JF1309: Get Out Of Student Loan Debt Through Real Estate Investing with Brentin Hess

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Brentin was able to pay off all his student loan debt with his investments in real estate. It didn’t come easy though, he worked hard to complete flips, and purchase some buy and hold properties as well. To hear how he got started from scratch and is now moving forward at a fast pace, be sure to tune in to this episode! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Brentin Hess Real Estate Background:

– He flipped his way out of college debt. He has done 16 flips over 3 years

– He has 13 rental units with a partner

-Certified Keller Williams Instructor

– Served as an Accounting and Finance Analyst for the Department of Defense for 5 years

– Is an instructor and Board of Directors Member for the non-profit, Keller Williams Kids Can

– Based in Baltimore, Maryland

– Say hi to him at: www.brentinhess.com

– Best Ever Book: Millionaire Real Estate Investor


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TRANSCRIPTION

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

Brentin Hess: I’m doing great, how are you?

Joe Fairless: I’m doing great, nice to have you on the show. A little bit more about Brentin – he has flipped his way out of college; that was the subject for the Bigger Pockets interview that Brentin did. We’re gonna talk about not necessarily his way out of debt – he flipped his way out of college debt – but rather how he has evolved his business and how he brought on a partner to have now a 13 rental unit portfolio.

He’s done 16 flips in three years, and he’s also a certified Keller Williams instructor. Based in Baltimore, Maryland, one of my top five favorite cities to visit in the U.S. With that being said, Brentin, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Brentin Hess: Sure. You nailed it. I am Brentin Hess, 24 years old, from Baltimore, Maryland. I got my real estate license at 19 on winter break of college; I didn’t do anything with it the first couple years, and then when I was 21, I met a mentor and he had a lot of money and not a lot of time, and I had all the time in the world, and in fact, I was at negative dollars, I was in student debt.

So we came up with this idea of “Why don’t we join forces and see what it’s like in the real estate investing world?” I was attracted to that opportunity, we came across a flip, and at 21 flipped that first house, and that’s where a lot of the stories come into play; it’s always that first flip.

From there, I’ve since been through a couple partnerships. Now I’m flipping solo, and like you mentioned, I’ve done 16 and counting. And then for the rental side, this year I’ve set a goal to get into rentals, and through various scenarios, I now own 13 rental units with a partner. And with all this, somewhere in there, in the early stages, I did leave my full-time salary job, to do this full-time.

Joe Fairless: Well, congratulations on that. How old are you?

Brentin Hess: Thanks. I am 24 years old.

Joe Fairless: 24 years old. When did you leave your job?

Brentin Hess: I left my job as soon as I graduated college, so right around twenty two and a half years old, so about a year and a half ago.

Joe Fairless: Okay, and how did you support yourself when you left your full-time job?

Brentin Hess: I was flipping for about the last year and some change of college, and it was with that money I was able to cash out to fund the first many months of no income, because the pipeline wasn’t that hot. I had one going on at the time when I left.

Then I did that to also pay down the college debt. So that lump sum of money – I had 34k in college debt, I paid that off, and then had some runway thereafter.

Joe Fairless: How did you meet the mentor?

Brentin Hess: Full disclosure – I have many, and I’m very grateful for that. The first one was – he’s a realtor (his name is Stew) in our office, and he had been doing a great job saving money, and he had rental properties, and then him and I decided to flip.

Joe Fairless: Okay, you were already a real estate agent, and then someone in that office is who you met, and you two connected, right?

Brentin Hess: Right. It’s amazing, the people inside this industry. Once you get your feet wet, just the people as far as — I mean, I raise capital from people in the industry, now looking backwards, and partnered with others, and gotten deals with others… It’s just a great industry of entrepreneurs.

Joe Fairless: Okay. You met your first mentor through being an agent, and that is at Keller Williams, I imagine…?

Brentin Hess: Yeah, my parents opened this brokerage 12 years ago, so I often joke that I had KW [unintelligible [00:06:00].22]

Joe Fairless: Right. [laughs] Well, you might actually have had that; that might be a thing, I don’t know. So that’s how you [unintelligible [00:06:08].06] then you flipped a house, it went well, and then you flipped other homes. But you said you’ve been through a couple partnerships – can you elaborate on that?

Brentin Hess: Sure. All have ended well, and they stared with great intentions. It’s one of those things where there comes a point where the vision might not align, or the values… To be a little bit more concrete, it’s simply that I had different goals. I wanted to get out of the exclusive partnership, because if I found myself finding the deals, then I was able to the figure out how to fund the deals. At that point I was like “Okay, we have to figure out if this is truly a win/win or not”, and I still have a great relationship with everybody, thankfully. Nonsolo and nonexclusive.

Joe Fairless: Okay. At the beginning you were more 50/50, because you were each bringing something, but then as you evolved as a real estate investor, you were able to bring the other aspects, therefore it didn’t make as much sense for you to continue the existing partnership.

Brentin Hess: Right. And those conversations made sense in that aspect… Going into it upfront and saying, “Hey, I’m here to learn, and there might come a time where you know enough and you have the drive to wanna do it on your own”, and that’s all it was. It wasn’t too big of a surprise, but I was 21 when I got started with no experience and no money, and I’m thankful for that partnership, very much so.

Joe Fairless: You said in 2017 your goal was to buy property and own it, and you said that you’ve done that now, you have 13 units through “various scenarios”, so please educate us on what are those various scenarios.

Brentin Hess: Sure. My business partner [unintelligible [00:07:56].18] we saw a three-unit on the MLS, zero days on market, and he was showing me how to truly underwrite these multifamily deals, having some himself… And we went out and we went to the property to view it; at that time, the listing agent was away, and we met the owner there. While with the owner, we were talking to him about why he’s looking to sell, and his future plans, and he mentioned in there, which then would be his motivation – he wanted to sell all his properties in Baltimore and move to Florida. He wanted to get rid of all his headaches. That was like that time where we asked the question of “Why are you looking to sell?” and “Do you have any other properties?” It led to that, and then from there we said “Why don’t we just make a deal where we buy your whole portfolio? What does that look like?”

So it went from a three-unit on the market to a whole 11-unit deal. It was a portfolio deal, three 3-units, two single-family… And I joke that the other eight units were technically off-market at that point. So I know there are a lot of conversations about “Deals are hard to find right now on the market.” Well, a simple question of “Does the owner have any other properties that he’d be willing to sell?” – that question itself is a lead gen tactic for off-market deals.

Joe Fairless: Oh, absolutely. That’s a very simple, but powerful question that should be asked in every transaction, that could lead to some larger stuff. You asked that question, he said in this case “Yes.” Then what do you do?

Brentin Hess: That’s a good question. At that moment, we realized that we were getting ourselves into a much higher price point than we imagined.

Joe Fairless: [laughs] That’s what I was alluding to, yes.

Brentin Hess: Yeah, so the situation pushed us into raising capital, and I was doing it on a smaller scale, for like bridge loans for flips, and it was at the time — this portfolio we bought for $423,000. We financed it interest-only with a local community bank, for six months, with the intent of once we renovate the 11 units – they were all vacant, so we place our tenants… When we get it to the certain debt service coverage the bank needed (one and a quarter), we were able to then take their six-month interest-only loan and refinance that, and they would just hold that note with their terms.

So we had to come up with 25% down of that 423k, and then we also needed our closing costs and whatnot. So we went out and raised money from friends – no family this time, or actually any of the times – and we… Now at this point I started building this muscle that I now am continuously working on.

Joe Fairless: Let’s talk about that deal… How did you structure it with your investors?

Brentin Hess: Sure. Effectively, it’s interest-only, annualized, there’s no equity; because of the relationships with the investors and the conversations had, I cannot disclose the interest rate, but to get an idea, it was in that 15%-20%. It’s supply and demand, I suppose, where now money becomes more cheaper when you build the bench and the pipeline… And it was a great learning experience. We raised that money, and now we refinanced it. The bank has the note, we had zero dollars of our money in the deal from the very beginning, and we were able to refinance and pay all of our investors back. That was seven months later.

Joe Fairless: That’s outstanding.

Brentin Hess: Thank you. In the midst of all that, we came across another two units, we bought that… So we have 13 units, no money in the deal.

Joe Fairless: With your own money, or you just raised more money for those two units?

Brentin Hess: Yeah, raised more money. We lumped it into the portfolio loan. I guess long story show now, with the valuations, the 13 units are right around $860,000. We have a note for 75% of that, and we don’t have any money in the deals.

Joe Fairless: Wow, 860k, a note for 75% and no money in at the end of the seven or so months, you said?

Brentin Hess: Correct, yeah. That’s a $645,000 note. The one thing that I’m extremely grateful for is that relationship with the portfolio lender, given my little track record that I shared, I had just graduated college, left a salary position, and my business partner is in real estate sales and he does investing, too… We both don’t look amazing on paper, especially not for a note of this size, and it was the portfolio lender that I had been working with him through my flips, and that track record plus a couple meetings, plus doing everything we possibly could… We in fact brought on a signer to co-sign with us on the purchase side, and then once it was an income-producing portfolio on the refinance, we got one of my friends who has a W-2 job – we refinanced him off the loan. So now it’s just us two on the loan. We had to get kind of creative.

Joe Fairless: What compensation, if any, did the co-signer have originally?

Brentin Hess: That’s a great question. We paid him $2,000 to co-sign on this loan, and we had an outside agreement that we put together and drafted up, so we had that signed in addition to him being on the loan, so that he was even further protected, for whatever that’s worth.

Joe Fairless: Got it. Some sort of personal guarantee if something were to happen. I’m with you. What did you all do to this portfolio that increased the value from 423k – assuming that’s what the value was at the time – to 860k?

Brentin Hess: We renovated the units… They were all delivered vacant, so we did all the renovations, and we placed all the tenants. We still have one commercial space — they’re all residential spaces, and one is a commercial unit. We’re working on it right now getting the commercial unit rented; all the other units are rented right now, and they are income-producing.

Joe Fairless: Wow, I missed that part, if you said it earlier; I didn’t write it on my notes as you were talking… They were all vacant.

Brentin Hess: Yeah, they were all vacant, which… One may make a case for how that was helpful…

Joe Fairless: Yeah, yeah, it could be better…

Brentin Hess: Looking back on it, it probably was… If you wanted to get in and get out and get this thing stabilized as quick as possible. The concern is the bank doesn’t per se love to give you a note with a non-income-producing property that’s not in great shape.

Joe Fairless: Yes, that is a concern. What questions did the portfolio lender ask you during those couple meetings, and what were your responses?

Brentin Hess: A lot of it was track record. I actually go back to when I first met him… Because we didn’t have the financials so much, so it was a lot about “Okay, what is your focus and what are your income goals?” and also it was like “What have you done in this space? How do I know that you’ve been able to renovate properties and you have your systems in place etc.?”

So going back when I met this portfolio lender, I was cold-calling them to get allowed a credit at a bank for flipping with my first partner (it was actually a partnership), and inside of that process I came across this guy. When I met him, I brought him a sandwich… Many have heard me tell this story – when I brought him a sandwich, apparently that one sandwich made us memorable, to the point where they were kind of closing their doors on giving out these lines of credit… In fact, he remembered us because of the sandwich, brought us back in… So now every time I meet with him, I bring him a sandwich. [laughter] Now we’re at the point where we go out to dinner, and just that relationship has been developed over time… And it was that simple, small, little thing, like “What can you do to just kind of stand out from the pack of this very saturated real estate investing industry?” That was one thing that I wasn’t truly doing intentionally, I just wanted to bring the guy a sandwich, because I would enjoy that, if somebody brought me a sandwich.

Joe Fairless: I love sandwiches, too. You renovated 100% of the units and placed the tenants… What was a major challenge during that process, and how did you overcome it?

Brentin Hess: Oh yeah, definitely tenant placement. We completely underestimated how quickly we can get these things renter. I was like, “Okay, well when they’re rent-ready, we’ll do everything we can to get that marketed and get tenants in there.” Well, what I realized was as some of them were ready, others were still being renovated, and with the time that it was taking to focus on the renovations and the loan and everything else, the bookkeeping etc., I decided to leverage out the tenant placement to people who have vetted tenants in my market and they know the programs.

So I would say eight of our tenants or nine are program tenants, so they’re subsidized, Section 8 and other programs… And all of this was through the relationships with tenant placement professionals. We pay somebody first month’s rent and they find the tenant. One of the greatest pieces of advice that I’ve received in this process was to make sure that it wasn’t a non-exclusive agreement. Therefore, at one point I had ten different tenant placement professionals marketing and lead generating the place, so the tenants eventually — it shakes out the one or two really good ones that you’re working with, and then thankfully they’ve placed them. But that in itself was a many months process.

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

Brentin Hess: My best real estate investing advice ever is consistency. One of the things that I had mentioned was that I’ve gone through many gyrations of sending out mailers and placing signs, and just the lack of consistency in those actions – I would have been just as well off if I took all my money and walked up to a trash can and dumped it in there.

Joe Fairless: What do you do now consistently from a marketing or lead gen or whatever standpoint?

Brentin Hess: I commit to mailing at least 12 mailers. I do split-testing, so now I do 12 mailers in six months (every other week), or I’ll do once a month for 12 months. Regardless, I commit to that; I’ll pay three months in advance every single time, and that’s just my way of not looking back, like “I already paid for it. It’s gonna go out.”

Joe Fairless: You mail how many a month?

Brentin Hess: Total number? Oh, I was saying that what I’ll do is every lead in my mailer list, I’ll make sure that I hit them 12 times, whether it’s 12 times  in 6 months, or I hit them once a month for 12 months.

Joe Fairless: Oh, okay, I understand now. I was like, “12? You could ramp up your game a little bit.” Okay, I’m with you…

Brentin Hess: Yeah, I’m only mailing a few thousand.

Joe Fairless: Yeah, every lead that comes in, you contact them in some way 12 times.

Brentin Hess: Correct, yeah.

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

Brentin Hess: I’m ready.

Joe Fairless: Alright. First though, let’s have a word from our Best Ever partners.

Break: [[00:18:39].17] to [[00:19:08].01]

Joe Fairless: Best ever book you’ve read?

Brentin Hess: Best ever book I’ve read is Millionaire Real Estate Investor, by Gary Keller.

Joe Fairless: It’s a great book. I haven’t read that book, I’ve read Millionaire Real Estate Agent, and that is a great book, even though I’m not an agent; it inspired me to hire an assistant as your first hire, and that helped me grow my company. I should read that other one, Millionaire Real Estate Investor.

Best ever deal you’ve done?

Brentin Hess: It truly was this 11-unit I went through, simply because it jump-started that track record, the confidence and all the building a rental portfolio, which is ultimately the end game. I’m really grateful for that. And then for a flip, I did make 63k with my partnership on the flip.

Joe Fairless: A mistake on a transaction that you haven’t mentioned already?

Brentin Hess: A mistake on a transaction I haven’t mentioned already… On a flip itself, I was the one finding the subcontractors, managing the subcontractors, and with underestimating the renovations budget, and I was spending a ton of time with managing the subcontractors to where I calculated it and I only made 10k in a flip, and I spent about 100 hours in the deal… So what I didn’t realize at the time was I was essentially working for $10/hour.

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

Brentin Hess: First and foremost, I am a proud uncle of two. My niece and nephew are my world; both [unintelligible [00:20:29].11] have fought for their lives, so every minute I can spend with them is a contribution minute that I very much cherish. I also teach for a non-profit Keller Williams (KWKC) with one of your former guests, John Newman. I also run a Facebook group – RECN Stories; that’s simply where we just document entrepreneurs’ lives, and there’s no monetary means tied to it, just giving back.

Joe Fairless: What’s the best way the Best Ever listeners can get in touch with you?

Brentin Hess: Reach out to me on Facebook or Instagram, send me a message. I will respond to everybody; it might not be exactly that minute, but I’ll get around to it. It’s just my first name and last name, Brentin Hess.

Joe Fairless: Well, thank you for being on the show. This truly is a story of resourcefulness, I think that’s what it boils down to. You’re given an inch and you take a mile, in a good way; it seems like you’re constantly connecting with others, growing, contributing, and ultimately it leads to deals like this portfolio, where you originally wanted a 3-unit, and that grew to 11, and here comes a couple other properties along the way, with that portfolio.

The lessons learned, I really appreciate you sharing, from how to get the portfolio lender on board, to bringing someone in to co-sign with you who has a W-2 job, how you structured it with investors, you paid a premium, but at the same time you cashed them out in a relatively short period, and now you own the property with your partner. Some would say that’s a much more desirable structure from your standpoint than if you gave them equity and now they’re long-term partners with you. So there’s tons of ways to structure it, and I’m glad you talked us through this, as well as your lessons learned.

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

Brentin Hess: Thanks, I appreciate it. Talk soon.

JF1199: Creating Success From The Start by Utilizing an Experienced Mentor with Joseph England

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Joseph is an active duty service member, and active investor. He found someone who was having success house flipping, and use him as a mentor to help him get his feet off the ground. Now Joseph is on his own and still doing a great job with his investing. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

Best Ever Tweet:

 

Joseph England Background:

– Active Real Estate Investor
– He is the property manager for all his properties and accomplished all of this while maintaining a full time position with the US Military and deploying overseas.
– Purchased first investment property in Baltimore in June of 2015
– Now, he’s done over 20 deals, 16 buy and hold properties and four rehabs in various stages
– Specialize in rehabbing very distressed properties (rentals and flips).
– Based in Baltimore, Maryland
– Say hi to him at jde@vikingpropertysolutions.net
– Best Ever Book: 10x Rule

 


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TRANSCRIPTION

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

With us today, Joe England. How are you doing, Joe?

Joe England: I’m doing great. Great to be here.

Joe Fairless: Yeah, nice to have you on the show. First off, thank you for your service; I know you are active in the army, so I appreciate everything that you and your colleagues do for our country.

Joe England: I appreciate that.

Joe Fairless: And then in addition, and more relevant to our podcast, you are an active real estate investor, and he has been a property manager for all of his properties, and accomplished this while maintaining his full-time position in the army and deploying overseas. He purchased his first investment property in Baltimore in June 2015, and now he’s done over 20 deals – 16 buy and hold properties, four rehabs in various stages. He specializes in rehabbing very distressed properties – I’m looking forward to hearing some of this stories – and he’s based in Baltimore.

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

Joe England: So I started out buying three rental properties. One needed about 15k worth of work, but I did it myself… I’ve had a little bit of background as a carpenter as an apprentice when I was in college, and a whole lot of YouTube videos went into that project.

The second house was actually a turnkey that we got for a pretty decent of a price; I think I bought it for 100k, and then it rents for $1,500.

Joe Fairless: Wow.

Joe England: And then the third one I actually found on Craigslist, and it was my first venture into the lower income neighborhoods in Baltimore, and it was already rehabbed, so this is technically a turnkey… At $35,000. That one rents for one thousand a month.

Joe Fairless: My eyeballs just went out of their socket with that… Holy cow!

Joe England: Yeah. That specific area actually, I sort of lucked out because some of these areas — it’s really block to block… So we found this really diamond in the rough, if you will. I found this house [unintelligible [00:04:29].09] but the whole area, probably a good five or six-block radius, just really quiet, really nice, in kind of one of not the greatest parts of town… So when other houses started coming up in that area, I started buying more of them; I bought a couple of them for 90k. Between purchase and rehab, I was averaging between 30k and 40k with these houses, and almost all of them rent for anywhere between $900 to — we actually have one that rents for $1,250 just one block away.

Joe Fairless: Those are incredible cash-on-cash returns, on the all-in 30k, renting between $900 and $1,250… I wanna talk about that, but first I wanna take a step back. You said you started out buying three properties – was that at once?

Joe England: They were within a two-month process. So me with the partner that I had, who I actually initially started with, I had recently re-enlisted, I had a bunch of money, and I knew what I wanted to do with it, so we did conventional loans on the first two, the typical 20%, they were in my name, and then what we had left was enough to buy the $35,000 house just pretty much I had the cash… Minus some emergency reserves that I set aside, I was pretty much out of cash at that point.

Then that was the summer of 2015, and then right around January – or probably the month before – I decided that I wanted to get into rehabs… One house I did do the rehab, but I did it myself; obviously, I didn’t wanna do that anymore. I wanted to hire contractors, and then I had a mentor who was a big house flipper, and kind of used him as my mentor, and then he helped me along. At this point he was living here, but he was also in the army and he had to move out of state… So he helped me in a lot of different ways, helping me out with some of his private investors, but I purchased my first rental rehab in January of 2016.

From there, I went on to do over 20 properties in 2016. That very first house was sort of the catalyst that has turned into what my business is now, which is I specialize in rental rehabs, with of course the occasional flip sprinkled in there.

Joe Fairless: And when you do the rehabs on these rentals, are they for your own portfolio, or are you looking to sell some and then use that money to buy stuff for your own portfolio?

Joe England: The rental rehabs – the goal is for my own portfolio. I have actually recently started looking into selling a few of them, sort of doing a little bit of a turnkey business, because I know that there are investors out there who are looking for a rental that’s already done, it’s got a tenant in and it’s already got property management in it… I’m setting up kind of like — that is sort of like a new wing of my operations, but for the most part they are all for my own portfolio.

Joe Fairless: Okay. The mentor who is in the army and was a house flipper and helped you learn the ropes on the rehabs… I’m assuming – but I wanna verify this – that you met him by just being in the army and you just came across him that way?

Joe England: Yes. His name is actually Ben Smith; he came to the same unit that works in the Baltimore, DC area. We instantly got along, and I just knew that he was a guy who, as he moved around from station to station, he would buy a new house in every area, and then once he moved, he would rent it out. I think by the time that I met him, he had like seven houses.

A few years later he decided to leave and head off to the next assignment, and when he did that, he decided that he was going to start flipping, and it turned out he was really good at it. After three years, he was probably one of the most well-known flippers in Baltimore, in just such a short time. His advice influenced and has been instrumental into my business, and it’s honestly a success. I wouldn’t be where I am without him.

Joe Fairless: What are some principles or tactical things (however you wanna approach this) that you learned from him that you applied towards your business, that has helped you be successful in your rehabs?

Joe England: I remember one of the first quotes he ever kind of gave to me was in regards to making offers. I remember when I was making my first offer and he asked me, “So how do you feel about your offer?” I was like, “Oh, I feel pretty good.” He was like, “Do you feel embarrassed by it?” I was like, “No.” He was like, “Well, it’s too low. If you’re not embarrassed by your offer, it’s too high.” So always go lower.

I started out adopting this principle of putting out these embarrassingly low offers, and most of them would get rejected, but occasionally – and it would happen – someone would come back and say yes, and then I suddenly got a property that was anywhere from 20% to 30% under market value, for whatever reason. You just never know… That’s my strategy when it comes to finding properties that are listed. I just see a property I have online, I look at it, I do the numbers real quick, and then I just send out these pretty embarrassing low offers. That’s how I found the majority of my houses.

Joe Fairless: Just online listings, sending embarrassing low offers, and it’s a volume game, right?

Joe England: Yeah. I know that other places this isn’t really much of a viable option, but one of the things that helps me is the fact that it is Baltimore city, and people are generally (for lack of a better word) afraid to do business in the city, for a number of reasons; we have its reputation for crime, the tenant-friendly laws, the high utility bills… You’re just dealing with the city and any type of its public work is pretty much a nightmare. But because of that, we have less competition, and then I know all the majority of the areas in Baltimore, because I drive through them; actually, I walk all of them, so I can spot areas that other people wouldn’t to find these diamonds in these roughs.

Joe Fairless: Talk to us about where the areas are in Baltimore that you see as good investment opportunities.

Joe England: This has actually changed, I would say, in the year, year-and-a-half since I started. So when I first started the actual rehabbing portion of the business, my main focus was an area known as Loch Raven. It’s sort of like a middle-income, blue-collar, working community just South of [unintelligible [00:11:27].18] University. And what was really nice about this area – the houses with the ARVs were around 150k, but we were able to get distressed homes between 50k and 65k, and they usually needed anywhere from 30k to 40k to put into it.

The margins were there, but one of the great things about this community is there were houses on Zillow that weren’t being purchased. Unfortunately, that neighborhood is now completely saturated as far as investors go, and I can’t find a distressed property there that doesn’t get swooped up by another investor… And a lot of them are new investors who are just trying to make the numbers work, and I’m getting outbid on properties; I’ll put in an offer — usually I don’t go any higher than 70k in this area, and then I’ll get outbid, and then I’ll find out that the house got purchased for $87,000. It’s ridiculous.

I think this has a lot to do with the market. As the height of the real estate market continues to raise, you get these people who are really excited about investing, and everybody wants to get into it and you have a lot of competition. But most people will go to what could be considered safe areas. Loch Raven, as far as Baltimore goes, is considered a safe area.

It got really hard to find distressed properties and not get outbid by them, so I started looking in sort of what I kind of like to think are some more of the fringe areas. For example, there’s an area in Baltimore that’s called Pigtown.

Joe Fairless: Pick or Tick?

Joe England: No, pig, as in like bacon…

Joe Fairless: Pig, got it. Pigtown, okay.

Joe England: Yeah, Pigtown, yeah.

Joe Fairless: [unintelligible [00:13:17].14]

Joe England: It’s actually just next to all the stadiums in Baltimore, just West of it, and it’s been an up-and-coming town for the last ten years, or that’s what they’ve been saying… And when I first got into it, one of the things that you always hear in Baltimore is “Oh, you should invest in Pigtown. It’s up-and-coming.” I remember first going over there in the summer of 2015 and I saw Pigtown myself, I was like “Well, this is not up-and-coming.”

Well, I just happened to go by there last year as I noticed that it was getting harder and harder to find properties in Loch Raven, and then I noticed that there had been a lot more rehabs and a lot more revitalization of that area, so I was like “Okay, well things are starting to pick up here”, so I started purchasing houses in that area. If you imagine a line of houses that are getting flipped, after a year that line moves a few blocks over… Well, I’ve essentially bought houses in preparation a few blocks down from where the houses are being rehabbed. But because people [unintelligible [00:14:19].25] block-to-block analysis, a lot of people won’t go that extra few blocks… But I first make sure that they work as a rental, so just in case that those property values don’t necessarily go up in five years, but they work as rentals, but at the chance that they do, these properties have the potential in 5-10 years to be worth $100,000 more than they are now. So that’s another strategy I’ve adopted as a rental rehab.

Joe Fairless: Let’s dig into that part a little bit, because it’s really relevant for most of the Best Ever listeners… Because when we have a submarket that we really like, and then all of a sudden it gets real hot and now we can’t find any deals, we’ve got to pivot and find the next submarket that we like. So I wanna dig in here a little bit into Pigtown, and I want to learn more and understand more about how you identify this as an area… And let me know if there’s additional things. First, I heard that you had heard for a little while that that was up and coming area, and when you first saw it, it was not, at least according to you, and now it is.

Secondly, you saw that there were already rehabs and revitalization happening in the area… Are there any more granular details or metrics or something that you can talk to us about for how you decided that this is the new submarket that you’re in?

Joe England: This is just one of the submarkets, but I think this is probably the best example of this strategy (Pigtown), but when I went and first looked at it back in December 2016 – this would be easier if I could show it on a map, but just East there’s this large road that goes down this part of Baltimore where all the stadiums are, and it’s known as Martin Luther King Boulevard… And everything West of Martin Luther King Boulevard is known as West Baltimore, and of all the parts of Baltimore, West Baltimore is known to have the worst reputation. Pigtown sits right there on the edge of Martin Luther King Boulevard, but the thing that Pigtown has in its favor is it’s right to the University of Maryland Medical Center. And one of the things that Baltimore is known for – and this actually goes back to how I pick areas – is there are hospitals everywhere in Baltimore… You know, John Hopkins and all these different satellite campuses… Well, Pigtown is one of those that’s right next to the University, so if you were to revitalize these areas, these houses, then these doctors, nurses, people who work at these hospitals would like to stay there, because it’s a good location, near the hospital, you’re right next to the stadiums, you’re a short little ride from any of the nicer parts in Baltimore…

So when we first looked, there was maybe like one or two getting flipped, and they were not that far from this particular road. But when I came back a year later, there had been maybe 30-40 rehabs in that area, and it was slowly moving West-ward, away from the road, to sort of revitalize the rest of Pigtown, and it’s been slowly moving farther West… South-West, if you will; that’s the shape of Pigtown as it leaves Martin Luther King Drive. So when I looked at it, it was hard to find properties that were right around where everybody was flipping, for there was a lot of competition. So I started looking a few blocks down, and there were a lot of houses that were either in decent condition, or they were distressed but they didn’t necessarily need a full gut… But based on the rents, I could get a house, buy it, rehab it between 60k and 70k, and they would rent for $1,200 or $1,100. Not as good as some of the profit margins that I get in some of the lower income areas, but the houses in lower income areas — and just to label one of the areas, it’s known as Biddle Street (that’s where I have a bunch of those houses).

So Pigtown has the potential of appreciating. These houses have the potential to appreciate, but the Biddle Street houses don’t. I even had them appraised last year when I was doing a portfolio loan, and the houses in Biddle Street would come out to about $35,000. But it didn’t really matter, because I owned them outright, and each one makes $1,100 to $1,200 in rent.

So going back to Pigtown, these houses made sense as far as rent goes, but with also the potential to appreciate as this line of flipping and rehabs – the whole area is getting revitalized… It may take a number of years, but I think in 5-10 years that it’s possible that this houses will be worth $50,000-$100,000 or more, because of how you looked at the history of how Baltimore revitalized some of its areas, and that’s usually what happens. The property values will definitely go up. But in case it just doesn’t — I don’t bet on that as a strategy. I don’t put all my eggs in one basket. It first has to work as a rental, so if it never appreciated and stayed at the exact value, that it still makes a good investment property. But for me that’s just kind of like the icing on the cake, the fact that it could possibly be worth $50,000 to $100,000 in a number of years.

Joe Fairless: That’s great. Thank you for walking us through that. That’s relevant for a lot of the Best Ever listeners, myself included, as we find the submarket we like, and then it gets too hot and we’ve got to identify another submarket or submarkets. Based on your experience as a real estate investor, what is your best real estate investing advice ever?

Joe England: It was kind of like a combination between my mentor Ben Smith, and I would say reading Grant Cardone’s 10X Rule. I remember going to visit my buddy Ben for the first time, and we were sitting down to talk about real estate for the very first time; I went down to his basement, and that’s where his office was. I sat down there with him; he had a multi-monitor set up, and he’s multi-tasking, going through all this stuff, and he just kind of mentioned “You know, when I get off work, this is what I do. I just come down here. I love it.” He even mentioned that it’s like a borderline obsession.

Then going back to it and listening to Grant Cardone’s book, The 10X Rule – massive action, you get those massive results, but really it comes down to having an obsession for this, because if you’re not obsessed with it… It’s hard to explain, but…

Joe Fairless: You get burned out.

Joe England: Yeah, you get burned out, but if you are obsessed with it, you just go at it; I come home every single day, and there’s a lot of other things that I could be doing, but I come back, I sit down at the computer and I start going through the listings, and I start sending out e-mails, and I start sending out offers, and much to the dismay of my real estate agent, I do this on a daily basis. Sometimes she’ll get hit with 5-10 offers that she has to do every single day.

Joe Fairless: Are you single?

Joe England: I am.

Joe Fairless: I was gonna ask how your significant other appreciated your obsession and how you navigated that, but it’s a non-factor…

Joe England: Well, I would say before that I would be – call it different things – a socialite, somebody who would always go out, go to the bars, go to the clubs; I definitely had a very robust social life. Then once I started real estate, that all went out the window. Looking back at it, I could care less, because I look at what I’m doing as I’m building a future for myself, and hopefully a future family, but also for the things that I wanna accomplish in life to help other people.

One of the dreams that I have is to take a group of people over to Africa, where I’ve deployed a lot, and help with a lot of situations over there; that could definitely help more areas that have been affected by poverty and food shortage, because of warlords taking food and using [unintelligible [00:22:22].19] and stuff like that.

When I was going out in the town and drinking and all that stuff like that, I wasn’t taking a single step forward to any of that – nothing future in my life, dreams or anything like that… So that was the biggest change in my life, once I started this venture.

Joe Fairless: Yeah, what you’re doing now has staying power for now and for your future and everyone else’s around you with a ripple effect. Are you ready for the Best Ever Lightning Round?

Joe England: Yeah.

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

Break: [[00:22:56].03] to [[00:23:48].02]

Joe Fairless: Best ever book you’ve read?

Joe England: This is really hard. I would have to say it’s between Grant Cardone’s 10X Rule and actually Elon Musk’s autobiography.

Joe Fairless: Alright, I’ll check out Elon’s. I haven’t read Grant’s, but I get the gist of it just through me studying him, and I’ve interviewed him on the show, and some things… But I really love studying Elon, so I’ll check that out. What’s the best ever deal you’ve done?

Joe England: The best ever deal I’ve ever done… That could be like a [unintelligible [00:24:16].12] answer.

Joe Fairless: Just give me one.

Joe England: I would say the easiest – a wholesale deal where I made 12k and I feel like I put an hour and a half work into it.

Joe Fairless: That’s a very good return… Even better than lawyers and doctors. What’s a mistake you’ve made on a transaction?

Joe England: I would say I always try to keep obviously emotion out of it, but sometimes there has been one or two deals where I felt like — one specifically that I raised up in price to get the deal, and I definitely regretted it later on. I still made money, but I cut it close. It ended up being a flip. After that, I just stick to the numbers; it sucks, but at the end of the day there’s always gonna be another house. That’s one of the great things about real estate. Houses are constantly depreciating; whatever rehab has been done, whatever HVAC system you put in, it’s on its way out every single day. Even new rehabs will need to be rehabbed in 10-20 years.

Joe Fairless: How can the Best Ever listeners get in touch with you?

Joe England: You can reach me by my e-mail. I’m actually currently setting up my website right now, but for right now the best way to reach me is through e-mail, which is jde@vikingpropertysolutions.net.

Joe Fairless: Well, thank you for being on the show. Thanks for talking about how you’ve been able to grow your real estate business from when you first got started, right out of the gate really quickly on those first three deals, to now rehabbing properties and perhaps eventually developing a turnkey model as well along the way, but then really growing your own portfolio.

The macro lesson for all of our listeners is how to find a new submarket when your gets too hot. Yours initially was Loch Raven – or at least one of them you had a lot of properties in… And then you had to find a new one, so you looked at — path of progress, you looked to see where are rehabs happening, and an area that’s being revitalized, plus has some consistent job presence in the Maryland Medical Center… So the takeaway would be look for hospitals, look for other medical offices, and then also having a lot of convenience factor, in this case close to the stadiums.

Then lastly, just buying for cashflow and making sure that the property works as a rental… Although I said lastly, that’s really the top priority – buying for cashflow, making sure it works as a rental, and then if you get appreciation on top of that, as you said, that’s icing on the cake.

Joe England: Exactly.

Joe Fairless: Well, thanks for being on the show. I hope you have a best ever day, thank you for your service again, and we’ll talk to you soon.

Joe England: Thank you so much.

JF910: Why He PASSED on a $17MM DEAL, or Was It?

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$17 million development deal? Well, you’ll have to hear what happened. Just remember that trusting your gut may be a good thing…especially when developing and speculating market conditions.

Best Ever Tweet:

Brooke Kaine Real Estate Background:

– President & CEO of Kaine Homes, Inc. & Kaine Investments
– Over 30 years experience in real estate business
– Land & new homes builder, built over 1,500 homes, private money lender $6M capital, 20-25 loans at one time
– Has 86 residential rental properties as partner with BOA Partners, LLC Jared Sleeth
– Real Estate Investor, Investment Manager at Kaine Investments, a private money lending company
– Investing for over 4 years all while working full time job, in August 2016 quit full time job to invest full time
– Based in Baltimore, Maryland
– Say hi to them at http://www.kainehomes.com/
– Best Ever Books: The Millionaire Real Estate Investor by Gary Keller

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JF867: From Rabbi to Zillow Competitor Helping Landlords Fill Vacancies

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That’s right, he wanted to be a rabbi. He later developed a platform that is becoming very pro in filling vacancies for landlords. He even states that he would love to compete with and eventually become the new Zillow. Hear how he got to this point and how he’s growing the business.

Best Ever Tweet:

Ben Schwartz Real Estate Background:

– Founder of VacancyFillers.com, a tenant placement company
– To date have helped sign 287 leases and brought in $3,602,482 of rent revenue for clients
– Success of his company stems from the online platform of unique marketing and systems
– Based in Baltimore, Maryland
– Say hi to him at http://www.vacancyfillers.com/
– Best Ever Book: The 10x Rule by Grant Cardone

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

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JF852: How to Transition to from Pen and Paper to a CRM #SkillsetSunday

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It’s time to update your process of lead generation, capture, and follow up. Throw out your pen and paper and let’s start automating! Of course this is done through an electronic program or software known as a CRM. You’re about to hear one of the best CRM’s on the market, turn up the volume and take some notes!

Best Ever Tweet:

Carlos Zamora Real Estate Background:

– Account Manager & Managing Partner of InvestorFuse, a lead management CRM system for investors
– Began wholesaling 3 years ago
– Graduated from the University of Maryland, College Park in 2013 with a degree in Communications
– Based in Baltimore, Maryland
– Say hi to him at www.investorfuse.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever

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Best Ever Show Real Estate Advice from experts

JF792: How You Are Missing Out On THOUSANDS by Not Creating This Experience for Your Tenants

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Are you ready to 10 X your return? You are a few professional photographs and some excellent customer experience pointers away from maximizing your income from your cash flow properties. Today’s guest is a pro in creating the hotel or vacation experience for her residents. Hear how you can set it up in your own real estate business and why it definitely makes sense.

Best Ever Tweet:

Susan Colwell Real Estate Background:

– Principal Partner at TriStar Group, A Real Estate Investment Firm
– Host of Real Estate Investor Radio podcast
– Spent five years managing two successful vacation-rental companies
– Based in Baltimore, Maryland
– Say hi to her at http://tristarinvesting.com
– Best Ever Book: The Alchemist by Paulo Coelho

Want an inbox full of online leads?

Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

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JF504: How You Can Achieve COMPLETE Automation in Your Real Estate Biz!

System building is his definition of being an entrepreneur. Our Best Ever guest is tenaciously seeking to create a product and environment that streamlines YOUR wholesale business using workflows and Podio, a simplified CRM. He started in a band and later jumped into systematic software creation for real estate. You will save thousands of hours if you listen to him, tune in!

Best Ever Tweet:

Dan Schwartz background:

– Musician, real estate investor and automation junkie determined to enhance the freedom  of entrepreneurs through technology and systems
– Has done 100+ wholesale deals since 2011 and a handful of rehabs
– based in Baltimore Maryland and say hi to him at http://www.investorfuse.com
– working on a lead management platform designed around the 80/20 principle
– Will be launching a fully automated membership work space called InvestorFuse in 2016.


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You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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

 

 

 

 

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JF350: Some MAJOR Advantages of Buying Through an LLC as Opposed To Your Own Name

Today’s Best Ever guest has the same idea you probably do- to NEVER have to work a full time job again. She is well on the track to that, and shares with us how she does her investing to cashflow almost right away!

Best Ever Tweet:

Nicole Williamson’s real estate background:

–           Based in Baltimore, Maryland

–           Purchased 2 rental properties within 6 months of each other in 2012 and today has a total of 6 units in Baltimore County

–           Say hi to her at http://www.streamingrentalincome.com

–           Volunteer at a local animal shelter and does work on her own cars

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Made Possible Because of Our Best Ever Sponsor:

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

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JF310: Renting to Section 8 and College Students and ALL You Need to Know About It

Our Best Ever guest today, shares with us the reasons you should NEVER stop buying. We also discuss the benefits to buying whenever and wherever you can, and all the implications of renting to section 8 tenants and college students.

Best Ever Tweet:

I go where the numbers make more income per the square footage of the house.

Pat Hiban’s real estate background:

–          Top producing real estate agent and owner of Pat Hiban Group with Keller Williams

–          Based in Baltimore, Maryland and active investor in real estate deals as well

–          Has 12 single family homes and 7 apartment buildings, a strip center, office building and 14 private companies

–          Awarded #1 Keller Williams Realty Agent in units sold nationwide in 2006

–          Host of popular podcast “Real Estate Rockstars”

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