JF2093: Bad Decisions To Good Decisions With Will Harvey

May 26, 2020 | Joe Fairless | 00:24:41

JF2093: Bad Decisions To Good Decisions With Will Harvey

Will is a Principal at CEO Capital Partners and recently left his W2 job to do real estate full time. He shares a great story of how he had a life of making some bad decisions in college related to alcohol and because of a great friend he was able to overcome this and now is a successful investor. 

Will Harvey Real Estate Background:

  • Will Harvey is a Principal at CEO Capital Partners
  • From Ashburn, Virginia
  • He started in real estate in 2016.
  • Personally owns over 1.5MM  in real estate mixed between rentals and Airbnbs
  • Recently left his W2 job to do real estate full time.
  • Say hi to him at : www.wealthjunkies.com  

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Best Ever Tweet:

“Seek advice from qualified people.” – Will Harvey


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, Will Harvey. How are you doing, Will?

Will Harvey: I’m doing well.

Joe Fairless: I’m glad to hear that, and looking forward to our conversation. A little bit about Will – he’s the principal and CEO — he’s a principal at CEO Capital Partners…

Will Harvey: That’s right. Most people mess it up and say it how you originally said it…

Joe Fairless: Yeah, I was like “Wait, there’s a preposition there.” At CEO Capital Partners. He’s based in Ashburn, Virginia, right outside of DC. He personally owns over 1,5 million in real estate in the DC area, which is a mix between rentals and Airbnbs. He’s been investing in real estate since 2016, and recently left his high-paying W-2 job, so congrats on that. With that being said, Will, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Will Harvey: Absolutely. Growing up, I was always on top of my dad. He’s been in business a long time… And he always taught me that — I’d go to a restaurant and I’d be like “I wanna work here one day.” I’d go to Chipotle when I was really young, and I’d be like “I wanna work here. The food is so good.” And he would always teach, “Now, you don’t wanna work here. You wanna own it.” So I was always instilled that whole “Own the ladder, instead of go up the ladder mentality.” So that was good.

I had a bunch of side hustles as a kid. I started out selling golf balls. I would find golf balls, clean them up, and sell them at a nicer course. As I went along with selling stuff  on eBay for people, and cut grass… And getting into high school I started going down the wrong path. I got into drugs and alcohol. Once I got into college, it got ten times worse. I just got real strung out on a bunch of stuff… I was there for three total semesters. My last semester was just a train wreck. I ended up pulling out of school, I came home…

Joe Fairless: What happened in that last semester?

Will Harvey: The main thing was just blacking out all the time.

Joe Fairless: It’s important to be conscious during college.

Will Harvey: Exactly, yes.

Joe Fairless: You’ve gotta be conscious during class time too, right?

Will Harvey: That’s right. So blacking out, and driving, and just doing all kinds of stupid stuff. Anyways, I came home, and I was actually home on winter break, and had just a total God moment. My Christian faith is what got me through everything that I went through. A family friend was in my parents’ driveway; I was living with them at the time. After a real bad blackout, my friend had punched me in the face a couple times, because I was trying to drive, and I was saying stuff about them… So the next day my face was all swollen and messed up, and this guy saw me and he’s like “What happened?” I was like “I don’t really remember.” And he thought about it — at the time he was sober 18 years; he was an alcoholic himself. So a couple days later he reaches out to me and he’s like “Hey, I was thinking about you over the last couple days, and I think this might be a little bit bigger than you think… So I would love to sit down — I’ll just tell you my story  and we’ll just go from there. No pressure.” And again, by the grace of God, I was kind of at the bottom, so to speak, so I agreed to meet with him.

Joe Fairless: And how did you come across this person in the first place?

Will Harvey: He was a family friend, lived in my neighborhood…

Joe Fairless: Okay.

Will Harvey: So I went and met with him. His story was identical to mine. I was sitting, talking to him, and I was like “Well, if he’s alcoholic and his story is exactly like mine, then what does that make me?” Two days later we told my parents; I admitted that I had a problem with alcohol, and ended up making the decision to pull out of school and get sober. I started going to AA meetings, and  all that.

Joe Fairless: Good for you.

Will Harvey: Yeah, I appreciate it. It was very humbling. Most 19-year-olds are not doing that, so it was very humbling, moving back in with your parents when you had the freedom of living at school and doing all that. Anyways, fast-forward–

Joe Fairless: And I’d say that everyone has areas in life that they need to have that sort of awareness and about-face; we’ve gotta do something else. It’s just that certain things, like alcoholism, drugs, other things – it’s more obvious from the outsider standpoint. But we’ve all got that stuff, right? Everyone has that.

Will Harvey: Right. Admittedly, now I’m addicted to work…

Joe Fairless: Well, your website is wealthjunkies.com, which after knowing this story — I was gonna ask you why you called it WealthJunkies.com.

Will Harvey: Exactly, that’s right… So fast-forward, after I was home and living with my parents, about a year and a half later I ended up walking on and playing football at a school in Ohio.

Joe Fairless: Which one?

Will Harvey: It was Ohio Dominican University.

Joe Fairless: Nice.

Will Harvey: It’s in Columbus, overshadowed by the other school in Columbus. [laughter] But I ended up playing there, and that was great, until I had double hip surgery. Then I came home and I kind of started my real estate journey. So I got into the mortgage business; a family friend got me into the mortgage business in 2015. I learned the business for about a year, and at the end of 2016 is when I went off into sales. So 2017 was my first year. I did well, and it was phenomenal; I lived it, breathed it, slept it… And it was actually before I started in sales. I was able to buy my first house.

The way that it all happened was I was in the mortgage business, and I didn’t know a ton about real estate, but I knew that it was a good thing, and I knew that I should buy a house, because I can  start building wealth. But I was making $30,000 at the time, and living in the DC area, you won’t qualify for [unintelligible [00:08:11].16]

So I went to my dad and I said “Hey dad, I have a potential opportunity for you.” And he’s like “Oh, great. Here we go.” So I showed him his house, and I was like “Look, I can’t qualify on my own, but I’ve done my research. This is the rental income that I can get. I’ll live in one room, I’ll rent out the other two. Can I borrow your ability to qualify?” So he agreed, and signed on the loan. I was able to get the house.

In the first month with two tenants – one was my brother and one was another family friend… The first month they paid me the rent, it almost covered the entire mortgage, and I was hooked on real estate. Hook, line and sinker. It was a house-hack before I ever discovered Bigger Pockets or anything like that… And I highly advocate that to anybody that I talk to, especially if they’re single and don’t have kids, or anything. I highly advocate for doing that.

Fast-forward a little bit more, I started originating and I started making good money, and at the end of ’17 I bought another house. Then fast-forward another eleven months from there I bought another house. Again, the houses here are ridiculous in price. One of those rental properties was over $400,000.

Joe Fairless: Dang. And you were putting like 20%  down?

Will Harvey: I put 10% down, because I moved into it. So each property I bought, I bought as a primary residence and moved into it. I had the lender’s consent, used the same lender, and they were cool with it. So that helped. All the rates are in the three’s, which is nice; I wasn’t having to do investment loans.

But after I got to three, I just realized that there was a serious scalability problem with what I was trying to do, and that’s kind of what led me into multifamily. So that’s when I started learning about it and going from there. If you wanna ask some questions based on all that…

Joe Fairless: Sure, yeah.

Will Harvey: Or I can keep going. What do you want me to do?

Joe Fairless: Well, your “personally owns” part – mystery solved  there. Because I introduced you as personally owning 1.5 in real estate in the DC area. Three homes, 400k(ish) a pop. There’s that. Is that all the portfolio, or is there something else?

Will Harvey: I actually have one more, and I had one that we sold; it was a flip. And then there’s another flip I’m doing with a partner right now… That was just a killer deal. I own it, but it’s in a company, and it won’t be owned for long; it’s not a long-term house.

Joe Fairless: Okay. And just to get an idea of cashflow, just pick one of the four homes, please, and tell us what’s the income, what are the expenses, high-level, and what are you making per month?

Will Harvey: Yeah, sure. I’ll pick the second one. It was the most expensive one. The cool thing about this one is that it was bleeding at one point. So I was able to kind of use the knowledge that I learned from multifamily and apply it to this. That’s what helped.

Joe Fairless: Oh, okay… Yeah.

Will Harvey: So I did have one person renting the majority of the house, and then I had Airbnb in the lower level; it was a separate entrance. The house was perfect for that… And I put a lock on the outside of the door, so they couldn’t access the rest of the house. It’s like a separate unit, essentially. And I had someone else renting the rest of the house. But what I did – once their lease was up, it was a three-level townhouse.

Instead of just doing the Airbnb and renting the rest of the house out as one lease, I kept the Airbnb and I did two separate leases for the two bedrooms that were upstairs. And by doing that – it was crazy; it turned it around phenomenally. Now it’s cash-flowing about $400/month… Which doesn’t sound like a lot, but since I’ve bought it, it went up in value $50,000. So it’s a high appreciation area. I know you preach the three rules – not to go for appreciation…

Joe Fairless: Right. Well, my approach is buy for cashflow, and then increase the value through value-add plays… And here you go, a value-add play. You kept the Airbnb, but then you changed it from leasing the other one as a regular rental to leasing it by the bedroom…

Will Harvey: Exactly.

Joe Fairless: …and then you separated that out. Let’s compare the Airbnb income per month, versus one-bedroom per month. What’s the difference there?

Will Harvey: The Airbnb is about $1,100/month. If you average it out, that’s what it comes out to. So it’s about $1,100/month.

Joe Fairless: Income?

Will Harvey: Income, yeah.

Joe Fairless: Okay.

Will Harvey: And then from that $1,100 — there’s not a whole lot of expenses. Let’s say about $60/month in expenses. There’s a cool app I’ve found where you can get a turnkey cleaner; it’s pretty cool. It’s called TurnoverBnb, for anybody listening…

Joe Fairless: Thank you. I wasn’t gonna ask that, but I should have, so thanks for offering that…

Will Harvey: No, absolutely. TurnoverBnb. So that’s about $1,100. But that room is so much smaller than the rooms that I’m doing a lease. So apples to apples, it’s hard to compare them… But it’s still more than what I’m doing for the leases.

Joe Fairless: What’s the bedroom rent?

Will Harvey: The master is $1,000, and then there’s another — there’s like a master two, and that one is a little bit smaller than the true master; that one is $950. So the Airbnb is better. The Airbnb is tiny compared to both of those rooms, and I’m still getting more rent.

Joe Fairless: So the reason why I asked that question was because of the follow-up, which is why not have all three be Airbnbs?

Will Harvey: Because it’s more of a headache to do it that way. I see it as more of a headache. Airbnb is not passive. People are coming… And I have it very passive now; I’ve been doing it for over two years, so I’ve kind of worked out all the glitches and have  it pretty automated… But one of the renters in the house I know very well, and she kind of oversees everything. So I’m giving up a little bit of income by not doing Airbnb for the sake of having peace of mind.

Joe Fairless: What, if anything, does she get compensated for overseeing it unofficially?

Will Harvey: If it’s something where I need her to clean it, she will, and I’ll just knock $50 off a rent. If it’s an emergency cleaning and the TurnoverBnb can’t do it in time, or there’s something that comes up with a guest, and they need something – then she’s there, and I kind of compensate her as I go. It’s a good arrangement that we have.

Joe Fairless: In terms of the process, with the Airbnb over the last couple of years you said you’ve got it down more or less to a smooth system… What are some major changes that have taken place over those two years?

Will Harvey: Getting rid of the stupid keyless entry that was giving me so many problems…

Joe Fairless: Oh, really?

Will Harvey: That’s a huge one, yeah.

Joe Fairless: Getting rid of it?

Will Harvey: Yup. It sounds crazy. That’s the reason I got it, was because I thought that it was gonna be so easy, nobody will lose a key, they [unintelligible [00:15:00].14] but it created so many problems.

Joe Fairless: Which one did you have?

Will Harvey: It was Schlage. They’re a name brand product, and it would always mess up. I’m not trying to dog on them, but…

Joe Fairless: You’re just speaking facts.

Will Harvey: Yeah, exactly.

Joe Fairless: So the battery went down sometimes, or…?

Will Harvey: No, it actually wasn’t the battery. It was really — I know I’m kind of getting in the weeds here, but there was this part inside, and it was like a little disk, and it would slip, and basically it would just spin freely, and it wouldn’t turn it. So I’d have to take it apart…

Joe Fairless: So why not just get a refund and get a different type of keyless entry?

Will Harvey: I don’t know, I bought it a while ago, and everytime I’d go over there I would just wanna fix it and be done with it and move on. So I’d youtube it, try to figure out how to do it… It would work for a little bit, but then a month later it would go bad. So the solution there was get a lockbox and have a key. So far, the good old-fashioned keyed entry has been fine.

Joe Fairless: Okay. What else?

Will Harvey: Another thing is I have a virtual assistant who handles all guest communications. A big thing with Airbnb is being a super-host, so you wanna do that… You wanna become a superhost, and in order to do that you’ve gotta get a bunch of reviews, and you’ve gotta be really good. So I had a virtual assistant – she’s awesome. Her name is April. And I’ve put together a process where as soon as someone books, she sends them a message and says “Hey, here’s the Wi-Fi, here’s this, here’s that.” There’s those frequently asked questions, so we kind of answered all of those questions in this first message.

So she would send that, she would say “If you need anything, let us know.” On the day they arrive, she would message them again, and basically reiterate that and say “If you have any issues with check-in, let us know.” And then while they’re there, for the long-term people, every Thursday she would message them and ask if they need anything. And then when they leave, there was a sequence where she would message them and try to get them to complete the review.

So that’s huge, in automating it… Because I was always too busy to ask for reviews and do all that. So having a system in place where she would do it was very helpful for me.

Joe Fairless: How did  you find the VA?

Will Harvey: UpWork. Neal Bawa motivated me to do that.

Joe Fairless: And how many VAs did you work with until landing with this woman?

Will Harvey: She was the very first one…

Joe Fairless: Wow.

Will Harvey: Yup. There’s a lot of people that have gone through a lot of VAs and not been satisfied, but knock on wood, she’s awesome.

Joe Fairless: Where is she located?

Will Harvey: Philippines.

Joe Fairless: And how much per hour?

Will Harvey: Five dollars and five cents.

Joe Fairless: And any bonus for doing stuff?

Will Harvey: I’d give her a Christmas bonus… If she makes a decision and it’s thinking outside of the box, she does something that’s impressive, I’ll give her a bonus. 10 bucks, 25 bucks, somewhere around there.

Joe Fairless: Had her for how long?

Will Harvey: I’ve had her since July or August of 2019.

Joe Fairless: Wow. Good. I’m glad to hear that.

Will Harvey: Yeah. It’s going great.

Joe Fairless: So now your focus is what?

Will Harvey: Multifamily.

Joe Fairless: Where are you at with that?

Will Harvey: Myself and four partners – we started a group about a year ago… And we got involved as a co-sponsor on a few different deals, and we were able to raise money on our first one. We raised about half a million dollars… And then about three weeks later there was another opportunity that came up, where we were able to co-sponsor… And that’s where we’re at now. We have one that we’re working on, and as this records, it’s under contract in Columbia, South Carolina… Which is pretty cool, because it’s the school that I was at, where I was a colossal screw-up, where I was getting into all the drugs.

Joe Fairless: Is that the Gamecocks?

Will Harvey: Yeah, University of South Carolina.

Joe Fairless: Yeah, nice. Now they’re USC.

Will Harvey: Yeah, exactly. That’s right.

Joe Fairless: I’m sure I’ve just made a lot of South-Caroliners upset when I said that… [laughter]

Will Harvey: Absolutely. That’s what everybody says.

Joe Fairless: Alright. Well, I’ll just join the crowd then and just blend in and run away.

Will Harvey: [laughs] You’re good.

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

Will Harvey: When I was in the mortgage business and I started learning about multifamily, and I knew it was something that I wanted to do, like you said in my bio, I was high-paid, I was making a couple six figures, and I was in my early twenties… But I just wasn’t happy. I wasn’t enjoying it. I felt like a hamster on a wheel. And I would ask people advice. And everybody that I was asking was in a position where they weren’t financially independent, they weren’t financially free or anything like that. They were working. So the advice – what I’m getting at is seek advice from qualified people.

Everybody I was seeking advice from was not in a position where I wanted what they had, so why was I asking them for advice? That’s my advice – try to find people that are actually qualified to give you  advice on what you’re asking about.

Joe Fairless: That’s a good reminder… Because there’s all different areas of life that we need advice on, and we might have a trusted friend that we always go to for advice, but is that trusted friend qualified in that particular area of life to give advice on? That’s interesting…

Will Harvey: You’re not gonna go to somebody and ask them about your marriage if they’ve been divorced five times… You know what I mean?

Joe Fairless: Well, it would be good to hear their advice and then just do the opposite.

Will Harvey: Yeah, that’s a good point. [laughter] That’s right.

Joe Fairless: Alright, we’re gonna do a lightning round. Are you ready for the best ever lightning round?

Will Harvey: I am.

Joe Fairless: First, a quick word from our Best Ever partners.

Break: [00:20:35].17] to [00:21:20].03]

Joe Fairless: Alright, what’s the best ever resource you currently use in your business, that you couldn’t live without?

Will Harvey: I would say with the personal portfolio I have – I will keep it with that – I would say the TurnoverBnb and the VA. So two.

Joe Fairless: Yeah. We talked about obviously you go over to TurnoverBnb – that’s an easy Google search – and then for the VA you talked about going to UpWork and finding a VA.

Will Harvey: That’s right.

Joe Fairless: What’s a deal that you’ve lost the most amount of money on, if any? I don’t think there is one based on what we’ve talked about. Maybe a flip, or something.

Will Harvey: No, there was no actual deal where I’ve lost money, but I’ve lost money when I first got into multifamily. There was a deal that I was trying to do on my own. It was a 14-unit property in a rural part of Virginia. I had deal goggles on, I wanted to close it so bad, and it was a pain in the butt. The seller was asking for stuff that was unreasonable. Long story short, I had the attorney do the contract over and over and over. The deal ended up dying, and then I got the bill for the attorney, and it was $9,000.

Joe Fairless: [laughs]

Will Harvey: That wasn’t fun.

Joe Fairless: What were some unreasonable deal points that the seller was asking for?

Will Harvey: I was so naive and inexperienced… He wanted to save money on closing costs; instead of doing a traditional purchase, he wanted me to purchase the underlying LLC that owned the property. I was getting advice from everyone saying that’s such a bad idea. You don’t know if he’s in litigation with someone… So it just created a lot of billable hours.

Joe Fairless: Yeah, that’s a pretty hefty attorney fee for a purchase and sale negotiation contract.

Will Harvey: That was my “Welcome to billable hours” moment. I wanted to throw up when I got that bill.

Joe Fairless: It sounds like you  had a very responsive attorney.

Will Harvey: Yes… [laughs]

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

Will Harvey: My mom started a non-profit, and you guys actually featured it on the Best Giving, or Best–

Joe Fairless: Best Ever Causes, yup.

Will Harvey: Best Ever Causes, yeah… Helping Haitian Angels. It’s an orphanage in Haiti.

Joe Fairless: Oh, yeah. That was fairly recently. Best Ever listeners, you can go to BestEverCauses.com. If you click on Recent Causes – I’m on there now – you can see that organization Helping Haitian Angels. Good, I’m glad to hear that.

So how can the Best Ever listeners learn more about what you’re doing?

Will Harvey: They can go listen to our show. We got our motivation from you, Joe, like we were talking before this started. I got roped into doing a daily podcast because of something Joe talked about at the conference… So thank you so much for that, Joe. It’s a lot of work, as you know…

Joe Fairless: Yes… Yes, it is.

Will Harvey: It’s awesome stuff. Our podcast is Wealth Junkies, you can find us there; or you can just shoot me an email, will [at] wealthjunkies.com.

Joe Fairless: Thank you, Will, for sharing your story, some challenges, some ways you overcame it, some lessons learned, like make sure we ask advice from people qualified in the area that we’re looking to get advice on, your Airbnb approach, TurnoverBnb, the VA, adding value to one of the properties that you own; it was losing money – what do you do? Let’s rent out by the bedroom, and let’s make sure we have that Airbnb rockin’ and rollin’. Some really applicable stuff, as well as what you’re focused on now with the multifamily.

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

Will Harvey: Awesome. Thank you, Joe.

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