JF2281: From Shadowing To Full-Time Investor With Jon Schoeller

Jon is a real estate investor out of Charleston, WV. Over the past 4 years, he has flipped over 150 houses with his partners and he has an additional 100 in his holding company. He owns, operates, and partners in 8 different businesses. His passion is teaching others how they can reach financial freedom while doing what they love. 

Jon Schoeller Real Estate Background:

  • Full-time real estate investor, co-owner of multiple business, and financial coach
  • Has been in real estate for 3.5 years and 13 years in business, coaching for 6 years
  • Portfolio consist of 115 flips and over 100 rent-to-own 
  • Based in Charleston, WV
  • Say hi to him on Youtube at Jon Schoeller
  • Best Ever Book: The subtle art of not giving a F

 

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Best Ever Tweet:

“Networking, don’t just shake hands, get around successful people and stay around them” – Jon Schoeller

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JF2280: Raising Capital Fast in an Efficient and Scalable Way with Hunter Thompson #SkillsetSunday

Hunter was fortunate to start his career in the wake of the Great Recession. At that time, he surrounded himself with great partners and educators. As a result, Hunter built his first company around his personal investment strategy. He was a sole investor at first; now he has hundreds of investors.

Hunter shares his experience in raising capital quickly and efficiently. Time is often the most important determining factor to close the deal. Listen to this podcast episode to learn how he closes deals within 30 days, having a line of prospective investors ready to wire the money in.

Hunter Thompson  Real Estate Background:

  • Founder of Asym (A-Sim) Capital, a private equity firm
  • He has raised more than $30 million in private capital
  • 10 years of real estate experience
  • Current assets under management of $100MM CRE
  • Previous guest on episode JF2028
  • Based in Los Angeles, CA
  • Say hi to him at: www.5millionin30days.com 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Attract, educate, nurture, and close” – Hunter Thompson.

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JF2279: Investing Out Of The Country With Evie Brooks

Evie Brooks (Atlanta, GA, and Veracruz, Panama) is an elite Real Estate Investment Educator, Keynote Speaker, Investor, Coach, Mentor, Entrepreneur, and former Advanced Trainer for “Rich Dad Poor Dad”, who now specializes in “All Things Panama”, including real estate and organic, sustainable agriculture investments. 

Evie Brooks Real Estate Background:

  • Full time investor and former advanced trainer for  “Rich Dad Poor Dad” 
  • 24 years of experience in domestic and global real estate
  • Currently investing in 13+ countries and 30 U.S. states
  • Based in Atlanta, GA
  • Say hi to her at: www.eviebrookspanama.com  
  • Best Ever Book: Who Stole My Pension 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Utilize the funds that you have in pension plans, IRA’s, & 401ks, in real estate” – Evie Brooks


TRANSCRIPTION

Evie Brooks: Hello, Best Ever listeners, and welcome to the Best Real Estate Investing Advice Ever show. I am Theo Hicks, and today we’ll be speaking with Evie Brooks.

Evie, how are you doing today?

Evie Brooks: I am good. How are you doing?

Theo Hicks: I’m doing well, thanks for asking. Thank you for joining me. A little bit about Evie — she’s a full-time investor and former advanced trainer for Rich Dad, Poor Dad, which is probably the number one best ever book we get on the show and probably for most real estate investors. So everyone knows who the Rich Dad, Poor Dad is. She has 24 years of experience in domestic and global real estate, and she’s currently investing in over 13 countries and 30 US states. She is based in Atlanta, Georgia, and her website is http://eviebrookspanama.com/.

So, Evie, do you might telling us some more about your background and what you’re focused on today?

Evie Brooks: Real Estate just runs through my veins. It is what I do. It’s my playground, my sandbox, if you will. And I accidentally stumbled into it right out of college. I was supposed to go to law school and ended up pregnant my first semester and was so sick I could not complete that journey, and ended up in real estate as a fallback and I’ve never looked back.

I stayed in corporate America for four years in asset management and property management commercial. And then I went out on my own and that has been my focus ever since. I started of course domestically, locally in my home state in Georgia, and then I expanded throughout the United States. And then I started doing international once I started teaching with the Rich Dad, Poor Dad Organization. And I started in Costa Rica. The big crash happened in 2008, I held on until 2012 and then I moved over to Panama, and it has been a whirlwind ever since that time, and looks to continue to be that way for many years to come.

Theo Hicks: Thanks for sharing that. So we’ve talked to people on the show before about investing in their own backyard, we’ve talked to people before about investing out of state, but it’s not every day, we get to talk to someone who is investing out of the country. So you kind of mentioned you started doing this during your time with Rich Dad, Poor Dad and traveling around, but can you get more specific as to why you decided to transition to investing out of the country? Why did you decide to not strictly stay in the states and invest? What’s the benefit you saw?

Evie Brooks: Well, when I was teaching with the Rich Dad Organization, initially, I was teaching domestically and they had an opening to teach in Costa Rica and Latin America, and I immediately jumped on it, because I love being there. It’s tropical, it’s warm, the ocean, water… So I immediately jumped on that opportunity and I started teaching the international investing portion of that training program in Costa Rica as an elite trainer.

In my very first trip, I purchased property myself, I started my first project, I ended up with over 750 acres total in Costa Rica, with projects that we were doing in Costa Rica because of the experience of international investing and the opportunities. So we really tapped into, for that market, the expat market; people from not just US, but North America, Canada as well, but all around the world; people that are looking for (and still) a Plan B or investments outside of their country or tax breaks and things like that. So that’s how it all started.

Theo Hicks: So you were teaching a course on how to invest internationally. So you applied the course to yourself and then—

Evie Brooks: Absolutely.

Theo Hicks: Okay, that makes sense. So can you tell us about your first deal? You said it was 200 plus acres of land. How did that come to be? So you land in Costa Rica for your training and then you have the land. Can you tell us about the steps in between?

Evie Brooks: Well, the first project that I purchased was only about 25 acres, and that was the first trip there. And then when I realized what the opportunity was going to be with that, I found a one acre parcel right on the ocean. I mean, just right on the front of the ocean. So I bought that one. And then I found another just raw piece of land that was 750 acres, and it was a huge undertaking because there were not even roads to get back to the land. So we had to bring in the roads and the utilities and the telephone poles and all that kind of stuff. So ultimately, we ended up with an over 700 acre master-planned community that we were developing in Costa Rica, until the big 2008 crash. And that was an interesting time.

Theo Hicks: So for that first 25 acre deal, are there real estate agents in Costa Rica? Is that how it works, or is it through some other avenue that you find these deals?

Evie Brooks: Yes, but not along the lines of what we think of as real estate agents in the United States. They don’t have the MLS, and it’s kind of like anybody can just stick up a sign “I’m a real estate agent” for the most part, especially at that time. So I wasn’t looking for real estate agents. I had my Costa-Rican attorney who worked for our company full-time, that would go with me, and we would just start looking for land. I do this everywhere I go, whether I’m on vacation in Belize or in South Florida, I’m always looking for real estate deals. So that’s what we were doing, and we found this big piece of property that we realized would be an opportunity for a large expat community, with all the amenities and things like that and that’s how it came to pass.

Theo Hicks: And you mean you’re literally in a car, just driving up and down the street with really no plans but just looking?

Evie Brooks: Exactly.

Theo Hicks: And then do you see the land or are there signs that are up?

Evie Brooks: There are signs. Of course, they were in Spanish and I didn’t speak Spanish. Just poquito, just enough to get by. But my real estate attorney was Costa-Rican, and so she was taking me everywhere she knew. She knew the market. She knew what we were looking for and so we were just out seeking for treasure.

Theo Hicks: That’s awesome. And so all of the deals you have done, have they been found through this method or are there other ways you’re finding deals too, like the word of mouth type of talking method?

Evie Brooks: A lot of word of mouth, of course. Everybody knows what I do and they’re always sending me opportunity. Now that didn’t happen initially right out of the gate. But as I became now known and people knew what I do and became an instructor for the real estate with the Robert Kiyosaki Organization, of course, I get referrals and recommendations all the time. But to this day, I will still take a whole day and just go drive — let’s say, I want to purchase land on Lake Lanier in north of Atlanta; I’ll just go out and start driving and all the little fingers up and down the roads behind where all the [unintelligible [00:09:08].06] are looking for a local treasure.

Theo Hicks: How do you fund these international deals? Is it through syndication, are you raising money? And then if you are, how does the process for raising money internationally differ from raising money in the US? Is it easier? Is it harder?

Evie Brooks: Well, we did a 506 Reg D for our Costa Rica project, and it was a US 506 Reg D but the project was actually in Costa Rica. I am not doing syndications at this point any longer. It’s so intense for effort, work legalities, rules and regulations… That the stuff that we work with now, I have connected with some of the largest developers, most well-known financially stable, financial debt-free developers in Panama, and have worked with them over the last eight years to put together owner financed type situations for our particular investors.

Most of the Expat type of investors that we’re looking are just looking for investments $200,000-$300,000, $1 million or just looking for a retirement home, a vacation home, that type of thing. So we’re now doing these large developments like the one that we did in Costa Rica… And I also did another one up in North Dakota, that I still have right now that we’re working on, but in [unintelligible [00:10:20].05] So it depends on the project itself and how much funds are required and needed, but I haven’t done a syndication since we did the Costa Rica project.

Theo Hicks: I’m sorry, I should have asked this earlier, what is an expat?

Evie Brooks: An expat, an expatriate; people from around the world that’s looking for a reason to leave their country, either on a resident basis or even change their citizenship or getting dual citizenship because of the benefits that’s associated with that. So you have people all around the world, even more so now after Coronavirus, than what we had before. We’re just getting swamped with people that’s like, “Okay, I was supposed to retire in two or three years, I was furloughed, I’m not going back, we’re ready to get out of here. We want to go somewhere else where the cost of living is less, the standard of living is comparable to what we’re used to, the taxes, we’re not going to have to have these taxes before we get our citizenship,” those kinds of things.

Theo Hicks: Perfect. So can you maybe give us an example of one of these expats who are using you to — let’s do an investment deal. So they’re trying to invest out of their country. Give us an example of how this works. How much money are they putting down? How does the seller financing structure work? What’s your ongoing involvement? Or is it just upfront, then you’re done? Can you maybe just walk us through a sample deal so I can get a better understanding of how this works?

Evie Brooks: Okay, first of all, with my clients, I’m never done. If somebody invests in a deal that I am involved with, as well as — typically, all these projects I’m invested in as well… But they’re going to get in or get out or they’re going to hold on to it for a period of time, or they want to rent it… We are all things Panama. We do everything from A to Z; from helping them getting their citizenship, their residency, finding a car, getting their legal visas, or their citizenship process… Now, of course, we’re not attorneys, so we can’t do that, we don’t provide financial advice. But we’ve got our power team in place and we can send them to the appropriate people to make sure they’re not getting taken advantage of; because we’re green guys, people see us coming and they see dollar signs. And so we’ve vetted all of these people.

But as far as the financing programs, with the deals that we’ve put together, you can get bank financing internationally, but it’s gotten a lot tougher, especially since the Dodd-Frank laws and the money laundering issues and all that kind of stuff. So it’s a long process and you pay more for the money internationally if you’re not a citizen of the country. So we started working with our developers. And every project is different, even with the same developer. You might have a project in the city and then another project out on the Gold Coast on the ocean that’s two hours away and they’re going to have two completely different structures. But the bottom line is you can put down 10%, 20% or 30% in a particular project, the owner will carry the financing for anywhere from 5-10 years. If you roll out and buy another one of their properties, then they will in some cases finance the first property to the second buyer, or they will always give them the option to do owner financing when they roll into their new property. So people are like, “I’m not ever going to get to a place where I’m stuck and I have to have the funds to pay this principal balance off.” It’s interest-only payments every single month, and those interest rates — in the last year we’ve had one particular project that we had three quarters of 1% interest, interest-only. So a penthouse on the ocean is less than $250 a month.

Theo Hicks: Like 0.75.

Evie Brooks: Yes, 0.075, it is three quarters of 1%. The average right now is about 4% for developer financing, but back in the day when the interest rates were higher, we would pay 7% interest rate. Then once a year, during the duration of the time that you own that property, you’re going to pay a principal pay down, which typically is somewhere between 5% and 7%. So let’s say you owe $200,000 on a property after you’ve put down your 30%, and that 30% was paid over three years, okay? So you have a $200,000 balance, you’re going to pay 5% per year or $10,000 per year principal pay down, one time per year. So it’s interest only each month, and then a principal pay down. Now there’s all kinds of different options and opportunities. Sometimes there’s a lease to purchase option. It depends on the project, the developer and the timing. I will say that with Coronavirus and everything it’s happened we might have some pretty interesting opportunities and promos coming up in the near future.

Theo Hicks: So you’re in a lot of countries, and it sounds like you’ve been to a lot of countries. I was reading your website beforehand and you’ve done a lot of talks in other countries. What would you say is the one hidden gem country, whether it’s someone living there or investing there, that — obviously, if someone has probably heard of this country before, but maybe not a country that they would expect to be a good place to either live or a place to invest; maybe it’s the same place, maybe it’s here a hidden gem for a place to live, maybe it’s a hidden gem for a place to invest… But what’s your answer for that?

Evie Brooks: Well, if I were emotional only and that’s what I was looking for, I would go to the Caribbean. There’s no question about it, because the crystal blue, beautiful ocean water and the sand and just the views. But I can never think like that. I’m always thinking bottom line.

Panama is absolutely, unequivocally in my opinion, the best place, and the reason why is Panama is on a tear. And the reason why is when the Panama Canal expanded in 2016, four years ago, for the supertankers to come through, the flow of money coming into that country has just been obscene. Now, you add to that the new Cobre copper mines that have started mining the copper, the copper mines are projected over the next 40 years to actually bring in more revenue than the Panama Canal. And when you look at what’s happened in Panama since the crash of 2008, the GDP has been obscene.

In 2009 it was the lowest that it has been, all the way up until we got hit with Coronavirus, and we don’t know what it’s going to look like on the other side of that. But it was 4% in 2009, all the way up to over 9.5% over the years between 2009 and 2020.

So it’s all about the opportunity, the bottom line, the growth, projections, those types of things. And can people come there and have a career? Can they come there and start a business? Can they come there and have the tax deductions that they’re looking for? So I’ve looked at many different factors that people are looking for, and we can just check off the box on just about everything in Panama.

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

Evie Brooks: My best real estate investing advice ever is to utilize the funds that you have in pension plans, IRAs, 401(K)’s and there’s ways to do this, in most cases, not in every case, in real estate… Having that underlying asset, especially in an international country, you’re just setting up protection for that [unintelligible [00:17:07].28] plan and those retirement funds.

I’ve never personally had an IRA or 401(K). And I know that sometimes you ask what is the best book you read recently and I’m going to tell you, it’s Who Stole my Pension? by Edward Siedle and Robert Kiyosaki. It just came out on the first of this year. And what’s happening with pensions and IRAs, 401(K)’s around the world is astounding right now, and if people really understood that, you just need to protect that money. And I have never had a 401(K) and an IRA because I’ve always been in control of my own funds, and my own retirement, and I’ve built a far greater retirement by doing this instead of putting it into a 401(K) or IRA type of structure.

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

Evie Brooks: Okay, let’s do it.

Break: [00:17:56] to [00:18:38]

Theo Hicks: Okay, Evie, well, you’ve already answered the first question, which is what’s your best ever book, and that was Who Stole my Pension? So the next question is, if your business were to collapse today, what would you do next?

Evie Brooks: I have two answers for that. I’ll really go and start all over in real estate again, in a realistic term. If I was just living in La La Land, I’d do what I wanted to do as a child, which was being a marine biologist.

Theo Hicks: Nice. Tell me about a deal you lost money on, maybe the most money, and then why did it happen? And then what lesson did you learn?

Evie Brooks: The deal that we lost the most money on by far was the Costa Rica deal because of the crash of 2008. No doubt about it. We lost as a group of investors, we were 506 Reg D investors, we had 63 investors, we lost over $13 million. I personally lost over $750,000 in that deal.

And the lesson that I learned was never, ever, ever to do an investment in a tourism only country. But again, I will never go to a country where vacation and tourism is the number one stream of income or the only real opportunity. Now, I said earlier that I’d love to be in a Caribbean country like Grand Cayman, but it’s tourism. That’s all they really have to offer. But I would never invest there because of that experience and having lost what we lost. And it wasn’t just the financial loss, it was the emotional stress of having to deal with that.

Theo Hicks: And do you apply that same logic to domestically as well, you won’t invest in a city that’s dominated by tourism, or is it just internationally?

Evie Brooks: You know, I’ve always thought about investing in the big cities, even downtown Atlanta, New York, places like that, and I never have, and I’m going to tell you how grateful I am right now. I’ve always been in the suburbs, because like I told you earlier, I love water. So I’m always investing where I’m on the water, like Lake Lanier in Atlanta, for example. In Florida, I was in Fort Myers, Cape Canaveral area. So I’m always going to areas where there’s water, and boy, am I thankful right now, because everybody’s racing out of the major cities to get to the suburbs right now.

Theo Hicks: Yeah. On the other end, let’s talk about your best ever deal. This could be best ever in regards to the most money or best some other way… But what’s the best ever deal you’ve done?

Evie Brooks: Absolutely, unequivocally the agricultural investments that we’re doing where you’re basically in an AG deal where you don’t have to hold the [unintelligible [00:21:01].13] personally. You’ve got somebody else doing it, you do a reverse Co-Op with a large, very renowned farming company. We are working with several of those from different areas; Colombia, Panama, Mexico, Peru… And you have the ability to get into what I’m now calling one of the greatest buzzwords of all time, which is [unintelligible [00:21:22].14] And when we stop and think about what’s happened with the Coronavirus, food was the greatest — and toilet paper… [laughs] It was the biggest demand that we saw; and you saw the shelves just empty off and people were terrified that they were not going to be able to get food. And it’s not a fad, people are going to continue to eat every day always from now on, and as the population continues to grow, there’s going to be a big demand for that.

Although it’s not as challenging and exciting, because it’s not hands-on, you forget it, you make the investment and wait for your returns from the produce production to come in. It is absolutely, in my opinion, one of the best investments that we can have, especially for that safety net that we’ve been talking about with what’s happening in our world right now.

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

Evie Brooks: I work with a number of different organizations, but I like to work with the Salvation Army and then American Breast Cancer. Also, different patriot companies that help those wounded warriors that have been hurt and cannot continue to function and have a normal life.

And then my biggest thing is I love educating; educating other people and teaching people about the real estate investment strategies and how they can actually, personally, control their financial futures through real estate if they really understand what they’re doing.

Theo Hicks: Well, on that note, what’s the best ever place to reach you to learn more about the international investing, the agricultural investing and more of the teachings that you have?

Evie Brooks: Well, if you go to eviebrookspanama.com – and there’s a little 11 minute video; if you watch that, I do offer a free one hour mentoring session with you. You have to watch that video, because we want to make sure it’s right for you and it’s right for us. And then we’ll do that one hour just to kind of evaluate, is this a path that you should take, that you need to take, that you’re ready to take? And then from there, we’ll proceed into whatever it is that you’re looking for, what your goals are.

We also do a three-day, four-night VIP tour in Panama. And that is an intensive boot camp, boots on the ground, educational program that we do. And we also discuss that in that video, and you can find out more about that there. And we do offer a one-third discount for that if you come through the video.

Theo Hicks: Perfect. Well, Best Ever listeners, just make sure you take advantage of that one hour session. So, Evie, thank you for joining us and walking us through your, in my opinion, unique investment strategy of investing in other countries, in agriculture… I’m definitely going to have to check out that video, because we’ve only been able to talk about this in 20 minutes, and I know it’s obviously a lot more in-depth than that.

But you talked about the reasons why you started investing out of the country. We talked about your first few deals. I really liked your driving for dollar strategy that you apply everywhere, but you had the Costa Rican attorney who knew the area very well, and you just got in a car and drove around looking for land, and you got a 25 acre deal, and then a one acre deal, and then the 750 acre deal through that… And then now you’re getting your deals through word of mouth, obviously.

We’ve talked about the way these deals are financed. That’s seller financing, interest only, one time a year principal paydown. And then you talked about the hidden gem being Panama. Obviously, in your website name you talk about the video about Panama, the private tour of Panama, and then your best ever advice was to leverage the IRA, 401(K) type funds and then use that to invest in real estate.

So thank you for joining us. Again, I really enjoyed this conversation. I always like talking to someone about something that’s again, unique and new, and something that I don’t know anything about. So that’s always fun.

So Best Ever listeners, as always, thank you for listening, have a best ever day and we’ll talk to you tomorrow.

Evie Brooks: Thank you so much.

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JF2278: Increasing NOI With Jamie Wohlschlegel

Jamie is the CEO of ServusConnect, ServusConnect is an exciting, new technology for the multifamily industry that delivers innovation and mobility to medium & large-scale apartment maintenance operations to optimize multifamily NOI.

Jamie Wohlschlegel Real Estate Background: 

  • CEO of ServusConnect, a multifamily property-tech startup
  • 6 years of helping multi families optimize their maintenance operations
  • Launched ServusConnect at age 40 as a first time entrepreneur
  • Based in Raleigh, NC
  • Say hi to him at: www.servusconnect.com 
  • Best Ever Book: Drudge Report

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Work on getting optimized with your digital approach, digital documentation is a big deal these days ” – Jamie Wohlschlegel


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 Jamie Wohlschlegel.

Jamie, how are you doing today?

Jamie Wohlschlegel: I am doing awesome. Thanks, Theo. Thanks for having me.

Theo Hicks: Absolutely. Thanks for joining us. So a little bit about Jamie. He’s the CEO of a ServusConnect, a multifamily property tech startup that focuses on optimizing multifamily maintenance operations; he’s been doing this for six years. He launched ServusConnect at age 40 as a first-time entrepreneur. He is based in Raleigh, North Carolina, and the website is https://servusconnect.com/

So Jamie, do you mind telling us some more about your background and what you’re focused on today?

Jamie Wohlschlegel: Yeah, I’m a typical mid-40 professional who’s had a number of careers. I did start out in multifamily out of college. I worked for a large multifamily operator in greater Washington DC and Baltimore Metro Area. And then I kind of got out of that, got into IT, and have been doing IT consulting for about 15 years, sales and consulting and working with Fortune 500, and that was a really cool experience. And then I kind of got bored.

About the time that I turned 40, I took a sabbatical from that job and started thinking about my roots and what was happening in the multifamily space, and saw an area that hadn’t been applied from a technology perspective in the maintenance area, and so we kind of dug in; that’s where we landed.

Theo Hicks: Perfect. So let’s talk about that. So what exactly does ServusConnect do for multifamily investors?

Jamie Wohlschlegel: Well,  ServusConnect is a dedicated maintenance operations platform and what we do is try to optimize and apply top technology to the maintenance workflow that typically happens between a resident and the management company or the folks responsible for handling maintenance issues in apartments. This is an area that has not necessarily had a lot of technology applied to it. It’s kind of an afterthought when it comes to the traditional property management systems that are out there, whether it’s your AppFolio’s, your Yardi’s, RealPages or MRIs, they all certainly have facilities modules, but they’re, again, typically an afterthought.

So when we started this process, one of the things that we saw was that maintenance operations was just a really black hole when it came to data, and that’s because a lot of it was still being done brute-force. There’s still a lot of paper and maintenance operations in multifamily… Which is really, really interesting, because it’s an area that just generates a lot of interaction with a resident. And as things have moved online, so online rent payments and online leasing and certainly during COVID-19 and pandemic, the need for a contactless resident experience with your landlord has been something that is really important, and certainly maintenance operations is a huge part of engaging with the tenant community.

Theo Hicks: From the residents’ perspective, if my management company, my owner is using ServusConnect and my toilet’s clogged, what happens? What’s the difference between me calling some guy and saying, “Hey, can you come and fix this?” What happens instead?

Jamie Wohlschlegel: Typically, a lot of management companies and certainly probably a lot of investors, who are also operators have ways for residents to put in service requests – either online forums, or they call the office or they have resident portal or maybe they’re running an AppFolio, so the resident has an app and will log in and will put their service requests in.

From there, that’s where the brute-force starts. And that’s where we have kind of find our niche is, providing that back office between the time that the resident calls in and it hits the system, to the time that the technician responds to it, digitally documents their work, and then that digital documentation gets recorded against the unit record, against that asset.

We really have found our niche optimizing almost that backend process and really streamlining the workflow from when a resident calls in and says, “Hey, I have a maintenance issue, my toilet’s clogged,” and they put that issue in an online form somewhere. That’s where a lot of our automation kicks in.

So it has required us to really open up API’s and figure out how to digitally connect those online resident forms and those property management softwares to our system. But really, where we shine at is streamlining the backend, which really makes a big difference when it comes to taking a lot of time out of the response time for maintenance operations to handle a resident issue.

Theo Hicks: Okay, so I submit my form, the only change for the resident, you’d say, would be a faster turnaround time. So from their perspective, they’re not seeing any of these calculations happening.

Jamie Wohlschlegel: Right.

Theo Hicks: They just call in and then someone shows up at their door faster?

Jamie Wohlschlegel: That’s right. The service request shows up digitally on a technician’s servusConnect technician app. We have points where we do touch the residents a lot is through our resident notification system. So we have automated resident notifications by SMS that go out and will alert the resident, “Hey, we’ve got your request, we’re adding it to our queue,” or when the technician gets ready to start the work, they’ll get an SMS that says, “Hey, so and so is going to be showing up at your apartment soon.” And then when the technician is done and they complete the work order, our system does send a survey to the resident. So we do have a lot of resident touch after that initial call and/or after that initial submission on the website that, “Hey, I have a maintenance tissue.”

So really, if we can keep an open line of communication with a resident and just brief them on what’s happening with their service request — because that’s the big problem is they put a request in online, and then it’s a black hole and they don’t know what’s going to happen until somebody knocks on their door.

Theo Hicks: 100%. Is it email or is it text notification? Is it everything?

Jamie Wohlschlegel: It’s both; it’s text and SMS. SMS is an email. So the SMS is the killer medium. I think the statistics are 95% of all SMS messages are read; you may not necessarily respond to them, but you pretty much read everyone. In the election season, now we’re all starting to get election SMS-es as well; you read them and then you delete them. But it’s a great notification medium; it doesn’t require residents to download some app that they may only use for a year while they’re living in that apartment. So SMS is the killer notification medium. And then from there, it’s kind of like the airlines – we take them into a unique mobile responsive browser-based, on their mobile device web experience so that they can see their service request and add any comments etc, get status details.

Theo Hicks: Do you have like a stat that says that before someone use our service, their response time was X and then after the response time was Y?

Jamie Wohlschlegel: Yeah. Usually, we’re seeing a 2X improvement. They call it service cycle time. So that’s a major metric that we track in our system. It is just the time that takes from what a resident submits a service request to when the technician completes it. That’ll typically improve 2X. The thing that I think that’s interesting that we’ve also started to see is that most operators manage for the things that slipped through the cracks. They’re not managing to the things that they’re doing really well.

And so one of the things that was surprising to us is that a lot of operators actually do a really good job responding and having short cycle times on a percentage of all of their service requests. But they don’t ever manage to that, because they don’t actually have that statistics easily available to them. What they’re managing to are the things like, “Hey, these service requests have been open for five days, where are they?” And then it’s a process to obviously try to figure out what’s happening on the service requests.

But when we get involved, we tend to have a lot of data that they haven’t previously been privy to, and so now that we can show and see where their faults are, and show them their improvements, we can also show where they’re actually doing really well, and those become key metrics on performance as they move out.

Theo Hicks: And this kind of my next question, which is from the property management and the owners’ perspective – do they have their own portal too where they can pull reports? The reason why I’m asking this is because I remember when I had a third-party management company, it was really annoying when I got a report and it just said, “$500 maintenance.” I didn’t know what it was, I didn’t know how many maintenance issues there was. I just was like, “Okay.” Well, something happened that month… And I called them and asked them what it was, and then they had to find the maintenance guy to figure out exactly what it was.

So from my perspective, as a landlord or as a property management company, what type of reporting do I have access to?

Jamie Wohlschlegel: There’s kind of two levels of reporting; there’s the what’s happening now reporting, like, what’s in the queue? What are folks working on? What’s the status of these open service requests? Have they been responded to? Have these guys uploaded photos and videos and comments on what’s been going on? So that’s kind of the current state of operations, which is very much front and center in our platform and our managers dashboard.

And then there’s the, “Hey, how are we doing? How did we do last month? How did we do last week? How are we trending over time? How do we do this year compared to last year?”  And beginning of 2019, we actually implemented a business analytics and business intelligence back into our system that allowed us to provide our owner operators and investors and all the folks who are interested in that type of data, more the analytical data of, “Hey, how is this particular property or how’s this particular service tech, or this team or this region performing over time? How have their service cycle times ebb and flowed?” and then compare that with the resident feedback, the survey data that we get in as well, and you can definitely start to see patterns here. So that has become a pretty important part for our clients of how they manage health of their maintenance operations teams, and frankly, how folks are doing and just general health and wellness of their operations. So yeah, for sure.

Theo Hicks: What’s the portfolio size of your average client? Like, if I’ve a duplex, is it something I’m going to be able to use and afford, or is this for bigger guys?

Jamie Wohlschlegel: Our target market based on our go to market model has been anybody over 500 to 1000 units under management has been a sweet spot. And as you get into 5,000 and 10,000 units and beyond that – we certainly have some very large customers who manage into the tens of thousands of units.

We typically price our product on a per unit per month basis, not necessarily by the number of service requests or not necessarily by number of users accessing the system. So it’s typically units under management. So we do have some small customers who get a lot of value out of our system, but sometimes it gets a little pricey as the portfolio just based on the model — the portfolio is very small, and it’s hard for somebody with less than 100 units to make ServusConnect work for them… Although we do very much try to work with everybody and want to work with everybody where it makes sense. But really kind of how we go to it is, hey, we want to work with as many people as possible and if you have a need in the space, let’s try to just be mutually respectful of each other’s time and amount that people have to spend on this type of problem and let’s just come to some sort of conclusion on what makes sense for both parties and move forward if we can. If we can’t, that’s okay too.

Theo Hicks: Perfect. So this might not be the best question, but — so you have a lot of experience in optimizing maintenance… For someone who can’t afford your product right now, what would be your best ever maintenance advice for that person with a portfolio under 100 units? What’s one thing they can do that’s not necessarily getting ServusConnect that they can implement in order to optimize their maintenance?

Jamie Wohlschlegel: First thing is try get organized with just your digital approach. Digital documentation is a big deal these days, and just being able to have a uniform way to connect a single channel, if you will, that connects with your maintenance teams, keep track of what they’re doing on a daily basis and get digital updates from them on the work that they completed… And then whether that’s a spreadsheet or— just a lot of times we see clients who have very capable property management software systems that have maintenance facilities aspects to it that are really not being utilized, so—and this comes from my IT consulting days. There’s technology that’s sitting on your shelf all the time. Every company has technology and every business has technology sitting on the shelf. Go and dust it off, make sure you understand what’s there and you can make it work for you and it helps you organize your day and see that you are on top of things. Use it, absolutely put it to good use. But if sometimes those things don’t scale very well and as you start to manage more teams and more units, and then you want to start to do some more intricate things with resident engagement, then certainly platforms like us are a good place to start. And we’ll talk to anybody and I’m happy to give anybody advice on this topic, even if ServusConnect isn’t a good fit for them.

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

Jamie Wohlschlegel: Oh, man, maybe. We’ll see. Let’s go. Let’s do it.

Break: [00:15:23] to [00:16:05]

Theo Hicks: Okay, Jamie, what online resource do you read, do you use to stay up to date with?

Jamie Wohlschlegel: I’m a news junkie, so easily Drudge Report is my number one go to.

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

Jamie Wohlschlegel: I would start a YouTube site for mountain biking, and a home improvement venture.

Theo Hicks: You should do that anyways, right?

Jamie Wohlschlegel: I should do that. I want to do that anyways. Someday, I’ll do that.

Theo Hicks: You just put a GoPro on your head while you’re mountain biking and then [unintelligible [00:16:32].03]

Jamie Wohlschlegel: I’m a huge project guy, projects around the house, building mount bike trails in the backyard, going and hitting jumps… That’s what I want to do.

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

Jamie Wohlschlegel: I’m big into praise and worship music. So I love to sing and play. I play guitar and I sing, and I love to do praise and worship music… So leading worship or being part of a worship team at Church is a way that I like to give back.

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

Jamie Wohlschlegel: LinkedIn is a good spot. I may not always respond right away, but LinkedIn is probably the one universal spot where folks can hit me up.

Theo Hicks: Okay, and that’s Jamie Wohlschlegel, so they can look him up on LinkedIn. Alright, Jamie, I really appreciate coming on the show and talking about your company ServusConnect. I kind of mentioned this, but yeah, maintenance is definitely a major area of headache, even for smaller landlords.

So we walked through how your company’s able to optimize maintenance operations, both on the residents’ side where they’ll get their maintenance requests fulfilled sooner, as well as no know what’s actually going on.

Jamie Wohlschlegel: Yeah. And it’s important to mention, Theo, that everybody does maintenance differently. Every company, every landlord, every investor, every operator does maintenance a little bit differently. And that is the challenging part about it, and I think that’s kind of made it difficult for companies like us to provide a uniform approach to it. But if you think about sometimes can you adapt to the technology? Man, we spend a lot of time thinking about this problem and I know, certainly a lot of other folks do, too. So if you’re a small operator, man, it might be a good idea to adapt to the technology that’s out there such that you can get some uniformity in your operations and that’s a really, really important point.

Theo Hicks: Exactly. Well, Jamie, again, I really appreciate you coming on the show. Enjoyed talking to you. Best Ever listeners, as always, thank you for tuning in and listening. Have a best ever day and we’ll talk to you tomorrow.

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JF2275: Fast Growth With Dan Perez

Dan is fairly new to real estate investing and yet has already accomplished owning 27 rentals, 5 flips, and also a limited partner in a 32-unit complex. He shares how he initially started from developing proof of concept to building a team and process that have enabled them to scale in a short time period. 

Dan Perez Real Estate Background:

  • Full-time corporate tax accountant for Qualcomm
  • Started investing in 2018
  • Portfolio consists of 27 rentals, 5 flips, and a partnership in a 32-unit complex
  • Based in San Diego, CA
  • Say hi to him at: danieljperez562@gmail.com 
  • Best Ever Book: Tax-Free wealth

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Stay consistent, keep underwriting deals, keep learning because when the right opportunity comes, you will be ready” – Dan Perez


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’re speaking with Dan Perez. Dan, how are doing today?

Dan Perez: Doing great, Theo. Thanks for having me on.

Theo Hicks: Awesome, well thanks for joining us. A little bit about Dan. He is a full-time corporate tax accountant for Qualcomm and started investing in real estate in 2018. His portfolio consists of 27 rentals, 5 flips, and a partnership in a 32 unit apartment complex. He is based in San Diego, California and you can say hi to him at his email, which is danieljperez562@gmail.com. So Dan, do you mind telling us a little bit more about your background and what you’re focused on today?

Dan Perez: Definitely. Yes, my wife and I live in San Diego, California, and we primarily invest out of state in Indianapolis, Indiana. We started at the end of 2018 and we’ve really grown since then. We went into real estate investing primarily for rental properties, but based on the market we’ve also taken down a couple of flips over that amount of time.

Based on the amount of capital that we have available to us, we actually used the BRRR method to start out using other people’s money to invest in rental properties, buy them, fix them up, add some value and appreciation to the property, so that we can refinance the money out and continue to scale. Our goal going into this was to allow us a bit of financial flexibility moving forward. We plan to have kids in the next couple of years, and our whole goal in real estate was let’s generate some passive income to help us out down the line, if one or both of us would like to stay home and raise our kids, or just provide another opportunity for us; we figured this would be the fastest way to get us there. And as you mentioned, we’re not only in Indianapolis with single-family rental properties, but we are also limited partners in a 32 unit apartment complex in Kansas City, Missouri, which is going well, and our goal moving forward is just to keep generating passive income.

Theo Hicks: Thanks for sharing that. So your first deal, did you use other people’s money?

Dan Perez: For our first deal we actually used a Home Equity Line of Credit on our primary residence. We actually did that on our first three properties; what we did is we want to have a proof of concept where we can work out the kinks and also just be ready for anything that maybe we didn’t think of going into this investment journey. And for us, after going through 3, potentially even 4 deals with our own money, what we did is then we were able to take our concept and pitch that to other investors to give them some comfort around, “Hey, here’s what Dan and Kelly are doing, it’s working. They’ve worked out some of the kinks.” You know you can’t figure out everything on your first couple of deals… But at least we were able to give them a level of comfort that says “They know what they’re doing, their process works, they’re going to get better and better with each deal. We’re ready to invest with them and they’re also making a good return on their investment.”

Theo Hicks: So you said you started in 2018 and you owned 25 rentals and then 5 flips. That’s like 32 and it has been 2 years, so what is that? 16 per year? So one per month. So I’m just curious, are you doing multiple deals at once now? Have you always been doing multiple deals, or did you do one at a time upfront first, and then did multiple deals?

Dan Perez: So at the end of 2018 where we actually spent most of our time was building out our teams. We’re both very meticulous in how we put together what we’re doing, our process and procedures, and then also we’re extremely picky about who we surround ourselves with, because we know that could really make or break what you’re doing in the investment market.

So for us, what we did is we spend about 3 or 4 months just building out our team, meeting people, calling other investors, asking them who they worked well with, who they didn’t work well with, and why. Because everyone works differently with their vendors. So for us, at the end of 2018 we actually didn’t even take down our first deal, it actually happened at the beginning of 2019. But just the amount of time and effort we put into building our team allowed us to scale at a fairly quick pace.

We actually picked up — I believe it was 20 or 21 deals in 2019, and we were doing multiple deals at once. So the first few we took a little while; we had to get comfortable with our teams and we had to figure out, “Okay, how quickly do we want to go?” Because we do have W2 jobs as well. So we didn’t want to take on too much at once. But once we had our team built out and were familiar with their processes, I think our busiest month we took down 9 properties at once and all 9 had rehabs going on. So that was probably our busiest month, it was august of 2019. But by that time we were comfortable with our team, they knew how to work with us, and it was difficult at times but we got through it.

Theo Hicks: How much money did you make have when you first started, that you used for those first 3 deals?

Dan Perez: So we had a home equity line of credit, I believe it was $180,000 to $200,000. But the house is in Indianapolis; you can pick up some solid three-bed, one-bath properties that need some work in the range of $40,000 to $55,000 in 2019; the prices have grown up a little bit since then. So that gave us the ability to take on those homes and the rehabs with our own money. So that is the beauty of the Indianapolis market – it’s very affordable to get into the market, and the rental rates are strong as well. So it is very conducive to having rentals.

Theo Hicks: Yeah. So if that for the first 3 to 4 months you focused on building your team… Who did you bring on? And then since you weren’t actively doing deals that time, and you hadn’t done a deal in the past, what type of things did you say to them to bring them? Or did they just say, “Yeah, I’ll work for you.” Or did you need to sell to them, in a sense, on your ability to actually do the deals, since obviously, they get paid whenever you actually do deals?

Dan Perez: That’s a great point you bring up. It was difficult with some of the vendors I was reaching out to without having done a deal. It is difficult sometimes to get people’s attention, because there are so many investors reaching out to agents, wholesalers, property managers on a day to day basis. A lot of times if you haven’t done a deal, some people  quite frankly do tend to not take you seriously, as compared to if you have done a deal or two. So keeping that in mind, I tried to respect that; I know everyone is extremely busy, and so if they didn’t have the time to work with me at that given time, so be it. I would have to move on. But at least I would try to pick their brain a little bit and say, “Here are a couple of questions. Can you at least help me to answer them or point me in the right direction?” So if I at least got them on a call, I wanted to make the most of that time with them.

But when we started out, I tried to keep my calls as short and succinct as possible, because I did not want to waste their time upfront. I knew as a new investor I could come off with doing so. So what I did is I had a list of vendors that we wanted to bring on to our team, starting with the property manager, deal finders, agents, and wholesalers. We needed to find someone that could provide insurance for us; contractors are in an extremely big one when you are using the BRRR method.

So we wanted to start with our core solid team, and what I did is I just had a generic set of questions that I would ask each, to figure out who worked well with us, who didn’t. But I think what I actually gained the most value was speaking with other investors, who are my competitors as well, in the Indianapolis market… Just saying, “Who’s working well for you?” Because I think that’s where you’re actually going to get the most honest feedback. What I’ve found is anytime you call a vendor, they tend to have pretty good answers for you. And everyone sounds good over the phone, but you get the most honest feedback from the investors that are actually working with these vendors.

Theo Hicks: And then it sounds like the other person on your team is your wife you said?

Dan Perez: Correct. Yup.

Theo Hicks: What advice do you have on making sure that that goes smoothly?

Dan Perez: That’s a good question, Theo. For us, what we did is we said we’re going to segregate the duties, so that we’re not stepping on each other’s toes, but also so we’re not duplicating work. The point of us going into this together is one, we both really enjoyed real estate. But the other thing is we want to make it as easy and seamless for us as possible, so it’s not necessarily a burden. It’s supposed to be as passive as possible, which takes time and effort, but with the two of us, I think it has honestly allowed us to scale a little quicker than maybe if you’re going in on your own.

So what we did when we started out is we said, “I am going to be more on the acquisition site, and managing the property managers, managing the day-to-day rehabs.” Whereas Kelly was going to be more on the back end; she’s a corporate controller, so she’s managing more of the finances, the re-finances on our properties, which is a huge undertaking. She’s managing the books, she’s working with our CPA’s, she’s doing a lot of the business side on the back end. We always joked that I get all the glory up front, and I get the Facetime with all the fun people, and then she’s on the back end doing the difficult task. But it takes a lot of pressure off me and allows me to scale with the deals that we’re taking on.

Theo Hicks: And do both of you have full-time jobs that are structured 9 to 5? Or do you have some flexibility that allows you to work on the business during the day? Or is it just all at night and weekends?

Dan Perez: I would say that our jobs are pretty structured; with both of us being in accounting, I would say our typical hours are about [8:30] to [6:00], or [6:30] at night. So we’re working about 50 hours a week. But what we do is with us being in San Diego, our team being on East Coast time, we’re able to wake up early in the morning, get the necessary emails. We prioritize any emails that we need to get out immediately, we get those out the door before we start our day jobs. And then we tend to sync up with our teams during our lunch break. And then after work, even though our team is probably home and eating dinner with their family, we’re catching up on other emails that maybe weren’t as urgent. So we do fit it in around our day jobs, but in the morning is typically when we get the most done.

Theo Hicks: And how are you finding your deals? You mentioned the agents and the wholesalers – are they the ones who are solely sending you your deals? So MLS and then wholesalers?

Dan Perez: Correct. When I started out, I was looking at Redfin I would say 30 to 45 minutes a day. One, just to see what deals are out there. But two, I was practicing my underwriting, trying to get comfortable with the rent rates in certain neighborhoods. Figuring out what the ARV’s might be, because that’s extremely important for using the BRRR method. So for us, looking at Redfin, looking at Zillow, figuring out rent rates and what homes are going for, I felt like it gave me a competitive advantage, because now I can look at a map of Indianapolis or any market that I’m looking at, I can more or less tell you if it’s a good deal or not upfront.

Now of course things can come up in due diligence, but at a high level I can usually run a real within 2 to 5 minutes and say, “Yes, this is one that we at least want to look into.” But after doing this for 6 to 8 months, and I became comfortable with it, my team started pretty much sending me every deal. I no longer have to look at Redfin or really go on any sites. My real estate agent will send me deals that he knows meets our criteria, and then we’ve made good relationships with wholesalers in the Indianapolis market, and now they send us deals that they know we will take down. And I think that that all goes back to we built the relationships upfront, and we say what we’re going to do, we act on it; we don’t drag our feet. If we liked a deal, we say “Yes, this works for us.” And we deliver on it. I think that the Indianapolis wholesalers now respect us for that, and they know that we will take down deals if we say that we want it.

Theo Hicks: But for your first deals, did you have those yourself on Redfin and Zillow?

Dan Perez: Correct. I would say the first 5 or 6  deals I found on Redfin. I sent it to the agent we were working with at that time, saying we’re interested. He helped us draft up the purchase agreement and then we worked with our contractors and our inspectors to get in there, do due diligence. You might need to go back and forth with the seller a little bit, based on new information that became available during the inspection, to get it to a price that now works for you. And then from there we would close on the deal and start the process. But yes, the first couple were deals that I was just looking all over Redfin, Zillow, Trulia, and I reached out to my agent and said, “Can we please draft up an offer?”

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

Dan Perez: I would say my best real estate investing advice would be to stay consistent and take action. I think a lot of people think that taking action only means putting in offers and buying properties, but there are other ways that you can take action. You can really build your team, build your network, you can learn. I know with COVID going on right now sometimes the deals might slow down. So I would say stay consistent, keep underwriting deals, keep learning, and when the right deal pops up, you’ll know that it’s a great deal to take down, and you’ll be ready for it.

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

Dan Perez: Let’s do it.

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

Break: [15:27] -[16:08]

Theo Hicks: Okay Dan. What is the  Best Ever book you’ve recently read?

Dan Perez: Tax-Free Wealth by Tom Wheelwright.

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

Dan Perez: I would figure out what I or my team did wrong, figure out how we can fix it, and I would go right back to doing the same thing I am now, picking up rental properties.

Theo Hicks: What is the Best Ever deal you’ve done? Either in terms of money or something else?

Dan Perez: I would say it was actually one of our first couple of deals. The agent we were working with identified a deal, more or less right up the purchase agreement for us. By the time I got into the office at 9 in the morning, it was in my inbox. I signed it, we had it under contract about an hour later. We were all into the property for $59,000 and it’s renting for $1,025.

Theo Hicks: Something I forgot to ask you earlier… Have you visited the market?

Dan Perez: I have. I’ve been three times and I’m actually flying out in a week.

Theo Hicks: Okay. And then on the other end, tell us about a time that you lost money on a deal. How much you lost and what lessons you learned.

Dan Perez: Fortunately we have not lost money on a deal. But I would say our most unsuccessful deal was a deal that we went into – it was a larger property that we were looking to flip. It was with an agent we were working with in the beginning, that we’re no longer working with. We went into this property as a flip, so we did very nice finishes on this property; it ended up not selling or even getting offers anywhere close to what would work for us. So we actually had to pivot and turn it into a rental property, which we’re not making the rental numbers that we would hope to, but we’re still cash flowing a small amount each month. We will look to either flip it in the future, or figure out another strategy with it. But I would say that that was the deal that went the most in the wrong direction of the deals we’ve done so far.

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

Dan Perez: Speaking to new investors, hands down. I love talking with new investors, helping them underwrite deals, helping them learn the market, helping them build their team… Whatever I can do to help give back. I had a lot of experienced investors that really took me under their wing when I was first starting out, and Kelly and I like to give back by having quick calls or Zoom sessions with newer investors and try to provide as much guidance and knowledge we can to them.

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

Dan Perez: The Best Ever place to reach me would probably be on Instagram. It’s @paperrouteinvestments. I tend to check that pretty frequently. And if people have questions I’m happy to give back to them and help however I can.

Theo Hicks: What types of things do you post on the Instagram page?

Dan Perez: We’re still building it out, but for now, we’ll post our properties that we’ve purchased, the areas that they’re in… Sometimes I’ll post the other interviews that I’ve done with different companies. So we try to post things here and there. I’m still getting better at that; I would say it’s probably one of the weaker parts of our investment journey right now, but in the future we’re going to work to build it out. Maybe post some case studies on BRRR deals that we’ve done, and anything that can provide value to people.

Theo Hicks: Awesome, Dan. Well, thanks for joining us and walking us through your journey of how you were able to build up this rental portfolio while working a full-time job, with your wife of course. So you went over how you’re funding your deals, especially with the HELOC on your home. And then you did that to create a proof of concept with your own money, and then you were able to pitch that to other investors for the rest of your deals.

You mentioned that you didn’t just jump in right away and do deals. Instead, you focused on building the team first, building that foundation, which is what allowed you to scale so quickly. And you mentioned that the best way to find these team members and to pre-qualify them is to reach out to your competitors, other investors, and see who they’ve worked with in the past and if they worked that well, and then ask them why, to make sure that you [unintelligible [00:19:42].29] with them.

You gave us some tips on working with a significant other, which can be really be applied to just business partners in general… Which was making sure you’re segregating the duties, you’re not stepping on each other’s toes, but you’re also not replicating the exact same things; as you mentioned, the breakdown of duties between you and your wife.

You mentioned how you were able to spend time on the business while working a full-time job… So waking up early, working during your lunch hours, and then working at night. And then finding deals upfront, you were finding your deals online, Zillow, Redfin, but you were also looking at those deals to practice underwriting as well. Those were your first 5 deals. And after that your team members, the agents, and the wholesalers you’ve built a relationship with would send you deals, because you were known to not drag your feet and would do what you say you’re going to do.

And then lastly your best ever advice, which was to stay consistent and take action, and realize that action isn’t just putting in offers. Action is learning, action is networking, action is building a team. Those small steps that are ultimately leading you to doing a deal. So Dan, 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.

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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JF2274: Real Estate Branding With Jaren Barnes

Jaren is a full-time real estate investor who previously worked with BiggerPockets in 2014 and he helped grow a wholesale company from 8-12 deals per month to 30. He has now grown a small land flipping business over the last 3 years that he runs fully remote. 

Jaren Barnes  Real Estate Background:

  • Full-time real estate investor and is the Senior Creative Director for RETipster.com 
  • 6 years of investing experience
  • In the past, he has worked with Biggerpockets.com, & helped grow a wholesale company from 8 deals per month to 30.
  • He has created a land flipping business that he runs 100% remote
  • Based in Chicago
  • Say hi to him at: www.retipster.com 
  • Best Ever Book: Best Ever Apartment Syndication Book

Click here for more info on groundbreaker.co

 

Best Ever Tweet:

“I think grit is the 80/20 of success” – Jaren Barnes


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 Jaren Barnes. Jaren how are you doing today?

Jaren Barnes: Man, I’m honored. This is a big deal. I really like you and Joe Fairless’s book Best Ever Apartment Syndication Book. I actually say a lot that it was the best course I’ve ever taken on a subject. So I’m a fan.

Theo Hicks: That’s great. We really appreciate that. And thank you for joining us and I’m looking forward to our conversation. So a little bit about Jaren. He’s a full-time real estate investor, as well as the senior creative director for REtipster.com. He has 6 years of investing experience. In the past, he has worked with BiggerPockets and helped a growing wholesale company from 8 deals to 30 deals per month. He also has a land flipping business that he runs 100% remote. He is based in Chicago and the website is REtipster.com. So Jaren do you mind telling us some more about your background and what you’re focused on today?

Jaren Barnes: Yeah. So I got my start in real estate specifically pre-doorknocking, pre-foreclosures in the San Francisco Bay area. I spent half my life in the San Francisco Bay Area and half of my life in a suburb of Atlanta Georgia, so very different places, very eclectic [unintelligible [00:04:23].25] quite a bit. And when I was in the Bay Area, door knocking, I learned a lot. I got a lot of deals, but was connected with some unethical guys that really didn’t have my best interest at heart, and I actually didn’t get paid at all through that whole process.

But I started a blog called realestatecatalyst.org and I did a review on BiggerPockets; this is back in 2014. And at that time, Josh and Brandon over at BiggerPockets were kind of the only two people working at BiggerPockets. And they had a couple of VA’s and programmers and things, but they were looking to grow their team, so I ended up joining forces with them temporarily. It was a temp situation from the beginning, just to help them transition so they can start building the local team there in Denver. So I did a lot of things over there; I learned a lot about real estate. I was the blog editor, the podcast show notes writer, and all kinds of crazy things for them on there.

And then from there, I obviously was exposed to real estate and knew I wanted to pursue that, and ended up moving to Indianapolis of all places, and connected with a guy named Brett Snodgrass, who runs a company called Simple Wholesaling, and I helped him grow. We had a small team around; at first it was 4 guys, and then it grew to about — I think by the time I left we were around 10. But I helped him grow from doing about 8 to 12 deals a month, to doing 25 to 30 deals a month on average.

And they’re a different wholesale operation than most; we didn’t do any assignments, we took everything [unintelligible [00:05:50].21] the title. Then while there, I wanted to use the skills that I had developed as a disposition manager, and knowing wholesaling, in some capacity that wouldn’t create direct competition to my boss, Brett. Because at that time I thought that I was going to be his right-hand man and I was going to be running with him until the hills come home. So I started looking at similar business models that weren’t directly in houses. So that’s where land came up.

We interviewed a couple of land guys on the Simple Wholesaling podcast, because I was a co-host there, and I ended up connecting with Seth Williams. I was in a mastermind group with him for a number of years… And he let me moonlight his course, the Land Masterclass, for free. So I took it and I gave it a really thorough review as a big thank you, and it radically changed my life.

I ended up within my first three deals making $30,000 in one transaction; it was kind of freak deal that doesn’t happen all the time, that’s definitely an outlier [unintelligible [00:06:46].05] But it changed my life radically. So I was kind of doing land after I had left Simple Wholesaling, and it just kind of made sense for me and Seth to merge, because of my background with BiggerPockets, and doing content stuff and podcasting stuff at Simple Wholesaling. There was a lot of overlap between the needs of somebody kind of replicating themselves in a different person [unintelligible [00:07:07].27] REtipster. So I joined the team, about two years ago actually, in July, which is crazy to think. But I have been working my land business and working at REtipster ever since. So that’s where I’m at today.

Theo Hicks: Thanks for sharing that. So out of those two things, what’s kind of your main focus?

Jaren Barnes: Definitely, senior creative director at REtipster. I do content stuff 8+ hours a day, for sure.

Theo Hicks: Perfect. I want to focus on that, but could you just kind of quickly tell me about this land deal. I know you said that it’s kind of not the normal land deal, but it sounded like it was a pretty important part of your journey. So kind of break down what was so unique about it.

Jaren Barnes: I did direct mail, and I got a call for a property in Southern Indiana that was something like 150 acres. And Brett, surprisingly, even though land was not his niche, had a deal in the pipeline that another wholesaler brought him for another a hundred and some acres. If I remember it correctly, it was like 225 acres total… And I did a showing as we were closing to a timber company, and they said. “Hey, we want to do a package deal for that property with Brett, and then your property, all in one”, so we actually did a double closing. And the stars aligned… And Brett still to this day says he has made more money in that one transaction than he ever has in one single transaction. And it was like this weird fluke; there was a really old realtor that wasn’t online at all, and he was probably pushing his 80’s or 90’s, and he was like, “Yeah, I got this client I’ve been trying to sell it for two years. I represent him, and he just wants to move it, so let’s make it happen.” And the spread per acre wasn’t that much. But when you multiply it by 225, it was huge. So it was just really incredible

And I will tell you, land is pretty amazing and a lot of people don’t understand the land business; they’re like “How can you really make crazy money in land?”, but it’s not unheard of to do deals like that. Seth actually showcased a property where he bought a property for $500 and sold it for $25,000. And that’s on our Youtube channel actually, at REtipster.

Theo Hicks: Perfect. So I kind of want to focus on the creative director, just because a lot of people — especially right now, I’m sure a lot of people are focusing on growing their brand online, but they’re not doing as many deals. So before we decide now what you’re specializing in, what’s the main objective as the creative director? Is it just pumping out content, is it driving people to certain actions, is it increasing the website traffic, or is it all those things? What’s the main objective that you’re supposed to accomplish?

Jaren Barnes: My main objective is to be a second origin source of content. So I review courses… I’m literally in a triplex right now that we recently just bought, and I’m house hacking. So I did a huge article about a year and a half ago where I interviewed different ways to house hack, that not a lot of people to talk about… And now that I actually lived it out and I decided what I was going to do, I’m going to update that blog post with my life, and it’ll be like a drone aerial shot of my house, and do a whole thing. I do a lot of video stuff. I do a lot of work on product development. I also am the main contact. Seth doesn’t do any of the coaching at all at REtipsters, so if you apply for our land coaching program, I’m the head coach there. So I work with all of our coaching clients.

Theo Hicks: So you just write content and then someone else is focused on converting people from that content? Or do you do that, too?

Jaren Barnes: I do some of that, but to be honest, something that’s really impressive about REtipster is it’s grown to what it is — I think last time I checked we had somewhere around 150,000 people coming to the website per month… And it grew organically. And we get the majority of our traffic from organic search. Now, I don’t think that in today’s environment you can really start without paid advertising and get there, but Seth started at the right time, and that’s where we’re at today. So, I’m actually being trained by a Facebook guy right now to learn a bunch of stuff about how to start supporting our growth efforts through paid strategies, but we are still very green on that. Most of our traffic just comes from people knowing who we are, and ranking, and re-listing URLs back to our site.

Theo Hicks: So how frequently are you posting content? Is it every week, every two weeks, every month?

Jaren Barnes: It’s a little bit different. So we have probably a content piece that comes out every day, but  we have a blog post that comes out — I believe it’s every other week, and then every Tuesday we have a podcast, and we are probably going to switch back potentially to… We’re testing out doing it weekly. For a long time, we’ve done a podcast that came out every other week, and we’re testing the waters… We’re still on the fence as to whether we’re going to stay weekly or not. But that’s coming out on Tuesdays… And then we have a lot of videos that come out randomly… So we could have 3 to 5 videos come out a week, or we might have one video come out on Youtube a week. It just kind of depends. Youtube is more of a support to giving tutorials on our written content, so our main driver is blogging; that’s the cornerstone of who we are.

Theo Hicks: So you’ve said that it starts with a blog, and then from the blog you’ll do daily social media post, as well as creating video content based off of that. But the blog is kind of like the starting point.

Jaren Barnes: Yep. 100%.

Theo Hicks: You said the blog is every week, right? Or every two weeks?

Jaren Barnes: I believe it’s every two weeks, unless something comes up.

Theo Hicks: So you’re doing longer blog posts, I’m assuming then, right? Even the short 600 words, usually how long are they?

Jaren Barnes: Probably on average is about 2,000 words per article, but it can range. Really, the objective is not to hit a certain word count, it’s to thoroughly explain the concept. So a lot of the stuff that we’re working on right now is defining a lot of terms, we have a whole terms directory that we’re flushing out… But if it’s not terms oriented, we really take a subject or a course or something that is extremely helpful, and we break it down to where anybody can understand it. So a lot of our blog posts could be paid content. It’s to that degree that we giveaway value.

Theo Hicks: So maybe walk us through — maybe not the blog post you’re doing on the house hacking, just because I’m sure a lot of people aren’t going to replicate doing something like that and then writing a blog post on it… But maybe give us a recent blog post that you wrote that was long, that was very in-depth, and then explain to us the process for writing that. How does it start? Do I have a topic, and then there is an outline, and then research, and then writing? Tell me about your process.

Jaren Barnes: Yeah. So really it always starts with the overarching question of “What’s the pain point?” Where is something that people need really clear directions on, or a really confusing concept like assignments, for example? I made an assignment video – it was a voice-over video animation, and it has I think last time I checked it was over 10,000 views on Youtube. And we take a concept like that, that for somebody just getting started in real estate can be really confusing to understand, and then they hear things like “It might be illegal… Is it not illegal?”, and what’s going on with it. So we take a  complicated subject like that… And I take the elephant essentially and then I break it down into the puzzle pieces. And then I have each puzzle piece explained thoroughly, so that it leads to the overarching goal of understanding assignments, or whatever the objective is.

But at a high level, the way you come up with really high-value content, I feel like, is taking the complicated and then making it simplistic. And the best way to do that is to break it down into baby steps. And even when it comes to goals and other things, too – that’s really a crucial key to being able to write things or to create things of value, and business plans, or action steps within your businesses – it’s to take something, “Okay, I want to make X amount of dollars,” big, hairy, audacious goal, and then break it down into literally like, I pick up a pen, and then I write, and then I do this. Really bringing it down to a very simple level… Which, again, your guys’ book, the Best Ever Syndication Book did a fantastic job. I review a lot of courses, and I mean that full sincerity, it lives up to its name. You guys did a phenomenal job with that.

Theo Hicks: I really appreciate that, and thanks for saying that, because that was a lot of work to put it together, as I’m sure you know from doing this for a job. So I understand the first part obviously, but do you go one by one, where you’ll pick one concept, and then you’ll knock that out of the park, post it, and then you’ll think of the other one? Or are you kind of planning ahead and saying, “Here’s one massive, complicated subject. I want to write ten blog post on this. So for twenty weeks, I know exactly what I’m going to write about.” Or is it every two weeks you’re coming up with something new?

Jaren Barnes: Because I actually do real estate — there’s kind of two ways to approach it, and I’ll get into it in a  second… But normally, it’s what am I learning in my real estate game? I’m pursuing apartment syndications and I’m trying to figure out the apartment game. So there’s going to be tons of content, because I have fresh eyes as a complete beginner in that space to run into the things that are extremely complicated, that are not explained well. And I can take notes as I learn, and overcome those obstacles, and then turn around and share that with the audience at REtipster. So that’s a lot of it, is just practical cases; I’m actually doing the stuff, and I learned, “Okay, this voicemail system that used to be great doesn’t work anymore. They increase their prices and they’re a terrible option now.”

Another great example is I wrote an article on Traveling Mailbox, which is a virtual mailbox system where people can send you letters to a physical address, but then they scan it and email it to you. So you can be anywhere in the world, as long as you have an internet connection you can have access to your mail. And that’s huge for somebody like me and other people who do land remote. Most of the guys do land remote; they don’t do it in their backyard, they do it in hotbed markets like Colorado, Florida, Arizona, etc. So to have those kinds of system set up is extremely helpful.

So I go and I figure out how to optimize my business and solve my own problems and then turn around and share that.

However, think if you were starting fresh today and really trying to grow content today, I think keyword research is extremely important, because you can use something like ahrefs.com and you can look at different keywords, or even hire a VA on Upwork who specializes in SEO research and say, “What are people searching for that doesn’t have a lot of actual content?” And you can find that sweet spot. It’s hard to find now, because things are going more and more noisy every single day… But there are subject matters that have a high search volume, but don’t have content that’s actually meeting that in a really high form. So you could start targeting those things if you really wanted to grow in scale.

It depends on how you want to grow a brand. At the end of the day, do you need to be the biggest guy out there? Or do you just need to be a big fish in a small pond in your market and in your niche? If that’s the case, if you just find things that are extremely helpful, even if 500 people watch it… Another perfect example is within Facebook marketing – this is a great example of creating good content. So Facebook has a backend called Business Manager; that’s where you run Facebook ads and things. They had an update recently and it’s been a couple of months since I’ve been in there, and I could not for the life of me figure out where to find my Facebook pixel, for an existing Facebook pixel. I couldn’t find the pixel code. I spent hours and hours and hours trying to find it. I called friends… And you know, it was really frustrating.

So once I found the solution, I created a three-minute video and I said, “Hey, just so that this is somewhere out there on the internet for somebody, I’ve found this. This is the solution.” And I only have probably 10 views on it or something, but I have four comments of people like, “Oh my goodness, thank you so much for finding the solution, this was amazing to find.” And that’s the perfect example.

If I was in Facebook marketing, like that was my thing, I would be answering those kinds of questions all day long, because that’s what people need. People use the internet outside of entertainment; for our space people use it to find solutions to problems, so that’s why you have to provide.

Theo Hicks: Okay Jaren, what is your best real estate investing advice ever? Or since we’ve been talking about marketing and branding, what’s your best branding advice ever? You can take it either way you want.

Jaren Barnes:  I think the answer is actually probably the same for both. It’s more of a mindset thing than anything. I think grit is the 80/20 of success. I think that at the end of the day a lot of what success looks like behind closed doors is banging your head against the wall until something works.

And a lot of people don’t like that, because it doesn’t sell well from a stage… But that’s the reality; if you want to get to the other side of success or the other side of greatness, it’s going to take a lot of blunt force, it’s going to take a lot of, “I don’t want to do this, but I’m going to do it anyway”, showing up and getting busy.

For a long time growing up as a kid, I always shied away from the hard stuff. I still to this day don’t understand working out. Why would anybody voluntarily go and get all sweaty and hot and bothered? It doesn’t make any sense. But it’s on the other side of that consistently that you reach what you want; you want to be in shape, you want to carry yourself in a way that’s influential, etc. So if there is one thing I could give to the world, it would be work ethic and grit.

Theo Hicks: That’s a really, really solid advice. Alright Jaren, are you ready for the Best Ever lightning round?

Jaren Barnes: Yeah. Let’s do it.

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

Break: [20:29][21:09]

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

Jaren Barnes: I’m going to say the Best Ever Apartment Syndication Book. Honestly, I can’t say enough about that book; I went through some courses and I really read through a lot of stuff, and that hands-down is the most like taking a super complicated subject and be like, “Okay, for market research do this; go to this website, and go here.” You guys did a phenomenal job.

Theo Hicks: Thank you.

Jaren Barnes: Definitely.

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

Jaren Barnes: Which business? Real estate? Or if I was let go from REtipster?

Theo Hicks: I’ll say both. What happens if both collapsed at the exact same time?

Jaren Barnes: At the exact same time? I’m probably going to go become a contractor.

Theo Hicks: A contractor?

Jaren Barnes: Yeah. I’ve been in about how to swing a hammer. I was super intimidated by the whole concept for a long time, but with this particular triplex I actually learned quite a bit. And it’s interesting when you have skillsets that are related to your hands – you’ll never go hungry, because if you don’t have any money, you can literally go door knocking like, “Hey, is there something I can fix for you? Is there something I can do?” That, or become a truck driver. In America truck driving, you can make some crazy money.

Theo Hicks: Yeah. That’s a good point.

Jaren Barnes: I would do that until I could start real estate again.

Theo Hicks: Tell us about the best deal you’ve done.

Jaren Barnes: Oh, man…

Theo Hicks: Besides that land deal you already told us about. A different one.

Jaren Barnes: So, let me think here… I have one right now that I think is going to be my best deal ever, but I haven’t done it yet so you don’t want to talk about that one.

Theo Hicks: Or we can talk about that one if you want to, it’s up to you.

Jaren Barnes: Probably the closest one was I bought a property, a land deal for $2,000 and I sold it for $18,000; that one was pretty nice. But that was just another outlier. I did blind offer direct mail campaign and he just didn’t want it; he inherited it. It was in Florida, he lived somewhere in New England, and he was like, “Yeah, let’s do it. I just want to get rid of it.” So I gave him $2,000, and with the closing costs it was like $2,500. And then I sold it I think like 2 months later. I think we lease it for 25k and we sold it for 18.

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

Jaren Barnes: Probably jaren@ibuyland.org. That’s my personal email. I got a lot of things in the fire. I’m actually working with a passion project, teaching people how to implement profit first in their real estate business, and stuff… And REtipster, and I’ve got real estate stuff… So if you want to reach out to me and learn more about what I got personally going on, I would say jaren@ibuyland.org, or jaren@retipster.com, you can use that as well.

Theo Hicks: Perfect, Jaren. Thanks for joining us today and sharing your tips for how to grow a brand, how to grow a blog. Really what your process is you basically do things, you investigate apartment syndications, or something that you don’t really know anything about, something that’s very new, and being a newbie at it, you’re going to come across things that you yourself have a hard time doing, or you’re unclear on, and it doesn’t make sense… And you assume that other people who are also new at it and are getting into this are going to have the same issues, so you do it. You figure out what works, what doesn’t work, and then you simplify that, and then you repeat the process over and over and over again. And it was kind of what you’re focused on now.

Obviously, the other way would be to do the keyword based research, where as you mentioned, you hire someone to do it for you… But really, it comes down to identifying pain points, and the best way to do that is to do things, to investigate things and see what is actually hard for you, and then talk about your journey.

You gave us plenty of examples of that, with the house hacking, through land, and then you talk also about how once you’ve written that blog post, you were able to use that information to post different various things on social media, as well as create different Youtube videos. And again, you gave a lot of examples on that.

So you can have one piece of content and multiplying it into multiple pieces of content to kind of cover the same topic on different channels. You went over a lot of examples and even into more details on that, but that’s really what it comes down to. So thank you for sharing your process with us. Everyone, make sure that if you want to grow a brand or grow a blog, this is the way to do it. So thanks again for joining us. Thank you again for your kind words about our book, I really appreciate that. Best  Ever listeners, as always, 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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JF2273: Generating Revenue & Traffic From Online Stores With Joe & Mike Brusca #SkillsetSunday

Joe and Mike Brusca are brothers who got started in online business selling on amazon and slowly started to grow into more online eCommerce stores, blog sites, publishing fiction books online, and recently investing cash flow into buying and selling land too.

Joe and Mike Brusca  Real Estate Background: 

  • Founders of Build Assets Online
  • Experience building 7-figure revenue generating stores online without a location
  • Based in New Jersey
  • Say hi to them on their www.BuildAssetsOnline.com 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Have content to build value and trust before offering an opt-in to increase conversions” – Joe & Mike Brusca


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 Joe and Mike Brusca. Joe and Mike, how are you doing today?

Joe Brusca: Hi Theo, how are you?

Mike Brusca: Thanks for having us.

Theo Hicks: I’m doing good. And thanks for joining us, looking forward to our conversation. So today is Sunday, which means it’s Skillset Sunday, where we talk about a specific skill that can help you grow your real estate business. And today we’re going to be talking about driving traffic to your website. So before we dive into that conversation let’s go over their background. They are the founders of Build Assets Online. They have experience building 7-figure revenue generating stores online without a location. They’re both based in New Jersey, and you can say hi to them at their website, which is buildassetsonline.com. So do you guys mind telling us a little bit about your background and what you’re focused on today?.

Joe Brusca: Yes. So we got started in online business, just some basic selling on Amazon back in 2014. Then we started doing publishing on Amazon. And basically, what it evolved into is us owning and operating a portfolio of online websites that generate income. So among these websites are e-commerce stores where we have partnerships with brands and dealers around the US, and we’re basically a retailer for their products; we have blog sites where people will google something, they’ll google “how to remove a stain from a carpet” and then they’ll land on our site, and then we’ll show ads and we’ll make money that way. We’ll also make money through showing some affiliate products on sites like that. We also make money publishing fiction books online… So it’s really a whole slew of things.

Recently, we started re-investing a lot of that cashflow that we were generating from these online businesses into buying and selling land, and I would say we are still relatively new at that, but we can speak a lot about to our experiences online driving traffic in so many different ways, and kind of different scenarios in regards to what’s appropriate for what, if that makes sense.

Theo Hicks: Absolutely. I think before we talk about actually driving traffic to websites, we should probably talk about the website itself. So maybe you’ll tell us what are some of the most important components that someone who wants to get people to actually come to the website needs to have first, before they start focusing on the variety of ways to get people there.

Mike Brusca: I would say it would certainly depend on whatever your goal is. So if it is a situation where you would want someone to make a purchase on your website, of course, you’ll want to be using a platform that would be conducive for that – Shopify or WooCommerce – and have certain elements to, say, get a deposit or something of that nature. If you’re just working to generate leads, of course, that’s a different situation. Or if you’re working to just get people in the door to give them information and have that lead to a particular action, that would be separate. But what I’m getting at is you want to think about the end goal first. So whether it’s lead generation, an actual purchase, or just serving them content in order to market to them again later, then those will be 3 very specific goals and what you would do would depend on that.

Theo Hicks: Okay, so from a real estate perspective it’s most likely going to be the first and the last. So, generate leads and then to provide content. So maybe let’s start by talking about the generating leads one first, and then we talk about the provide content. So If I want to generate leads to my website, what do I need to do on my website?

Joe Brusca: Well, most obviously, you need a place for them to input their information, to sign up to become a lead. So when you’re thinking about driving your traffic, say you were driving your traffic to content – which we can get into – say you had a blog post… You’ll want to have a lead form or a link to your lead form, somewhere woven into that blog post.

Or if you’re just traffic to a certain page, say you have a product listing on that page, you can have a page to sign up for the newsletter or something like that, some incentive for them to sign up to become an actual lead. That’s really the first thing you need in place if you’re going to collect a lead. So I’m just speaking to this as if someone is a total beginner at online marketing. To do that, you need to have an autoresponder; we use an autoresponder called AWEber and it’s basically just a platform that allows you to collect emails and send emails, and you can collect other information as well, such as phone numbers and things like that. And there are tons of other software that you can use if you’re going to be doing like phone leads and stuff like that. But as our businesses is right now, we would like to focus on emails.

If you do want to do phone leads, you can use things like Google tag manager, where you can actually define actions. So say your goal for someone landing on your website is to get a call. You can use Google tag manager – and this might be a little bit advanced, but you can have your tech guy do it – to where if someone is on your website and say they’re on a mobile device and they tap the phone number, which is going to prompt their phone to call, and that’s something you can track as an action in your google analytics via a Google tag manager. So like Mike said, once you define the goal, there’s usually a pretty easy solution to do it.

Theo Hicks: I’m curious about your thoughts on this… So I see some websites that have a home page and then ten different tabs you can navigate to, and I see some websites where it’s just one page and it’s like the blog page, and there really aren’t other pages on that website besides that main page. And there’s obviously anywhere in between. Which end of the spectrum do you think is better? I’m sure it depends on what your goal is, but as for the purpose of generating leads, what’s the best format? Do you want to have a bunch of tabs, an About Us tab, the blog tab, the podcast tab, Contact tab, or is it better to just have everything on one page?

Mike Brusca: I think sometimes people can do too many things and get almost flustered by trying to do a million things at once. Honestly, if you see a website that is essentially one page with a Contact form, you can be almost positive that they’re driving traffic through some sort of paid means; so whether that is Google ads or Facebook ads or what have you… They’re using those external sources to get the traffic in and onto that page, and that way it’s super simple for someone to sign up. That’s the only action they can take, is to sign up.

But on the other hand, if you have a website and it’s filled with multiple pieces of content, those pieces of content can generate organic traffic just through ranking in google, or getting traffic from social media, what have you… But you can also amplify those pieces of content in order to get people onto your website, sort of nurture them in the sense of building trust so that they understand you know what you’re talking about, and they can learn more about you, and then they can choose to sign up themselves. So each way has their pros and cons. Joe and I specifically prefer to do it the content route, and there are a few different reasons for that we can get into.

Theo Hicks: Okay. [unintelligible [00:10:19].00] having the multiple pages on?

Joe Brusca: Yeah. When you say multiple pages, again, it’s going to come back to the goal of your website. So I’ll just give you an example; on our land site we do have multiple pages, because we sell multiple pieces of land. So if someone is browsing, say they’re looking to buy land in California, we want them to clearly be able to see all of the properties that we’re selling.

Let’s take a step back for a second. What Mike is saying with the content is that having content builds trust in the audience. Say you are trying to drive paid traffic off Facebook, and you just send to a form where they fill in their email address, and their name, and their phone number. Someone might not do that on their first go around. Some people might, but some people might not. But a more sustainable route is to actually target them with content. What do I mean by that? So say you are renting vacation rentals in Ocean City, New Jersey. You can have an article talking about breaking down the different costs of what it costs to rent in Ocean City, New Jersey, and what you can expect to get in a given price range.

Now, if you drive somebody to your website to that article, kind of like “No strings attached, just here’s the information” and then you have a gentle reminder at the bottom of the article “Hey, become a lead. Sign up for my email list to get notified on properties become available”, some people are more receptive to that than just wanting to get the latest updates on “When new vacation rentals become available, sign up here.” Some people are going to far more receptive to seeing the content first and then getting asked to sign up.

And using the different technologies that are available online — so if someone lands on your content page and you have your Facebook pixel installed, I’m sure all your listeners have seen themselves get re-targeted around the web if you’re looking up dog biscuits or something, and then all of a sudden your web browser is filled with ads for dog biscuits; you can actually do the same thing; so you can target people that have read your article on prices for vacation rentals and what you’re going to get. You can target them to become a lead later down the line, and they’re more likely to do that, because it’s not like a cold audience anymore; it’s a much warmer audience, because it’s the second or third time they are engaging with your website.

Theo Hicks: I see. [unintelligible [00:12:33].00] the last part… So if I write an article — let’s say I want to rent in Chicago. I read an article about all the different places you can rent in Chicago, different prices, different amenities around the area. In the bottom, I’ve got my old lead capture form and they don’t sign up – essentially, if I then have paid advertising, then since they looked at my article, then if they’re on Amazon or something, a little ads pops up and it might potentially be an ad to my company?

Mike Brusca: Not necessarily Amazon, but yes.

Theo Hicks: Okay, some other website, I’m sorry. I just used Amazon as an example.

Mike Brusca: Yeah. You can capture that – pixel, it’s called. So they’ll have that as they browse around, going to Facebook, search other things, etc. So you can use that audience to — say you have a thousand people visit your site and they get pixeled, you have this thousand-person audience. And by targeting those people specifically, you can afford to bid more, because you know that they’re interested; they’ve been on your website, they’ve read your content, they may know who you are already… And it’s a lot warmer with an audience, just like Joe was saying. It’s not like you are spending money on getting people on the door and then they leave because they don’t know who you are and you never speak to them again.

Theo Hicks: Something said earlier about your blog site, so that you’ll have something like how to remove a stain from your floor, right? So in a blog post like that, what would be the lead capture at the bottom? Do you sell cleaner products? Is that what that would be for?

Joe Brusca: In a business like that we might not have an end goal. So we might just be driving traffic from organic search on Google, just to show them ads.

Theo Hicks: Oh. Okay.

Joe Brusca: That’s where we get paid showing ads. But that’s just one example of a business model that we do. So on our eCommerce stores, we can serve them similar content, something about different types of kitchen islands you can buy, and then they’ll get a pop up saying “If you want a discount,  make your first purchase with us.” So that’s an example of a more goal-oriented thing. With online marketing, this might not be that relevant to the audience listening, but as I was trying to say before, it is goal-oriented, and sometimes the goal is just as simple enough as showing someone an ad.

And to kind of loop it all back together, if you are doing advertising online, it’s those types of sites, like the stain example – that’s exactly where your ad might show up if you are re-targeting on Google. So if someone landed on your page about rental properties and then you are re-targeting them with the Google display network, your ad could come up on those websites that are just serving ads. And then they can click and then sign up and become a lead for you then.

Theo Hicks: And the actual software that you use is called Google Display Networks? Is that how you re-target people? Even pixels?

Mike Brusca: You would do that within Google Ads. The Display Network, it would be during a display campaign inside of Google ads.

Theo Hicks: Do you guys do Google ads yourself? Or do you have someone do it for you?

Mike Brusca: We do Google Ads ourselves. And for what we do, it’s like one of the most important functions of our business, is driving the traffic. And I would honestly recommend to anyone, if they want some sort of paid traffic presence online, that they should learn some of it, at least starting out… Because no one is going to understand your business as much as you do. And to just let someone in the door, and say “Hey you know what you’re doing, can you just run my ads?” They’re probably not going to produce a good result for you, and you’re going to waste a lot of money.

It’s not that people out there that run agencies and stuff like that, they don’t know what they’re doing; they actually understand ad platforms very well. But it comes down to again, understanding your business, how much things are worth to you… So if you can’t communicate that easily to an agency, then you’re better off learning it yourself.

Theo Hicks: So if someone is coming to that website and I do a Google ad, is there like a filter I can use? Like I want to only target people on, let’s say, the blog website that you use specifically to list ads on, right? So if there’s something like a function in Google ads, where I can say “Okay, well I want anyone who has been to my website to see this ad when they go to your blog about cleaning your floors.” Is that how simple it is? Or is it a little bit more complicated than that?

Mike Brusca: They would see the ads across any website that has Adsense enabled. So it’s not like they would only see those ads if they go to your cleaning site. They would see it basically anywhere on the internet, because the majority of content sites–

Theo Hicks: Yeah. I understand that. I was asking about setting it up in the first place. Is  it as simple aslike just  a button I can click in Google ads that says “I want to target people who have been to my website.”

Joe Brusca: Yeah.

Mike Brusca: So you would set up what’s called the Global Site Tag, and you can just Google that and it will give you instructions on how you do that within your account. So the Global Site Tag is what pixels, the people on the site — so they visit the website, they get pixeled, and then the number will build in your audience. So you can create an audience on Google very easily that just says, “Visitors in the last 180 days”, and that number will grow as people continue to visit the site. So long story short, if you want to target those people, you will just go to audiences inside your campaign and just select an audience to target.

Theo Hicks: Perfect. So it’s called the Global Site Tag.

Joe Brusca: Just to be clear, If you want to do this on Facebook and Instagram as well, it’s a separate tag. It’s actually called the Facebook pixel. And just like the Google Global Site Tag, it’s a little piece of code that you just paste into the backend of your website. And once it’s on your website, your audience will build on Facebook. And then Facebook will track the same way Google can track what pages they have been to, and all that. And it all happens within their browser using cookies.

Theo Hicks: Now let’s talk about the actual content. Let’s start to focus on your land one. So you want to send you people to your land websites, and you’re doing this to your content; what types of blog posts are you writing about to get people to come to your land page eventually?

Mike Brusca: So for that, we don’t necessarily use content, because it’s not going to be the quickest and easiest route to getting customers. For the land situation, we almost treat it as an eCommerce product; so people can go on our website, they can place a deposit, and essentially we’re selling this all online. And then once they deposit, we’ll handle all the logistics of transferring the deed, and stuff like that.

So really the quickest way for us to do it would be we, we’ll list ourselves on the MLS just through any sort of flat rate MLS service. Put it on Craig’s list, Facebook, Marketplace, and we’ve also done YouTube ads for the property. So we’ll get nice pictures, drone footage etc. make a video for it. And then you can target people in that particular radius with that video on Youtube, and you can even narrow down — say if it’s a property on a lake, you can narrow down the people that are interested in lakeside activities, like fishing, kayaking, etc. So they’ll see that ad as they’re on Youtube, and that would funnel them on the website to check out the product, and then they’ll be pixeled, and then you can re-target them.

Theo Hicks: I see. So what type of products do you write the blog post for then usually?

Joe Brusca: It’s not to say that we would never write blog posts for land stuff, but it’s really important to be tactical and think about when you want to do it… Because it’s a long term strategy. Because ranking in Google does take a little bit of a long time. So with the land stuff right now we’re kind of experimenting with multiple different locations, multiple different states… But the time to start producing content, where you want to rank in Google and do the blog thing, is when you know that okay, this is the particular customer I’m serving, I’m serving this particular area, and it’s more like a repeatable fashion.

So again, it comes down to defining your goals and understanding the traffic method and how the traffic method works. Producing content takes a long time, and it takes a long time to rank in Google. So it’s not worth doing just for no reason; you have to know that you have a business in that space and that the content is going to meet the goal of that business.

So yeah, we create content for our eCommerce stores because they’re well established and we know the type of customer we want to bring in, we know what the type of customer is going to be searching, because we know that from our paid advertising. Because when we do paid advertising on Google, we can see someone who lands on our site – they might be searching for “green kitchen island”, and we know, okay if we have an article about 25 different types of green kitchen islands, that’s a good article that would bring us the customer that we are looking for.

So in terms of the land thing for us, we’re not quite at the content stage yet. But that doesn’t mean that any of your listeners won’t be at that stage. It just comes down to do they have an established business in an area that they want to try and increase their market share in.

Theo Hicks: So you’re saying that you can determine the type of content to produce based off of the people who are clicking on your paid advertisement? Is that what you’re saying?

Mike Brusca: Yeah, for sure.

Theo Hicks: Alright, well is there anything else you guys want to mention as it relates to driving traffic to websites or any other call to action you guys have before we wrap up?

Mike Brusca: Well, one last thing for driving traffic to your website… I would say anyone, if they have not done this, they should make a Google My Business listing. That would certainly help them with whatever they are doing that’s real estate related… Because when people search your name and your website, and even whatever you’re offering to some degree, it will give you extra exposure, and it will help you take up extra search engine real estate. Google My Business, very important.

Theo Hicks: Alright. Anything else I failed to mention? Like a call to action, or where people can go and learn more about you?

Mike Brusca: Yeah. If you want to learn more about what we do, how to drive traffic to a website, and all that, you can check us out on buildassetsonline.com

Theo Hicks: Perfect. Joe and Mike, I really appreciate you guys coming on the show. I’m sure it’s probably clear that I don’t know much about driving traffic to websites, or at least not the specifics about it… So I’m going to try my best kind of summarize at least some of my main takeaways.

The pixeling people – I thought it was interesting. So you said that you can create a global site tag to pixel people that have been to your website and then you can re-target them with Google Ads. And there’s something similar but different that you can do for Facebook as well. And what I got is that everything is very dependent on what you’re trying to do, what your goal is, who your customer is, what area are you trying to focus on… So those are all things that you need to determine first before you decide which is going to be the best way to direct traffic to your website – whether it be paid advertising, whether it be doing content.

I thought it was interesting when you guys mentioned how one of your businesses is literally just doing blog posts and then putting ads on there. I knew it existed, but that’s just interesting to me. And then all of the things that you’re doing online.

We also talked about some of the differences, the pros and cons of having a website that’s just one page as opposed to having multiple pages. We talked about if someone just has one page on their website, they’re probably focusing more on Facebook advertising or other external advertising and it’s sending people to that particular page… Whereas multiple pages allow you to generate more traffic organically, plus you can then use that content to target people, it helps you develop trust.

So I think this is going to be an episode that’s going to be worth a re-listen, especially for me. You guys went over a lot, so I appreciate that. Best Ever listeners, as always, thank you for listening. Have a Best Ever Day and we’ll talk to you tomorrow.

Mike Brusca: Thanks.

Joe Brusca: Bye, Theo.

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JF2272: Experience Gives Perspective With Arn Cenedella

Arn Cenedella started his real estate career in the 1980s after graduating from the University of Michigan. During this time he invested locally and remotely in Charlottesville, VA and Austin, TX. After 36 years as a broker, he decided to leave Silicon Valley and head to Greenville, SC with his girlfriend in November of 2014. He now has 8 rental properties, 3 subdivisions, 2 condo conversions, and 3 residential lots permitted for single-family development. 

Arn Cenedella Real Estate Background:

  • Full-time real estate investor
  • 34 years of real estate investing experience
  • Portfolio consist of 8 rental properties total 13 doors, 3 residential lots, 15 completed flips, 3 subdivisions, 2 condo conversions, and 4 passive investments
  • Based in Greenville, SC
  • Say hi to him at: www.investwithspark.com  
  • Best Ever Book: Building a Story Brand by Don Miller

Click here for more info on groundbreaker.co

Best Ever Tweet:

“I believe if you approach real estate with a long term perspective, you can ride out the inevitable ups and downs of economics” – Arn Cenedella


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’ll be speaking with Arn Cenedella. Arn, how are you doing today?

Arn Cenedella: I am doing great, Theo. Glad to be here and pleased to have the opportunity to talk to your Best Ever audience.

Theo Hicks: Absolutel,y and thank you for joining us. Before we hop into that conversation, a little bit about Arn’s background. He’s a full-time real estate investor with 34 years of experience. His portfolio consists of 8 rental properties (13 doors), 3 residential lots, 15 flips, 3 subdivisions, 2 condo conversions, and 4 passive investments. So he has done it all. He is based in Greenville, South Carolina, and his website is investwithspark.com. So Arn, do you mind telling us some more about your background and what you’re focused on today?

Arn Cenedella: Sure, I’d be happy to. So like many of your listeners, I went to college, I planned to become a scientist or an educator, got a master’s degree in chemistry from the University of Michigan, but then I went into the real estate business back in 1978. So I had the good fortune to grow up on the San Francisco Peninsula, basically above Silicon Valley, and went to work for my father who was a great mentor, taught me the brokerage business as well as the investing aspect of real estate… And I had the good fortune to work there for 35-40 years in probably one of the best real estate markets in the world.

Theo Hicks: So you have seen a lot of market cycle ups and downs, so I think maybe a good place to start would be how do you see what’s going on right now, since we’re recording this on August 19th… So how do you compare what’s going on right now to previous recessions? And maybe kind of talk to us about the mindset you have after experiencing a lot of these recessions, as opposed to someone who just started investing in real estate in 2009 or 2010 and has only experienced growth, and hasn’t seen the other side?

Arn Cenedella: That’s a great question and hopefully I can help your listeners feel okay about what’s going on. So certainly, COVID is something new to me. I think it’s new to all of us. But I can tell you, I bought my first house in 1980 and paid 11 and 3 quarters percent on my mortgage. And I was happy to get 11 and 3 quarters; it seems like a lot today, but 6 months later rates were up to about 16%. Been through the dotcom boom, through the dotcom bust, various cycles, Resolution Trust… Not many people remember the S&L crisis, I believe, in the early 1990s.

So there have been various cycles, and in general, I’m an optimistic person and I believe if you approach real estate from a long-term perspective, you can ride out the inevitable ups and downs of economics and just what happening in the world. So I’m optimistic about the future, I’m continuing to invest. Fortunately, my rentals have done well on collections and have had no issues there, and I think by and large from what I understand, rent collations on most residential multifamily properties has remained pretty good, even though the COVID issue.

Theo Hicks: So kind of three options – you either don’t do anything, you don’t buy, you don’t sell, you just chill. The other option is to sell something or all of it. And the other option is to buy. So based off of your experience again with these previous real estate cycles, what are you doing and what would be your advice to people?

Ard Cenedella: So first of all I would say, “don’t panic”, that will be rule number one. And I think hunkering down, getting a read on what’s going on is good, but I also believe that there are always opportunities to buy and sell, depending on your particular situation. I would say if you’re in good real estate investments, cash-flowing, you’re properly capitalized, you can ride out the downtimes while still be looking for opportunities. Right now, what I’m doing is I’ve started to transition my actively managed rental portfolio into passive investments. So over the last 6 months I’ve probably made 4 passive investments in multifamily syndications, primarily in the Southeast, but also elsewhere in the United States. And I generally sold one of my rentals and made a passive investments. So I think there are opportunities to transition one’s portfolio at any time, and I think it’s just a matter of keeping your wits about you and evaluating and making good decisions.

Theo Hicks: Before I ask you about the passive, you’ve mentioned something about– you said if you approach real state from a long-term perspective, then you’re going to be able to ride out the ups and downs. You kind of mentioned cash flowing and being properly capitalized… Is that what you mean? …that you buy properties for cash flow and don’t be over-leveraged. Is that what you mean by long term?

Arn Cenedella: Well, what I would believe is if you invest in real estate and you have a long-term perspective, which is 5 to 10 years, I would say the overwhelming majority at the time those investments will prove to be a positive factor in your life. Certainly, you don’t want to get over-leveraged, because if you are in a situation where you’re over-leveraged, you may be put in the situation where you have to sell when the market is not ideal, and I believe people can get themselves in trouble that way. But if you have good, solid properties, properly leveraged, that are paying for themselves, then yes, time is on your side and you can just ride out the down cycle.

Theo Hicks: So as I mentioned in the intro, you’ve got your active investments, but you also have passive investments. You said that you made 4 passive investments recently. So is this something that you’re doing because you just don’t want to be an active investor anymore, or you’re doing it because you think that’s it’s a better use of money being invested passively in this larger apartment syndications, as opposed to doing your own deals?

Arn Cenedella: It’s a great question, and I would say it’s a combination of both. I’m 65 years old now, and I do not want to be as involved in the day to day management of the property. There are a lot of things I want to do. I have several passions that I enjoy. I’ve loved actively managing my real estate portfolios over the last 30 years. But I’m just at a point in my life where I want less day-to-day responsibility.

So I think freeing up my time is one part of the answer. The other part is – generally coming from the San Francisco Bay area, most of my investments have been more in appreciation markets than cash flow markets. And in looking at my return on my equity on a cash flow basis, it is lower than what I can achieve through the multi-family syndications. So my purpose of transitioning my portfolio is to free up my time and also increase my cash flow. So those are the two main things. And I’d like to help other investors who have a similar history to me. I’d like to help them perhaps consider transitioning into more passive multi-family investments.

Theo Hicks: Are you able to do these passive investments? Because you said that you sold a property. Is that a 1031, that is the passive investment? Is that kind of like your strategy?

Arn Cenedella: It’s pretty difficult to 1031 into a passive investment, so I have to pay Uncle Sam a little bit of money. But we pay Uncle Sam on every dollar we ever make, and real estate gets taxed less than our typical ordinary income. The other thing that will help me is most of these syndications I’ve invested in have a large first year– I believe it will be called bonus depreciation… Where in the first year I’ll receive a K-1 with a relatively sizeable tax clause. Since I am considered an active real estate professional, I’m able to apply that passive laws against any other income. So in my particular situation, I’m hoping the bonus depreciation, which by the way expires I believe in a year or two, will be used to offset some or most of my capital gain. Yes.

Theo Hicks: I just interviewed someone – he’s a GP, and he had a deal under contract before the COVID outbreak, I think he said February. And then COVID happened and he lost the previous lender, and he was able to get an agency loan with a really low interest rate, but he was also able to negotiate a pretty large discount in the purchase price. So from your perspective, when you’re analyzing these passive investment deals, and I’m assuming they’re doing the same thing, they’re getting a discount in there, and they’re assuming some sort of reduction in income that first year or something, do you think that the returns that you’re seeing projected are going to be lower than what you actually see once things turn around?

Arn Cenedella: Well, that’s a 64 million dollar question. And of course, it all comes down to the skill and integrity of the operator, of the syndicator, and how he or she goes about his or her business. So I would say most of the passive investments I’ve made, price reductions have been able to be negotiated. Probably not as big as people think. What I’m kind of seeing is maybe 3, 5, 7 percent off pre-COVID pricing. So there’s no fire sale, at least not yet; there’s no panic. So I believe the prices have been negotiated down a little bit. I think the underwriting has been tightened up. I’m looking at one possible investment now where the operator’s projecting a decrease of $100,000 year one in rental income. So not only are they projecting flat, they’re actually projecting a decrease, and I appreciate the integrity of an operator who does that.

I think what counterbalances is it all out is the unbelievable interest rates you can get on agency debt. One of the partnerships I’m in I believe we got 2.88%, ten years, with maybe 3 or 4 years of interest only. So I believe the rates — and again, I bought my first house at 11 and 3 quarters. So when you’re talking 2.88%, 3%, it’s like they’re giving money away. So I think the financing available now compensates for the potential issues. Eventually, we’ll work our way through COVID, and I’m optimistic about the future. So even with these passive investments, I’m looking more 5, 7,10 years down the road, where am I going to be. Not as concerned about what’s happening 3 months from now.

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

Arn Cenedella: My Best Ever real estate advice – and this may go counter to many of the people on your podcast – would be slow and steady wins the race; consistent investment over time will lead to financial freedom. In my investing, I focused on solid [unintelligible [00:15:43].28] base hits. I’m not interested in the grand slam. I kind of don’t trust that. I’d rather do it slow and steady. So I believe there’s kind of a logical sequence to investing, to gaining knowledge, and that sequence is beneficial over time.

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

Arn Cenedella: I think so.

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

Break: [00:16:11][00:16:50]

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

Arn Cenedella: Well, since I’m starting a new investment group, Spark Investment Group, the best book I’ve recently read is Building a Story Brand by Donald Miller, which gives some good advice on how to best brand oneself and so forth. So it is a fascinating book and is been a big help for me.

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

Arn Cenedella: Honestly, and I say this without trying to be flippant, I’d probably go play golf. Because after all isn’t the point of this real estate investing, passive investing, is to create a passive income, to create financial freedom.  And over four decades of real estate investing I’ve been fortunate enough to be able to do that. So I’d probably get bored playing golf at a certain point, and then maybe go back to selling houses like I did 20 years ago.

Theo Hicks:  Tell us about the Best Ever deal you’ve done?

Arn Cenedella: The Best Ever deal was a flip that a wholesaler sent me. The property was an old beat-up house, fairly good size, but it was on an acre. And I had a good feeling it could be subdivided, so I bought the house, we subdivided the land, created two additional lots, fixed up the house, sold that… I sold the two lots I created to builders, and probably had about a 30% return over 18 months. So that was one of my better ones.

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

Arn Cenedella: Well, I’ll return to golf; so I’ve played golf since I was 8 years old, and it’s a passion of mine, so I now volunteer at the First Tee of the Upstate, which introduces young kids to golf, but even more importantly, uses golf as a way to instill core values, principles, character, integrity, honesty. So it’s a great program and I love being involved with youth in sports.

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

Arn Cenedella: Best ever place would be my cell, 650-575-6114, or my email which is arn@investwithspark.com.

Theo Hicks: Alright Arn, thanks for joining us today and proving us with your wisdom on how to–

Arn Cenedella: Not sure about that, but okay. [laughter]

Theo Hicks: …how to continuously thrive in real estate through the various ups and downs. So you talked about you bought your first house at an 11.75 interest rate. And then you said that it actually went up 16. I knew that but it is just funny, because now you say that you’re in a deal where the interest rate is at 3%. So it’s a huge difference between what you started off, to where you are now. And you said you went through all the various ups and downs and that it’s really about having a long-term perspective on real estate, thinking in terms of 5, 10 plus years, as supposed to thinking what’s going to happen a few months from now.

So you said that it means not being over-leveraged and it means making sure the property can at least pay for itself, so you’re not forced to sell. In regards to what’s going on now with COVID, you said that hunkering down is totally fine, but you also think that there are always going to be opportunities, to sell, depending on where you’re at in your business. And you mentioned that right now you’re transitioning from active to passive; you made 4 passive investments in the past year… And that the reason why is: one is to free up your time, but two, because a lot of your deals are in this appreciation markets.

The cash flow that you get in these markets is not nearly as high as the cash that you can get on these vacation deals, so that’s why, as you mentioned… And sometimes it makes sense to buy, sometimes it makes sense to sell, or do both during these types of economic environments.

We talked about what these sponsors are doing to conservatively underwrite their deals, price reductions, underwriting, lower year one incomes compared to T-12’s, and then the fact that the interest rates are just insanely low.

And then your Best Ever advice was, “The slow and steady wins the race.” Being consistent over time, following that logical sequence will result in financial freedom. And that you’re a base [unintelligible [00:21:11].18] kind of guy as opposed to the home run grand slam. You don’t trust the grand slam; you like the consistent, steady investments.

So, Arn, I appreciate you coming on 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.

Arn Cenedella: Thanks, Theo.

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JF2271: Advantage of A Full-time Job With Brian Doyle

Brian Doyle, from Minneapolis, MN and has grown his portfolio to 65 units all while having a full-time job. He will talk about how to choose the right full-time job to grow your portfolio, how he finds deals, and why having a full-time job is an advantage, not a disadvantage. Brian is currently on the board of the 2000 member Minnesota Multi-Housing Association and he is past president of the Minnesota Real Estate Exchangors, he is married with three kids and races sailboats on the weekends. 

Brian G Doyle  Real Estate Background:

  • Works full-time with Marietta Drapery and Window Coverings while investing part-time
  • 23 years of real estate experience
  • Portfolio consists of 65 units
  • Based in Minneapolis, MN
  • Say hi to him at: Brian@doylepropertygroup.com 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“You’ve gotta provide more value than what people expect” – Brian Doyle


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 Brian Doyle. Brian, how are you doing today?

Brian Doyle: I’m so good and super glad to talk to you, Theo.

Theo Hicks: Absolutely. Thanks for joining us. Looking forward to our conversation as well. A little bit about Bryan – he works full time with Marietta Drapery and Window Coverings while investing part-time. He has 23 years of real estate experience and his portfolio consists of 65 units. He is based in Minneapolis, Minnesota, and you can say hi to him at his email address which is brian@doylepropertygroup.com. So Brian do you mind telling us some more about your background and what you’re focused on today?

Brian Doyle: First of all, thanks for having me, Theo. I’ve been a fan of you guys and the show for a while, so it’s an honor to be here. If you go way back, I think I learned a long time ago that it’s super fun to be in a position to be able to provide your own value and create value on your own. And then I learned that in cub scouts, believe it or not; that was a long time ago. They told me in cub scouts, they said, “Hey, whoever sells the most popcorn for our fundraiser will win a bike.” And I literally remember the moment they said that I stood up or at least perked up, and I said, “Whoa, what did you guys just say? Whoever sells the most popcorn can win a bike?” I never in my life had an opportunity to trade something, which was my time, for something of value. And I told everybody “I’m going to win that bike”, and every single person I looked at, and every single person I talked to, including all the leaders, and all the other cub scout people, they were like, “Whoa, there’s a lot of people in Colorado Springs. There’s a lot of competition. You don’t want to set your expectations too high because you don’t want to be disappointed”, and all this stuff. And I literally said “I’m going to win that bike.”

I went out every day for 3 weeks and I [unintelligible [00:05:07].20] the neighborhood from right after school to 9 o’clock at night. And I won the bike, and it was awesome. It was the first time in my life that I’d really set a goal and accomplished the goal, which was fantastic.

So I learned from that moment I was like, “I never want to work at a job where I punch a clock that isn’t commission-based.” And that was super fun. So I transitioned from there, I obviously grew up, I went to college… I really liked the idea of Domino’s Pizza. Domino’s Pizza, they’ve got thousands of stores worldwide, and they started with two brothers. One brother wanted to get out of the pizza business after they owned their first store, and the other brother bought him out and gave him the company car, which was a VW Bug. I think that was an interesting story, because basically this guy who wanted immediate results got this Volkswagon Bug, and the other guy who had a little bit more foresight, now he owns thousands of stores across countries. It’s fantastic. So I liked that, I like the long game of things.

I did buy a house in college, and while I owned that house I moved to Vail as a ski instructor, and I really learned at that point the passive versus active income. Pretty cool to be a ski instructor out in Colorado and have a property in Duluth, Minnesota that I still make an income off of. So that was pretty fun.

And then after that, I came back and I bought another house from my wife’s landlord. And I was sitting over there one day and the landlord comes over, and the bathroom is leaking into the kitchen, and he’s just swearing up a storm, and he hates this house… He cussed and said, “I hate my life.”

I went over there and I said, “Hey, dude. I want to buy this from you.” I was only about 21. And the guy is like, “Yeah, man. I’d be happy to sell it to you.” And I bought that house and I made $9,000 per year basically off that house of net income. And $9,000 per year is kind of a magic number if you’d ask me, Theo. And the reason is it’s because there are about 9,000 hours in one year.

So if you can find a property that makes $9,000 a year, you’re making about a dollar an hour. Which doesn’t sound like a lot, right? But the fact that I can go to bed and wake up $8 richer every single night is just something that blows my mind. And that was one investment 20 years ago, so it’s just fantastic. So anyway $9,000 is super fun.

Warren Buffet says you got to find a way to make money in your sleep, or you are going to work until you die. And that was that deal.

So kind of speed forward a little bit, I got a job, got laid off from that job, got another job, and I still have that last job. And the reason — I think probably a lot of listeners have jobs, and a couple of things you’ve got to ask yourself. You’ve got to say, number one, “Is my job flexible in time?” If your job is flexible in time, it’s a fantastic job to have a side real estate business. The only thing that you’ve got to focus on is, “Does your job allow you to work with other people in the real estate business?”

So in my job, I sell blinds to apartment buildings, and I sell drapes to hotels. Well, what a great opportunity, and I sought that job out specifically because it worked in the real estate industry. If you have a job right now that isn’t in the real estate industry, you might consider becoming a vendor or something else in the real estate industry with which is what you might finally want to do… Because I get the chance to talk to other apartment owners all day every day about their blinds. So, it’s a really helpful thing.

So speed forward from all that, now I’ve got 65 units. Most of those are condo’s, I have about 50 condos. The reason that condos are interesting, if somebody is thinking about buying a condo, it’s nice because you only handle the stuff that’s inside your unit. So you don’t have to handle all the other stuff, which is fantastic. It’s a hard way to grow your business, because every single deal you’re negotiating a new deal. So that’s kind of crazy. It takes a long time to grow to 65 units, because you got to negotiate 65 different contracts. And then I also have one little restaurant that I own, that I lease out the restaurant building. And I’m a limited partner in about 500 units, which is about 8 other deals, which is another good way to get involved with real estate if you’re not in it. So that’s a big quick and dirty where I’m at right now Theo.

Theo Hicks: Thanks for sharing that, and I like your comments about getting a job in real estate; a good way to get started in real estate is to transition from whatever job you’re doing now to a full-time job in real estate. So thanks for sharing that.

When it comes to flexibility, so the other aspect is, “Is it flexible in time?” Do you mind elaborating on that a little bit? Do you mean that you’re not working 9 to 5, or you are able to work less than the traditional 40 hours per week? What do you mean by a job that is flexible in time?

Brian Doyle: Well I should step back for one second. I think what you need to do in any job, or any sales transaction or anything, even landlord-tenant, you need to provide more value than that person expects. If my job expects me to, in my job, sell a million dollars a year worth of blinds, I’m going to out and I’m going to sell 4 million dollars a year worth of blinds. And the reason I’m going to do that is number one, I’m probably on commission-based, number two is that I want to provide more value than they expect.

And when you do that, you create a situation where that company is willing to let you do your own thing. I was a sales manager for that company, I’m no longer a sales manager recently because there’s just a lot of stuff… But when I was about 30 I was a sales manager – I’m 42 now – and you always micro-manage the people at the bottom, right? The people at the top, you don’t have time for; you’re too busy managing the micro people at the bottom. So if I’m on the top as a salesperson, or accountant, or whatever I’m doing, or property manager, or leasing agent, I’m going to give that person flexibility because they provide so much value to my organization, right?

So I think you create flexibility in your job, not because you work less, but because, hey, if I need to run out and go look at an apartment building for sale, it’s no big deal because they know I’m going to get my stuff done. So that’s what I mean by flexibility, I guess.

Theo Hicks: So essentially get a job, work really hard on the job so that your boss isn’t constantly asking what you’re doing, until you spend time doing real estate on the side, basically.

Brian Doyle: Exactly, yeah.

Theo Hicks: Okay, perfect. So you say that you own a restaurant, you do condos, and then you invest in eight, I’m assuming, apartment deals as an LP. Of those 3 which is your main focus? Which part of your business do you focus on the most?

Brian Doyle: Condo deals.

Theo Hicks: The condo deals? Maybe walk us through what types of things you’re doing outside of work in order to grow that kind of business?

Brian Doyle: Well, in 2003 I bought a condo for $120,000 from a friend of mine. I bought it cash, I didn’t have all the cash for it, I only had about half the cash, so I asked my dad, I said, “Hey dad, will you give me $50,000 so I can buy this condo?” So he became a 50/50 part-owner with me on that. And what happened then is I bought a fourplex, and then I sold it, and all this other stuff in 2005. And then 2008 comes around, and that same condo that I bought for $120,000 was now worth about $45,000. Most people say that’s a terrible sad story, but that’s not a terrible sad story; that the greatest story ever because all of a sudden I knew exactly what that property would run for, I knew the dissociation, I knew everything about condos, so then I tried to buy every single one I can get my hands on, because if the numbers worked when I bought it at $120,000, they’re going to work just even better at $45,000.

So that’s what really happened between 2008 and now, is that I bought every condo I could afford. And most of my properties are owned free and clear, mainly because if you’re going to buy a $30,000 condo it’s hard to go get a mortgage for $30,000. The paperwork isn’t worth it and the closing cost probably would be 10% of the deal. So I would just go and I would save up money and I would buy a condo. And then I’d save up more money and I’d buy a condo. And I never would have this lifestyle creep where  “Oh, now I make more money than I made last year, I’m going to go buy a new thing.” No, I kept it and reinvested into real estate.

Theo Hicks: Are you still able to buy condos at this price point now?

Brian Doyle: No.

Theo Hicks: Yeah. I didn’t so. So are you still buying them cash now? Are you on hold?

Brian Doyle: It is the most interesting thing in the world right now. It feels like 2005 again to me, honestly, because in 2005 I sold a fourplex in a not super great area of Minneapolis for $400,000, and I had bought it for $135,000 four years earlier. And I was like, “What do I do with this money, because I don’t want to go buy another fourplex for $400,000. That’s the reason I just sold my fourplex for $400,000.”

So right now all that same condo that was at $120,000, went to $45,000, and now it’s probably at $135,000 right now, okay? So, it’s just getting back to the previous values. So right now it’s tough. What I’m doing now is I’m networking with every single person I know. There’s a ton of nuances with condos, and the fact that they are not mortgageable sometimes, if one owner owns more than 10% of the building, or there’s over 50% of the rentals in the property, or if there’s too much retail in the property… So a lot of these people are kind of willing to just sell for less than the fair market, because they have a hard time getting out of them.

Now I’m going to have the same hard time getting out of mine, because I haven’t really figured out that exit strategy quite yet… But I think I’ll package them and sell them to one investor. But people are still willing to negotiate. So no, the good old days of 30 caps or 20 caps are really gone. They’re down to 4, 5, or 6, or 7 cap if you buy a condo right now. But there are still deals to be had, and I think if you’re a long-term investor, you just dollar cost average over years and you’re going to be fine eventually.

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

Brian Doyle: I really, really think you need to get on the same page with your spouse as far as spending your money goes. I think a ton of people want to buy properties that don’t have any money, or they got 10,000 bucks and this is what they have, and they lose it, they’re screwed because they’re living paycheck to paycheck. Because they’re leasing cars, and all this stuff. You’ve got to have a weekly or at least monthly budget, what I call parties, with your spouse. You’ve got to call them budget parties, by the way; nobody wants to go to a meeting, everybody wants to go to a party, so go have some budget parties… And figure out how you’re going to get on the same page and start saving money so you can start investing.

Theo Hicks: And you do weekly budget parties with your spouse?

Brian Doyle: We sure try. You know, it gets busy in the summertime, so we hit about every other one of them. But she kind of puts up with it. She’s been nice to entertain me; and I’m kind of the nerd of the group so she’s nice enough to show up.

Theo Hicks: So you guys just go over what was spent that week, and what was necessarily spent and what was unnecessarily spent?

Brian Doyle: Just basically where we’re at, where we’re going. And it’s good just to get on the same page, just to have a meeting with your spouse, because you’ve got to be on the same page. Not even just for your budget, but just in general. But it’s good to look at things and say, “Where do we want to spend money? Where do we not want to spend money?” We’re both all about experience, so it’s like, “Okay, let’s ‘overspend’ on this travel, and then let’s talk about it. Is it really worth it to go out to dinner tonight? I’d rather spend that on something else.”

So honestly, it’s great, because you maximize the value and the fun out of every dollar, rather than just kind of haphazardly going through life and then coming back and saying, “Oh, what did we do?” So, it’s a worth-it activity.

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

Brian Doyle: I am, man. Hit me.

Theo Hicks: Okay. Fist, a quick word from our sponsors.

Break: [17:12] -[17:48]

Theo Hicks: Okay Brian, what is the Best Ever book you have recently read?

Brian Doyle: Well the most recent book I read, one of my favorite books is a book by Gary Tharaldson. It’s his Gary Tharaldson story, it’s Open Secrets of Success. Available on Amazon. He is the richest guy in North Dakota; he built a hotel empire all on his own, he didn’t syndicate anything, he did it all on his own. Bootstrapped the whole deal, got up to about 350 hotels, sold some of them. And he’s just a fantastic, down to earth, hard-working guy.

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

Brian Doyle: Well, probably the honest answer is I’d probably just start it over again. But the more fun thing I would like to think I would do is I’d go buy a sailboat and just sail around the Caribbean for a while.

Theo Hicks: Nice. Out of all the deals you’ve done, what’s the best deal you’ve done?

Brian Doyle: The best deal I ever did was I wanted to buy 8 condos from a guy, and we’d negotiated the price, and he said, “Let’s get this done.” We’re all ready to close and he said, “I can’t close them, it’s because my accountant says I’ll owe $170,000 in tax.” So rather than just walking away from the deal, we created a master lease option, and I did that with $50,000 down, and I make $25,000 per year off that deal; just 50 cap. And if and when he’s ready to sell or passes away, one of the two, I will then buy them from him for a pre-negotiated price.

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

Brian Doyle: My favorite way to do it is if a tenant is struggling, it’s probably because they have low financial education. I pay for tenants to go through Dave Ramsey’s Financial Peace University. And one tenant did that and he really turned his life around, and he credits me with turning his life around. And now he’s a manager at a Pizza Hut or Domino’s I guess. And he isn’t a renter anymore but he really credits me with turning his life around, which I didn’t do anything other than pay for him to go to that class, and I’d pay for anybody who would go to that class that is willing to go. Kind of fun.

Theo Hicks: I’ve never heard that before, that’s very interesting.

Brian Doyle: Yeah, it’s only $100 to go to the class. It’s like free; and if I can do that little push, it’s kind of fun.

Theo Hicks: Is it online or is it in-person?

Brian Doyle: In-person and online. There are two ways.

Theo Hicks: And then lastly what’s the Best Ever place to reach you? And then anything else you wanted to say to end the interview.

Brian Doyle: Appreciate that Theo. The best way to get a hold of me is my email address for sure. It’s brian@doylepropertygroup.com. I think you said you’d put that in the show notes. I guess I’d end with – if there’s one takeaway, it’s you’ve got to provide more value than people expect.

One thing we do is when a tenant has a leak or something, we call them up and we send them a $25 Starbucks card, we say thank you to him constantly; we’re sorry that that happened. Even if it’s not our fault we do that, because that’s how people want to be treated. And if your job expects one thing, just do a little bit more. If your customer expects one thing, do a little bit more. You’re going to always have success if you just do more than other people expect.

Theo Hicks: Perfect Brian. Well, thanks again for joining us and sharing your Best Ever advice. Some of the biggest takeaways that I got and I’m sure the Best Ever listeners got as well, are your thoughts on the job. I know a lot of people when they get into real estate the first thing they think about is, “How can I quit my job?” And I like your approach better, which is to figure out how you can continue to work at your job, while at the same time being able to work in real estate… Because having a job you have income coming in, you’re more attractive to lenders, and that’s the route you want to go, as opposed to just quitting your job. You’re not going to get a loan if you’re not going to get money coming in.

So your advice is to create a lot more value than what your company expects. And don’t be one of the people at the bottom that gets micro-managed and gets calls and emails from your boss all the time. Instead, if you provide more value than they expect, if you’re doing a commission-based job and make more money, but you’ll have more flexibility to spend on growing your real estate business. And you could use that money in order to grow even faster.

And then the second thing you said about the budget party with your spouse, or I guess if you don’t have a spouse, you can do your budget party by yourself, to see where you’re spending your money each week and to see if there are ways you can reduce your spending to save up more money to buy more real estate. And then you also went into your philosophy on buying condos, which was also very interesting.

So Brian, 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.

Brian Doyle: Thanks, Theo.

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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.

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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JF2268: Nice Guys Buying Houses With Terry Burger

Terry is a full-time real estate investor with 19 years of real estate experience and founder of “Nice guys buying houses”.  Terry will be sharing some great information around how to find leads, to strategies in how they separate themselves from other real estate companies such as focusing on the Better Business Bureau and focusing on a specific customer. He also was open to sharing how he comps markets by focusing on micro-markets, schools, and other ways. 

Terry H Burger Real Estate Background:

  • Full-Time real estate investor
  • 19 years of real estate experience and 5 years of investing
  • Portfolio consists of 6 rental properties and flips 30-40 per year
  • Based in Atlanta, GA
  • Say hi to him at: https://www.niceguysbuyinghouses.com/ 
  • Best Ever Book: Traction

Click here for more info on groundbreaker.co

Best Ever Tweet:

“If you have that warm fuzzy feeling when you find your first deal but not sure about the numbers, then you need to be careful” – Terry Burger


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’ll be speaking with Terry Burger. Terry, how are you doing today?

Terry Burger: I’m doing great, Theo. Thanks for having me on today.

Theo Hicks: Absolutely. Thanks for joining us, looking forward to our conversation. A little bit about Terry. He is a full-time real estate investor, with 19 years of real estate experience and 5 years of investing. His portfolio consists of 6 rental properties and he does 30 to 40 flips per year. He is based in Atlanta, Georgia and his website is niceguysbuyinghouses.com. So Terry, do you mind telling us some more about your background and what you’re focused on today?

Terry Burger: Yeah, no problem. So I am a trained classical musician, turned middle school band teacher, turned realtor, turned real estate investor. So I spent about 9 years teaching public education and then went into residential realty or real estate for about 16 years, and then made the transition around 2013 to investing full-time. And that’s a little bit of my background. Kind of my claim to fame is my superpowers comping property and knowing what the consumer wants.  I have probably walked through 10,000 properties, I probably had 5,000 moms in my car at any given time. So I kind of feel like I’m the house whisperer when it comes to knowing what the retail consumer wants. So that helps me in my flips for sure.

Theo Hicks: Well we’ll definitely talk about those two things. So the comping properties and the knowing what people want. But before that, so you do flips and you do rentals. So which one is your main focus?

Terry Burger: So we flip to buy and hold. We like to generate cash through our flips and then we can save the best ones with the most cash flow as a rental properties. So we’d pick up two, maybe three a year, if we can.

Theo Hicks: What’s your main way to generate leads?

Terry Burger: Let’s see, the main way to generate leads is direct mail at this time; we buy some online leads as well. Those are our two primary.

Theo Hicks: You buy online leads. Do you buy like lists?

Terry Burger: Yeah. So there are companies out there that have great organic traffic. So you could either do Google pay per click – we have done that before – and drive traffic to your own site. Or you have these companies out there that have really great SEO and they appear in top search results in just about every market and they get plenty of leads. So we basically just pay for leads from them.

Theo Hicks: Interesting. So you have like an ad on their website? Like if I go on a website, on the corner it will have an ad for you buying houses, or how does that work exactly?

Terry Burger: No. It’s not an ad at all. It’s kind of like they go in, and because these companies have national SEO presence they just go in, and let’s say somebody clicks Greenville, South Carolina, I have a house to sell in Greenville, South Carolina, then I buy that lead.

So if you think about how Service Master does it for storm-damaged and water-damaged houses, it’s just a national website and it’s a lead collection service, and then there are a multiple of people that buy leads. I can give you the company names if that would be helpful, Theo.

Theo Hicks: So you buy it and then they will send you a list of people who said “I want to sell my house in this market”?

Terry Burger: Yup. Let’s say Suzy Smith hits their website, and they know that I’m going to pay X amount of dollars for this lead, call it a hundred bucks, a hundred and fifty, two hundred dollars… Then they send that lead over to me and they just ping my credit card per lead.

Theo Hicks: Okay, and what are some of the websites that do this?

Terry Burger: There’s a needtosellmyhousefast.com, is the most common one, and then fasthomeoffer.com is the other. A lot of people, I think, have heard of fasthomeoffer.com.

Theo Hicks: And then for the direct mail, what’s your criteria for that? What type of people are you mailing to have you found to be the most receptive to direct mail? And then what type of messaging are you putting on these letters?

Terry Burger: I think the best messaging is just consistent messaging. What is it that your company has that might separate you from other people? So we have done a really concentrated effort to get Better Business Bureau reviews. So we leverage those Better Business Bureau reviews against our competition, and we hear this all the time, “We went with you because you were BBB rated,” or “We called you because you were A+ rated on the BBB.” That seems to help us a lot, so that kind of messaging – we get that out all the time. And then in terms of the type of person that we mail to, just like everybody else, they need to have equity, and we’re just trying to figure out who is motivated.

We have personally, I don’t think, ever bought a house from anybody under 40; so we go 40 and up. We just kind of look at our avatar customer, who is it. The problem with us sometimes is – I remember buying a house from an attorney couple one time. So typically he wouldn’t be our avatar customer, but they hated realtors. Really, honestly, Theo, that’s really what it boils down to. If they don’t like real estate agents, they call us. And I think from an investor’s perspective, a lot of times that’s what makes the investor a really good option for people, is because a lot of people have this bias against real estate agents sometimes. And that usually stems from a bad experience along the way.

And look, I was an agent for 17 years, I sold over a thousand houses, and I was a really good agent, but did I make everybody happy all the time? No, I didn’t. So that one person that I didn’t make happy, or they didn’t have the experience they thought they would have, they may reach out to an investor.

Theo Hicks: So, you’ll have on the direct mailing a stamp that says “A++ Better Business Bureau”? [unintelligible [00:08:33].23]

Terry Burger: “And if you hate realtors, call me.” No, I don’t put that on there.

Theo Hicks: Well it’s funny, because I talked to people before who would put that they’re an agent on there, and say that’s like a benefit to them that they’re an agent. But it’s interesting, they said sometimes people don’t even like agents. That could potentially hurt you as well. So thank you for sharing that.

So you send out your direct mail and leads start coming in. Now you said that you are the master comper. So how are you able to determine what the offer price is without having to go and inspect every single property?

Terry Burger: Yes, so during COVID-19 we have switched over to in-person and phone appointments, and I think a lot of people have shifted that way, right? So our biggest obstacle is how do we evaluate the property when we can’t see it. So, I’ll tell you what we do.

Let’s say we put a house under contract over the phone.. Then of course I teach comping to my team so they kind of get how to comp a property; we could talk more about comping if you want, but the process that we used to do it virtually like this, especially during their phone appointment era that we’re in, is we send our home inspector there and we also send our photographer at the same time.

So we give our photographer a big checklist of things to look for, in addition to just looking for problems in general. So our home inspector is there going all over the house, and it takes a couple of hours for him to do that. And then our professional photographer is in there with wide-angle lens and  micro-lens, and she’s shooting videos, she’s shooting photographs, and she sends them back to us in high resolution. So I can get on my Mac or whatever and I can zoom in really, really tight on things; as long as you get that stuff back in high resolution, you can zoom in on something really detailed without having to be at that house. And that’s how we do it right now.

Theo Hicks: Okay, can we take a step back… Because this is what you do after you got it under contract, but how do I know what that contract price is, how do I know what to offer?

Terry Burger: So, the way we comp properties is our philosophy is we comp in micro markets. So if you think of the city of Greenville, South Carolina, that’s kind of micro-market to the whole country right? But it’s more of a micro-market regionally… So we drill down a little deeper and say, “Okay, this neighborhood right here,” Judson Mill for example, “is its own micro-market. It has its own set of values, its own set of people that live there, they buy there, and all that”, right? So one of the easiest micro-markets that we use are main roads; we won’t cross over a main road, we’ll stay within the boundaries of main roads and we’ll try to stay inside of a little neighborhood pocket that we know is how are we going to grab our comps.

The second trick that I teach people – this is an old agent trick… You’re going to at your values based on the elementary school. So you could do a zip code search which gets you kind of big picture, you could do an elementary school to search, which kind of drills you down a little deeper… Or if you want you can go into the MLS, or PropStream or whatever program you’re using, and you draw out a little polygon based on the area that you want. So we employ the polygon method, and we employ that elementary school method, particularly when you’re in the suburbs.

Theo Hicks: And then is that… Is the number like dollar-per-square-foot? Is that what you are looking at?

Terry Burger: If we can find houses that are all very very similar, we look at the values and we can ballpark it. But yes, very wildly in square footage, which in some of our areas they do… Then we are looking at 2 values – the market value cost per square foot, which would mean a normal residential retail sale, and then hopefully sometimes we can find current condition comps of houses that needed to be fixed up and sold in the MLS.

Theo Hicks: So my second question, how do you know without seeing the property if it is going to need $5,000, $20,000, $30,000 in renovations?

Terry Burger: We use a home visit sheet that I came up with. It’s got a lot of the numbers on it; so if our acquisitions manager is looking at the comps and they see that the ARV includes new kitchens and it’s basically flips, if they see that, then we are going to estimate our rehab based on those comps. We only look at the comps when we estimate rehab.

Theo Hicks: So you just assume that if the comps have a new kitchen, then you’re going need to put in a new kitchen; if the comps have whatever else, you’re going to need to do that. Okay.

Terry Burger: Yep. It’s interesting, in some markets they just paint the cabinets white. They don’t put in new kitchens. In Atlanta a lot of new kitchens go in, but in Greenville, they just paint the cabinets. So we look at those comps and go, “Okay, two out of three of the comps have painted cabinets. Why don’t we just paint the cabinets?”

Theo Hicks: What about the major cap-ex things like a roof, or painting the outside a house, air conditioning, HVAC – how do you know if you’re going to need to replace any of that stuff?

Terry Burger: So in our home visit sheet, HVAC for example – is it older than 10 years? If it is, we automatically replace it; we budget for a replacement. The same thing with the roof – if it’s a 30-year architectural shingle and they’ve got 20 years on it, we’re going to budget to replace. If it’s a 15 and has 10 years on it, we’re going to budget to replace.

Theo Hicks: Who does the home visit? Is someone from your team doing this? Or are they sending this to the owner to fill out?

Terry Burger: So our lead intake people do it during that screening call that comes in, and then our acquisitions department goes a little bit deeper on the phone, asking them questions like that.

Theo Hicks: So the next thing that you’re an expert in is knowing what a buyer wants. So if you’re flipping most of these, and you’re keeping some yourself, what do you mean when you say that you know what they want? And what step in the process does that come into play?

Terry Burger: Well, I’ll tell you a funny story… Clients are always asking me, would you buy this house? And that’s one of the most popular things real estate agents get asked by their clients. Would you buy this house? And over the years, what I’ve seen, particularly in the residential suburbs, – so I’m in the North West suburbs of Atlanta, and then we’re in the suburbs of Greenville, we’re also in downtown Greenville as well… But I asked three words; so I said, “If I’m sitting on my deathbed in a hospital and somebody asks me what’s the secret to real estate, I have 3 words for you: backyards sell houses”, period.

So in Georgia, for example, we are in a very hilly area, in North West Atlanta, kind of the foothills of the North Georgia Mountains, so there’s a lot of topography changes. So you’ll have a big family-friendly, 2-story traditional house, but your kids can’t pick a soccer ball in the backyard, because it’s hilly, or it’s steep, or whatever. So I always told my clients, “Look for a nice backyard first. You can fix up the house, but that piece of dirt is always going to sell that property.” So that’s the biggest one for us, particularly around here, is a nice backyard.

Theo Hicks: Alright Terry. What is your best real estate investing advice ever?

Terry Burger: A lot of people say this, but gosh, it’s so true, Theo. You’ve got to buy it right, and you cannot get emotionally involved in the buy. You have to keep your wits about you, be numbers focused only, and buy that house right.

Theo Hicks: In your agent days when you were dealing with clients buying a home, this seems, at least from my perspective, to be more relevant when someone’s buying a single-family house. How do you communicate with a client who is emotionally invested and wants to buy this house that’s either overpriced, or it’s going to cost too much money to fix up? What’s some advice that you’d give to them, and then think that you’re talking to a Best Ever listener who might be emotionally involved in a deal and how to get them to relax a little bit and calm down.

Terry Burger: Yeah, those first few deals are pretty emotional. I remember my first deal, the butterflies were in my stomach; I ran the numbers on a napkin at a Chick-fil-A… But I knew it was a great deal. I think inside, at least for me that first deal or two, I was so giddy about the deal, I couldn’t wait to get the ink on the paper, because the deal was so good.

Now I’m numbers-oriented; that’s not everybody. So I was emotional about it because I knew I had a great deal, because I analyzed the numbers. So if you have that warm fuzzy feeling because you found your first deal but you’re not sure about the numbers, you’ve got to be careful there.

I would always tell my retail real estate clients, “The numbers don’t lie.” So for example, if you’re going to buy a home for you and your family Theo, you’re going to look at it and go, “Well, this one is priced $20,000 more than the one that sold down the street last month. Why? Why is that?” “Well, it has a pool.” “Okay, so how much was that pool?” “It was a hundred thousand dollars.” “So you’re telling me I can get that pool for 20 grand?” That’s a good deal if you want a pool.

So it’s just looking and comparing the facts with all of the houses, just like an appraiser would. And just looking at those things and analyzing them. And knowing your numbers, knowing what stuff costs.

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

Terry Burger: I’m ready.

Theo Hicks: Okay. First, a quick round from our sponsor.

Break: [16:57]-[17:33]

Theo Hicks: Okay Terry, what is the Best Ever book you have recently read?

Terry Burger: Right now I’m reading — we have a pretty big team so I’m trying to learn how to lead my team better… So I would say lately, in the past 6 months, two:  Traction by Gino Wickman, and then the Who Method For Hiring by Geoffrey Smart. Those two.

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

Terry Burger: Oh, wow… Thanks for planting that seed in my brain. I would figure out how to do it better. I love real estate; I’d figure out how to do it better so it didn’t collapse again.

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

Terry Burger: My first deal was really sweet. The guy had an old Porsche 911 that he wanted to fix up. The house sat empty for 9 years after his ex-fiancé moved out… And he had just got a wild hair that he was going to fix up this 911 and it was going to cost him 40 grand, and he needed 40 grand. So I gave him 40 grand for a house that was worth a lot more and fixed it up. And even to this day — we have made $65,000 on that property. Probably one of our best flips ever.

Theo Hicks: I wanted to ask you one more question – who is your favorite classical musician, classical composer, and classical artist?

Terry Burger: Composer would be Gustav Mahler. And I was a trumpet player, so my all-time favorite trumpet player is Philip Smith in the New York Philharmonic. He teaches at the University of Georgia now.

Theo Hicks: When you said that in the beginning, I wanted to ask that question, because I always listen to classical music while I work.

Terry Burger: Mahler is like the Led Zeppelin or The Kiss of that era. It’s just lots of brass music.

Theo Hicks: How do you spell it?

Terry Burger: M-A-H-L-E-R.

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

Terry Burger: My wife and I like to give. She’s a giver, and I like to make the money so she can give. So we support our church, we support missions organizations… One time we were trying to give away 20% of our income. It might be that way now, I’m not sure, but we give away a significant portion. I am passionate about Operation Underground Railroad. Their sole purpose is to free children from sex slavery or any other type of slavery all over the world. And that’s one of the causes I really care about right now.

Theo Hicks: Do you know who Bill Allen is?

Terry Burger: Yeah. He’s a good friend of mine, in fact, I’m now the Chief Operations Officer of 7 Figure Flipping.

Theo Hicks: I just talked to him right before we got on.

Terry Burger: Oh, that’s awesome. I talked to him earlier today too, he didn’t know I was going to be in your podcast.

Theo Hicks: Wow. And then I talked to someone else on his team yesterday, Beka Shea. It’s a small world.

Terry Burger: Yeah, good friends of mine. And Mike Simmons… Those guys, we kind of grew up in this business together, Bill, Beka, and I.

Theo Hicks: Small, small world. Alright, last question. What’s the Best Ever place to reach you?

Terry Burger: The best place to reach me, probably Facebook. For somebody who’s just reaching out to me it’s Facebook; just private message me, Terry Burger, and you can reach out to me there.

Theo Hicks: Perfect, Terry. Well, thanks for joining us and walking us through your step by step process for flipping homes, starting from your direct mailing strategies, as well as buying leads from websites like needtosellhomefast.com and fasthomeoffer.com.

We talked about how you create your offer, which is by doing comps based off of the micro-market, so a neighborhood with the major roads as the boundaries, as well as looking it up by elementary schools. And then from there, you do phone conversations with people once these leads come in.

The biggest obstacle is evaluating without seeing the property, so you will send the inspector as well as a photographer who will have a checklist of the things you look for, and then make sure that they take high definition pictures, so when you get the pictures you can zoom in to see any issues that you want to investigate further.

And you mentioned something else too about knowing what the buyer wants, and that the secret to real estate is backyards sell houses. You can’t really renovate a house and add a backyard, unless you cut the house in half. I don’t know what you would do. So look for the backyard, and then you can make the inside of the house really wherever you want it to be.

And then the Best Ever advice was to buy it right and don’t get emotionally involved on your numbers. Act as if you were an appraiser. So thanks Terry, again, for joining us. Best Ever listeners, as always, thank you for listening. Have a Best Ever day and we will 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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JF2267: Burn The Ships With Adam Balsinger

Started in real estate 6 years ago and while working a sales job with the goal of making money on the side flipping houses until he could go full-time. Real estate slowly took over his focus and eventually his sales numbers started to fall and eventually he was let go. This forced Adam to focus 100% of his efforts on real estate and now the rest is history.

Adam Balsinger  Real Estate Background:

  • Full-time real estate investor focusing on his wholesale business and partnership in multi-family syndication
  • Has 6 years of real estate experience
  • Portfolio consist of 12 Legacy rental units, 50 multi-unit doors as a LP, 92 as a GP, and flipped/wholesale over 100
  • Based in Charlotte, NC
  • Say hi to him at: Instagram @realestateadam7
  • Best Ever Book: Never Split the Difference

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Focus on one thing at a time” – Adam Balsinger


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 Adam Balsinger. Adam, how are you doing today?

Adam Balsinger: I’m really doing well. Theo. Thanks for having me. Excited to be on the show.

Theo Hicks: Thanks for joining us, looking forward to our conversation. A little bit about Adam’s background. He’s a full-time real estate investor focusing on his wholesale business, as well as his multifamily syndication business. He has 6 years of real estate experience, his portfolio consists of 12 legacy rental units, 50 multifamily doors as an LP, 92 more as a GP, and his wholesaling and flipping business just went over a hundred. He is based in Charlotte, North Carolina and you can say hi to him at his Instagram page which is @realestateadam7. So Adam, would you mind telling us a little more about your background and what you’re focused on today?

Adam Balsinger: Sure. I got into real estate 6 or 7 years ago, and I think my entry to real estate was probably a little bit different than a lot of people. I’d been selling software at that time; I’ve always been in some sort of entrepreneurial or sales type of capacity ever since I’ve graduated from college back in the early 2000s. So I’d been selling software at that time, I decided I wanted to get into real estate, and my intent, Theo, was to try to do that under the radar. I was going to work on my flipping business, so my entrance into real estate was fix and flips. And the idea was that I was going to work my full-time job, I was going to flip part-time after hours and over the weekend, and that I was eventually going to transition to full-time real estate fixing and flipping properties.

Well, my interest in real estate far outweighed my interest in continuing to sell software and being an employee. So it didn’t really go according to plan. I spent a lot more time working on the fix and flip business, my numbers tanked in my software sales, so I was actually let go after three months of trying to do the two. So my rug was pulled out from under me, and I was kind of forced to make things work with the real estate business. Not necessarily a way that I would recommend to other people; I think the smarter away to go about doing it is to slowly establish what you’re doing, get some consistent revenue coming in, and then step away from what you’re doing full-time.

There’s an old story, I forget who the general was, but would talk about– and you hear this a lot with leadership and mentality. Him and his soldiers would land on the beach, and he would actually burn the ships so that there was no retreat, so the only possible outcome was death or victory. And it kind of put me into that position having the salary and a 9 to 5 job pulled out from under me.

So I started doing fix and flips and my business has kind of grown and evolved over time. The intent was to just do fix and flips, stat cash, buy single-family rental properties, and retire with a portfolio of 10 to 20 of those properties. And I think a lot of people get into real estate expecting something, from things they read or podcasts they listen to… And then you get into it and you realize that your expectations may not have been really aligned with reality… So things just evolve, things change over time. Right now I’m partners in two separate businesses’; my fix and flip business – I’m originally from Philadelphia, that business is in the greater Philadelphia area. So that’s business number 1. And then the other business which is a little newer is multifamily syndication; I’m a partner in that business and I’m located here in Charlotte. We focus in the South-East of the United States on the multifamily business.

Theo Hicks: Your story about getting into real estate and then being fired in 3 months is very interesting. I kind of want to talk about that a little bit more if you don’t mind. So…

Adam Balsinger: Sure.

Theo Hicks: Had you done any deals at this point? Or you just…

Adam Balsinger: No.

Theo Hicks: So how did you pay for your first fix and flip deal if you didn’t have a job?

Adam Balsinger: Hard money lender and then a gap funder. So we had a hard money lender come in for the bulk of the purchase, as well as the renovation. And at the time I did not have the money to cover what the hard money lender was not going to fund, so I actually had to go out and borrow that capital from somebody else. I had a private lender to cover the difference.

Theo Hicks: Maybe kind of walk us through – so you got fired… How long until you find your first deal? And then how did you meet this private lender? How did you meet this hard money lender? How did you find that deal? Kind of walk us through that.

Adam Balsinger: Yeah. So before I really jumped in feet first, I paid for a guru education on fixing and flipping, and that took quite a bit of capital and of itself to pay for that course. So I had the bit of the network that I had already established as I was going and getting started. So I was able to leverage some of those relationships to be able to find the hard money lender, as well as then the private lender. So that was all through networking that I was able to find these things. And actually, I was able to find my first deal as a result of the networking that I had done through the guru education that I had done.

Theo Hicks: And then, would you have money saved up from your job to cover living expenses, or was that an issue as well?

Adam Balsinger: I did, yes. There was enough there that leanly I was able to kind of get by. You know, I wasn’t doing any fancy vacations or anything like that for quite a while. I was still pretty young too, and we wind up with more responsibilities as life goes on. I was joking with you that I’ve got this pile of Amazon boxes for — my wife and I, we’re due by the end of September, so the baby will be here probably by the time that this episode actually airs. So I didn’t have anything like that. I was a single guy, I was renting with some buddies from college, I was basically only paying for one room… So it was easier for me to manage, just because the expenses were already pretty low.

Theo Hicks: Okay. So how long did the first deal take to complete, and then how much money did you personally make on that deal?

Adam Balsinger: The deal took a while. Actually, the first couple of deals that I did were in the Atlanta market, from Philadelphia. So just through networking – I was obviously working on developing the relationships in Philadelphia that could help me find deals… But just through some of the people I met with the guru program that I mentioned before, it just so happened that a deal or two kind of fell on my lap in the Atlanta MSA… So it took a little while; they were bigger renovations at that time, and of course, this is going back now… But popping the top, ripping off the roof on like a ranch or a bungalow, and then adding the second story – that was a really popular way to flip properties in Atlanta at the time. So that was really the first — I guess two deals that I had done were those types of renovations.

I did really well on one of them, and we may be made 10 or 15 grand, something like that on the other. And it’s just because there are some things that you can miss sometimes when you’re not there, boots on the ground depending on who you’re relying on, or your inspection of your contractors, the work that your contractors are doing – those things are all really important.

So we had fixed up this one property, put it on the market, and it just sat on the market, and sat, and sat, and sat. And we could not figure out why; we had dropped the price a couple of different times… I wound up flying down to Atlanta from Philadelphia to walk the property, and Theo, no kidding man, as soon as I walk through that property I was like, “I know why this thing hasn’t sold.” And it was because as a way to try to save some money on the renovation, we decided that we were going to re-use the original trim in this house. You know, people love original stuff, it’s retro, original, it helps you on the marketing with people that look for that kind of stuff… But it had been painted — it looked like the trim had been painted three thousand different times. You could see the drip, and then the drip had been painted over… So it just looked like crap. So we pulled all that trim off, put on new trim on, painted that, and the house sold in a week, no joke, after that took place. So just one of the things you learn as time goes on, to look at some of these details.

And we had boots on the ground; our real estate agent, she and I are still super tight… And it was just something that she missed. She just for whatever reason wasn’t equating the property sitting and the price point that we were marketing at as that trim being a problem.

Theo Hicks: That’s a very bold first deal, turning a ranch into a two-story. I’d like to see it. So at what point…

Adam Balsinger: I didn’t have a job anymore. I was like… I’d been looking for deals, so that I was just like, “Well, hey the numbers work, it seems like.” I talked to a couple of people that employ that strategy. It’s a great strategy. If that’s your niche, then there are fewer people willing to do that heavy of a lift, that are looking for cosmetic renovations. So if you’ve got the team and you like doing that type of renovation, I think it’s a really good niche for people to play in. It’s got to be the right market, factors have to really line up for it.

Theo Hicks: Perfect. Let’s transition really quickly into multifamily. So I’m assuming that you invested in the LP first and then did the GP afterwards?

Adam Balsinger: That is a correct assumption.

Theo Hicks: That’s what I figured. Let’s talk about the GP. So, why did you transition into multifamily?

Adam Balsinger: Well, the whole catalyst for getting into real estate full time and doing fix and flips in the first place, as I had said before, was for rental properties. Passive income was what I was really after. I’ve always been more attracted to real estate than the stock market. Having a physical, tangible asset, I really like the idea, and I think that with what’s going on with the economy and fiat currencies all around the world, that this decision in my approach, I think, could really pay off here in the mid-term to the long-term.

But as we were picking up one single-family house, and you wind up with a loan on it, you’re making a hundred bucks a door, after you’re paying your expenses. So, I very quickly realized that 10 to 20 houses making a hundred dollars a month off of those was not going to go very far. So, I started thinking, “Okay, I’m going to need a lot more doors in my portfolio to generate the type of income that I’m looking for than I initially anticipated.”

So, let’s say I’m adding 10 doors a year, that still takes a really long time. You’re BRRRing and you’re making a hundred or two hundred a door… You’re dead by the time you’re making enough money to be able to live off of. So, I started thinking, “How can I scale this? How can I do it quicker? How can I amass that number of doors in a shorter period of time and be able to have the passive income that I wanted coming in?” And the answer was multifamily.

So we did the LP as a way to establish a track record to make my team more real when we were talking to brokers. One of the challenges we had initially was, “Oh, we own 12 doors. We want to buy a hundred unit property” and we were having a lot of difficulty being taken seriously. So we partnered up.

I did actually two different LP deals. I was LP in 330 units. One of the deals that I was in actually has gone full cycle. So it was already bought and resold. So at one point, we were going to brokers and saying, “Hey, we’re part of owners in 330 units, but we’re looking to branch off and do our own deals” So it helped us with the track record. It also helped us grow a network that we could then tap into when we were looking to take down our own property.

Actually, the person that I  invested with, the 280 units that went full cycle, he’s actually my sponsor, one of my key principals, the person that signed on the loan for my 92-unit. So that relationship may not have ever been formed had I not invested capital into his deal.

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

Adam Balsinger: Focus on one thing at a time. I mentioned that I run those two businesses, right? I do think that that has slowed down the progress for me in the growth and the development of each company. I think that if I had just focused on wholesaling until the time where that was just totally humming and more like an ATM, where it would just print out money every month, that would have helped me speed up the growth of the syndication business faster. So I think that I spread myself a little too thin for a year or two in there.

So my advice to anybody new would be, “Pick what you want to do. Do enough research before getting into it to know that that’s where you want to be, and block out all the noise.” Just listening to this podcast you can probably come up with 20 different investment strategies. Wholesale, fix and flip, single-family, multi-family, notes, BRRR, all this different stuff; creative finance…

It’s so difficult to get good if you are spreading yourself too thin. Dual sport professional athlete, you don’t even see that anymore. There’s only been a couple of people who have been athletic enough to be a professional in two sports. You never saw a three-sport professional athlete. It does not exist. So it’s silly as a new person coming into real estate, thinking that you’re going to become a master of four different strategies. Just laser focus on one, get it down, systemize it, and then add a second one later. You almost want to make it hands off, systemized, that it’s functioning without your daily involvement before you worry about adding on a second vertical. So that would be my big piece of advice. I think a lot of people mess that up, getting started.

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

Adam Balsinger: I’m as ready as I’ll ever be, Theo.

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

Break:  [17:21] to [17:57]

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

Adam Balsinger: So recently – and I push this book on my wholesaling team every chance that I get – is Never Split the Difference by Chris Voss. I think it is a phenomenal negotiating and sales book. One of the best ones I have ever read.

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

Adam Balsinger: I would immediately start working on wholesaling. I love wholesaling. I think that it’s really really competitive just because the barrier entry is really low, but I think it’s one of the best ways to churn out quick chunks of cash quickly.

Theo Hicks: Tell us about a time you lost money on a deal. How much did you lose and what lesson did you learn?

Adam Balsinger: So I don’t have the exact number that I lost… I know it’s about 5k to 10k. I didn’t want to know the exact number, because it would have made me even angrier. But it had been a fix and flip that went sideways. It was one that we did in the greater Philidelphia area, contractor bailed on us throughout the job, they ate into our rehab budget really significantly, and we did not have the same amount of work that had been accomplished in the property as had been taken out of the renovation budget… So we had a lot of difficulties then finding some decent contractors that could come in and finish the job at a number that wasn’t going to totally kill our profit.

So not only did we have to replace the contractor and then put more money back into the renovation, but it took a really long time for us to find somebody to come in to pick up where the previous person had left off. So it screws up your budget and your timeframe when you have to replace somebody, but we just also took a really long time trying to find that person to come back in. The property probably sat for a month or two as we were trying to find the perfect person to come in and finish the project. And then of course, there were still issues with that contractor.

So it was just one of those deals where it seemed that everything that could go wrong, did. And even then after we sold the property, the exterior guy that had done some stucco repair apparently did not do the stucco repair properly, so the new owner was getting water in one of the back rooms in the property within 3 months of buying the property. So, we wound up having to negotiate money back into their pocket; of course, that’s [unintelligible [00:20:29].09] We didn’t want them to be unhappy with the property, so we gave them some money so that they could get it fixed on their own. So it’s just one of those things where it was like everything that could go wrong, pretty much did.

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

Adam Balsinger: My Instagram, @realestateadam7.

Theo Hicks: Well Adam, I appreciate you coming on the show and sharing with us your Best Ever advice. I really liked how every time you went through some phase in your life you were able to tell us the lesson that you learned. So I tried my best to write all that down, but… Just a few examples.

Number one, I’m sure a lot of people can relate to when you first began your real estate journey with a full-time job and thought you could balance it, and then you went all into real estate, and were not able to spend much time on your job and eventually got fired pretty quickly. And then you were able to leverage the network that you had created from the mentor or the guru class you took to find your first deal, to get the money for the first deal… So I guess that’s one lesson there, is the network that you’re going to get money for your deal from.

And then you talked about the first fix and flip which you did, which was a ranch that you chopped off the top and added in another level. Obviously a very bold first deal, but you said the numbers worked, and there’s actually less competition in those types of deals, as opposed to the kind of light cosmetic work.

You talked about the importance of your contractors and the boots on the ground, your real estate agent when you’re doing fix and flips out of states… And that you actually had to go to the deal to realize that the trim was really bad and that’s why it wasn’t selling.

You said about your transition into multi-family, you did it because of the scalability as well as getting passive income from that physical, tangible asset. And you talked about how your time as an LP actually helped you establish a track record with a broker, but also allowed you to have a network that allowed you to do your own syndication deal. with the example of the GP on one of the deals you had invested in was a sponsor on your deal.

And then you gave your Best Ever advice, which was to focus on one thing at a time. You mentioned how you think you’d be a lot further in your multi-family business if you were focusing on the wholesaling first, and then a multi-family second. I guess that can also apply to your job situation as well.

So thanks again for joining us, I really appreciate it. Congratulations again on your child.

Adam Balsinger: Thank you. We’re very much looking forward to it.

Theo Hicks: Best Ever listener as always, thank you for listening. Have a Best Ever day and we’ll talk to you tomorrow.

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JF2266: Hidden Investing Secrets With Holly Williams #Skillset Sunday

Holly is a returning guest from episode JF1600. She has been investing in real estate for the past two decades with multiple properties in New York, Texas, Mississippi, and the Carolinas. She also started syndications during the same time Joe Fairless did and in fact, was one of Joe’s first investors. Today Holly is going to be sharing with all of us some insights on her new book called “Hidden Investing – Secrets that the top 1% know”. 

Holly Williams Real Estate Background:

  • Spent 25 years in advertising as an executive while slowly dabbling in real estate
  • 2 decades of real estate investing experience
  • Portfolio consist of properties in New York, Texas, and Mississippi, Carolinas
  • Based in New York City
  • Say hi to her at: www.hiddeninvesting.com/book 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Multifamily syndications, has grown beyond my wildest dreams, and it’s changed my life ” – Holly Williams


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’re speaking with a three-time guest, or soon to be three-time guest, Holly Williams.

Holly, how are you doing?

Holly Williams: Hello, Theo. It’s so good to be here with you.

Theo Hicks: Oh, good. Thanks for joining us again. So her last episode was Episode 1600, so make sure you check that out. And today is Sunday, so we’re doing a Skillset Sunday, talking about a specific skill that our guest has, and we’ll be talking about her book called “Hidden Investing”, which is secrets that the top 1% know. So we’re going to get some of those Holly’s secrets today.

Before we get to that, as a reminder, she has spent 25 years in advertising as an executive, while slowly dabbling in real estate. She has two decades of real estate investing experience. Currently, her portfolio is in New York, Texas, Mississippi and The Carolinas.

She is based in New York City. And to learn more about her book and to get yourself a copy of her book, that we’re gonna be discussing today, you can go to https://hiddeninvesting.com/book.

So Holly, do you mind telling us really quickly what you’ve been up to since you’ve last been on the show? And then we’ll hop into that book.

Holly Williams: That’s great. And I thank you again for having me on the show. I’ve been involved in syndications as long as Joe has. I was one of his first investors, as your listeners may know or may not know. And then I began to work with him and kind of learned along with him, kind of at the same time, although he’s always been more advanced than me.

So little did I know — I knew that real estate investing was an amazing way to build wealth, I knew about the tax benefits, I knew a lot of those things, but if you have a full-time career, I was not focused on it, right? It’s very difficult, it’s a ton of work.

So, when I discovered multifamily syndications, it’s grown beyond my wildest dreams and it’s changed my life. By investing passively in syndications, I was able to build wealth, and I watched my parents along the same time do everything that we’re taught in school. I went to business school, I didn’t learn anything. I didn’t even know what syndication was. And when I started learning about it, the only reason I really got into it is because I believed in Joe. And throughout this journey, I’ve realized that we are taught in school – or at least I was, growing up in a middle-class family and going to a state college, all of those things that we do… I was taught many, many, many things, and a good portion of the things that I was taught to do from a financial perspective were really myths, and it didn’t work for my parents.

The whole system basically is really set up for us to die broke. When we put money in a 401(k) and we retire, through a financial advisor who works with us on a retirement plan, all of the things that you’re “supposed to do”, it involves withdrawing a certain amount of money every year. As a matter of fact, the IRS requires you when you’re retired to withdraw this money. So when you do that, it’s taxed at a [unintelligible [00:06:31].19] rate, which I didn’t realize. And once you sell the stock, it’s gone. So I think in our minds and I know in my parents minds, if you have a million-dollar nest egg, we think “Oh, the stock market’s going to return 8 to 10 percent a year, whatever, and that’s going to provide me with an $80,000 income” and that’s just not what’s going to happen in most cases. So it comes down to luck, and luck is not a real great strategy.

So the more I learned about syndication, the more I learned that you could invest passively in a private investment and bypass a lot of the huge fees and those sorts of things that Wall Street does, I began to awaken. And the more I looked around, the more I studied and understood, and sort of basically associating myself with people that are very wealthy and did grow up with this kind of learning… These guys know – there’s a whole world out there that you really have to know somebody; it’s a club… And it really changed my life. And that’s how the rich stay rich. So it’s just my belief. I’m not a financial advisor, I’m not a CPA. I’m just a person that’s telling my experience here with private investing. My eyes opened up the more I learned what was available, so I decided to write a book about it.

Theo Hicks: I think I heard in that intro — because you said in the book you go over 10 things at the top 1% know. And I think I caught a few of those in there, but I doubt we’ll get through all ten. Maybe starting at the most important and then going down, what are these top ten myths of investing?

Holly Williams: So the first sentence in the book is “Our belief systems run deep”, and a good part of the book talks about the mindset of the wealthy. And I’m going to speak for myself, and probably a lot of the listeners can relate to this… We get our values from our families, from what we learn in school, from the media. We’re bombarded with all of this stuff. And I go to school, and my antennae go up when I hear there’s an investment opportunity; I’m like, “Why didn’t I learn about it in school? Why didn’t my parents teach me about it? Is this about Bernie Madoff?” Because that’s all the media tells us about.

So the very first thing that happens is that I go back to my view of the world that I was given. And the wealthy – and I’m talking about the people that have generational wealth, and grow up understanding what I’m about to say, is that their view of the world and their view of how they relate to money, how they look at investing, how they live and what role money plays in their lives, is just very different. And they understand a lot more about how money really works.

When you go to a bank or you go and you invest in a mutual fund or whatever, they’re taking that money and they’re investing in private investments. So they understand that, and they understand how money works, and the velocity of money, and keeping it moving around, and good debt and bad debt… So I go into a lot of those things. And there’s nothing original in the entire book, but what I’m hoping to do, my goal with the book is just open people’s eyes.

You can research what I’m saying, and please, refute me. But it’s true, right? And people tell me, “This is too good to be true. This has got to be a scam, this has got to be–” And the wealthy know about this because their view of the world is shaped at an earlier stage.

The second thing is I was brought up to think that only one person can go to the top, or you have to win the Spelling Bee. We’re all very much brought up – or at least me – in a scarcity mentality; when you go to work in the corporate world, I’ve got to go up the ladder, and if I go up the ladder, you can’t go up the ladder. I’m going to go up the ladder faster than you. And all of those things — well, if you look around at what the wealthy do, they think of a job or whatever as a learning experience and a springboard, and they don’t think about that as the end game, or they don’t think about getting money as the end; it’s a tool to get to where they want to go.

So they plan their lives, and they realize that when Jeff Bezos gets wealthy, that he may very well be a jerk. I don’t know him. But I will say this – he’s not taking anything from me and you. There’s a large segment of the population today that wants to redistribute the wealth. You hear these people, and you see it all the time – people win the lottery and then they are broke in five years, or whatever. And then you hear stories about how people get wiped out financially and then they were able to build it back, right?  Well, it’s because of the mindset.

If you redistribute wealth, there’s a reason it’s just never worked in history, because it’s the mindset first, and it’s learning about money, and it’s changing those built-in behaviors, that frankly, society wants us to have, because it keeps us working, and a cog in the wheel, and it keeps the wealthy wealthy.

So it’s not really a secret; people talk about it. Warren Buffett says all the time that he pays a lower tax rate than his secretary does, whatever. And we just go past that. We don’t focus on that and begin to understand exactly what he’s doing. And what he’s doing is, yeah, he’s buying stocks, but he’s not going into his Fidelity account or E*Trade and buying stocks like you and I are. That’s not what he’s doing.

So it’s just a very different way of thinking about money. So the first couple of chapters is about that abundance mindset, that way of thinking about money. “The 1%” was a better title. It’s really the 0.5%. I mean, really, really wealthy people, that know how to build generational wealth. And again, what we’re taught to do is spend it all and die broke.

Theo Hicks: Perfect. I agree with everything you said. Keep going. What are some of the other myths? I’m going to let you talk, mostly because I want you to get as much of these myths out as possible.

Holly Williams: Sometimes I ramble, because I’m passionate about this. At the end of the day, my Why is that I watched my parents really follow the rules, and I watched myself follow the rules. I started out filling out the 1040-EZ form. 20 years later, I found myself not wealthy, in my mind, living in New York City and paying 50% of everything I made in taxes and watching it go poof. So I don’t believe that the government is a good steward of my money.

Another thing I talk about is the tax code is meant to tell us how much money we owe in taxes. That’s not what the tax code’s meant to do. The tax code is meant to incentivize us to take certain actions so that we can add value to the economy, and grow the economy. And many people smarter than me have figured out the tax code; and it’s not my job to decide if it’s good or bad, it’s my job to follow the laws of the land.

When people say “So-and-so is finding a loophole in the tax code” or whatever – that’s not what they’re doing. They’re following the laws of the United States of America. So by learning those and learning what the government wants me to do, and following what the government wants me to do, I add value to my life, to your life, we have employees, we’re able to grow wealth… And what’s been amazing to me is that I’ve been able to help people like my brother, who grew up just like me, and he’s like, “Oh, my goodness.” I’ve been able to help some of my colleagues in advertising and some of them say, “Oh my God, my accountant says it’s true”, and I’m like, “Yeah, it’s true.” So that’s one myth.

The tax code’s a gazillion pages long and 90% of it is how to do things that the government wants us to do. Another chapter is about — 9/11 really shaped me, and it shaped a lot of people. I watched people jump out of buildings and it was terrible. I was living in Manhattan, and had just flown on in that morning, and it was [00:15:25].05] day.

Now, Coronavirus, just before the pandemic — but I learned a lot from 9/11, right? You learn a little resilience, and that all people are not good, and you need to trust, but verify… And we were all down at ground zero, trying to help, and Christy Whitman was the head of the EPA at the time, and she was just conveying probably what she knew. I don’t think it was intentional, but she came out and said, “Okay, there’s nothing to worry about. The air is safe at ground zero.”

So one title in my chapters is “The myth is the air is safe at ground zero”, because cut to double-digit years later and I’m attending funerals all the time. And I have friends that are awfully sick. So the air was not safe at ground zero, and the experts didn’t know. And we’re seeing it today with Coronavirus. Do we wear the mask? Do we not wear the mask? What kind of mask do we wear? How is this spread? How is it not spread? You can fly on a plane. You cannot fly on a plane.

So all of those things – I don’t think that the quote on “experts” are intentionally going out and saying, “I’m going to lie to these people so that a lot of people would get this thing and die”, but I do think that they really believe, that that’s what they’re saying. But they’re not sure. Well, it’s the “not sure” part that they don’t really tell us. So we’re not taught to really think critically anymore in school, and we’re taught to take what’s given to us and go follow it. And you can still be very respectful of people, and the experts are very smart people, and you can still be respectful of people, but not just take everything they say as the Bible. And I would urge you not to take everything I’m saying. This is my experience. This is one person. So I’m hoping that this will spark some in people’s minds that, “Hey, I’m not the only one talking about it.” And if you start researching it, you can see that pretty quickly.

Theo Hicks: I think my last one is interesting. I’ve talked a lot of people who say that their best ever advice is — they have all the qualifiers, they say “Don’t listen to every single person [unintelligible [00:17:32].11] You’re going to find people who say, “Do not do this specific niche”, or say not to get into real estate in general, and they have all their different reasons why… And to, as you mentioned, be respectful, but make your own decisions.

Holly Williams: Correct. And there are many, many, many ways to invest in real estate, and in anything. And that goes back to looking at your values, looking at what values we were given, and the map of the world that we were given. That maybe it doesn’t work as well anymore.

So my husband, for instance, was taught and it was drilled into him that mortgage is bad, mortgage is bad. You have a paid-for house. Mortgage is bad. And you know something? We have two houses that are paid for. I know that that’s probably not the best use of that equity. I know all of that. I know all about pulling out money. I know all about how to do that safely. But you know something – if it were me, I would do that. But it’s not just me. So if it’s going to cause my husband to stay up at night and worry, it’s just not worth it.

So you have to really understand, I’ve dumped a whole lot of ideas from my map of the world or whatever that I was given, and that’s one of them that I realize is probably not the best financial decision… But not everything in life is a financial decision.

So you really have to decide what you want, and what you feel comfortable doing, and the kind of life that you want to live. I get it, I’m surrounded by all this positive thinking, and I’ve done all of that… But my husband isn’t, and he’s not going to. It’s just not worth it, right? Because I love him, and I don’t want to cause him to be super-stressed about anything. So that has value to me.

So I think it goes back to what kind of investor do you want to be? Where are you in your life? And where I am in my life is about cash flow and capital preservation. And real estate syndication is the way that I do it, and the way that a lot of other people do it; it’s all about not losing money. I need that money for retirement. So to me, that’s the kind of real estate investor I am. There is no doubt that you can take a burned-out building, and it needs a doctor, and go in and rehab it, and make it beautiful, and sell it, and triple/quadruple your money. I’ve made money with depreciation… But you’re depending upon the market. So I don’t do that today.

So it goes back to your values. But what’s key, I think, is to understand that. I know what I’m doing when I’m not paying off my mortgage. People say, “Oh, my God, you’ve got all this equity. What are you doing sitting on it?” And I’m like, “Hey, listen, that’s a personal thing.”

So I think that you have to really understand what’s important to you and what’s not. And the wealthy – that’s really all they care about, is what’s important to them. And a lot of it is maybe because they are wealthy. But if you want something, you’ve got to study people that have what you want, and do at least a little bit of what they’re doing.

Theo Hicks: Exactly. Well, Holly, I wish we could have gotten through more myths, but it is what it is. I think you said some really good ones. You said a lot that I probably missed, so it’s definitely worth relistening to as well as getting her book.

But the ones I did pull were number one, the mindset and realizing that the wealthy have a certain mindset that they got early on in their lives, most likely. We’re taking about people with generational wealth… And that was passed down to them, as opposed to most people are just getting their mindsets from school, from their family, from TV, from whatever. So realizing that and understanding what that wealthy mindset is, and getting rid of your values and adding their values.

The other one was the scarcity versus the abundance mindset. So the myth was that when you’re going out there doing a deal, you’re taking that deal from someone else, as opposed to having that abundance mindset, which is—

Holly Williams: There’s always another deal.

Theo Hicks: Exactly. What the wealthy have. And you gave a good example with, if you were to give it someone who doesn’t have a wealthy/abundance mindset a bunch of money, they’re just going to lose it all. Whereas the saying that “the hardest million is the first million” – because once you make your first million, you know how to make it again, even if you lose it all.

The other one was the tax code. So the myth is that the tax code is just telling you how to pay your taxes, when in reality, it’s something that’s meant to incentivize people to take certain actions to grow the economy, and the incentive is paying less taxes.

The other one was the myth that the air is safe at ground zero. And the thing there is that the experts while they’re smart and should be respected, you need to have critical thinking skills, and make your own decisions. So if someone’s telling you to not do a deal, just because they’re someone you perceive as an expert, doesn’t mean you should just listen to them; you should still pursue it further. Because again, they might have different values, and things that might be important to them that aren’t important to you… Which goes into the other myth you said, which is about the mortgage being bad, being good. And the lesson there was that just because something might be good financial advice doesn’t mean you should blindly do it. There’s other factors that come into play as well.

In this case, for you, you believe there might be a better use of that money, but it’s not worth doing because it’s something your husband isn’t comfortable with. And your husband is valuable to you, so that is one of your values. I thought that was really interesting and important as well.

And then for all those myths, you said they all kind of come back to the values. So again, make sure you pick up her book, it’s called “Hidden Investing”. I’ve got the link, it will be in the show notes.

Holly, I really appreciate talking to you, and Best Ever listeners, as always, thank you for listening. Have a best ever day and we will talk to you tomorrow.

Holly Williams: Excellent.

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JF2265: Physical Therapist With A Real Estate Passion – Lee Yoder

Lee is a full-time physical therapist and a part-time real estate investor. He had a great full-time therapist job working with corporate clients making great money and eventually decided to give that up to work in home health to have a more flexible schedule so he could help his wife with the kids and after taking this pay cut he started to look for additional ways to increase revenue and so he started by investing into real estate. You will see how even if you are working full-time you can still invest in properties with families and friends.

Lee Yoder  Real Estate Background:

  • Full-time physical therapist and part-time real estate investor
  • 2.5 years of real estate investing experience
  • Portfolio consists of 34 units; 16-unit, 10-unit, and 8-unit
  • Based in Lebanon, Oh
  • Say hi to him at: www.threefoldrei.com  
  • Best Ever Book: Best Ever Apartment Syndication Book

Click here for more info on groundbreaker.co

Best Ever Tweet:

“You have to think a little bigger, 10x your dreams” – Lee Yoder


TRANSCRIPTION

Theo Hicks: Hello, best ever listeners. Welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today we’ll be speaking with Lee Yoder.

Lee, how are you doing today?

Lee Yoder: I’m doing great. Thanks so much for having me on, Theo. It’s a real honor to be on you guys’ podcast.

Theo Hicks: Absolutely. Thanks for joining us. A little bit about Lee. He’s a full-time physical therapist and part-time real estate investor. He’s been investing for about two and a half years and his portfolio consists of 34 units, between a 16-unit, a 10-unit and an eight-unit. He’s based in Lebanon, Ohio, and you can say hi to him at his website threefoldrei.com.

So, Lee, do you mind telling us more about your background and what you’re focused on today?

Lee Yoder: Yeah. So I started out in physical therapy… Man, how time flies… I guess it’s been like eight years ago. I got out of doing that, got into home health physical therapy, and it was great schedule-wise. My wife really enjoyed me having such a flexible schedule and being home. We had young kids… But it was extremely boring and unfulfilling for me. So actually, through physical therapy I got into the corporate side and was a clinical director for a company and started building a division for that company based on the home health physical therapy. So I was managing all the therapists between Cincinnati, Columbus and Dayton. So at that point, I’m really enjoying my work, but now I have no flexibility and my wife’s really struggling raising the young kids by herself most of the time. So that didn’t really work either.

So I kind of stumbled upon real estate through a friend, read the Rich Dad, Poor Dad like a lot of people do, and thought, “Okay, well maybe I can go back to doing home health physical therapy, so I have more flexibility, more time at home, but so I don’t get bored, so I’m not unfulfilled, I can get into real estate.” So that’s what I did about three years ago. Well, I left about four years ago, but I didn’t really get started in real estate until three years ago.

So left and I took a big pay cut. I was like I said, a clinical director, kind of moving toward a Director of Operations, role making north of six figures, and left and was not making that in home health physical therapy, but I had a lot of freedom, a lot of flexibility. Still had the stability of a full-time job, but was able to really jump into real estate.

So like I said, did that about three years ago, kind of started like a lot of people, I did a flip, flipped a duplex, had some lenders on that for a little bit, but didn’t hang on that very long… And then about a year and a half ago, well come up on two years ago, I joined the Cincinnati RIA; the Cincinnati RIA has an apartment syndication focus group led by Mark Hutton, who does an awesome job. I think you guys just recently had him on your show. But he kind of became a mentor to me. Meanwhile, I’m always reading and listening to podcasts and everything, so learning and just knowing that I really want to get into multifamily space.

So Mark helped me a lot and just started underwriting deals. And yeah, well, not even about a year ago, I put in an offer and then started moving forward and was able to purchase that 16, 8 and 10-unit kind of in rapid succession, all last fall. So did all that, and basically I spent the last year really bringing those around; two of the three were significant value-add properties, so just kind of been working on those.

And really the past several months, really most of this year, since I’m just really trying to get the apartment syndication business, more formalized and really try to build out a business, to go after a little bit bigger properties and bring on more investors, kind of follow Joe Fairless’ blueprint. I was kind of going through his book and trying to follow that blueprint and take a step up a little bit. So that’s what I’m trying to do now.

Theo Hicks: Thanks for sharing that. Was that the order that they were purchased, 16, 10, 8, or is it—?

Lee Yoder: 16, 8, 10. Yep.

Theo Hicks: And you bought all those really quickly?

Lee Yoder: Yeah.

Theo Hicks: Did you syndicate those or was that your own money?

Lee Yoder: No, it wasn’t my own money. But we just kind of did a joint venture simple LLC with close friends and family. So just a couple people in each one; they’re smaller properties, pretty low purchase price. So just two or three people on each deal.

Theo Hicks: Which of those was the hardest deal?

Lee Yoder: Probably the hardest was the first.

Theo Hicks: Okay, so first deal was the hardest. Let’s start from beginning. So did you pursue certain size deals based off of how much money you knew you could partner with, or did you find the deal first and then find the money?

Lee Yoder: Kind of find the deal first. I really went after everything. I mean, I was working up to 100 units, even though it would have been a real struggle to raise the money for something like that back then. But then looking all the way down to six or eight; I really did want to be commercial, I really wanted to go after a commercial property, so I wasn’t looking at anything too small. I kind of thought between the 10 and 20-unit range was where I wanted to be. I was looking at stuff bigger, but I kind of figured “I’ll just find the deal and then I’ll go take the rest on from there, one step at a time.”

Theo Hicks: Perfect. So you identified the size of deals you wanted to look into. How are you generating leads?

Lee Yoder: You know, I really wasn’t, Theo. I was just doing it the lazy way, just looking online. So all three of my deals were listed. Two of them I found on LoopNet and then one was really listed by more of a residential realtor and that one was just on the MLS, and a buddy of mine actually found that. I’d been telling him about investing for a while and he wanted to get into it with me, so he sent that to me that day it was listed, because there was a friend of his that listed it… And he’s like, “Hey, what about this one?’ And it was a great deal. So yep, I found them all online.

Theo Hicks: So you would just go to LoopNet every day just to see what the new deals were? What was your original process for initially screening the deals? Because I’m imagining when you first go on LoopNet, there’s 100 deals outside of the unit size. What were some of the other things you were doing to quickly eliminate some deals and then figure out which ones to focus more on? And then once you did that, what did you do to focus more on those?

Lee Yoder: I didn’t have a good screening process at the time. Through the apartment syndication focus group here in Cincinnati, Mark shared with us an underwriting tool, and it’s a pretty quick underwriting tool. I use Joe’s as well, and Joe’s is much more in-depth. So the one that Mark shared with us, you can fill out pretty easily. And a big part of what I was trying to do was practice underwriting.

I was really using the underwriting tool on a lot of deals and just run them through there, and it’s just a quick, “Here’s what the income is” and figure out — expenses being about 50%, what kind of loan do you think you’re going to get? Here’s your NOI, here’s your cash flow after you pay the mortgage… It gives you like a break-even number. So here’s basically how poorly you can do on the property and still break-even.

So just kind of a really quick underwriting tool. But I was doing that on most of them. And the more you do that, Theo,  I would start to be able to look at deals, and just really quick in my head, you can do a quick income times 95% because you want to figure 5% vacancy, divide that in half and then divide by a cap rate that you’re looking for. So just even doing that real quick with deals.

I mean, I would love to own in Cincinnati, but so many deals I would look at in Cincinnati is like, “Wow, this is a six cap, that’s not good enough for me.” I don’t have the money already. I’m trying to create wealth, not just put my wealth into a property, like the guys who are buying a four or five cap or whatever; they’re just looking for a place to put money sometimes. But I was looking for a better deal than that. So I could just do a quick underwriting and just like, “Is that going to be a good enough return for me?” And I was able to cross off most deals like that.

Theo Hicks: And once you found this 16 unit deal and it passed that initial screening and you knew that this is the one, then what happened? Did you negotiate the price and then pursue money and then start finding the team that’s going to manage it? Walk us through that point, up until the close.

Lee Yoder: I was doing some networking, but really it was, I guess I’m kind of a jump-and-build-a-parachute-on-the-way-down type of guy. So I talked with Mark about it, Mark helped me a lot. I actually brought him in on that first deal with me. He didn’t put any money into the deal, but he had done so much to help me, so I gave him a piece of the deal to continue helping me out with it. But I made an offer and they were asking for $440,000 for that. And Mark kind of taught me, and others as well, if it doesn’t make sense at that number, what number does it make sense at? So I made an offer at 350k, we kind of went back and forth a little bit, but we just stuck to that number. And it had been online for a year and a half, it had under contract a couple of times, fell out both times. So you can imagine the sellers were just really ready to sell. So we just held to our guns there at 350k and they came down to our price. And so at that point, it got real and then I started getting really serious about what property management company would manage it for me, because I knew I didn’t want to manage my own properties… And just started getting quotes on stuff really quick. And as we got the inspector out there, he had a lot of connections…

So I would just encourage people, as you’re going down that path, if you kind of force yourself into it, you’re going to come up with a lot of the team members that you need as you get into it. Suddenly, the broker that I’m buying from — I wasn’t working with a broker, but the broker that I’m buying from, he’s giving me referrals, “Well, hey, use this property management company.” And then Mark as well, he was kind of a mentor of mine, so he was giving me a lot of referrals, but really kind of did that as we went along through the inspection period.

Theo Hicks: So the management company and the inspector, all the people came through your connection with Mark?

Lee Yoder: Yeah, Mark had a connection with the property management company, but the selling broker recommended the same one… But yeah, Mark referred me to the inspector.

Theo Hicks: What was the original list price?

Lee Yoder: 440,000.

Theo Hicks: 440,000. I heard 140 and I was like, “Wait, 140k for a 16-unit?” So it was originally for 440k and then you settled 350k. Okay, I’m sorry.

Lee Yoder: Yep. No problem.

Theo Hicks: What about the money for the deal?

Lee Yoder: Actually, just one money partner and it was a close family member. My in-laws actually brought the money down for that deal. So it was just me, close family and Mark on that deal.

Theo Hicks: How did that come to be? Did they know about this beforehand? Did you just call them up and say, “Hey, I need $100,000? What do you say?” And how did that conversation work? Were they the only people you talked to or did you talk to other people? Maybe walk us through the money raising process from your perspective.

Lee Yoder: Sure. I’d been talking to a lot of people about real estate. So this was about two years into my real estate investing career. So I flipped a single-family home and flipped a duplex. So my in-laws were actually involved quite a bit on the single-family, and had loaned us some money on that just because the HELOC we were using didn’t come through, an issue with the bank. But anyway, they kind of accidentally got into that with us, we paid them a little bit of a return, so they kind of saw, like, wow — you know, they’ve never done anything like this. So then I was like, okay, kind of get this real estate thing—my father-in-law is very handy, he likes doing stuff like that… So they kind of saw the power, but we didn’t use them on the duplex, and they were kind of like, “Why don’t you use us on this? We thought we’d invest with you again.” My wife said, “Well, you know, we got the HELOC now. So don’t need it.” So they were kind of getting some interest.

And so again, I didn’t have the money raised upfront. So I got it under contract, talking to people about it, talking to my in-laws about it and they just said, “Well, you know, why don’t you just let us bring the money for the deal?” So they had just kind of gotten interested in real estate, kind of saw the power of it and they had done a really good job saving their money, and decided they wanted to invest with us. So that was pretty organic.

Theo Hicks: Perfect. So you said that this was the hardest deal. Was is hard because you kind of had to do everything on the fly or was there something else that happened that made it a difficult deal?

Lee Yoder: Well, half of it was hard because it was my first one and I didn’t have all the connections. So as soon as I got done with the first one, I felt very comfortable offering on another one. I felt like, man, I got the property management lined up, I got my inspector lined up, I got the lending lined up… Just so many different things, and I just felt more confident about, “Okay, if the numbers look good to me, then it’s good. I know it’s going to work out.” And it’s just not such an intimidating process once you’ve done it once. So that was part of it, why the first one was harder.

And they needed a whole new roof. It’s an old school building, so it’s kind of a weird building; it’s a huge building for a 16-unit, and it needed a lot of work. So there were a lot of common areas, big hallways, a lobby and they needed it totally gutted and redone. There were three vacant units when we got it. A couple people moved out pretty quickly after we got it, because we increased rent by $25, just to ask for a utility bill-back, because we actually pay all utilities, including cable. We pay everything. But we also cracked down on smoking the building. So we lost a couple tenants pretty quickly.

So the first few months were okay, and after that more people moved out and we really lost a lot. So we weren’t planning on making much money in the first year, but I think we basically made zero in our first year, so yeah, it was kind of a long process to turn it around.

Theo Hicks: Did you fund the renovation costs? Was that included in the loan or was that extra money you got?

Lee Yoder: Yeah, it was included in the money that my family brought to the deal.

Theo Hicks: Okay, so they covered the down payment for the loan and then all the renovations.

Lee Yoder: Correct.

Theo Hicks: Okay. So you bought this deal, was it two years ago?

Lee Yoder: No, almost a year ago.

Theo Hicks: Okay, so where’s the deal at now?

Lee Yoder: We’re renovating one unit right now, we’re almost done with it. We just let a tenant go. So we have 15 of the 16 full. The 16th is almost fully rehabbed. And in fact, I think they put the flooring in yesterday, probably they did between yesterday and today. So we’ll be trying to get that one rented out and we’ll be full. We’ve raised rents for everybody, like I said, did a $25 bill back… But we’ve actually turned over seven of the units. And on those units, we’re getting anywhere from a $70 to a $90 rent premium when we remodeled the unit and put new tenants in them. So on seven of the units we got that kind of a rent premium. There’s a cafeteria in it. Like I said, it’s an old school and there’s a cafeteria, and we have a church renting out that space, so they’re paying 60 bucks a week for that space.

Theo Hicks: Nice.

Lee Yoder: Yeah, we’ve turned a couple offices and different things into storage… So we’ve really brought the value of it up and we actually have it listed for sale right now.

Theo Hicks: Awesome. Well, congrats.

Lee Yoder: Yeah. Thank you.

Theo Hicks: Thanks for walking us through all the details. Every time I do that is because it is your first deal and I like going through the first deal with people, so that people listening who haven’t done a deal for realize that when most people do their first deals, they don’t really know what they’re doing.

Lee Yoder: Yeah, correct. 100%.

Theo Hicks: And it ends up working out if you continuously grind, if you have the right team, if you have the right people around you and you have the right mindset… So thank you for sharing that.

So, Lee, what is your best real estate investing advice ever?

Lee Yoder: With all the books that I’ve read, everything I’ve learned, I like to say that I think you have to have a mix between The 10X Rule, which is Grant Cardone’s thing, and then Darren Hardy’s, The Compound Effect. He wrote that book because Grant Cardone just talks about like 10X-ing your dreams. I actually never read the book, I understand the concept; and that part’s pretty easy for me. I don’t have trouble dreaming big and thinking like, “Okay, maybe I could own 100 properties.” But a lot of people I think struggle with that part. If you struggle with that part, I think you got to get your mind wrapped around – there’s a lot more possible than what you may think. So you’ve got to think a little bigger, 10X your dreams. If you think the most you could ever do is own one house, well, 10X that and at least think that maybe you could own 10 properties.

And I think after that, though, Theo, The Compound Effect talks about just taking consistent action. And it’s like the small things that you have to do over a long period of time to build up the momentum to eventually see this exponential growth and really take off. I don’t know your story as well, Theo. Joe, to me, is like an incredible example of that. So many guys that get into the apartment syndication space or just the multifamily space in general, it takes a long time to get that first deal. But that whole time, you’re building connections, you’re improving your underwriting process and your ability to underwrite deals, you’re talking to people, you’re slowly raising money, and then suddenly, you finally get that deal, you’re ready for it, you take on that first deal…

Michael Blank talks about “The law of the First Deal,” that was certainly true for me. You get that first deal and suddenly, the second one kind of comes to you in rapid succession, and then you’re off to the races, because you’ve done these consistent things, processes, procedures, all these things you’ve done over the past, sometimes a year, a year and a half for some guys, to get to that… But then you can really take off. And that’s really hard. That’s hard for me, because I just want to look for properties and go after a property, but there’s a lot of things you’ve got to do to prepare yourself to be able to take on it, especially a bigger property. So I’m kind of working through that now.

Theo Hicks: Awesome. Are you ready for the best ever lightning round?

Lee Yoder: Yeah, absolutely.

Theo Hicks: Okay.

Break: [00:17:47] to [00:18:25].

Theo Hicks: Okay, besides The 10X Rule book and The Compound Effect book, which you’ve already mentioned, what is the best ever book you’ve recently read?

Lee Yoder: I’ve got to say recently, Theo, it really is the Best Ever Apartment Syndication book. Got it here… That Joe wrote. When I decided I really wanted to move forward with the apartment syndication route and go after some bigger properties, I got that book, and to me, it’s a textbook. I actually partnered up with but the guy I used to work with on the corporate side, and he’s partnering with me on apartment syndication stuff, and I told him to read that. I said, “Man, just go through this. It’s a textbook, you’re going to learn so much.”

So if anybody’s serious about getting into the apartment syndication, I would highly recommend that book. It shouldn’t be like your first book, if you’re looking to get into real estate, because it’s next level stuff, I think. Some of it’s a little bit beyond me still. But if you understand real estate and you want to do apartment syndication, that’s a great, great book.

Theo Hicks: I love it when that’s the best ever book. Thank you. So if your business were to collapse today, what would you do next?

Lee Yoder: If I can stay in real estate, like if I suddenly couldn’t try to syndicate any more or couldn’t go after multifamily properties, I would probably go back to flipping. My wife and I, we actually just finished up a flip a few months ago. We really enjoy doing it together. We really enjoy having the kids join in. They’re still a little bit young, they’re six and four, but they’re getting closer to the level where we kind of do it as a family. So I would probably go back to flipping houses with my family.

Theo Hicks: Out of all the deals you’ve done, what’s been the best ever deal?

Lee Yoder: So the best ever deal would have been the 16-unit that we talked about, because I was able to purchase that for 350,000 and we were able to negotiate. I didn’t talk about this. We bought it for 350k, but we actually negotiated; the seller is bringing $100,000 cashback at closing, because it needed a new roof and a ton of other stuff. They were able to see the building was kind of falling apart, they were going to have to help us; we put some back into it to bring it around. So we got that. I did put a little bit more into it, we used some of the cash… So we probably put 45k into it. But at any rate, we’re into it for under 400k, and we’ve got it for sale for 700k right now.

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

Lee Yoder: Recently, my wife and I really enjoyed involving our kids and getting giving to our residents. So having kids often makes you—well, I think it makes you want to kind of be the best version of yourself because you want your kids to become the best version of themselves. So it’s really inspired us to show them how we can share Jesus’s love and the blessing that we’ve been given to bless our residents with those. So for Christmas, we handed out like a little Christmas gift to all of our residents; just because of COVID, we handed out a gift card to all of our residents and our kids are the ones that will put those on their doorstep and stuff. So being able to do that for our residents, it’s fun. We like it, but it’s fun to involve our kids in that, and for them to see that as well.

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

Lee Yoder: So you mentioned my website already, and I appreciate that. https://threefoldrei.com/ and we’ve got some free resources there, like a sample deal package. And I tell people about, on the website, how I paid zero percent taxes on the 16-unit I’m going to sell, and how I’m making that work out. But you can email us at info@threefoldrei.com. And then you can call us at 937-400-3044.

And then actually, Theo, I have a podcast that I just started, focusing mostly on multifamily, but also a faith and family aspect. And my podcast is called Three Fold Real Estate Investing.

Theo Hicks: Perfect. If you’re watching this on YouTube, you can see his logo behind him right now. All right, Lee, well, I appreciate it. I enjoyed our conversation. Besides the takeaway I mentioned right after we talked about your first deal, which is that a lot of times people don’t really know what they’re doing on their first deal – I was like that, and most people I’ve spoken to are like that. And so if you haven’t done a deal before, don’t allow the thought that you don’t know enough or analysis by paralysis stop you from doing a deal. As long as you, again, have the right mindset and the right team, you’ll be able to figure it out along the way.

The other interesting thing you said was about your job right in the beginning, where you said that you were making more money at your previous job. And obviously, you could have kept doing that, could have kept making more money growing that part of your career. But you realized that you weren’t able to spend too much time doing what else you wanted to do with your life, and so you took a step back, took a pay cut, came back to the more flexible, you called it the “boring” job, and then were able to use your extra time to spend with your family as well as your real estate.

So I think the lesson there is that if you want to get into real estate—actually, I just talked to someone who kind of did the opposite of what you did. He had his full-time job, he started doing real estate on the side and then ended up getting fired, because he wasn’t getting enough time. But I think the better solution is to find out a way to either get a new job or just do something that you’re going to be able to do while you’re building up your real estate career. Obviously, people have been fired or quit and had it work out, but I think your strategy is a little bit safer and I’d probably recommend that strategy.

And then thirdly, your best ever advice, which is to find the balance between the 10X rule and then the kind of slow compound effect. You don’t have to just do one or the other. You can keep both in mind and realize that you set these big goals, but you also need to realize that if you continuously grind over time, you’re going to see that compound effect, the exponential growth.

Lee Yoder: Yep.

Theo Hicks: So thank you, Lee, for joining us. I appreciate it again. Best Ever listeners, as always, 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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JF2264: Investor Agent With John Chin

John is the co-founder of Investor Agent where they have done 2,800 rentals and flips. He started at 19 in the military by picking up real estate courses where he could barely understand the terminology but through perseverance and hard work he now manages over 470 cash flow rentals.  

John Chin Real Estate Background:

  • John is the co-founder of Investor Agent
  • You’ve done 2,800 rentals and flip properties (mostly short sales, foreclosures, and REOs)
  • Closed over $260 Million residential investments
  • Currently manage over 470 cash flow rentals
  • Based in Orlando, FL
  • Say hi to him at:  www.investoragent.com 
  • Best Ever Book: Power vs Force

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Start working with investors, one investor client will change the trajectory of your future” – John Chin


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 John Chin.

John, how are you doing today?

John Chin: I’m doing good, man. Thanks for having me.

Theo Hicks: Absolutely. Thanks for joining us. Looking forward to our conversation. A little bit about John. He’s the co-founder of Investor Agent. They’ve done 2,800 rentals and flip properties, mostly distressed residential properties. They’ve closed over $260 million worth of residential investment and they currently manage over 470 cash flowing rentals. He is based in Orlando, Florida, and his website is www.investoragent.com.

So John, do you mind telling us some more about your background and what you’re focused on today?

John Chin: Yeah, man. So we have a traditional brokerage background. I’ve been doing traditional residential sales for a long time. I started when I was 19 years old while I was in the military, serving in the Air Force, didn’t like turning wrenches that much, didn’t see myself doing that forever… Although it was a good experience, I wanted to get into real estate investing.

So I think a lot of us — to kind of date me a little bit… A lot of the listeners know Carleton Sheets and picked up that ‘No Money Down’ course; it was when it was like a three-inch thick package of audio cassette tapes. And I couldn’t get past the first chapter, because I didn’t know the language as a 19-year-old; I’d never bought or sold the house. So I got my real estate license to learn the course. And then started accidentally selling houses to my military friends.

Then had kind of a fortuitous pivotal moment when I sold a house to an investor who had multiple rental properties. And he kind of took me under his wing and that kind of changed the trajectory of my career in real estate, which is now about 25 years. And I just focused at that point forward on residential real estate properties.

So you fast-forward to today and now we work with licensed agents who want to get into the residential investment space, so that they can do more closings with clients who want to buy rental properties or flips and that sort of thing.

Theo Hicks: So you said that you want to help them work with investors, or you want to help them invest themselves?

John Chin: We helped them to work with investors first, and as a byproduct of working with investor clients and being in that space — it’s kind of like being in the commercial world, but in a residential space… Then as a byproduct of that, you pick up key relationships with investors who then you do JVs with, and you start investing yourself; capital doesn’t become an issue anymore, you have unlimited funding, essentially, with your deals…

And so licensed agents, typically who have an interest in real estate investing will, in our opinion, do it the wrong way. So they start trying to learn how to invest in properties, do coaching programs… You could spend 20 $40,000 pretty easily trying to learn how to invest in real estate and not ever make a penny.

Well, our view is, if you’re a licensed agent, you have access to the MLS, and we teach you how to hack the MLS to find deals; then you work with investors first. You learn as you go, you’re making money as you learn, and then you keep the cherries along the way. So it’s like joining the military, you get to make money while you learn a trade, and then you get out, as opposed to going to college, where you’re paying to learn,  and then you’re trying to make money after you graduate. It’s a little bit of a paradigm shift.

Theo Hicks: Yeah. I was actually talking to someone earlier this week who has a corporate job. She caught the real estate bug, she wants to get out of that job, and her thought is to become an agent, start up being an agent in order to generate income from selling homes in order to make enough money so she can quit her job, and then ultimately start investing. It sounds like you work with people who are already agents, but would you recommend that if someone is in that position, if someone wants to get started in real estate and they have no experience whatsoever, they’re working a job and they want to get their feet wet – do you recommend their first step being getting their license?

John Chin: Yeah, 100%. It’s funny, there’s two schools of thought about that. A lot of estate investors don’t like to get their license, because they like to operate in what I call the gray, where they don’t want to be liable or be in front of a judge saying that, “Oh, you’re taking advantage of the public, you’re a licensed professional,” and they don’t want to deal with the disclosures, and all that kind of stuff. But our school of thought around that is that if you’re a licensed agent, you have that kind of educational base and all the tools to access inventory, like the MLS and you have a broker to guide you and keep everything compliant… That’s, in our perception, a good foundation to start from.

And then if you’re doing investing the right way anyway, then you shouldn’t be afraid of disclosures and investing in real estate as a professional. So that’s our take on that. And if you start that way, with the intention of doing residential sales, but then focus on working with investor clients and—there are cash investors right now that are closing multiple transactions a month on almost every MLS in the whole country. So if you find out how to identify those people, why not work with less clients, do more transactions, not have to deal with buyers and sellers who have finance contingencies and a lot of the hiccups that you deal with emotional buyers and sellers? …that by the way, they’re only purchasing every 7 to 15 years, right? When you think about somebody who’s buying or selling a home.

And if you’re a licensed agent, you’re lucky if you get both of those transactions, the buy and the sale. So why not work with cash investors who are buying a lot of times sight unseen, that don’t have any finance contingencies and they’re closing multiple transactions a month? So we try to accelerate somebody’s success and their money-making opportunity by working with investors, as opposed to your traditional retail client is what we call that.

Theo Hicks: Sure. So you said two things there. One, was identifying the cash buyers, and then two was – you said this earlier, I think, about hacking the MLS. Let’s talk about the ID and the cash buyers first. I kind of got two questions there, answer both or whatever… But the first one is, from an agent’s perspective, how am I finding these types of cash buyers? And obviously, that’s going to apply to wholesalers or anyone who needs to find cash buyers in general.

John Chin: Yeah. Yeah.

Theo Hicks: But then secondly, kind of flipping it around. If I’m an investor and I want to work with an investor-friendly agent, what types of things are agents looking for in their ideal investor client? Will they take anyone who says, “Hey, I want to invest”, or are they looking for a specific person with a specific background and specific ability before they begin to work with them and give them access to their hacked deals?

John Chin: It’s interesting… I think the second question is a lot easier and faster to answer. And the answer there is to anybody who’s been on floor time as a licensed agent who got a call from a “investor”, you want to run the other direction, because most of them are tire kickers. They have you on this wild goose chase and you’re sending them MLS listings and you have no idea, number one, what to look for. You don’t know how to qualify them. But if you know how to qualify an investor right – it’s basically  just two things. They have a track record and a history of closing on deals. If they have a track record and history – that’s the first thing we’re asking them on the phone – and they have realistic criteria on what they’re looking for, then yeah, they’re worth working with. But we’d rather work with someone we don’t have to qualify.

That comes back to your first question, is how do you identify these cash investors that are buying multiple properties? Well, on any MLS search, you can do a search for cash transactions. If you know how to on the MLS pull up all the cash transactions within a certain window – we like to go back like 60 days, 90 days – and then you then append that information with absentee owners, so where the mailing address is different than the property address, and you see someone doing that three and four times the same party, then you know they’re an active cash investor in most cases. Unless you’re in a place like the mountains of Tennessee or in Orlando, for example, or maybe Vegas… Chances are those aren’t vacation rentals. Those are probably long-term rentals and they’re building a portfolio. So then it’s just a matter of contacting those folks, finding out what their criteria is.

And here’s the thing. The number one turn-off with investor clients for licensed real estate agents is that they have unrealistic expectations and they want huge discounts, which as you know, today’s competitive environment seller’s climate, you’re not going to find those kinds of discounts.

So what’s nice about working with people who have tons of transactions and a history of cash deals on the MLS is you’re talking about inventory that’s on the MLS. You don’t have to be a specialist at finding off-market deals, which my partner Ron and I have a lot of experience with that.

Ron’s background is wholesaling, where him and his group – they were closing 50 to 60 transactions per month wholesaling, right? So that’s his background. You complement that with my background, taking possession of properties and full-cycle flipping them, and funding them and so forth… All of the stuff that we’ve done in the past has been a mix of off-market and on-market MLS deals. But when we’re working with licensed agents, we’re helping them utilize a tool that they already pay for, the MLS, to find those investors and find the deals already buying that’s on the MLS.

Theo Hicks: So let’s transition into that… You told me how to find the investors… How do I find the deals now on the MLS?

John Chin: It’s easy. Literally, if you do the first part – we call it our investor launchpad sequence. Picture that a rocket ship is taking off. You’re newly licensed and you want to work with investors, you don’t know where to start. I’d tell you to start by looking at the MLS, doing the search I just described; that surfaces the active cash investors that are buying multiple properties. Well, by virtue of those search results, you see the kind of properties they’re buying. So if you contact those investors and find out that, okay, these are the addresses they bought, that translates usually to a yield requirement they have.

So if you look at what they paid for the properties, and you can easily research what they rent for, those are the same assumptions that these guys are making to get to their yield requirement… And you know that, okay, they’re looking for at 12% gross yield, for example. That’s kind of a rule of thumb to start your search.

There’s a misconception that a lot of agents have – it’s that to work with these private equity firms and companies that are doing these transactions, you have to be very sophisticated with analysis. You don’t. Because they have all their own people that crunch the numbers, right? All you have to do is find the addresses that meets at most a gross yield, which to you and me, we don’t think a term of gross yield; we think cap rate or net income, right? Or cash on cash return if we’re doing a leveraged purchase and financing. But these guys think in terms of, “Look, the only burn I’m going to put on that agent is you just research a realistic [unintelligible [00:13:14].10] number and an address and a price that meets a certain rent multiplier. Send that to us. We’ll do number crunching and get granular with it and then we’ll give you a yes or no.

Theo Hicks: So I’m just trying to make sure I’m getting this right. So I search all these cash buyers, I find the types of properties that they’re buying, and then from that, I know what yield they want. So what’s the next step from there? Going through the MLS and looking for properties that match that criteria? Is that what you’re saying?

John Chin: Exactly. So they’ll have some input process or a team that will take the addresses that you want to send them and then they’ll do further analysis on them. And then they’ll tell you yes or no, and then you represent them on the transaction on that buy.

It’s so overly simple that it’s mind-boggling that agents aren’t doing more of this, right? So if you don’t know what their yield requirement is, you will literally just put an address in, and then you’ll have some sense of what they’re looking for, based on what they’ll tell you their gross yield requirement is… And most institutional investors today are going to be anywhere between the 12%, maybe 15% gross, and then they’ll have some geographic criteria they’ll have on where they won’t buy. Usually, it’s exclusionary. They won’t tell you where they will, but they’ll tell you where they won’t.

So based on that geographic criteria, usually they’ll tell you their requirements on the specs of the house; maybe minimum three bedroom, they’ll have a vintage or a year built requirement. They won’t go back more than 15 years. They won’t do heavy rehabs maybe. They’ll have their exclusionary geographic criteria, but they’ll tell you what that criteria is. And because there are so few agents who know how to work with them, for you to be able to approach somebody like that and say, “Look, I’m a licensed agent. I want to work with you. I can help you find these properties,” they’ll send you their template or their “buy box”.

Theo Hicks: So essentially how that works – you search MLS, cash transactions, absentee owner, multiple transactions. I call them, say, “I’m an agent,” say, “I want to work with you, what’s your criteria?” They send me their criteria and then I search the MLS, I find a list of all the properties that I think meet their criteria, send them an Excel spreadsheet and then it kind of goes from there?

John Chin: Yeah, they’ll usually have one point of contact that you’re working with, somebody on the ground, and sometimes it’s even another agent; or maybe it’s somebody internal, at their ivory tower. And they’re never, by the way, local. Maybe if you live in Phoenix, you’ll be working with them locally or something like that. But usually, there’s five investors that have probably purchased 30% of — we’re in Central Florida, right? So in central Florida MLS, we have about 30,000 property listings; of all the cash transactions, they’re probably purchasing between 25 and 30 percent of all these cash transactions, five different buyers. And they all operate very similarly to what we’re describing right now.

Theo Hicks: And then at what point as an agent — how long they do this for until I start to transition into doing my own deals?

John Chin: If you are into wholesaling — and I have to kind of switch hats for a second here. I’m so into working with licensed agents who are working on the MLS and they have to conform with the brokers requirements and that kind of stuff… But if I’m starting with an investor’s perspective, somebody who’s potentially wholesaling deals and they know that game, then a lot of times it’s a matter of you just contracting the properties yourself. And a lot of times, these buyers – they don’t care how they get them, they just want to get their yield requirements. So if you have to do an assignment or a double closing, they’re fine with that, because they’re paying cash, there’s no underwriting requirements… It’s a pretty easy game. You just have to make sure that their rehab numbers aren’t out of this world and they meet what you expect them to look like.

So if you’re a wholesaler, to answer your question, if you want to get into doing your own deals, what ends up happening is you come across in this exercise of serving that investor and making commission’s on them, you start coming across cherries that you end up wanting to keep yourself. What also will surface is your mid-tier investor clients and your Mom-and-Pop investors who also want to play that game, but not to that scale, that you’ll end up serving and finding deals for as well.

So in our experience, when you’re working with those Mom-and-Pops and those mid-tier folks, they end up becoming JV partners on deals… Our own flips – we never fund or put any money into our own flips. We never even do hard money loans. By virtue of working with these investors that trust us, and they know we have contractors and property management operations in place, and we have all the mechanisms on the assembly line to take that residential property and to monetize it as a flip or rental property, they want to fund our deals.

So we get 100% funding, we typically offer these investors—because think about it, you’re a cash buyer and you’re looking to build a rental portfolio. And let’s say today, a good cap rate might be 7% or 8%, if you’re in a decent area. Do I want to do that and make 7% or 8% on my cash at the end of the year, or can I give Theo,  an investor agent, some of my cash for him to fund a flip? Maybe be exposed to 80% of the ARV so I’m pretty safe, I have some margin of safety there. But I give you 100% funding and you give me in return — our typical term is about 8% interest preferred return on my money, and maybe a 15% clip on the profit beyond that. So it’s kind of like a CD with a lottery ticket attached to it as a little bonus, right? Profit kicker.

And then now if you make me 10% in a six-month span, and you can do that for me twice in a year, I’m at 20% return on my cash. Why won’t I just keep doing that and be completely liquid after every transaction? So it’s very easy then for you to graduate from being an investor agent – good credit, bad credit, no money, maybe you have some money, but to convert a lot of these investors into private money.

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

John Chin: It’s easy. One investor client will change the trajectory of your future because of what they teach you, the access to resources and how they shorten your learning curve. So if you’re working with investors, you make friends, and one or two of those friends are going to become your mentor. So just start working with investor clients. Don’t worry, everything else will take care of itself.

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

John Chin: Yeah, let’s do it.

Theo Hicks: Alright.

Break: [00:19:07] to [00:19:54]

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

John Chin: That’s easy. David Hawkins, he wrote the book Power vs. Force. The more recent book is The Pathway of Surrender: Letting Go, by David Hawkins. It could be the most important book you could ever read and the only book you ever need.

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

John Chin: I’d throw a dart at the map, and as long as I had a phone and a laptop computer, I’d probably go out there, start finding some cash buyers and then start finding deals for them and reverse wholesale.

Theo Hicks: Is there a time that you or a client you work with lost money on a deal? How much did they lose and what lesson did you learn?

John Chin: Many times, actually, including myself. The most recent one I’m thinking of is about $80,000 on one flip that we’re still contending with right now, because after the transfer of the title – because we purchased the property subject to – the IRS filed a tax lien even though there wasn’t one in place and we’re still contending with that, with an IRS that’s shut down right now, in some of the departments. So anyway, we do it all the time.

And the lesson you learn from it is, in every single case, the common denominator on losing money on a flip is because I put too much trust in somebody and never validated. And I didn’t control it and micromanage that deal with somebody maybe that I haven’t done business with before. Almost every case, whether it’s contractors who messed up, competence or character-wise, or it’s somebody who was overseeing a rehab… It always comes down to someone who in many cases are well-intended, but incompetent.

Theo Hicks: On the flip side, what about the best ever deal you’ve done, either monetarily or some other reason why it was the best deal?

John Chin: The best deal I’ve ever done was probably — we love lease option sandwiches, just controlling an asset and not having to deal with the rehab; we do quite a few of those. None of them stand out. One of them where we made about $80,000 when you combine the option money that we got up front, the spread and the cash flow for the year and a half we had it, and then the amount of money we made on the sale price between our buy and the sale… That one comes to mind. It wasn’t the most money we made on a deal, but it was so easy. So those are the ones that kind of stand out.

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

John Chin: Well, Ron and I, we both are coaches, youth coaches, that is. I coach the lacrosse, ron coaches football and soccer… And both have young kids. And number two is we kind of take our coaching to a level that [unintelligible [00:22:16].26]  just the games and things like that. So we kind of serve as mentors of the kids that we coach and love.

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

John Chin: The easiest place to find us is https://www.investoragent.com/ because we’re offering credentials, the content and the tools and the community to support to a licensed agent who wants to get their foot in the investment world.

Theo Hicks: John, I really appreciate you coming on the show today and walking us through this very simple but very effective step by step process for new agents to not only grow their real estate agent business, but also ultimately transition into doing deals themselves.

And essentially, the process is that you go to the MLS, you look up the cash transactions with an absentee owner, so they don’t live at the property they bought, and they’ve done multiple other transactions in a month or in a year. And then you reach out to that person, because you assume that they’re an investor, confirm they’re an investor, determine what their criteria is, and then go through the MLS and find deals that meet their criteria, send them the address, send them the price, and send them the rent you’ve done, and they’ll take it from there.

And if you do this process enough, you’ll start to build up relationships with people, you’ll start to learn what a good deal is, and then eventually you can start to cherry-pick those deals yourself or start to partner with people, start to have people invest the capital into your deals, assuming you’ve kind of got the relationships with the contractors and the lenders and the property managers. And it is that simply, you said.

And you said that if your business were to collapse today, you would just throw a dart at a place on the map and just do that there.

John Chin: Pretty much. I would say too another way of saying what you just said – because that was a very good summary – is focus on the who, the investors. The what and the how – that comes as a by-product of just serving investors. It’s very simple.

Theo Hicks: And then your best ever advice was to, as you mentioned, focus on the client. And that one client, one mentor can change the trajectory of your future. Like for you, that person can be your one mentor, two mentors, three mentors that guide you towards whatever your investing goals are.

So thanks, John, for joining us and sharing this fantastic strategy with us. I’ll definitely tell the person I talked to listen to this episode. Perfect timing. This is exactly what she was looking for. So I can just say, “Hey, listen to John’s episode.” And anyone else who wants to do the same thing, who wants to get started in real estate, can just listen to John’s episode.

So thanks again, John, for joining us. Best Ever listeners, as always, 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.

Follow Me:  
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JF2261: “Passive” Income With Chris Hsu

Chris Hsu is the co-founder and CEO of Zibo, a venture-backed financial services company for independent landlords. Chris invested in real estate for over 20 years while pursuing a corporate career and learned that investing in real estate is anything but a “passive” income. He founded Zibo to help independent landlords save time and increase cash flow in their rental businesses.

 

Chris Hsu Real Estate Background:

  • Co-founder and CEO of Zibo (zee-bo), a venture-backed financial services company for independent landlords
  • U.S. Army Armor Officer
  • Has been investing in real estate for over 20 years
  • Based in Redwood City, CA
  • Say hi to him at: www.zibo.co 

 

 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Talk to your customers, understand their pain points and how they are currently addressing those points today” – Chris Hsu


TRANSCRIPTION

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

Chris, how’s it going?

Chris Hsu: I’m doing great, Theo. It’s great to be here with you.

Theo Hicks: That’s good to hear. Thanks for joining us. A little bit about Chris. He is the co-founder and CEO of Zibo as you can see by his beautiful attire, which is a venture-backed financial services company for independent landlords. He’s also a US Army Armor Officer. He’s been investing in real estate for over 20 years. His company is based in Redwood City, California, and you can say hi to him and learn more about his company at www.zibo.co. If you’re watching this, you can see Z-I-B-O.

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

Chris Hsu: Sure. A little bit about my background. I grew up in Louisiana and decided I wanted to go to the army. So I went to West Point, joined the army. As you mentioned, I was a tank officer stationed predominantly in Germany; left the army and that’s when I started becoming a real estate investor. I was doing it on the side, it was like most mom and pop real estate investors. I didn’t have a lot of money when I got out of the army, I didn’t have any equity and I wanted to build some wealth and equity for me and my family, so we started investing in real estate, just really learning from friends and borrowing tools and just kind of building your own online/offline, Excel spreadsheet, paper-based system… And I worked at various different companies all throughout that to really culminate in being a public company CEO of a tech company, of a software company.

And I took a little bit of time off, stepped back and thought about what the heck do I want to do with the rest of my life, and I’ve just always found, I would say, real estate investing a hobby, something I really loved… And with some guys who had been really successful real estate entrepreneurs, we got together and we started Zibo.

Our mission in life is to fundamentally change the experience that small independent mom and pop landlords have with financial services. And that’s people that own anywhere from one single-family rental home to 100 units, and a mix of multifamily, single-family, mobile homes, you name it… Because they all have a very similar problem and a very similar stresses. In almost all cases, they’re really focused on trying to get to that elusive passive income, where they’re just cashing a check. And we just thought that there’s a better way to bring financial services to that independent, underserved mom and pop landlord, which is the vast majority of the landlords in the United States.

Theo Hicks: Thanks for sharing that. So the goal of your company is to transition people from more actively investing, being involved in their business, to as you mentioned, just collecting the check. So what would you say is the number one thing that is keeping people from being completely passive or at least more passive? And then how does your company address that problem?

Chris Hsu: There’s two aspects to passive income. One is the passive part and the other is the income part. I think on the passive part, we’ve spent time with thousands of landlords and independent mom and pop landlords, and what you hear from them is just a ton of stress and worry and time spent on simple things like collecting payments. Am I getting paid on time? Am I going to be able to get my bills paid? Is the timing of when I get paid correspond with when I have to get bills paid? If I’ve got 20 properties or 20 units and I’ve got rent collections checks and all kinds of forms of payment coming in, it takes me three weeks to pay me on time and to get those checks deposited in the bank.  Well, what Zibo is doing is trying to automate that process, so that landlords have one integrated dashboard that they can see exactly—if you’re a tenant and a landlord on Zibo, as soon as the tenant hits a button to send a payment, whether it’s credit card, debit card, check, money order – as soon as that’s sent, the landlord is going to see a status. So they’ll know within a couple of days who’s paid the right amount on time, etc, because they’ll have a dashboard. They can set up automated payments.

In today’s day and age 80% of tenants want to pay electronically, either bank transfer, credit card. 42% of tenants want to pay by credit card, debit card, any form of electronic payment. But yet today, 80% of payments are still cheque, cash, money or cashier’s check. There’s a huge mismatch. And part of that is because the banking system which is the main system which landlords use to manage their account, they use basically their bank or a whole series of banks, Excel, paper and maybe QuickBooks. But that bank account is not set up to be able to take the forms of payment that make it easy for them to accept credit card, debit card, even from two different banks are very difficult to do.

What’s Zibo has done is create an automated platform that allows landlords to collect rent the way that tenants want to pay it; free of charge to the landlord, all in an integrated system. If they have 20 bank accounts, they can bring all those bank accounts into one environment with one log on, they can see all those bank accounts and they can transact from Zibo across all those bank accounts. They can move money back and forth, they can collect rent, they can pay bills. And the really interesting thing is that all of that we’ve used medical algorithms to essentially help landlords classify and organize all the rent and expenses to specific properties and specific schedule, i.e. tax buckets, which allows them to stay organized. They can have one bank account for their operating account, 10 properties in it, and they can keep everything organized and we pay 3.75 times the national average interest on checking accounts.

We have tools for keeping your security deposit straight. So your security is deposit probably is spread all over lots of different accounts. If they’re commingled, you shouldn’t be commingling them, meaning if they’re in your operating account, they should be separated. Well, we’ve created tools on top of our Zibo bank account that you can use with your current bank accounts or on Zibo, that allow you to keep all that straight. What tenant belongs to what security deposit? Do I owe them interest? When does their lease become due? Lease document, checking document, all in one place.

So we tried to really become the one-stop shop for end to end cash management for that independent landlord.

Theo Hicks: And then you said the other aspect of it was the income aspect. Do you cover that as well or is that something separate than what you just mentioned?

Chris Hsu: You’re absolutely right. So there’s a couple different ways that Zibo can help impact income. Number one is, if you’re paying somebody to do all that rent collection for you, Zibo can do that for you for free. So you can save up. actually. We have lots of landlords out there that are spending anywhere from 5% to 10% of their income, where you get a free tool. We have landlords coming to us and telling us, “Look, we’re tired of paying a monthly fee and then having our tenants have to pay a big fee just to pay by cheque.” Zibo solves that problem.

The other thing is, landlords have tons of cash, it’s idle cash. Think about all the cash just sitting in security deposit accounts that you can’t touch, or all the cash that’s sitting in your excess operating account. And in most cases, you’re getting no interest on that. And in fact, if you have a business checking account, if you have an LLC or any form of business checking account, you’re paying 29 bucks a month just to have that account. We charge you nothing and we give you interest on top of that. So that’s for idle cash working for you to generate returns for you.

And the other thing we do is we offer competitive loans and insurance. So if you think about the independent mom and pop on insurance — I’ll just use an example insurance. Independent mom and pop pays, on average, 50% to two times what an institutional investor who has thousands of properties and has a master insurance policy with one of the biggest insurance brokers or carriers in the country. The independent landlord, even those that are being managed by property managers, don’t have access to that same insurance policy.

So what Zibo is doing is we’re aggregating all of that demand of independents and we’re creating master insurance policies, so you can get lower cost insurance, you can better protect your asset at lower costs.

Then the final thing I would tell you that we’re doing is, with all the expense classification I talked about and how you can basically classify every single expense to a property, every piece of revenue to a property, and to schedule a tax bucket, we create the ability for you to benchmark your own properties and then also to look at how your properties are performing vis-a-vis other properties.

Now, if you do that, then that basically highlights areas where your properties are underperforming. You’re spending too much on utilities, you’re not getting enough rent per square foot, whatever those metrics are. And if that’s the case, then there are a simple set of things that you can do to increase that income. So lots of different ways. Again, we think the independent landlord is very focused on passive income, we’re trying to help them on both sides of that equation.

Theo Hicks: That last point about comparing the P&L I think is [unintelligible [00:12:53].23] where you’re underperforming. How does Zibo get paid?

Chris Hsu: We make money by essentially negotiating deals with insurance companies, negotiating deals with the mortgage companies, and by taking a portion of the transaction fees associated with various different forms of payments, negotiating with the payment providers. But if you think about it, what a lot of folks are selling is SaaS platforms; we’re providing essentially a SaaS software platform that includes banking, payments, insurance and lending. That core platform is free and all transactions from the landlord perspective are free, minus things like if you want to do a wire. We have a standard fee for that. But everything else is free. If you want to do  ACH transfers, if you want to move money, if you want to accept cheques from your tenants. By the way, we’re the only platform that does online and offline payment methods.

So in other words, if you’re still one of those landlords that’s accepting physical checks, we’ve created a remote deposit capture, so you can actually take a picture from your phone of that check and deposit into your bank account, and it goes right to your Zibo dashboard for all those properties. So as I mentioned before, having one place to view by property, by tenant who’s paid, who’s paid the right amount, who’s paid on time, and have a 12-month rolling history on that. No one’s doing that.

Theo Hicks: As the CEO of a tech company, how do you spend the majority of your time? I’m just curious to see, you have a business about being passive… So how passive are you?

Chris Hsu: Oh, wow. Let’s just say there’s nothing passive about being the CEO of a tech startup. I will say that if you just think about what my job is, my job is to, number one, set the vision and strategy of the company. So there’s a lot of customer research, industry research, economic research, really understanding the trends of what’s in real estate investing, in financial services and in the technology that powers financials. So I spend a good deal of my time on that.

The second is finding the team. So first of all, figuring out what change do you need to execute on a strategy and finding the key leaders that I’ve got confidence in their capabilities to bring us to that strategy, and ultimately that vision, to fundamentally transform the experience that independent mom and pop landlords have with financial services. And then helping those teams allocate resources and hire people.

So when I started this, I was the first employee; I had no people. And we’re now 34 people globally, with lots of other external marketing consultants and PR and all these other things. But we had to build every aspect of that and that’s time-consuming; making sure that you hire the right people with the right skills to deliver on the strategy. And then I spent a lot of time making sure that those people now are working as a team.

As you’re building a new innovative product, you’re scaling the team, you’re scaling the product and you’re building the processes as well, and keeping all that aligned is just a heavy lift. And then I spend probably 20% of my time, in addition to that, talking to customers… Because I just think that — I’ve got a lot of my team whose job it is to interview customers, to get their insights, to do user testing with them… But if I get disconnected with customers, I can’t do the first part of my job, which is strategy.

And then I spend the remainder of my time, which kind of overlaps with the customer time, on making sure that we’re creating awareness for Zibo; because we can build the best product in the world, but if those independent mom and pop landlords aren’t aware of it and don’t know that what we’re doing is providing them an automated end to end cash management platform that gives them access to competitive loans and insurance, then we built a great thing that’s not going to be successful.

So I have a specific percentage for all those things, but that’s really the job of a startup CEO. It is anything but passive.

Theo Hicks: Yes… Alright, Chris, are you ready for the best ever lightning round?

Chris Hsu: I’m ready for whatever you’ve got.

Theo Hicks: Alright. First, a quick word from our Best Ever partners.

Break: [00:17:28]

Theo Hicks: Okay. Chris, you mentioned that a lot of your job is doing research. So what is the best ever resource you use to perform your research?

Chris Hsu: Well, number one is I actually talk to customers. I truly believe that that’s the number one form of research, and we’ve done a bunch of professionally facilitated research. We’ve spent a decent amount of our funding early days on just talking to customers in a structured way with professionals to really understand what are their pain points and how are they currently addressing those pain points today. And I think we read lots of stuff on the internet, we talk to lot of experts, but there’s no substitute from hearing first-hand how customers are dealing with these problems. And then because we have these technology tools today, we can do a video like you and I are doing and they can actually walk us through their portfolio and how they’re managing things and how they’re doing their banking. There’s no substitute for that.

And then we have lots of public data sources like census information, and we’ve just pulled lots of data together to try and triangulate who is that mom and pop landlord? What software and organization tools are they using? And where is there an opportunity for Zibo to come in and fundamentally transform their experience?

So that’s really the main sources.

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

Chris Hsu: As I mentioned before, I served in the military, and the reason I served in the military was because my father grew up in China during the Japanese occupation and communist revolution. And he spent the vast majority of his life trying to escape that and get to the United States. He ended up spending several years in Formosa Island, which is now Taiwan, and then eventually, in his mid-30s, made it to the United States. And he raised four children, all of us with the perspective that we had to serve our country, because freedom wasn’t free.

So for me, service was a huge component. My brother and I both went to West Point and both served in the military, and all of my volunteer hours, time and money goes to somehow serving veterans, whether it’s veteran homelessness or helping veterans transition from the military to a fulfilling career. I’m the senior advisor at a company called COMMIT that really dedicates full purpose to helping that. And then my family, we funded the Hsu Freedom Scholarship at West Point, which is designed to provide one to two cadets every year a scholarship in the summer to go around the world and study and write about oppression and the fight for freedom. So the theme for me is all about service and really veterans and serving this great country.

Theo Hicks: And then lastly, what is the best ever place to reach you and to learn more about your company?

Chris Hsu: You can reach us at https://www.zibo.co/. It’s not .com, it’s .co. You can learn about all the products and services that we provide, you can learn about our team, and if you want to reach out to me directly, I love talking to customers and interested folks. My email is very simple. It’s chris@zibo.co. So email me. Also, look for me on LinkedIn. I’m very active on LinkedIn. So Chris Hsu, and look for that, Zibo Inc. But follow us, like us and please try our products. It’s been great, Theo, connecting with you.

Theo Hicks: Yeah, absolutely. And thanks for joining us, Chris, and telling us about the advantage of technology and how we can use technology to go from spending lots of time in our business to automating it as much as possible. So we talked about the two ways that technology can help you. It can help you become more passive, but it can also help you increase your income as well.

You mentioned how you as a company get paid and we also talked about what it’s like being the CEO of a startup, for people who might not know what it’s like. It’s not as passive as your business can be if you use a technology service like Zibo. So make sure you check that out. Again, that’s https://www.zibo.co/.

Chris, again, 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.

Chris Hsu: Thanks, Theo.

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JF2260: Daytrader to Real Estate Investor With Mitchell Jaworski

Mitchell is a full-time real estate investor and owner of ScaredyCatGuide.com. Mitch has invested in many different types of vehicles from a full-time day trader to now a full-time real estate investor because he has found that it is much easier than dabbling in the markets where we have less control. 

Mitch Jaworski Real Estate Background:

  • Full-time real estate investor and owner of ScaredyCatGuide.com 
  • 6 years of real estate investing experience
  • Portfolio consist of 6 rental units, 2 flips, 2 wholesales
  • Based in Palm Beach, FL
  • Say hi to him at: scaredycatguide.com 
  • Best Ever Book: Big Shifts Ahead

 

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Real estate is the one asset class where you have the most control over the results of your investment” – Mitchell Jaworski


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 Mitch Jaworski. Mitch, how are doing today?

Mitch Jaworski: Doing awesome. Glad to be here.

Theo Hicks: Thanks for joining us. I’m looking forward to our conversation. But before we hop into that, let’s go over Mitch’s background. So he’s a full-time real estate investor and owner of scaredycatguide.com. He has 6 years of real estate investing experience and his portfolio consists of rentals. He’s also done flips and wholesales. He’s based in Palm Beach, Florida and his website, as I already mentioned, is scaredycatguide.com. So Mitch, do you mind telling us a little bit more about your background and what you’re focused on today?

Mitch Jaworski: Sure. So I think like everyone else, you evolve in your investing. So I went from being a full-time day trader, and addicted to the stock market, to getting into real estate and really realizing real estate is the best investment out there. I’m proud to say I’ve invested in pretty much everything, and I’ve found that real estate is the one asset class where you have the most control over the results of your investment. And also, you don’t have to be a rocket scientist to do well in real estate, you really don’t. As long as you know the basic principles, everything after that is more situational and just getting creative, as opposed to other investments, like stocks where you can get crazy algorithm computers and stuff trading. So it’s one of the reasons I really love real estate.

For me, I started out just straight — the first property was basically a turnkey rental. And as I progressed I started falling into what was really my bread and butter, the BRRR strategy. Most people know, buy, renovate, rent, refinance. I love it for the value-add component, and that’s mainly what I do, is value-add rentals. But if the money is right I will flip. Recently I had what was supposed to be a rental, that I realized this was much more beneficial financially to turn into a flip. So we flipped it. We’re under contract. We’re supposed to close sometime next week. I’m looking forward to that. And yeah, wholesaling – it’s funny, when you’re a real estate investor, you look to connect with wholesalers to find you deals. But when you press pause, I guess in a certain market, you’re not acquiring that market, those wholesales are still hitting you up.

So because of that, I generally started co-wholesaling, because I have a network of people in a different market I am in, so I was able to co-wholesale a few deals… Which is nice because you connect two people, it’s a win-win, and you make a little fee in the process. So, that’s saying that your network is your net worth, I’m living it right now. So it’s pretty cool  to have my hands in the three big different facets of real estate investing has been fun, considering day one it was just kind of turn-key rental, and then it just evolved from there.

Theo Hicks: Once you decided that you were going to move from your day trading to real estate, what was the first thing that you did to get the ball rolling on doing your first deal?

Mitch Jaworski: Well, I’d like to say I made a clean break, but I still do a bit of day trading. Can’t get rid of the bug. But I always had a financial background, I have an economics degree, so I knew nothing about real estate when I started. It was just, “Alright, if I can bring enough rent to cover my mortgage, my taxes and my insurance, I should be okay.” Now, anyone that’s experienced in real estate, we know there’s a bunch of stuff that’s left out right there. So that’s what I did. The irony is I actually found a tenant before I found my first property. And I did what a lot of people saying you’re not supposed to do, rent to family or friends. So, the short version is a buddy of mine, his dad was renting a house. It was being foreclosed on, because I guess his landlord was not paying the mortgage. So I said, “If I find a place that’s the same size and I can rent it to you for the same price, would you want to rent it from me?” And hands down he was ready to go. So that’s what I did.

I found a property, essentially, that would fit my tenant. He moved in, he lived there for five and a half years, which is great, no turnover… And I actually sold that property last year, which was bittersweet in a way, but it was great. I had one tenant, it was in South Florida, so the appreciation was pretty much out of control, it was awesome. And I have used that money to roll into different markets. I’m investing a lot in the middle of Massachusetts now. I’m starting to invest in middle Pennsylvania… So I went from being very local to now almost exclusively investing out of state. I haven’t bought a property in [inaudible [07:18] County Florida since 2017, because numbers got to work, and the numbers just don’t work in that area. You can find some stuff wholesale here and there, which is why I have a good wholesale and network down there.

But I always tell people, “If the numbers don’t work in your area, you have two choices. You can grind and work off-market deals and find something that does, or you can go find a market that does work and just get over the fact that you’re not going to be able to drive by your property every day.” Because as a new investor, we all want to be able to see our property all the time.

There’s a reason I have a brand called Scaredy Cat, because my first three properties were all within a three-mile radius of my home. And now six years later, I’m basically buying things out of state, almost sight unseen. I have boots on the ground that are my eyes, but it’s still not me getting in there and doing it myself. So, anyone can progress really, with real estate. It is I think the big takeaway I’ve learned, at least from my experience, no matter how scared you are… Because I really was a control freak, scaredy-cat, like I have to see it, I have to touch it, I have to be in control. And now I got used to property management, I buy out of state… So, I think that’s just the big thing I’d like to share – if you have the fear, just push through it, because we’ve all been there and I especially am a big example of it.

Theo Hicks: Really quickly — because I want to talk about the out of state business… But just really quickly, how did you find that first deal in South Florida? Was it on market, was it off-market?

Mitch Jaworski: With straight newbie status, I had a realtor that I played basketball with, and he had worked with some investors, and I told them that I was thinking about grabbing something to turn into a rental. And mind you, I was still renting an apartment at that time. I bought my first rental property before I bought my own personal home, because I wanted an asset that generated income. I was always, like I said, a financial guy, and stocks are great, but I just thought that maybe some dividend stocks – how you’re generate an income without you grinding and making transactions? So that buddy I played ball with basically started looking for stuff for me, and they found something that was in my price range that would make sense with the rent I knew I could get, and I scooped it up

And like I said, that’s why I was pretty much turn-key, I bought it from the regular homeowner, and I pretty much just got in there and had a handyman repaint it, and that was about it. Then my buddy’s dad moved in and I learned how to be a landlord from there. And he definitely gave me some learning experiences. A good guy, but sometimes a little late with their rent and things like that. So I got my landlord certificate on that one, I’d like to say.

Theo Hicks: There you go. Alright, so you’ve got this deal in South Florida, you sell it, you start the process of investing out of state before you sold that deal… My question is, can you walk us through from somewhere — I said for that first deal, once you decided that you were going to start investing out of states, that was the first step you took; and then from there how did you build it to the point where you’re confident in buying deals? Because, again, you are the scaredy-cat guy, and you’re confident on buying those deals out of the state.

Mitch Jaworski: And you know what? As an investor, you’re always going to push that inner scaredy cat, because now buying property out of state doesn’t scare me… But now I’ve pushed the envelope with different types of creative financing and things that I thought I would “never do”, that now I’m comfortable with, that years ago I was like “Oh, my god.” So the first answer is — it’s a personal answer, in that everyone has a bit of a different process. For me, I generally look for areas where I have some kind of network possibly already. Maybe I have an old friend, maybe I have an old business associate, or maybe it’s someone I’ve met just through a lot of the real estate groups, whether it’s Facebook or just — everything’s virtual now, so you can do REIA meetings all over the country, which I really suggest people leverage right now while everyone’s doing things from Zoom.

But I’m always going to check the market though. So that’s kind of the basic what’s the population growth, is there any? Anything that’s got a declining population, out the window. I want it growing if it’s an appreciation market. If it’s a cash flow market, I want it to be at least flat. I invested in a market in Massachusetts, the population has not changed in 20 years. And that’s exactly what I want, because it’s a cash flow market; no one comes, no one leaves, they just stay and rent and it’s perfect.

So I would definitely suggest making sure the population isn’t declining. I obviously keep an eye on overall crime compared to the national average. I want it below the average. And then from there, you find your town. Everyone’s got a preference, A, B, C class markets. I generally find myself in kind of like the B minus C plus is my sweet spot. Some people are willing to go into areas that offer better cash flow, but maybe have more problems… And then other people just want that A-class rate, gambling on the appreciation. And it’s a personal decision in the end.

So, like I said, as long as I don’t see any red flags or population crime — and the numbers have to work. I’ll start looking for average rents versus your average listing price. You cannot buy things on MLS; if I can, then it’s even better. Or, do I have to start working the off markets and finding local wholesalers.

But the one thing I always will do once I locate markets, I take a trip. I’m going to go there, I’m going to check out the market, I’m going to almost drive for dollars, that town. And then decide if I want to move forward. I’m going to try and meet as many people as I can, I’m going to use a realtor — I’m going to meet a realtor. If I’m looking at properties I know we’re going to need specific work, I’ll try and contact contractors and see even if any are willing to go look at a property with me. Tough, they’re usually busy, which is a good thing… You want a busy contractor. If your contractor is completely free all the time, that’s surely a sign that he might not be a good contractor. So I like that sometimes I have to chase after my contractor. Not in terms of completing a job, in terms of getting a hold of him and getting him scheduled for a job. Because then I know he’s busy and he’s in demand. So, you always take the good with the bad. So anyone that can drop everything on demand for you, either A, it’s because you’re paying them the most, or B it’s because they don’t have enough work.

Theo Hicks: You also look at property managers in there, when you’re driving there for dollars? Or do you look at that later?

Mitch Jaworski: I will try and line that up, if I can, especially because — you’d be surprised how much you can learn from the local property management. They have their thing on the pulse of that area, as they should, so they kind of direct you and give you information on different neighborhoods. But more importantly, what I’ve noticed is there’s a lot of property managers that are good at what they do, that might invest a little bit or want to invest, but just either aren’t in a position to financially, or they have that mental block; they are able to manage properties great, but for some reason they have this mental block on, “Financially I can’t do that, or  I don’t want to take that risk doing private money”, or whatever it is. And those people are great, because generally they also have  good leads; they know the properties that are out there that are either for sale, or properties that they can point you to that clearly are either vacant, overgrown grass… And they have a whole clientele already of people that they’re managing properties for, and some of those people may be looking to unload pieces of their portfolio.

The greatest is if they have a client in their ’60s or ’70s. “Please introduce me!” Because that person is generally looking to wind down at that point. They’ve owned stuff for 20 or 30 years, so… Again, it goes back to these advantages to networking. So yeah, I will definitely do tha. If I have boots on the ground, someone I’m partnering with, if they have any experience, a lot of times what I’ll do is if I’m being the main financial partner, then, “Alright you’re doing some management and some sweat equity,” and that’s how this deal is going to work.

So I have had that happen as well, like what I have in Massachusetts; luckily, my partner has the ability to property manage. But when I look at deals though, I’ll always factor in that 8% to 10% for property management, because at some point it will be hands-off for all parties involved, and I still need the cash flow to be right.

So that’s something that I think a lot of people forget to do early on, they go like, “Oh, I’m going to self manage, I want the experience.” Well, still factor in property management, because you want to take your hands off the wheel at some point, and you don’t want to basically cashflow negative when you add in the property management.

Theo Hicks: How are you funding the deals? Is this all you? Do you have money partners?.

Mitch Jaworski: So early on it was all me; when I first started, I was able to get traditional loans a little easier because I had the text documents and a lot of good stuff. When I went full time investing, then you know how that goes… No nice 1099 or W2. So that’s when I started going private money. But for the most part, I have used is my own personal capital plus an equity line on my primary residence to fund most of my deals. And then what I’ll do is as soon as they complete, I’ll refi out into a long term loan. But recently I’ve started to ramp-up acquisition mode. So now I’ve started to use the same — I call them private lenders. Kind of like that secondary market, like the [unintelligible [00:15:48].05] loans. They lend to you in your LLC. So a lot of those firms, they offer short term products; sometimes I leverage those. They are similar to fix-and-flip loans, but you get better terms than you would with hard money.

So luckily, I’ve been able to get away with not using hard money yet, which there’s nothing wrong with if it gets you the deal, but as we know, hard money is very expensive, usually 12%, 2-3 points. And if you’re newer, sometimes it’s even higher than that. So yeah, primarily funded with my own capital, my personal equity line, and then I’ve been using these secondary lenders to either refinance and cash out, or to do like 12-24 month fix-and-flip loans that are at favorable rates compared to hard money.

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

Mitch Jaworski: Oh man. Do we have an hour? [laughs] Really? The short version is, get started, take action. I do a lot of meetups In South Florida, I co-host a couple of them. We have a good mix of veterans and newbies… But the thing that kills me the most is when you see newbies come in and they’re thirsty for knowledge – and we were all there. I binge-listened to this podcast and BiggerPockets, and several other podcasts, my first year. And it was just like, “Absorb the knowledge. Absorb knowledge.” But if you don’t do anything with it… And in the end, the single sentence I can give someone for best advice is, experience is the best teacher.

So get that knowledge, listen to the Best Ever podcast, heck, jump on scaredycat.com, and read all the blog posts I’ve written over the last 4 years. Get as much knowledge as you can. But in the end, you have to take action, because not only you will not forward if you don’t take action, but also, there’s going to be unique experiences that you’ll have. Like Theo, me and you can sit in a room with 20 newbies and they can ask us questions all day. But you know what? Each one of them is going to have an experience at some point that you and I have not experienced in our real estate investing career. Because in the end, it comes to personal experience; everyone’s goal is different, every property you buy might have a different surprise that we have not come across.

So get the knowledge, especially if you are new, learn the basics, learn that foundation, so you can avoid a lot of mistakes, but then you have got to take action. And just anything you think you don’t know, experience is the best teacher and then you can leverage it on the next deal.

Theo Hicks: Yeah, perfect advice. Alright, Mitch are you ready for the Best Ever lightning round?

Mitch Jaworski: Heck yeah, let’s do it.

Theo Hicks: Alright, first a quick word from our Best Ever partners.

Break: [00:18:06].25] to [00:18:50].10]

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

Mitch Jaworski: Well, I’m biased so I can’t say my book… But I just finished one actually that my good buddy [00:19:00].10] he’s an awesome real estate investor, and we kind of share resources so much, and he told me about the book called Big Shifts Ahead. And I devoured that book. It’s basically a demographics book. It’s just straight data and demographics and recognizing trends, and it altered my opinion in regards to what I think the real estate market might do over the next three to five years, because based on the data in that book, there’s going to be a boom in household formation. It already started — because the book is a few years old. So it already started, but we’re going to see a big jump in the next three years in the number of new household formed, which means more demand for housing, and we already have a supply shortage.

So even if we run into some kind of foreclosure wave, there’s going to be a ton of demand out there, and it’s going to continue over the next few years. So that kind of blew my mind and that’s just one little example. I really recommend the book. It’s so much information that really will help you recognize trends and understand why they exist. And they do generations, but they do decades, so from the ’30s, all the way to the 2000’s and how those people think and why, based on their experiences. So, just a great book.

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

Mitch Jaworski: Hopefully never after really think about that, but honestly first thing, If I’m going to stick real estate, I’d pick up the phone and started dialing for dollars and trying to do wholesale deals. Just get on that phone start dialing and do some wholesale deals to generate some capital, to get right back into what I was doing.

Theo Hicks: Tell us about the time that you’ve lost money on a deal. How much did you lose and then what lesson did you learn?

Mitch Jaworski: Well, since I’m a scaredy-cat, it’s probably more of an opportunity cost. No one is going to probably believe me, but I have never lost money on a deal, and I’m very proud to say that. But it’s also because I was such a scaredy-cat; there are several deals that I look back on and just… It’s one of those, “Why did I not do that deal?” And I was scared of something that turned me off that made me think that I might lose money. So the biggest thing to me has been opportunity cost. There are a few deals I look back on where I didn’t just pull the trigger because I ended up being scared, and I look back on them and they were home runs. So my biggest loss is really just that opportunity cost. I’ve been blessed otherwise to just have all winners so far.

Theo Hicks: Tell us about your biggest win, what’s the best deal you’ve done?

Mitch Jaworski: There’s a couple, I guess, that would fight for it. So I guess I’ll just pick one, because fresh on my mind. I did a duplex with a partner, we got it late last year. It fell to us; it’s the property we looked at earlier in the year, we didn’t make an offer on it, because we were going to lowball the heck out of them. It went under contract, and I saw it come back to the market about three months later, so we made a lowball offer on it. They didn’t take it, I guess it went under contract, that fell through, and they ended up contacting us. So at this point we looked at it in January and we ended up going under contract for it in October. So it fell to us, and we ended up grabbing it for just over a hundred thousand. It was a duplex, we put 25,000 into it, and just refied actually about a month ago for two-thirty.

So it’s always nice when you can generate 100K in equity on something that doesn’t need a ton of work. And the biggest issue at that moment was when COVID hit was when we were looking to refinance, so we ended up being delayed for three months on our refinance, because you know how that one goes. Everything tightened up, especially the secondary lenders. A lot of them went out of business. So, we just sat and collected good cash flow and had capital tied up, but it ended up being still an awesome deal, and that capital is actually going to work now. We’re negotiating a deal this week, off-market, that hopefully we can get locked up by Friday.

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

Mitch Jaworski: Honestly, I love teaching, it’s the reason I wrote a book, and I’m part of four different real estate meetups. It’s not like there’s an admission or anything, it’s just investors getting together and there’s always a lot of newbies. I share everything I can, they ask questions… A lot of these people like to come to these meetups, they’ll email me with questions here and there and I’m happy to help. I just enjoy teaching and I really enjoy it when someone basically makes a better choice or doesn’t make a mistake because of some kind of advice I gave them. I don’t know why that just juices me up, it makes me happy… So just teaching, really. I love teaching and seeing people be able to do better and not make the mistakes I made… Because in real estate mistakes, in the end, they cost money. That’s all there is to it.

Theo Hicks: Then lastly what’s the Best Ever place to reach you?

Mitch Jaworski: So you’ve mentioned the website, scaredycatguide.com. Obviously, people can find my contact information on that website, along with — I write a weekly real estate blog. So plenty of education there. And you can email me directly at info@scaredycatguide.com.

Theo Hicks: Perfect, Mitchell. Thanks again for joining us and walking us through your journey and kind of what you have been up to. Some of the biggest takeaways I got was I liked your thoughts on the contractor, and how if you reached out to a contractor and he drops everything and comes to do whatever you need them to do, it’s not necessarily a good sign. It’s actually good to have a contractor who is busy.

You also mentioned your Best Ever advice, which was to get started. A lot of people can understand that. It’s important to consume content, it’s important to read books and gain knowledge, but at the end of the day, you’re going to go through something that you did not read in a book, and the only way to know how to get through that is to do it.

Mitch Jaworski: And just to interject one thing to add to that advice – learn how to run the numbers. Use a property calculator. There’s one on my website, but there are tons of them anywhere. Just use a property calculator and make sure you know how to run the numbers to see if a property is going to cash flow. Because if it doesn’t look like it’s going to cash flow, don’t waste time looking at it, or know you need to negotiate it way down. That’s what I see people doing now in hot markets, is overpaying. So run your numbers.

Theo Hicks: Exactly. And then the other thing was about management companies and how property management companies, obviously, primarily will help you manage the property once you buy it, but they are also really good sources of leads too, because they are not only tapped into the markets and maybe will see distressed properties and tell you about those, so they’re kind of good bird dogs, but they’re also good because they have clients and they will know. If you’re selling a property, you’re going to let your property management company know that “Hey, I’m selling this property. So prepare to lose this property.” So they’re a great source for deals.

Mitch Jaworski: And it’s in their best interest to get it sold to another client.

Theo Hicks: Boom, there you go. And then the metrics you look at when you are considering a market out of state. So you said that you’ll start at places you already know someone, so a friend, a work colleague, that way you have at least some existing network in the area. And then you look at things to make sure that there is not a population decline. You don’t necessarily need population growth. You gave the example of a market where it hasn’t grown in 20 years, people never leave. Those are still good markets for cash flow.

Mitch Jaworski: Yes.

Theo Hicks: You look at crime, and then you said it’s very a personal decision on the class of neighborhood that you invest in. Obviously, you also look at average rent versus the average list price to see if it’s possible to get deals on the MLS, which is amazing; if not, then you’ll need to network with the local wholesalers.

So – tons of great information. Make sure you check out his website. Again, that’s scaredycatguide.com, link will be in the show notes as well. Thanks again for joining us. Best Ever listeners, as always, thank you for listening, have a Best Ever day and we’ll talk to your tomorrow.

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JF2259: Translate Classroom Courses to Online With Carla Cross #Skillset Sunday

Carla Cross is a long-time licensed real estate professional. She and her husband started investing in single-family homes in the late ’70s. As the author of 7 books for real estate professionals, Carla is a known authority on productivity and profits. She is a recipient of the National Association of Realtors Educator of the Year Award. With her background in sales, management, and training, Carla is helping her audiences ‘translate’ their classroom courses to effective online formats.

Carla Cross  Real Estate Background:

  • Licensed real estate professional, and author of 7 books for real estate professionals
  • She started investing in single-family homes with her husband in the late ‘70s
  • She is also the recipient of the National Association of Realtors Educator of the Year Award
  • Based in Seattle, WA
  • Say hi to her at: https://carla-cross.com/

 

 

Click here for more info on groundbreaker.co

 

Best Ever Tweet:

“What’s challenging is when your teaching someone to do something you must be sure your teaching them in the right order” – Carla Cross


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 Carla Cross. Carla, how are you today?

Carla Cross: I’m doing great, thank you. It’s sunny… What can be better?

Theo Hicks: Yeah, it’s a little dark in here, but I do have some sun coming in. So, I feel you. Carla is a repeat guest. She was a guest in our first year, episode 154. So being a repeat guest, we’re going to do a Skillset Sunday episode. But before we get into that, a refresher on who Carla is. She is a licensed real estate professional and author of seven books for real estate professionals. She started investing in single family homes with her husband in the late 70’s, and is also the recipient of the National Association of Realtors Educator of the Year Award, which is going to be important for what we talk about today. She’s based in Seattle, Washington and you could say hi to her at her website, which is carla-cross.com. Carla, before we jump into today’s skillset, could you tell us a little more about your background and what you’re focused on today?

Carla Cross: Sure. I come from a very closely related field to real estate, music. I started playing piano when I was 4, and I played by ear, and then took lessons, and I thought I was going to become a professional musician forever. I have a Bachelors in Piano and a Masters in Music Theory, but I couldn’t really ever figure out what I love to do, and I stumbled into real estate to help my husband when he was between radio DJ jobs. But I found out I love selling real estate, and those of you out there that are selling real estate or investing, you’re doing it first because you love it. Because there’s something about it, because it’s a basic security issue. And don’t we know that right now with COVID there’s nothing more important right now than the people’s security and the security of their homes. So I found I really loved it. The music was wonderful, but nobody ever died for a lack of music, I don’t think.

So I went into real estate and I’ve found I loved it. My husband went back into radio, but I stayed in real estate and became the top sales person, and became a top manager. Then I started teaching classes all over the US and all over the world. And the books that you see at the back of me, I actually wrote because I put them together as help tools for my agents first. So that’s really how it started. I’ve mostly done work with real estate agents, but I did write a book– I don’t know if you see it back there… But it was for buyers, “Buyer Beware: Insider secrets you have to know before you buy a home.” And that was at the time when Buyer Agency was just starting, and there were a whole bunch of misconceptions about it, both from the public and the agents. So, that’s why I wrote the book. But all the rest of them have been for the real estate professionals.

Theo Hicks: Perfect. Thanks for sharing that. So the skillset of today is how to create a course– more specifically how to create a course, a seminar that is online. So take it away. Let us know exactly where we start if we want to create a course. I think the answer is pretty obvious, but how to actually do it might not be so obvious.

Carla Cross: Oh, absolutely. Obviously we have to– as I said, I do a lot of speaking, I do a lot of writing, I help real estate professionals become certified trainers in the State of Washington and all over the US. And of course, all of us have had to go online. Now I just did webinar– by the way, if you want to see the webinar about some tips on taking your classroom online, you can just go to my website and go to Free webinars and more, and you could see it. I’ll say it again at the end. But it’s a good overview of all the things you have to do.

So, what I discovered during that webinar was that about 90% of the classes that real estate professionals and affiliates – and that would be anybody like title people, and all the people that teach the real estate, 90% were live. We just weren’t doing much online, because we didn’t have to. So all of a sudden everything’s online. But you can imagine it’s kind of Fruit Basket Upset. The problem is first of all the classes, most of them aren’t really classes, they’re information dumps. And so for you out there, you can’t create a course online until you’ve created the whole format offline. Does that make sense? Because if you try to go online with it and you try to use all the gewgaw’s on any software, like small groups or polls, you don’t know where to put them. So, you don’t want to just buy some software, or rent it or whatever, course software, and then start in. You start by actually creating the course.

So when you create the course, the first thing you do obviously is write down all the stuff you know and then you organize it. And then you say “How am I going to teach this?” So those of you who are watching, of the Zoom calls or courses, or whatever you’ve watched online in the last 3 months, how many of them have been interesting? How many have been involving? When I ask the people on this webinar – and most of them were real estate trainers – I ask them how long they could focus on a 45 minute webinar, about 50% said only up to 10 minutes. Now these are trainers. These are people who want the information.

So basically, what I’m saying is be really careful not to copy all these people that are doing all these online things are. Because most of them actually are pretty awful. But I don’t have to tell you that. You know that, because you’ve had to watch them, right? So then what you want to do is think, “I’m writing this course…”  And by the way, don’t try to dump the whole load and tell them everything you know. Figure out what you can do – this big rule, 45 minutes only. I think Theo’s doing this interview, it’s about 20 minutes. Right Theo? It’s 20 to 25 minutes?

Theo Hicks: Yup.

Carla Cross: Okay. Because that’s enough. But you can get away with a course, especially if you have time for questions, no more than 45 minutes. You’ll just lose everybody. And you’re going to be exhausted. So, 45-minute segments. That doesn’t mean you have to do a whole course. Just segments.

So what do you do? You think about what do I want to teach? What do I want them to walk away with at the end of 45 minutes? Not “Can I dump everything I know about everything?” But, “what do I want?” So think in segments. In the industry now we call that micro learning, where we’re going deeper into something. Now you can do an overview, but you’re still going to have to involve them.

Let’s take a look at how you might involve them then, because you don’t have them in the classroom. And one of the things that I’ve discovered by teaching a bunch of real estate people and affiliates is this – we’re good talkers. And Theo, you know this from interviewing a lot of us, we’re pretty out there. At least when we’re performing, we’re performers, right? So it’s easy for us to get interaction with a group or crowd. But now let’s go online. Nobody’s really there. And even though I can see Theo, and Theo can see me, I don’t get that physical energy, because we’re not really there.

Now multiply that by the number of people you’ve got in your course, or class, or Zoom call. You don’t have the energy. So what are you going to do to involve them?

Let’s say you’ve got your course, and if you were going to teach it live, you would ask them a question. And they would talk, and that’s called discussion. Well, if you try that and you’ve got 50 people on a Zoom call, that’s going to be really awful. And usually you have to mute everybody anyway, because you know dumb things happen in a way. They go to the bathroom, or their kids come in, and whatever… So you’ve got to mute them, right? So what do you do? Take that question you would ask  – and talking about how to create that course – you could put a provocative question right at the beginning. And that question should give you some information as a spring board for you to go the next thing.

For instance, I talked to you about the question I asked, “What percentage of your classes you’ve taught before COVID were live?” And this was to a whole bunch of real estate trainers. And again, they said 90%. What was that? That was my spring board. So I can go “Yeah! And we can’t do it now. So what in the heck do we do?” Because we can’t just turn on the camera and talk. It’s death.

So, you’re going to ask a provocative question at the beginning of your course. And to get your answers, you’re going to use tools, if you can. If you’re using Zoom, Zoom lets you use polls, I use GoToWebinar for my webinars. But take a look at all those different platforms, use the ones that give you the kind of abilities that you need to teach the way you want to. You’ve got to be more than just talk.

So you’re going to ask a provocative question, then you’re going to take those answers and you’re going to comment. And that’s going to lead you to the next section. What else can you do, besides polls? Don’t beat the dead horse, don’t do too many, don’t do more than 3 or 5 in 45 minutes. They won’t even respond. I had a really good trainer with me– by the way when you’re doing online,  have somebody else there with you if possible… To do comments, to read what’s coming in in the chat, all that kind of stuff. Well I have a really good trainer I work with, so she was keeping track of everything… And we were noting – even though again, these were a bunch of trainers and you would think they’d want to tell us all this stuff… The biggest response we’ve got was 70% of them answered, in other words they answered the poll. Even though I thought those polls were like, “Hey, everybody would want to answer this stuff.” So why didn’t they answer? Oh, they were doing other stuff, they weren’t paying attention. So when you do your polls, know you’re probably not going to get them all, but shoot for a number you want to get, because that’s going to give you your spring board to go forward.

What else can you do? Well, in a live class, hopefully you’re going to divide them into small groups and have them do some work. And by the way, learn how to use different kinds of teaching methods besides lecture and discussion, because you need to have those teaching methods written in your course to translate it to online. It’s going to be a little different, because you can only use the software instead of using yourself inside the class.

So let’s say you want to them to work on something, you can divide them into small groups and have them work on something, and give you their reports back. That’s a really cool thing to do. And one version of Zoom lets you do that. I highly suggest that you do that, because everybody likes to talk. So you want to give them a chance to talk to each other, but not always to you, because you can’t control 50 people talking. Those are just two things that you could do when you’re doing this online course.

So what you always want to do too is as you’re watching these courses – and I watch lots of them to see how they teach. Not necessarily what I learn about everything, but how do they teach. So watch those and ask yourself how can I put that in?

For instance, the other day – this one’s pretty interesting… I saw one where the instructor said to people, “Get out of your chair and go find something in your office or home and come back and tell us what it means to you.” I thought that was pretty clever. Because you know how you sit in the chair and you’re like, “Oh, I’ve got to get out of here.” So she literally had them get up, go find something and tell the significance. Now, how could you use that in your course? Well, for instance if I was teaching how to take my classroom online, because I’d have a bunch of instructors, I could have them go get something, like a great book that they’ve read, that they want to share one thing out of it. And then I could have everybody tell us, or I could put them in small groups and tell each other, and then have them report. I thought that was very brilliant, to be able to get people involved, but in a kind of a surprising way. I’ve only seen that done once, and I’m going to do it in some way. So I suggest that you think of things to get them out of their chair. I’m not watching really the time, so you tell me, Theo, how I’m doing time-wise.

Theo Hicks: You’re doing great. Thanks for sharing all that. I’ve got a few follow up questions. I kind of want to focus more on the first aspect of it. Because you did elaborate in a lot of detail on the second part, which is actually how you teach it. So you’ve mentioned that obviously the first step isn’t to find a software, isn’t to find some technology to use, but to actually create the course first. You said that to write everything down and then organize it. How do I know if I’m ready to teach a course? How do I know if I have enough information in my head to create a course?

Carla Cross: That is a great question. When I said write everything– yeah. I was really kind of making the assumption that we have a lot of information. What’s really interesting is all of us are carrying around a lot more information about anything than we think we are… And when you start writing it down — in fact I can’t really grab it now, but I’m going to write a book on how to train and take those principles into online. Just like we’re talking about today.

So when I did the proposal, I wrote down everything that I can think of about the course. Now, it didn’t all come from me. Where did I go? I went to the notes on the webinars, the notes I’d taken. So when you’re going to do a course– let’s say Theo you want to do a course and you’re going “Wow, I know people need to know this, but I don’t think I know enough.” What do you do? Just like when you write a book, you do research. So you go “This is what I’d like. I don’t have enough information in that aspect.” So you go do some research, get some books, look on the web, all that kind of stuff. You will surprise yourself.

Here’s the big mistake we make when we create courses, whether it’s classroom or online – we make them too big. For instance in real estate, people will want to write a course on everything you need to know about listing property, and I’ve got an hour. No way. What about, instead, how to find people who might want to list their property. That’s one module.

So take those things apart and think about how deeply you want to go in each subject. As I said, you could do either an overview, or you can chunk it down and just do a bit of it and then go to the next one. Does that answer that question about where do you get the info?

Theo Hicks: A hundred percent. One thing, Carla – I know you know this. I know this… Anyone who does podcasts or any sort of content knows this… You can talk about one thing for way longer than you actually think. If you want to do a video on– a perfect example would be the podcast that me and Travis do now, where we’ll do a blog post that you can read in 30 seconds, so we can talk about it for half an hour and get through a third of the blog post. So I think that something else to– it kind of goes along the same lines of you know a lot more than you think, and then obviously if don’t have enough, you can research. So when you say write things down, do you mean sitting at your computer and just start typing it out?

Carla Cross: Oh, yeah. Yeah. I just can’t find my list of all the things that I wrote for this proposal. Because then what I had to do was, after I wrote them all, then I put them in some order.

Theo Hicks: That’s what I wanted to ask you next. So I’ve got my Word document, I’ve got my notebook full of notes. What’s the best way to go about organizing them?

Carla Cross: Well, there are several ways. One easy way is chronologically. For instance, my example of how to list property. Chronologically, the first part would be how do you find people that want to list property. Chronologically is easy, because it’s through time. You can also do it by subject. Here’s subject number 1, here’s subject number 2. What’s challenging is that when you’re teaching somebody to do something, you have to be sure to teach them in the right order. I’m just teaching one of my friends to read music who’s been a singer for many, many years. She’s sung in all these groups all over the world, and she said to me the other day, “I can’t read music.” I couldn’t believe it, that she couldn’t read music and she’d been able to do this.

Well, I bought a book to go through with her, because I do have a Masters in Music Theory, but I thought, “Oh my gosh. I can’t teach her all this unless I organize it and write it all down first. And I don’t want to spend 6 months.” So I bought the book. Guess what? The first thing this book teaches you to read music is the rhythm part. I wouldn’t have started there. But there’s a good reason why he started there. I don’t remember, but he started there. So he started with the very simple principles of reading rhythm. And then he got more complex. Then he goes into reading notes.

So sit down and say to yourself, “If I’m going to teach somebody to do something, what’s the right order?” So how do you find out? You try it. I taught piano and flute for many years. But even teaching instructor development… You’ll learn if you’ve got things out of order, because people will go, “Well, I don’t know that. I can’t get that. I don’t understand.” That means you weren’t clear enough in your instructions, and you didn’t have them actually doing something with it. So that’s a big part of it.

I’d really suggest you to [unintelligible [00:21:42].10] how to teach a course – I do have an online course and you can go to my website and see it if you want to. But that way you get all the principles I’m talking about. And you’re not just guessing at these things. You know, “Oh, I’m starting this chronologically and this is what I’m going to put in it, and this is why I’m going to put it in it, and these are the exercises I want so I don’t bore people to tears.”

Theo Hicks: Perfect. Alright Carla, is there anything else you want to mention as it relates to creating an online course? Or really anything else you want to tell people before we conclude the interview?

Carla Cross: I think no matter what we do today, we’re going to do it online, just like you and I are doing this online. And I know the first one we did was telephone, I believe. But we’re all going to do these things, Facetime kind of thing. So no matter if you don’t want to really create a course, all of these communication skills will help you. For instance, I own a real estate company also, and we’re teaching agents how to do online listing and buyer presentations. Because so much of the agents’ work now is not going to be face to face.

So if you’re an investor and you’re working with an agent– of course, having been licensed for all these years, I suggest obviously always work with a great agent that you interview and that you screen… Don’t just go to somebody because you saw them. But you want them to have great skills presented remotely, because they probably will. So I ask them that question, “Tell me about the skills that you’ve got presenting. Do you have an online presentation? Show me.” Because all hell can break lose, if they don’t know what they’re doing and they’re in your hands — so you learn this stuff to some extent, so that you could pass it on.

The other thing that I’d say doesn’t have to do with courses, but as Theo said, we’ve owned different kinds of rentals for a number of years… So everybody’s in security issues now, so with your tenants – be very kind to them, help them out any way you can; they will never forget you that way. It’s really important right now. I’m finding that in doing a lot of things for tenants, not because I have to, but because I want to… And what I’ve also found is that they really, really are responsive to that. They would really do anything for me and anything to stay there. So that’s kind of my advice to you just as a human being, and as an investor or a landlord.

Theo Hicks: Thanks for sharing both pieces of advice. Carla, thanks for joining us. You’ve told us how to create an online course. You mentioned first to actually create the course, which involves writing everything down and organizing it. You gave us examples of organizing it. Even if you think you don’t have enough information to do a course, first try writing it all out. And even if you don’t know anything, or don’t know enough, you can always go out there and do research, that’s what everyone does, whether they know things they’re not; they’re going to have to do some sort of research to do a course. So don’t feel bad or like an impostor if you’re doing research.

And then the second step is to figure out the best way to teach it, to get the information out there. You gave us a lot of really good tips, but I think the best one you gave was the first two of them. One, don’t do a massive dump; keep it short. And then have no problem doing a 10-part course to keep things concise.

And the second thing was some of the creative ways to get the audience involved when doing an online course. Put provocative questions and then have a poll, divide them up, and have them do different exercises and report back. Have them do things that gets them out of their chair, with the example of finding a book or something in their house to talked about. You mentioned at the beginning that if we go to your website carla-cross.com, she has a free webinar where you can go into more details on this in 45 minutes… So make sure you check that out at her website. Again, thank you for joining us. Best ever listeners, as always, thank you for listening. Have a best every day and we’ll talk to your tomorrow.

Carla Cross: Right. Thank you Theo. It was great.

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.

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JF2258: Your First Deal Is The Hardest To Find With Antoine Martel

Antoine is a repeat guest who appeared on episode JF1720. Previously, he talked about how it took him 9 months to find his first apartment building and today he shares how different it has been in finding new deals because his door has been flooded with multiple deals because people started to see he was serious and would get the job done. 

Antoine Martel  Real Estate Background:

  • 25-year-old real estate investor
  • Does 120 flips per year (turnkey rentals), owns about 100 units
  • Based in LA, CA
  • Say hi to him at https://martelturnkey.com/

Click here for more info on groundbreaker.co

Best Ever Tweet:

“Controlling your growth is important, you can move very quickly but sometimes it’s important to slow down a little bit to see how things go” – Antoine Martel


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 Antoine Martel.

Antoine, how are you doing today?

Antoine Martel: Very well. How are you?

Theo Hicks: I’m doing great. And thanks for joining us again. So Antoine is a repeat guest. He was on here about a year and a half ago. So as a reminder, he’s 25 years old now, real estate investor and he does 120 flips per year. He also owns 100 multifamily units. This is up from 20 units last time we spoke, so he’s gotten 80 more units since then. He’s based in Los Angeles, and his website is https://martelturnkey.com.

So Martel, do you mind telling us a little bit about your background and then what you’ve been up to over the past year and a half?

Antoine Martel: Yeah, sure. So thanks again for having me on the show again. It’s great to be back, and a lot has changed, a year and a half later… We’re doing around the same amount of flips per year or turnkey rentals per year through Martel Turnkey, but especially last year, I was focusing a lot on the multifamily acquisitions. As you can tell, to buy 80 units in one year was a lot for us, because it was multiple different properties. So I think when I first came on the show, I’d actually bought my first apartment building, and that was a 20 unit building. And I think I was talking to Joe about how it took me nine months of reaching out to agents, non-stop for nine months, every other week, contacting these agents to find that first building.

And then after the first building, it was like the deals were coming to me left and right. My email was blown up with deals next door to the building I had just bought. The word had got out that some rich guy in California was buying stuff in Memphis, and all these brokers started reaching out to me. And I’m by no means rich, it was just they saw that all the renovations being done on the property and they thought, “Oh, wow, maybe that guy can pay top dollar for my property,” and little did they know that they were selling it way under market value and that’s how we were able to buy so many so quickly. So that’s how we were able to buy 80 units last year. So that’s kind of what I’ve been focusing on in 2019.

And then 2020, we’ve kind of slowed down the apartment building side, and I’ve been again focusing back on the turnkey side. So trying to get us from 10 houses a month to where we are right now to 20 houses a month, by opening up a new market.

Theo Hicks: Wow. So you bought the 20 unit property, and then all the 80 units came from brokers just reaching out to you?

Antoine Martel: Yep. I didn’t have to go look for one deal after that. It was crazy. They say the first deal’s the hardest and that was very true in this case. I looked super-hard for that 20 unit. As soon as people saw that I performed and the kind of renovations I was doing, the deals were coming to me. And also, I had rapport with brokers now, where before I was cold calling these brokers, “Hey, my name is Antoine. I’m a real estate investor in California.” They get that phone call all day. But now I can say, “Hey, I own 123 Monroe Street in Memphis, it’s a 20 unit building. Do you know it?” “Oh, that’s you, huh? Yeah, I saw it. I drove by it,” because it’s a small part of town. So there’s very few brokers, but you have to get in with something. And that was my foot in the door then with all these other brokers, because they saw that I was legit. I had bought something and they saw the renovations that were happening, so they were kind of excited to send me other deals, because there’s a lot of dilapidated stuff that just hasn’t been touched since 1960, and I was coming in and giving it a 2020 refreshed look, and the brokers were excited to be a part of that.

Theo Hicks: So these brokers that are reaching out, had you talked to them previously and said, “Hey, I’m Antoine, I’m looking to buy deals” and they’re like “You know, maybe… I don’t know…”, or were they these brand new brokers that essentially were cold calling you now. Had you already talked to them before?

Antoine Martel: Both. So a lot of the brokers I’d spoken to in the past, just because I was literally cold calling everybody for those nine months when I was looking for that first building… I mean, I was on LoopNet. Anybody who had a LoopNet account in Memphis, I was calling them. So most of them I had spoken to in the past or sent an email, but most of them didn’t pick up the phone or didn’t reply to the email. Now, as soon as I bought that property, they saw it closed in the MLS, and it was made public that that building had sold, and they saw the renovations happening, then people started doing their digging and started replying and calling me like, “Hey, I saw you bought this. I have this off-market opportunity” etc.

So it was a little bit of both. Many of them had spoken to me in the past, and then the conversation had kind of changed a little bit because they were like, “Yeah, okay, now that I know you’re legit, I’m going to go start talking to some sellers that I know, because I think you’re going to close and you’re going to do what you said you’re going to do.”

Theo Hicks: And then in this part of town, you said, there’s a lot of dilapidated 1960s houses. Was this house that you bought, this 20 unit, one of the first homes in that area to be rehabbed, or had there already been rehabs occurring in that area?

Antoine Martel: This is Midtown Memphis, so a lot of the single-family homes have been renovated and updated and they’re selling for $200,000 or $300,000, which is pretty high end for Memphis, Tennessee. So that’s the single-family inventory. The multifamily inventory on the other hand, there was a bunch of new developments, like new construction projects, old parking lots just being leveled and being turned into dirt and then an apartment building going up… So that’s kind of what was happening, but nobody was going to these old 1960s/1970s apartment buildings by a Mom-and-Pop landlord and renovating those, and making those look nice, with tile flooring and stainless steel appliances and granite countertop, right? So that’s kind of what my niche was, because nobody was really touching that. Somebody was either flipping the homes and selling them for 200 or 300 grand. I wasn’t really interested in that. And then somebody was doing new developments. I didn’t have the cash or the people to be able to do that. So I was kind of right in the middle, which was doing the value-add small apartment buildings.

Theo Hicks: And then these more recent deals that you’re doing, are you just doing the exact same business plan, doing the same renovations to them, still have the same market rents, same level of renovations, things like that?

Antoine Martel: 100%. Exactly the same time. We’ve bought five buildings so far and all five of them have been exactly the same gameplan. Normally, we buy them, the rents are 400 to 500 bucks a month for a one-bedroom apartment. We’ll go buy those properties. Tenants, most of the time, just leave on their own accord after we start doing some exterior renovations. Then with the vacant units, we start renovating those, spend 10,000 to 20,000 bucks a unit, and then relist them for rent for $800 to $900 a month, so pretty much doubling the rents. And there’s a clientele out there that’s willing to pay for that, whether it’s college kids at the University of Memphis, or young working professionals that work downtown or in the Medical District.

Theo Hicks:  That’s something else interesting you said there. So you’re not having to forcefully remove people, you’re not having to wait until a lease expires. They’re just leaving on their own accord?

Antoine Martel: Yeah, because most of these mom and pop landlords just have — it’s crazy… 70% of the leases are just month to month anyways. And many of these people, once they start seeing the renovations on the exterior like paint the property, we’ll repave the parking lot, we’ll build a fence around the property, they’re like, “Oh-oh, my time is ticking. There’s no way that I’m going to be able to keep this rent up. I’m just going to start looking for a place to move.”

So they’ll kind of do it on their own. I’ve never had to go and forcefully evict a bunch of people in an apartment building. I don’t like to clear a house, especially if it’s a 20 unit building and I have three or four units vacant. Okay, I’ll work on those units for a month… Because the renovations for these units take a couple of weeks. It’s not some quick paint job. It takes a couple of weeks, because – new flooring, new kitchen, new bathroom, everything’s been touched in the apartment. So it takes some time to get it done. I don’t want to have an empty apartment building, I’d rather be making 400 bucks from somebody than just having a unit sitting vacant.

Theo Hicks: And then do you know going into a property that the leases are month to month, and that’s one of the things that you are actually looking for in a property, or does that not matter as much?

Antoine Martel: It doesn’t matter all that much. We’ve just been kind of lucky with all the deals we’ve bought, that the majority of them are month to month tenants. If a property that I was buying and the numbers still work, but they were on leases, I think I could still make the deal work. it wasn’t really a big factor for me. It was just something about these mom and pop landlords that own these properties. They just didn’t really care about leases and didn’t renew them, and many of these people were month to month and they lived there for many, many years.

So I don’t think it would be a deal-breaker for me if they were on leases, unless they were on something crazy like everybody was on a two year lease and I couldn’t do anything for two years, then okay, that might be an issue… Because most of my projects for the multifamily and my goal is to make them just two years long, where I could buy them, renovate them the first year, increase the rents, and then year two stabilize it and do a cash-out refinance. That’s kind of what the goal is. So, it hasn’t been an issue thus far and I don’t think it would be an issue again, unless there’s some crazy lease in place.

Theo Hicks: So you’re doing the cash-out refi to get your own money back or do you have investors investing in these deals?

Antoine Martel: Good question. So the first two deals we bought were our own capital; no investors. I wanted to test it out, wanted to make sure I knew what the hell I was doing before I started raising money from other people. Then the three deals after that, they came to me and I didn’t really have enough capital to take them down myself, and I was like, “Okay, maybe I’ll start bringing in some people into these deals, and not do a syndication, but more do joint ventures with people,” because I’ve been investing in real estate for five years now, so people along the way have been reaching out to me to invest, and they have large sums of money, and [unintelligible [00:12:15].08] No, I want to do something bigger. So those people I reached out to, and “Hey, I have this apartment building, do you want to partner up with me on it?” And that’s how I was able to buy the last three buildings. So that’s what I’ve been doing with the last three buildings, is just raising money, joint venture just with people I’ve met and networked with along the way.

Theo Hicks: And then what does that JV look like? What’s the breakdown of the compensation?

Antoine Martel: So most of them — of course, it’s different for every deal, but let’s say for building the cash required is half a million dollars. So most of the time, we’ll come up with 50% of the funds, the investor will come up with 50% of the funds, and then we’ll sign on the loan, they don’t need to sign on the loan, and we’ll get 60% ownership and they’ll get 40% ownership. That 10% additional fee for us or kickback to us or equity for us is just for finding the deal, managing the deal and signing on the loan.

So that’s kind of how we’ve been doing it. Some variation of that, of course, every deal is a little bit different. But that’s kind of how we’ve been doing and working out these deals.

Theo Hicks: Perfect. And then when you say you’re managing it, so do you have your own management company or do you have a third party?

Antoine Martel: I’ve just been managing the construction process using our contractors, etc, etc. Property management companies, all third party. We’ve been using third party property management for the last five years and it’s amazing. I don’t really want to handle the property management side, so we just have these companies we’ve been working with for a while that managed our single-family homes, they manage our turnkey rental property clients, and they also manage the apartment buildings as well for us.

Theo Hicks: And then for the JV, these investors, are they just bringing the money or do they have other roles in the deal as well?

Antoine Martel: Well, it depends on how active or passive they want to be, because we have a system and process in place already. Many of them are going to be passive and still be in the decision-making process. And about like, “Hey, should we go high end?” Again, most of our units, we do them exactly the same, and same renovation. So they’re part of the decision-making process and they’re involved in the process, but many of them kind of just let us take the reins and they’re kind of just standing beside us along the ride.

Theo Hicks: Perfect. So since this is your second episode and you gave us your best ever advice last time, let’s do it a little differently this time and we’ll say, what is your best ever advice or the best thing that you’ve learned or the piece of advice that helped you scale from 20 units to 100 units, since we last spoke?

Antoine Martel: Great question. And I would say controlling your growth. I’m a young guy too, and right out of college, I bought my first house, my last semester at university, and now I’m doing 120 homes a year, 10 houses a month just a couple years later. And a lot of people would say that’s super fast, but to me when you’re in the weeds every single day, it doesn’t seem all that fast, because every day you’re pushing to the next level and doing stuff to get to the next level to do another house, another house, another house.

And I would say that you can move very quickly and you can blow up your business and buy a ton of apartment buildings, but sometimes you need to take your foot off the gas pedal, and you need to kind of slow down a little bit, see how things fall through or see how things go. And I think that with the whole COVID Coronavirus thing as well, it’s had a lot of people take their foot off the gas a tiny bit, just to see how things shake out. Because with the turnkey rentals too, we were nervous about people backing out of deals, we were nervous about our contractors not being allowed to go to the job site, even with the apartment buildings [unintelligible [00:15:29].13] be able to go to the job site.

So controlling your growth and don’t grow faster than what’s possible, because I think that’s what breaks a lot of people. So just controlling your growth and making sure that you’re growing at a steady rate.

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

Antoine Martel: Yep.

Theo Hicks: Okay.

Break: [00:15:46] to [00:16:29].

Theo Hicks: What is the best ever book you’ve recently read?

Antoine Martel: The best ever book, Sell It Like Serhant by Ryan Serhant.

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

Antoine Martel: Man, I’d probably do it all over again. Let’s say I had zero dollars, I would probably use the people that I know with the money that they have, and I would probably go and do some BRRR projects with residential one to four units, buy them with their money, renovate them, refinance them, pay those people out and then just keep doing that until I had enough money coming in.

Theo Hicks: What are the four deals you’ve done since we last spoke? Which has been the best deal?

Antoine Martel: There was an apartment building in Midtown Memphis right next to Cooper young, literally a football field away; you can see Overton Square, and you can literally see the square from the apartment building. That’s the best deal I’ve ever done. That’s a lifetime legacy asset. It’s, in my opinion, the best location in Memphis, Tennessee ever. So that’s pretty exciting, and we’ve paid a pretty penny for it, but I think it’ll be worth a lot in terms of appreciation which is hard to get in a place like Memphis.

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

Antoine Martel: Giving back, I was on a mentorship call for somebody’s mentorship program last night… And I think that that’s a way that I like giving back and I wrote a book and I give it away for free. I go and try to educate and help people get started as much as I possibly can. I go on live streams on my Instagram all the time and post content every single day.

So that’s how I’d like to give back and just help, you know, help somebody who was like me sitting in a college dorm room trying to invest in real estate and trying to change their life and the family’s path and trajectory. So helping people get started.

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

Antoine Martel: Best ever place to reach me would be my Instagram. You can go shoot me a DM, follow me. All my contact information is there. My handle is @MartellAntoine.

Theo Hicks: Awesome, Antoine. Well, thanks again for joining us and catching us up on what you’ve been up to over the past year and a half. So again, you’ve gone from that 20 units, done four more deals and now at 100 units. And you mentioned that all of your deals have essentially come from these brokers that you had either spoken to in the past or had reached out to and been ignored. But once you had done your deal, you now had that rapport, as opposed of calling brokers, talking to brokers and saying, “Hey, I want to do a deal.” Now, you say, “Hey, I’m Antoine. I just bought that 20 building down the street or at this address.”

Antoine Martel: Yeah.

Theo Hicks: And because you had reached out to them in the past, you said you cold called every single person you possibly could or emailed them, you were able to get all your deals from the broker relationships.

Antoine Martel: Yeah.

Theo Hicks: So I think that’s something that would be very helpful for our listeners to know that… You spent all this time getting that one deal… So you could say, well, you spent nine months doing that one deal, but in reality, you spent that nine months getting all these deals.

Antoine Martel: Yeah, 100%.

Theo Hicks: If you hadn’t put that work in, you wouldn’t have gotten the four deals, which seem like they came pretty easy, but they actually didn’t. It took a lot of upfront work to do.

And then you mentioned that you do have your cookie-cutter system where you buy the property, you start rehabbing the exteriors, residents get the clue that things are changing and they start looking elsewhere, so you don’t even have to worry about evicting people or having those difficult conversations. You work on the vacant units first, you spend about 10 to 20 grand per unit, and then you will get everything renovated year one, stabilized by year two, and then do that cash out refi.

You mentioned your first two deals, you used your own money to prove the business plan and then after that, you expanded to using other people’s money through JVs, and you just reached out to people that you had met before who had reached out about doing deals and you didn’t really have something that met their criteria. Now, you did.

You gave an example, you said that you’ll put up half the money, they’ll put up half the money, you’ll sign the loan and then it’s like a 60/40 split. And then your best ever advice was to control your growth; not necessarily go at a slow pace, but go at a steady, manageable, sustainable pace and don’t feel like you have to go psycho and buy all the properties year one.

So, Antoine, it was great catching up. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

Website disclaimer

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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.

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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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