe Fairless: And that also comes with more and more experience; the more experience you have and you’re exposed to different situations, the more that feeling becomes more valuable, for sure, right?

Nathan Tabor: Yeah. Develop a team. Even if they don’t work for you, find two people and go sit down and talk the deal out with them. Lay out everything and find counsel from others, even if they’re not part of your group, and just say “Hey, does this all add up? Look at this”, and let someone look at your work. And I did this for a while, too – don’t have this fear of like “Oh, I can’t show somebody this, they might not like it” or “They might try to talk me out of it.” If you can’t justify to someone else why you should be doing this deal, don’t do it.

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

Nathan Tabor: I’m ready.

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

Break: [[00:33:06].10] to [[00:33:33].29]

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

Nathan Tabor: The Bible.

Joe Fairless: Best ever deal you’ve done that isn’t your first and isn’t your last one?

Nathan Tabor: I bought a 66-unit complex for $1,075,000 that they were asking 2,5 million. I put a million in it and sold it for 2,9 million in 14 months.

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

Nathan Tabor: Children’s efforts, especially at Christmas time, helping others in their time of need.

Joe Fairless: And how can the Best Ever listeners get in touch with you and learn more about what you’ve got going on?

Nathan Tabor: My website is NathanTabor.com.

Joe Fairless: Nathan, thank you again for being on the show. You talked through case study after case study of what to do, and mostly what not to do, which is a great way to learn, and we’re very fortunate to hear the lessons that you personally experienced, and that way we don’t have to personally experience them.

Nathan Tabor: Joe, do you know what my tagline is?

Joe Fairless: What is it?

Nathan Tabor: Amazing successes, epic failures.

Joe Fairless: There you go. Well, you listed a lot of surprising due diligence tips that we might not be doing, but we should be doing on an apartment building. One is go to the zoning department and get a signed note from them saying the property meets zoning laws. Two, make sure we’re looking at the bank statements; certified rent roll – yeah, but that doesn’t actually show money going in the bank account, so get those bank statements.

Three is from an operations standpoint – make sure we have at least six months’ worth of operating costs in reserves. If we do happen to buy property that has significantly lower economic occupancy than what we anticipated, then start filing evictions and move as quickly as possible to stabilize the property. And another tip for due diligence – looking at the water leaks in the old bathrooms behind the tub, or behind the shower, and if you don’t have an access panel, then put one in there and look at 20%-25% of the units, and if they don’t allow you to, then ask for a credit.

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

Nathan Tabor: Thanks, Joe. I appreciate it.

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