JF1896: How To Grow Your Property Management Company with Jason Hull

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We have an expert in the field of property management on the show today. Since Joe and Ashcroft us third party management, we don’t get into the details of property management as a business and how to scale it. Jason is here to help us and anyone listening who wants to grow their property management company. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“If you take on bad clients, your operational costs will be 10x higher than a good client”


Jason Hull Real Estate Background:

  • CEO of DoorGrow, is a property management growth expert
  • They have:
    • 1,900 property management business owners in their Facebook community
    • Helped 400 clients since they opened in 2008
    • 135 active coaching clients
    • 53k downloads of their podcast DoorGrowShow
  • Based in Valencia, CA
  • Say hi to him at https://doorgrow.com/


The Best Ever Conference is approaching quickly and you could earn your ticket for free.

Simply visit https://www.bec20.com/affiliates/ and sign up to be an affiliate to start earning 15% of every ticket you sell.

Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


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

Jason Hull: I’m doing great. How are you?

Joe Fairless: Well, I am doing great as well, and I’m looking forward to our conversation. A little bit about Jason – he is a property management growth expert. They have 1,900 property management business owners in their Facebook community, they’ve helped 400 clients since they opened in 2008; 135 active coaching clients and 53,000 downloads on their podcast, “DoorGrow Show.” That rhymes, I like it. And you’re based in Valencia, California. With that being said, Jason, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Jason Hull: Yeah. A little bit of background for your listeners, which are in the real estate industry – I grew up around a real estate mom. She paid me two cents a fold to fold tri-fold fliers that I would canvas neighborhoods with, on either a scooter or rollerblades. So I grew up with a mom who show me hustle, she was an entrepreneur. And I’ve got several brothers in the real estate industry, but I was the one that was a nerd. I just got into technology, I started geeking out on stuff, I love entrepreneurism… And fast-forward, I ended up somehow coaching property management business owners, in an industry that I’ve never even had a rental property, but they keep coming to me, and I’m really good at helping them do what they need to do.

Joe Fairless: So what do you help them do?

Jason Hull: Basically, what I do in a nutshell at DoorGrow is we take property management business that are struggling to grow and we rehab their business, just like you would rehab a property, so  it could cash-flow or rent-roll effectively. We rehab property management businesses so they can cash-flow or make money properly. Essentially, we’re doing anything from cleaning up their brand, to doing their website, to helping them set up a reputation strategy, to drive more warm leads, prospecting methods, sales process trainings, pricing strategy and psychology… Whatever it takes on the front-end of their business to help them grow. I just tell them “I’m not gonna teach you how to do property management. Not my jam. But I’ll teach you how to win.”

Joe Fairless: How do you know the industry so well if you haven’t done it yourself?

Jason Hull: Great question. I don’t know the nuts and bolts of property management. I’m not gonna coach somebody on how to deal with tenants, toilets and termites; not my thing. But I think the basics of what makes a business work really apply to any industry, and I just applied it to a niche that we started to get strong in organically, and it kind of took off. But there’s nothing magical in particular that I do, I would say, that wouldn’t work in any industry. But what we do is quite unique, and most business owners when they’re trying to grow their business, they first focus on SEO, pay-per-click, content marketing, social media marketing, and pay-per-lead services. And I don’t believe you need any of those in order to grow your business. We used to do those things, but we help property management companies grow without them… And they gro really well.

So the challenge is all of that really is kind of pinned on search engine marketing, all those channels. And the idea behind search engine marketing is if I could just have the top spot on Google, all my hopes and dreams would come true. And I jokingly call that the SEO lottery.

You don’t have to play the SEO lottery in which you have a few noisy winners at the top, and everybody else is a loser, in order to grow your business. There are other ways to grow your business.

Joe Fairless: Yeah, I think of the profit on A&E, I think; it doesn’t matter the channel… That’s gonna bother me, but anyway – it’s where he goes into a cupcake shop and he gives people products and process, and he gives an analysis of the business, and then figures out how to fix it. And he – to the best of my knowledge – hasn’t been in all of the business industries that he’s fixing, but he has a certain process. So I get the concept.

One thing that he did have is he had successfully created his own business, and sold it, and done well, and blah-blah-blah. What were you doing prior to DoorGrow?

Jason Hull: Really we were operating as a company called Open Potion, and we largely did website design. Originally, I started out freelance, really just me, and doing websites for clients… And I kind of quickly became the secret weapon of property managers. One of my first clients was my brother. He was bought into a property management franchise, he didn’t like the website, and asked me for some help; I gave him some tips from a marketing perspective…

Joe Fairless: What were they?

Jason Hull: I said add some faces to it.

Joe Fairless: Okay, add some faces…

Jason Hull: What were the tips?

Joe Fairless: Yeah.

Jason Hull: Add some faces; you need some humanity on your website. If there’s no faces on your homepage — imagine you walked into a town and you didn’t see any humans anywhere.

Joe Fairless: Scary.

Jason Hull: Yeah, it feels weird. And that’s how some businesses look. You see high-rise buildings, and maybe corporate structures, and you see text, and there’s no people. Or even worse, sometimes you see people, but they all look like really smiley, cheesy stock photos. They’re a little bit too good-looking; something’s off. They’re Stepford wives, or you’re in some sort of alternate reality… You need real people. People buy from people. People like people. Go figure. So that was one of the first tips I gave them.

Then I said “Why don’t you also take some of this content that’s just blobs of paragraphs of text, and let’s chunk this.” At least add bullet points. Something. Break it up a little bit. Make it easy to digest. Because people don’t read websites. They skim. So make it easy for them to do that. Add social proof, add trust symbols. There’s lots of little indicators that create trust, and sales happen at the speed of trust. So if your goal is to make money, the website really is all about creating trust, not about manipulating Google.

Joe Fairless: What are social symbols that add trust?

Jason Hull: For example social proof, or trust symbols… Social proof would be video testimonials, text testimonials with a face next to it, because that makes it real… Those things increase conversion rates.

Joe Fairless: Got it.

Jason Hull: It says somebody else is vouching for your company. Social proof would be indicators like if you’re a local business, having the Chamber of Commerce’s logo on there, that’s showing you’re a part of it. Better Business Bureau. Other trust symbols might be trade organizations. In my industry there’s NARPAM, which is the National Association of Residential Property Managers. So they’ll have their NARPAM logo. It might real estate logos, or Fair Housing stuff, whatever. Anything that says “We’re safe, we’re trustworthy. Here’s another third-party that’s vouching for us. We’re a part of this.” It just makes people feel safer. And if you put those trust symbols near lead capture, conversion rates are proven to go up.

Joe Fairless: When the prospective client comes to you and she says “Jason, I need help. My property management company is struggling to grow. We need to cash-flow more, and we wanna scale.” What are the questions you ask her?

Jason Hull: One of my favorite sales questions – and this is probably interesting for any listener – I first say “What is your biggest challenge in your business right now?” I love asking that question right now, because that’s the one thing they really care about. “Where is your pain?” Then they’ll tell me what their biggest challenge is. Sometimes they’re telling me what may not fully give me the story, so a great follow-up question I love to use in sales – if I don’t feel like I’m really getting the bedrock there – is “Why now?”

I’ll say to them “You’ve probably seen me on my podcast, you’ve probably watched a bunch of videos, you’ve probably been around me for a while… Why now? Why are you reaching out now? What’s changed?” And in those moments, you start to step onto sacred ground. Something interesting happens, because I start hearing stuff like “My wife just left me.” Or one guy said “I’m waiting for a double lung transplant, because I have a serious illness and disease and I wanna make sure my business is operating effectively, and I’m nervous.” Or “I had cancer, and I just came through it.” You’ll hear all kinds of crazy stuff. Sometimes it’s more simple, like “We just lost a bunch of our portfolio, our doors, and we’re struggling to grow, and it’s getting painful.” But it starts to go a little bit deeper beyond the superficial, because there’s something driving them to talk to you right now, if somebody’s reached out to you. If somebody’s become open to having a conversation with you that’s a sales conversation, “Why now?” is one of my favorite questions to ask.

Joe Fairless: What are top five things that when someone comes to you, you usually can implement rather easily to get them in the right direction?

Jason Hull: The basic things that we take a business through are really about five things. The first thing we wanna tackle–

Joe Fairless: Oh, what a coincidence.

Jason Hull: The first thing we wanna tackle is branding, because branding affects the very beginning of the sales pipeline, at the awareness stage. For example, in property management, a lot of property management companies have a brand name that says “Real Estate” in it, and real estate in your brand name in property management is a quick way to scare off maybe about half of your potential customers… Because they want a specialist, they don’t want somebody that’s out hunting/chasing real estate deals. They want somebody that’s actually gonna take care of their property. Like, is property management even really a focus for you? Because it’s not even in your name, or it’s not a main part of your name, or you’re trying to do two things.

So branding is a big thing, after we get that thing cleaned up with the company… And there’s a lot of potential pitfalls when it comes to branding. Using names that are generic, that people can’t remember… Because the crux of branding is being memorable. The number one source of leads and deals is word of mouth, for most businesses. And the crux of that is being remembered, too. So if they don’t remember you, your brand and positioning might be off. And if that’s off, you could be losing out on half the amount of deals and leads you could/should be getting… And that’s a big leak. So we wanna take care of that first. Then we move through the pipeline.

Reputation is a  big deal. You wanna make sure you have a strategy in place… Because most business owners get started and they think “If I just provide really good customer service, I’ll have great reviews all over Google, Yelp and everywhere else.” But that’s just not true. Those that have a really good reputation have some sort of process in place. They have a system they’ve created for soliciting feedback, for getting good reviews, for reaching out, identifying peak happiness, leveraging the law of reciprocity… These kinds of things. So we wanna make sure we build a process to get them better reviews.

We have a platform called GatherKudos.com, which any business or industry can use. We set it up to help facilitate this process, because property management companies have a hard time getting good reviews. This is a big challenge in this industry, because tenants generally are not very happy when they don’t get their full deposit back. So we had to build and create a system that would allow them to make the negative reviews more of an outlier, so that they were consistently getting positive feedback and reviews online from their happy tenants and owners.

GatherKudos.com is a service that we provide to do that for any industry; it just happened to be something our clients needed, and then we started tracking clients from all over. So we focus on that. Then we also focus on the websites…

Joe Fairless: Before you move on, how does GatherKudos work exactly?

Jason Hull: Real simple – we set up a landing page for the business, GatherKudos.com/yourbiz, or whatever, and then basically when people go to this page, in a single click it identifies whether they are happy or something else. And if there’s something else, then instead of giving them all your review site – so if they’re happy, it’ll just show all the different review sites, and it says “Pick whatever you’re comfortable with, basically. Pick whatever you’re used to.” Rather than trying to corral everybody to Google or to Yelp, they can pick from all the different sites. They may have come to you through Zillow, or Trulia, or something else, and that may be where they wanna go leave you feedback. So it allows them to go to the channel that they’re used to. Maybe Facebook is what they’re into and used to. Maybe they’re not a Google person or a Yelp person.

So it prevents waste of reviews, it prevents them from getting stuck or confused, and then it gives them directions how to do it. Real simple, text and images, and they click the button to go off to leave this review.

If it’s negative or neutral, then it a single click it will qualify them and identify them as this, and then it will give the opportunity for them to give you direct, immediate feedback. They can fill out a form there to send you an email, or we usually have the business owner put their cell phone number and say “We wanna hear from you directly. Call me if there’s an issue. We wanna take care of it.” So this allows people to bypass that natural barrier to feedback that every business owner creates as they build a team.

As we scale and build a team, we move our office into the back, we set up an auto-attendant, we have a receptionist… We’re protected, so that we can leverage our team, but the challenge is it creates a barrier to feedback between us and the customer, and we no longer have that direct feedback to know how we’re really doing… And the only person that really maybe knows is our frontline staff, that might be the ones offending our customer.

So this allows them to bypass your frontline staff for you to get direct feedback, and it makes it safe, so you can get feedback, good or bad. If it’s good, it’ll push them towards the review sites. If it’s bad, it gets to go to you directly, and then you can take care of it, so it helps prevent negative reviews… Because most people’s feedback is more in the neutral to negative category – they’re not at DEFCON 5 nuclear, wanting to destroy your business, but those are the ones that end up on review sites. And if you can capture them before they get to that point, you may be able to prevent a significant amount of negative reviews online. An ounce of prevention they say is worth a pound of cure.

Joe Fairless: So if it’s a positive review, did I hear you say they give text and an image…? Do you provide them with sample images within that platform?

Jason Hull: Yeah, so what it will say — for example if they click on Google, then it’ll say “Here’s how to leave a Google review. Here’s the steps”, it’ll show screenshots, like what the button looks like to click on, and it gives them directions.

Joe Fairless: Got it. But you don’t provide them with sample images to upload; they have to upload their own image and write their own text.

Jason Hull: Yeah, they leave their own review, they do their own thing, so it ends up being real.

Joe Fairless: Got it, okay. Cool. And just jumping back to the branding part, and being memorable – you said make sure that you don’t have “Real Estate” in the name, have “Property Management” in the name; it makes total sense. And be memorable. What are some other branding guidelines that you’d give to someone whenever they’re creating a brand in property management?

Jason Hull: Some of the basic rules in branding in general are you wanna avoid names generic to the category. So if you’re a real estate business, you don’t want your name to be “Best Real Estate Company”, or “Phoenix Realty” if you’re in Phoenix. You also don’t wanna have names that are generic to the location, like Phoenix Realty if you’re in Phoenix. You’ll notice that some of the most successful brands have nothing to do with the category. Who came into the scene of online books and crushed it? Amazon. Who came onto the scene and started crushing online search? Google. Who started the industry of facial tissue? Kleenex. These names had nothing really directly to do with the category. They were original, unique names. So you don’t want names that are generic to where you’re like the same as every other company in the market. In Phoenix, you would have “Phoenix Carpet Cleaning” and “Phoenix The Bank” and “Phoenix Whatever”, and you don’t wanna be “Phoenix Property Management” or “Phoenix Realty” etc. It just makes word of mouth really difficult. People can’t remember names that are generic.

So that’s one of the biggest rules, and there’s a whole host of rules when it comes to color, when it comes to layout, with the logo, when it comes to spelling there’s a lot of potential pitfalls… The absolute worst thing you can do with branding, for those listening – take a look at the brand name, and if you have a generic business name, it’s generic to the industry or the category, and you’ve misspelled it to be clever…

Joe Fairless: [laughs]

Jason Hull: Barber,  and you do Haircutz, with a z at the end, because you think you’re clever, you are probably losing out on tens of thousands of dollars in annual revenue. Probably monthly. So… Yeah.

Joe Fairless: Will  you just close the loop on why misspelling it would be a mistake?

Jason Hull: Oh, yeah… So there’s this great thing called autocorrect that happens, which if your name is misspelled, every system on the planet is gonna try and fix it, so people won’t find out. Another thing is people won’t hear this misspelling, so verbally word of mouth gets hurt and damaged… And if it’s a generic name, if they search for you because they’ve heard about you, who are they gonna find? All your competitors. That’s what they’re gonna find when they search for a generic term. So that’s the basis of that, I guess.

Joe Fairless: Great stuff. Let’s do one more. I know I asked for five, and you’re prepared for five, but we probably have time for one more… So what’s another step in the process you take someone through?

Jason Hull: Well, at the very front end you’ve got branding, reputation, and then the website. Because the reputation stuff is gonna feed you leads to your website. People are gonna check your website, so it needs to be high-converting, and it needs to be focused on trust. So the three biggest tips I could give for a website – look at your homepage; it needs to answer three core questions. Every visitor has three core questions when they land on your page. The first question is “What do you do? Is it what I need?” That’s question one. If it doesn’t answer that in big, bold text, at the top of the page, “We manage properties in Phoenix”, for example, or “We help real estate investors find property”, or whatever it might be… People wanna know “Am I at the right place?” That’s question number one.

Question number two once they know they’re at the right place, that you can do what they need, question number two is “Why should I choose you to do it? What’s special about you? Help me make a choice here. Why should I pick you over everyone else that does that? Because there’s other people that do that… What’s different about you?” Help them make a choice. So why choose us.

You should have some unique differentiators, or a unique selling proposition, or something that sets you apart, to say “Here’s why you should choose us to do this.” That crux of your content below the headlines that I was just saying you need, should be on the page. And then the third question – so once they know what you do, and why they should choose you to do it, the next logical thing they’re gonna be thinking is “Alright, what do you want me to do next?” Then you need the call to action. So the third question that they need answered is “What do you want me to do next? What’s the next logical step I would be willing to take as a consumer? Give me that direction and I’ll do it.”

You’d be surprised how many websites have no call to action on the homepage, no lead capture to fill out a lead… There’s no action that they’re asking them to take. They’re just hoping that somebody will just decide to do something.

Joe Fairless: What is a call to action that a property management company should have?

Jason Hull: One of the most simple is “Give us a call, or fill out this form for a free quote, or find out what your property could rent for”, or even just “View pricing. Go to our pricing page” is a great call to action for the homepage… Because everyone’s gonna want to do it anyway. Send them there, and then have that page sell really effectively.

Joe Fairless: Based on your experience as an entrepreneur in the real estate industry, what is your best advice ever for property managers?

Jason Hull: My best advice ever for property managers, especially for the business owners, is don’t be a property manager. Consider yourself an entrepreneur. Be the business owner. Property managers are who you hire. They’re the people that do the work in the business, for you. So be the business owner, and get out of the tactical day-to-day.

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

Jason Hull: Let’s do it.

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

Break: [00:20:53].14] to [00:21:34].23]

Joe Fairless: Best ever challenge you’ve come across when working with a property manager/business owner?

Jason Hull: Oh, man. The best challenge… There’s been so many different challenges, but I would say one that stands out is I had a client come to me that had 600 units under management. That’s a pretty healthy property management business. It’s rare to get to that point. But he was making zero dollars. He had zero profitability, he was making no money. And I said “How is this possible?” He said “Well, I’m doing three million a month in real estate in my brokerage.” So he had a really healthy real estate company, and his property management company was his cancerous tumor, sitting on the side of this healthy body called real estate. And that’s somewhat common in the industry, that you’ll have businesses that do both brokerage and property management, and a lot of times they artifically have broken past some of the typical barriers they would have had to make changes to get through by siphoning away resources from the real estate company.

So we took that challenge and I coached him through it, and he fired about half his staff, he fired about 200 doors, and he’s making a whole lot more money. So one of the biggest challenges in the industry that this reveals is what I call the cycle of suck. They take on bad clients. And this applies to any industry, any business. If you take on bad clients, your operational cost will be ten times higher than that of having a good client. So sometimes in order to move forward we have to trim the bush, so to speak. We have to get rid of the fat that’s causing harm… And some of these clients are eating up 80% of our resources and they’re only paying us  a small portion. If you can clear those people out, it creates a lot of room and space to be profitable, lower your operational costs and to grow and bring on more business.

Joe Fairless: Best ever book you’ve recently read?

Jason Hull: A really fantastic book is a book called “It doesn’t have to be crazy at work”, by Jason Fried. He is the CEO of Basecamp, and I actually got to hang out with him on a call, not unlike this, face-to-face on video, for about 90 minutes… And at the time, I had a bunch of different software tools we were using, we were really struggling in the company; I couldn’t wrap my head around why. And he spent 90 minutes with me, showed me how he runs his company… He’s written all kinds of books on virtual teams, and things… So I was really excited to hear what he had to say. No kidding, in a day he had cut my staffing costs in half. Our productivity had doubled.

This book is fantastic, because — he just recently  came out with it, and I had met with him years ago, and he had transformed my business from just that one call, showed me how he ran things. He just came out with this book and it reveals a lot of the principles that he had shared with me on the call, so I’m really excited to share that book with everybody.

One of the biggest takeaways is to eliminate interruptions. It was one of the biggest things that I got. One interruption will cost you about 18 minutes of productivity. So if you or your team members are interrupting each other, or coming into each other’s office once every 18 minutes, you’re basically at a standstill in your business. So by eliminating/cutting down interruptions, our teams become infinitely more productive; we cut down on all kinds of meetings that weren’t necessary. We don’t feel like we’re spinning our wheels anymore, and business gets a lot quieter.

Joe Fairless: What’s the name of the book again?

Jason Hull: “It doesn’t have to be crazy at work.” It’s all about creating calm in the workplace.

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

Jason Hull: Really easy. I am the same username/handle/tag on all social media, King Jason Hull. I’d love to connect on Instagram, Facebook, Twitter, Snapchat, you name it. Feel free to connect with me there, and if you wanna connect with me for business reasons, I’m DoorGrow everywhere. You can check us out at DoorGrow.com.

Joe Fairless: Jason, the insights you gave are applicable to not only building a property management company successfully – or rather making it profitable – but also any company, so I’m grateful that you were on the show. It doesn’t take much of a connection to go from what you’re saying about building a property management company to building a fix and flip company, an apartment syndication company, a real estate brokerage… So I’m grateful that you were on the show, and sharing the tips, from branding, to websites, making them have the right messaging, and to reputation strategy and the importance of it, and the website that you have, GatherKudos.com.

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

Jason Hull: Thanks. I appreciate being here.


JF1889: Investing In & Managing over $2 Billion In Real Estate with Alexander Radosevic

Listen to the Episode Below (00:32:48)
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Alexander is joining us today to share his background, how he got into real estate investing and built a large company focused on investing and managing real estate. We’ll hear a couple of case studies from some of his deals, how he found them, financed them, and what he’s done with the deals since acquiring. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“There are so many career opportunities in real estate” – Alexander Radosevic


Alexander Radosevic Real Estate Background:

  • Launched his real estate company, Canon Business Properties, in 2001
  • His company now owns or manages over $2 Billion of retail, hotel, industrial, and residential properties
  • Based in Beverly Hills, CA
  • Say hi to him at https://www.canonproperties.com/
  • Best Ever Book: Great by Choice


The Best Ever Conference is approaching quickly and you could earn your ticket for free.

Simply visit https://www.bec20.com/affiliates/ and sign up to be an affiliate to start earning 15% of every ticket you sell.

Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


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

Alexander Radosevic: Doing great!

Joe Fairless: I’m glad to hear that, and looking forward to our conversation. A little bit about Alexander – he launched his real estate company Canon Business Properties in 2001. His company now owns or manages over two billion dollars of retail, hotel, industrial and residential properties. Based in Beverly Hills, California.

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

Alexander Radosevic: Sure. Initially, I was an investment banker with Lehman Brothers, from ’84 to ’87. That collapsed, and I got involved with real estate through a client, and have consistently stayed in that marketplace, from the acquisition side, into management and construction… And the focus of our company is in those areas today. We focus on retail investment, commercial/industrial investments, we also then take care of construction and construction management, and we’re also advisors in other genres for debt financing and things along that nature.

Joe Fairless: So when you were an investment banker and you transitioned into real estate full-time, what were a couple of your first projects that you worked on?

Alexander Radosevic: Interestingly enough, I was involved with debt financing first. Numbers is something that comes very good to me… So I analyzed a lot of properties first, before we started making acquisitions. So it gave me a lot of understanding really how properties operate. And I looked at industrial, office, retail – all different types of investments, from the analytics side, and see how profitable they were for our investment purposes. That was my first role in real estate.

Joe Fairless: So you were a W-2 employee, assessing opportunities that you all wanted to finance?

Alexander Radosevic: Yes.

Joe Fairless: Okay. And then how long did you have that role?

Alexander Radosevic: To give you an idea, after about two years of doing this, one of the brokers I did a transaction with – I asked “How did everything go? Were you happy with the funding?” [unintelligible [00:03:36].20] “What are you gonna do with your $10,000?” and I was like “Excuse me?” He said “Yeah, isn’t that what you made on this?” And I was thinking like “Wow, this is interesting. What did you get out of the deal?” and he said “Well, I made $50,000 out of it.” So I had immediately said selling is a much better opportunity from the side of the financing for me at that time, I thought, and I enjoyed getting out of the office and working on properties. So that sort of conversation got me to get out of an office, go entrepreneurial, and begin to search for investments on my own, and that’s how I started my company. I was driven by the commission dollars earned from the sale and acquisition side, other than the financing side.

Joe Fairless: So you had that background both from Lehman Brothers as an investment banker, and then also looking at debt financing… And what was the first couple projects as an entrepreneur?

Alexander Radosevic: Well, probably the one that I’d say to me was the best one for me long-term – in 1994 we had the L.A. riots here, and South Central L.A. was the area which was hurt the most. At that time I was looking at properties there and found an abandoned bakery, about a 40,000-foot single-tenant building. It had been burnt. I took a risk, which we all know risks can have great rewards… I acquired the property, I went in, I had some construction background already through my family, and my father was in the construction business… I went through, cleaned the property up, and converted it into a nine-unit multi-tenant manufacturing/warehousing building.

What that became was my first value-add project, really without even knowing it. And it sort of set a template for me going forward, and it’s something I still do today.

Joe Fairless: How did you get the funds to purchase that?

Alexander Radosevic: My very first real estate transaction of my life – I bought land at Laughlin before Laughlin was ever developed. I was reading something called The Penny Saver; it was a throw-away paper here in L.A. while I worked at Lehman Brothers…

Joe Fairless: Sure.

Alexander Radosevic: …in my twenties. I think I was 22 at the time when I bought it… And I bought 2,5 acres on the river, which as we know Laughlin, Nevada has now turned into quite a profitable sort of marketplace. There’s hotels, some 60,000 people there living, and so forth. So that was my first opportunity in real estate, and I used those funds from the monies I made there and continued to invest those monies when I sold out of that property and invested into other real estate opportunities.

Joe Fairless: And that abandoned bakery – did you get financing on it?

Alexander Radosevic: Yeah, we did. At the time it was tough to get…

Joe Fairless: I bet.

Alexander Radosevic: [unintelligible [00:06:25].04] you’re talking double-digit rates… But I think I probably leveraged somewhere around 40% debt. It was all I could get out of it… So I had to raise 60% capital. but once I got the capital, the profit — not even the profit, really. The building was bought at such a good price, obviously, like anything in that time. It was worth it. I took a little risk, and the rewards were there.

Joe Fairless: So it’s been a little while since that property that we’re referring to, and I respect your memory. I appreciate you going back in time with us on this… You’ve clearly grown your company to a great degree since then… So along the way, my assumption is that you’ve optimized certain things that you do now on deals, compared to when you were doing your first handful of deals as an entrepreneur. What are some things that you’ve now optimized, knowing what you know now?

Alexander Radosevic: Well, from a standpoint of acquisition, due diligence has become to me the key to all the opportunities I find for myself personally, and those that I represent on transactions. I’d say the ability to gather and review information today, in comparison to what I did 20 years ago, is really one of the key elements to what we do for not only myself, but for my clients. We’ve got a very vast portfolio of property. We look at tons of deals all the time, and our ability to thoroughly examine cashflow, marketplaces, management, financing, all within a concise period of time, so that we’re performing and not losing opportunities, like we had at times – I’d say that’s been probably the key growth for me personally, is to have the ability to analyze the information quickly, and that the information is accurate and thorough. It’s been a great change for us.

Joe Fairless: Would those be the four buckets that you do due diligence in? On a high-level… Cashflow, marketplaces, management and financing?

Alexander Radosevic: Well, those four are critical. Look, first of all, you have to know what you want to achieve. Are you looking value-add, are you long-term hold, are you short-term? Are you gonna tear down, develop? You have to know what you’re shooting for, but first and foremost, like they say, “location, location, location”, and then of course, pricing and financing, because you’ve got debt… And for me, since we have a lot of properties under management, we’re real strong on who will be the team that’s gonna be responsible for that asset as it’s being repositioned or acquired. So those are four strong buckets, but there are other criteria in which we may look at something for a specific client… Especially if we’re looking for trophy/legacy properties. There are other very serious factors to look at, and those become a little bit more detailed… Without getting into that; I’ll just leave it at that. But there’s other criteria for different acquisitions, but those would be the four primary.

Joe Fairless: Let’s go with any of them, whichever one you wanna go with. Cashflow… When you say marketplaces, just so I’m tracking what you’re talking about, what are you referring to?

Alexander Radosevic: Okay, so for us it was some corporate offices here in Beverly Hills. We consider L.A. our home base… Outside of Beverly Hills, a province within L.A, right? So we look at the marketplace here as a focus — if we’re looking at retail, we might be looking in Beverly Hills specifically; we might be looking at a trophy sort of property on Rodeo Drive. And then within that area it’s just gonna be a long-term hold  for the family, are we looking to perhaps take out a quality tenant, bring in a new tenant that the family has a relationship with? It’s that sort of criteria.

If we’re looking at industrial properties, which I’m a big fan of, to be honest with you, we’re looking for properties that are located near international airports in major cities like LAX, Denver, Cincinnati. We’re looking for major distribution centers, let’s say within a mile or two-mile radius, that we’re looking to acquire to develop… So that marketplace already has a built-in need, or a built-in opportunity, if you will. That’s the  criteria in which we’re investing for that particular purpose. And again, we’re in different areas, but let’s just hone in on the idea of industrial, for instance.

Joe Fairless: Sure.

Alexander Radosevic: We’ve looked at stuff in Houston, George Bush Airport, LAX airport… We wanna stay, as I said, within a mile to two-mile radius. We know that these are key opportunities for distribution, and distribution now is becoming quite a big topic with what Amazon has done recently to the marketplace. We’ve been probably doing that for almost 15 years consistently, and that actually has been one of the best returns we’ve seen; industrial real estate has become a very hot topic, whereas 15 years ago there were very few really dedicated to that market space.

So that’s what I’m referring to. If it’s in industrial, we’re very specific on the criteria we’re gonna acquire. We have a base of who we’re probably gonna be looking for for tenants. We’re doing build to suits, if you will, along the way… And that’s how we evaluate the real estate; if it’s gonna be an office building, again, whether it’s in South Beach Miami, in a marketplace right now where we’re looking at some opportunities, there has to be for us to evaluate an end game [unintelligible [00:12:08].19] for us in that marketplace. We’re not just going in blindly, and I think that’s where we really capitalize, again, on the information that we’re ascertaining on these deals. Because when you’re not in a city itself, you’ve gotta rely on foot soldiers’ information. So this is critical to us.

Joe Fairless: Let’s talk about a recent transaction… Just real quick, what’s a recent transaction, and then I’ve got a couple questions; I just wanna learn more about it.

Alexander Radosevic: Sure. Recently, we’re looking at – to be honest with you – land acquisition, that we’re gonna go into for the development of a boutique-style hotel. That’s hotness marketplace, as you know; I know you’ve had some of your speakers speak about this… The small boutique hotel is a very hot market. We’re looking now for something on the coast here in California. California has a lot of restrictions, [unintelligible [00:13:03].03] but we’ve found a land, we do have entitlements in place, and it was a process that was started by the previous owner some nine years ago…

Joe Fairless: Wow…

Alexander Radosevic: And it will take us about another four more years of entitlement work to get what we need out of it. To give you an idea, that’s a very, very marketplace-specific opportunity. And once it is entitled, of course, like anything else, it will give us  a tremendous amount of opportunity and profitability, that’s for sure.

Joe Fairless: I was gonna ask some questions, but you took it in a direction that’s much more interesting than what I was thinking, so let’s talk about it… Nine years that they started on it, and then four additional years; what is transpiring over the four years?

Alexander Radosevic: Sure. Coastline development, which is similar to (let’s say) inner-city development, if it’s got too many apartment buildings, there’s more restrictions placed on it. But coastline here in California in particular is difficult. So the nine-year process was converting what was originally a residential/commercial use into what will be a hotel use. So the zoning process itself, with the prior ownership, and the city, combined with the Coastal Commission, all have to come to an agreement on the conversion from its initial approved use into a hotel base use.

So you’ve got three different governmental agencies working at the same time, and not all of them want the same result. Then you have to have some legal power come in, you have to have some meetings with city officials… There’s just so many things that take place that many people give up.

Joe Fairless: Oh, yeah.

Alexander Radosevic: This family persevered, but they owned quite a bit of real estate, knew or were properly advised by  a third-party that said “This is gonna be your highest and best use”, but the issue was they couldn’t take it to the end because they lacked what the city really wanted, which was where we come in – hotel-experienced operator/developer that could show the finish line to them. And that’s where some people get stuck and repurposing a property. You have the great idea and you have the right intention, but you don’t have the expertise. Without the expertise sometimes you just have to sell it and allow someone else with more expertise to take over.

So we’re looking at that opportunity now, and we’re gonna get the feedback we believe that we should get, which is an approval. The issues now we’re battling with is how many keys are we gonna get out of the property. We would like to get 131 keys, but we may only get 101. Well, if you only get 101 keys versus 131, you’ve lost almost 25%, right? So now the dollars and cents become more critical. The construction costs may come down, but then your cashflow NOI on the back-end are also coming down. These are really critical issues when you’re developing any sort of project roundup that’s relying on cashflow, not the single-tenant use.

So this is part of what any development — this is gonna be the same with an industrial building. If you only get a 500,000-foot structure down to 300,000 feet, it’s the same sort of an issue. But in this particular matter we’re fighting to get as many keys as we can, obliging the city with communal parking for the [unintelligible [00:16:29].09] providing some retail opportunity,  a quality restaurant, and all those factors come into painting this beautiful picture, so that someone sitting behind an office the day that it goes to a Council meeting can now look at this visually and say “Okay, I get it. Let’s go with 131 rooms” or “Let’s split the difference at 117, but you’ve gotta give us an extra 100-car parking on the weekends for the beach, and we would like two restaurants instead of one”, and some other criteria. So it’s a give and take, and it’s a process, but it’s one that — in this particular case I can’t share with you the exact location, but it’s gonna be very well received and a very well-used hotel.

Joe Fairless: So you’re estimating four years from now that process will be completed…

Alexander Radosevic: Yeah, yeah.

Joe Fairless: What about the project makes it worth four years of your life to focus on?

Alexander Radosevic: In that particular market space it would be the only class A opportunity there. So number one, the destination is very well known, however there just has not been a new development there in over 20 years. To give you an idea – number one, we’ve capitalized on the most important part… Quality AA, plus location, the most newest development, highly-trafficked, perfect opportunity for us to capitalize on what will be a new destination. High dollar rent per door, and in a marketplace that, as I said, is very desirable. It’s a very well-known area. If I said it, you’d be like “Oh my god, I can’t believe this is gonna be the first one in 20 years”, but that’s the way it is; it’s been that way. So that’s the answer for that.

Now, why is it worth the four years? Well, the back-end value of it – it’s construction costs after we’re done and  into this project, and depending on what flag we decide to put there, it will be more than 4x return on your money after it’s all said and done. So you’re looking for that sort of opportunity. It doesn’t come that often, so  you have to be patient; it’s just part of real estate, you have to be patient at times… And this is one of those you’re gonna have to jump through not one hoop, not two hoops, but probably like 50 more hoops. It’s gonna be that sort of process.

Joe Fairless: If you were the original owner, so nine years ago you owned that land, and for whatever reason it also would have taken you 13 years from the start to finish to get it done, would you have chosen to do this, versus just — you said it was zoned for residential, so I assume you could do some sort of multifamily use there…?

Alexander Radosevic: Yes… No. Because multifamily — well, actually let’s take that back. The answer is I would have chosen it, knowing what I know now. But nine years ago you don’t know. So if you take a risk like when I bought that 1994 property – they took a  risk and carried that torch a long way, but only lacked one component: they don’t have the expertise in this marketplace to develop this property. They had to have a third-party come in or flip it. So had they had the experience, then they would have taken this all the way to the end and really benefitted. They took it as far as they could.

One lesson I learned from one of my original clients was I bought some land — I bought land a lot, and I had asked one of my clients to help me build it. He was a builder. He was actually an industrial real estate builder and a mentor of mine, and one of the guys I first started managing with. I bought some land down in San Diego, and I said “Look, I got this from a guy, he went belly up, out of New York, doing a subdivision funding up in San Diego. And it was about 32 acres. We can get 16 homes out of it. Each parcel had to be a minimum of two acres, and I was gonna put a park in the middle of it, and it would be a communal park for families.

Joe Fairless: It sounds like a nice place.

Alexander Radosevic: So I laid it all out and I called my client up and I said “Would you help me with this?” His answer was “Alex, you’re a great guy…” I was maybe 29 at the time. Not even 30 yet. And he says “…but here’s what I’m gonna tell you. If you can just get some utilities there and get some streets paved, let someone else carry that torch and build the houses. You did your part and make a profit.”

To give you an idea – I ended up buying all those pieces at about $70,000 for a two plus acre parcel was my total all-in cost in the end, and I sold them off for over $200,000 a piece without putting up a structure.

Joe Fairless: Beautiful.

Alexander Radosevic: Just assembling land and getting utilities, and basically doing a subdivision, getting things lined up and handing it to somebody else can also be a very profitable business in real estate. Real estate is great for that reason, because you can be a land guy, you can be a land parcel guy, you can be the guy who puts utilities in and flips it to the developer, you can be a finance guy… There’s so many [unintelligible [00:21:07].08] opportunities in real estate, and I’ve had the good fortune of touching a few, and really becoming an  expert in some others.

The land thing happened through a client who said “I won’t help you, but here’s what I would do if I were you, and this is how I got started.”

Joe Fairless: With this transaction, the one with the boutique hotel, did you just outright purchase that land from them? Or is there a joint venture?

Alexander Radosevic: We will do a joint venture…

Joe Fairless: Okay, cool.

Alexander Radosevic: …and they will participate, as some do, not on a 50/50 basis, but we’re giving a sort of back-end deal, and then at the time of the sale, if we decide to sell out, there will also be a piece for them on the back-end.

Joe Fairless: Cool. So their contribution was the land, plus getting it to wherever point they had gotten it, and then you’re taking it–

Alexander Radosevic: Correct.

Joe Fairless: Got it. Okay. And if they had sold it to you outright, I was gonna ask you why they didn’t just do a joint venture, but never mind. Okay.

Alexander Radosevic: [unintelligible [00:22:02].07] he would love that. Any guy like me would love to have been able to acquire it all out, but you know what –  they’re not fools either. They did have [unintelligible [00:22:09].18] They just didn’t have the expertise to take it to the next level… As I didn’t when I bought that land in San Diego. I knew the client, it was a client of mine. He says “Look, Alex, I don’t wanna build with you right now, my friend. I’m building other things. But here’s what I would do… Take it from there.” So they did what they could do, and I think they’re very happy. We came in strong, and — don’t get me wrong, this isn’t something that happens in a day. It took quite a bit of time to build a relationship. It’s not just coming in and knocking on someone’s door and saying “Hey, we’re the best deal in town.” It’s building a relationship with someone, the family, and creating some faith and trust, and having some sort of proven track record to do something.

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

Alexander Radosevic: Best ever advice – if you can, try to hold the properties that you buy, allow them to appreciate, and leverage against them, as opposed to selling them and trying to trade up. We all need to sell and trade up to buy bigger and better things, but there comes a point in which if I just had held on a little bit longer to some investments, I could have easily leveraged out now two or threefold what I got out of it selling it. It’s just the way it is. And I have tried to buy in areas — because I understood how to underwrite property, so I’m always trying to buy in areas where I know that are strong, that are growing.

As a cheat sheet answer – and sorry to divert, but you’ll have the chance to do what you want with the information I’m providing – I would track the top five best places to live and work in in the United States when we’re looking and analyzing properties. So that’s one of the criteria I look for. I look at consensus information throughout the country, and tracking the top five places to live and work. What does that tell me right away? There’s expansion, there’s stability, there’s financing…

I’ve tried to invest that way not just in California, but throughout the United States, where I’d put my money and my clients’ money to work. In those marketplaces you know that push comes to shove, you can always get rid of a property. In all those marketplaces that we’ve held on to, refinancing out, cashing out, holding the asset is a better position to take.

Joe Fairless: What source do you use for best places to live and work? Or sources. Because there’s all sorts of stuff  [unintelligible [00:24:28].16]

Alexander Radosevic: Yeah, unfortunately that’s changed a lot, too. You bring up a great point without really saying it… There’s too much information available for a lot of us, and knowing when information has value is what you’re kind of alluding to; which one of this many sources is there.

So there are government consensus in every state, that I’m more a fan of than just a third-party periodical published by a company saying “These are the spaces.” So I’m looking at cities, I’m looking at their information provided, because theirs is the most accurate in terms of income, revenue, traffic, tax bills, all that information. Now, there are companies now that are coming out, and I’ve had a chance to speak on some panels that are out there, but I won’t say one is favored to the other. I would have to say if you go online and you’re looking for that specific information – growth, tax bill, tax benefits, utility bill opportunities…

You must understand, if you’re building an industrial building, I’d rather build it in an industrial marketplace right now that the city is giving tax benefits for the next ten years for developers coming in that are building in this marketplace, and I know that’s gonna be attractive for the buyer coming in, and the manufacturer coming in, because they’re also getting tax benefits. So if I’m looking at an industrial building, I’m looking for those specific  marketplaces, with those key information, if you understand what I’m saying.

So I’m picking the five best places to live and work, and then I’m saying “Okay, I wanna build an industrial park near an airport. Where am I getting the best tax benefits from?” That area is gonna be growing. This is gonna be a multi-tenant park, there’ll be a lot of small mom-and-pops wanting to develop in that area and service the community… So I’m looking at true city factual statistics; I’m not really going to third-party emailing sort of collaborated surveys done by third-parties. I’m actually going to those cities and getting as much information as I can from them directly.

Joe Fairless: And then your team has to aggregate that, and then make it apples to apples comparison, because I’m sure you’re getting it in all sorts of different formats from each of the different cities, right?

Alexander Radosevic: Right. And there are, as I said, without giving a lot of secrets out, there are ways to get that information a little bit easier… But you’re right. We will look at the information aggregated, and I’m looking for specific factors that are attractive to me in that marketplace. As  I said, housing, if you’re doing an apartment structure, how many have to be in a community that’s really thriving? How many of those have to be units that are dedicated to housing for X, Y and Z? Is it 10% of those properties? Is it gonna have to be subsidized housing? Is it 18% of that property that has to be subsidized housing? That element to me right away is important, because that’s gonna change my cashflow out of that property by x%. Is it worth it for us? So we’re looking at certain criteria within that marketplace specific to our needs.

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

Alexander Radosevic: I hope so. Let’s do it.

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

Break: [00:27:39].25] to [00:28:18].18]

Joe Fairless: Best ever book you’ve recently read?

Alexander Radosevic: Wow… That’s a tough one. I’d have to say probably a book — Great by Choice, let’s go with that one. Jim Collins is a pretty well-respected author, and he’s got some good books out. I don’t know how many bestsellers — he’s got quite a few. The most recent one is why do some companies thrive, let’s say in uncertainty and in chaos, and others not? It’s a great read; it’s something that anybody in business can use.

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

Alexander Radosevic: Wow. A mistake… You know what – as always, lack of due diligence.

Joe Fairless: What about a best ever deal you’ve done?

Alexander Radosevic: I alluded to the first one, the bakery, but probably the best I ever did was buying that land in Laughlin, Nevada. It was my first, and it had an amazing return.

Joe Fairless: What did you buy it and what did you sell it for?

Alexander Radosevic: I bought those parcels of land for $2,500, with $500 down. 2,5 acres on the Colorado River. I am embarrassed to say that we’re talking well over hundreds of percent return on my money.

Joe Fairless: [laughs] Embarrassed/you’d do it again.

Alexander Radosevic: Oh, my god… Let’s say 1,000% return on my money, right? Yes, of course. It’s just luck. Sometimes we need to be lucky in life, right? But I was reading a paper — and I’ll tell you why I read the paper; can I get a minute?

Joe Fairless: Yeah, of course.

Alexander Radosevic: I know it’s the lightning round, but I’ll just tell you – true story. At the time I was working at Lehman Brothers, and a couple guys had brand new Porsches. And I wanted a Porsche. I had heard a story that a woman sold her husband’s Porsche for $100, angry because she had cheated on him. And that’s why I started reading that Penny Saver. Because I really was — I was reading the Wall Street Journal, what you normally do as an investment banker; you’re in a different realm. But that story got me so convinced, so I started reading it all the time, and coincidentally I found this guy selling this land in the Penny Saver. I contacted him, and he goes “If you buy this, you’re gonna be rich, kid.” I was like 22 at the time, the guy was like 45 years old. He was an airline pilot, of all things, who was friends with the developer.

Joe Fairless: Oh, wow…

Alexander Radosevic: And he goes “Trust me, you’re gonna be lucky.”

Joe Fairless: [laughs]

Alexander Radosevic: So I bought as much as I could, with $500 each time, and that’s how it worked out.

Joe Fairless: Oh, good for you. Best ever way you like to give back to the community?

Alexander Radosevic: Okay, so I didn’t come from any family with money, to be honest with you. I alluded my dad was in construction… My mom and dad divorced when I was six months old, and my mom remarried a clothing guy; I worked after school every day as a kid, since I was eight years old, buttoning blouses, and sweeping the floor, and doing things like that with my stepdad. So I didn’t come from many money… And what I do or what I like to do is help young entrepreneurs that lack education or funding, if you will, that have the strive and desire to be successful – I like to help in that matter one-on-one, if I can. So I always focus on trying to help young people, or young men or women, whether they come to my office and they leave to go on to another career, or they come to my office and  start their own construction company… Whatever it is that I can do. But I like the idea of working with someone one-on-one and helping them grow.

Joe Fairless: How can the Best Ever listeners learn more about your company?

Alexander Radosevic: The company is Canon Properties. I’m at my office here. My website – you gave it – is canonproperties.com, and I’m happy to take any email. I try my best to respond, I’m at alex@canonproperties.com.

Joe Fairless: Alex, thank you so much for being on the show. I loved hearing about the boutique hotel land acquisition joint venture that you’re doing, and just talking us through the four-year process (knock on wood) that you’re about to undertake, you and your partners, as well as the previous nine years that your joint venture partner undertook with what they did.

Then also the deals that you did previously, and then talking a little industrial, too. We don’t talk enough about industrial on this show, so again, thank you so much for being on the show. I’m really grateful for our conversation. I hope you have a best ever day, and we’ll talk to you again soon.

Alexander Radosevic: Thank you so much for your time, and I really appreciate the opportunity to speak with you as well.

JF1881: Learning From Our Real Estate Investing Mistakes #SkillSetSunday with Kent Clothier

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Kent is back on the show to talk to us about his latest project as well as mistakes he has made throughout his career. He’s working on making home selling and buying more accessible to everyday people and investors looking for discounted property. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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“They put their property on the platform and in less than 24 hours they will have 50-100 cash buyers bidding on the property” – Kent Clothier


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Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


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

Kent Clothier: I’m doing good, brother. How about you?

Joe Fairless: I’m doing well, I’m looking forward to it. Best Ever listeners, you know Kent, and one of the reasons why you know him is because you’re a loyal listener, and back — let’s see… Episode 440 – wow, that’s a lot of days ago… This is like episode 1900, or something. So he was on the show, and the title is “Live your passion by having the end in mind.” So if you wanna hear his best ever advice, then go ahead and check out that episode, episode 430.

We’re not gonna talk about his best ever advice; what we’re gonna talk about today are the mistakes he’s made, and what he’s learned from them. So we’re gonna make this a Skillset Sunday episode. I imagine there’s tons of skills that are coming from the lessons that he’s learned.

Just a refresher on Kent, and then we’ll get into it. He’s the founder and CEO of Real Estate Worldwide. He was previously part of Memphis Invest, which is a real estate investment firm that has bought and resold more than 5,000 residential properties. With that being said, Kent, do you wanna give the Best Ever listeners just a little bit more about your background and your current focus?

Kent Clothier: Absolutely. As you said, I’m the CEO and founder of Real Estate Worldwide, and my family and I started Memphis Invest many years ago, which has become one of the premier real estate investment companies out there. It flipped over 5,000 single-family homes, and it continues to flip 8,00 to 1,000 properties every year.

Real Estate Worldwide is a company that I’ve founded back in 2008, that provides not only real estate education, but real estate tools to the investing community. And then recently, in fact getting ready to launch – we have been largely focused on our newest project, which is called Kribbz, which is a buying and selling platform that we’re bringing into the real estate industry at large, that we are extremely excited about… It’s gonna kind of make the entire process a lot easier, a lot more efficient, and ultimately a lot less expensive. So that’s kind of what I’m all about. If it’s real estate, I’m in it.

Joe Fairless: Well, I wanna learn about mistakes and lessons you’ve learned, but I am curious about Kribbz. It’s a buying and selling platform, it’s gonna make the process easier… What exactly is Kribbz?

Kent Clothier: Well, you’ve been doing it as long as I have; the real estate process is extremely cumbersome, especially if you’re a direct home seller; largely, you get into the transaction without completely understanding all the costs, all the time, effort and energy involved in it, and many times you show up to the closing table and what you think you’re going to get versus what you do get is radically different. So we set out a couple years ago – my co-founders and I – to solve that problem; create a situation where a seller can sell a house, and sell it basically fee-free, and in turn go directly to the most ravenous buyers that are out there, which are cash buyers in the market right now, that wanna buy — they largely make up over 35% of the market, in any many market. Most people don’t realize that… But 35% of all transactions that are happening on the real estate market today are being done with cash.

There’s just no good way to get the cash buyers connected to these home sellers in any kind of way, and proved real value to both of them. So Kribbz does that. basically, it is a bidding platform where sellers go on, and in less than 24 hours they have multiple cash offers from a variety of different buyers that are sitting in the market, and they can pick and choose… Maybe think of it like a Kayak, when you’re buying a hotel room or you’re buying a plane ticket; it’s very similar – you’re picking and choosing which cash offer you want to take, or none of them, and can close in as little as 7 to 14 days on a deal, all completely fee-free.

And from the buyer’s standpoint – we’re solving a problem on that side as well. The buyers want the inventory, want to deal directly with the sellers, but it’s a very costly proposition for them from a marketing standpoint, from a going out and visiting with motivated sellers, all that kind of stuff. So from their standpoint, they get to sit on a platform and have great deals brought right to them, that have all been vetted, they’ve all had a Kribbz representative walk through the house, take pictures etc. and they can bid on the property very confidently and get charged roughly $3,000 to ultimately close on a deal that if they had done it themselves would have easily cost them $5,000 to $7,000 just in marketing costs and soft costs, going out and visiting the property etc.

Joe Fairless: The single-family space… I’ve only purchased four single-family homes; I do apartment communities, so this isn’t my area of expertise. But from the little I know, if I want to sell my house all-cash, then first off, cash buyers will likely want some sort of discount, my guess is. It doesn’t matter what the percentage is, but some sort of discount. So if I’m wanting to sell my house cash, then I’m in a position where I’m going to sell it at some percentage of discount. And if that is the case, the challenge that I’d love to hear your thoughts on is it doesn’t seem like you’d have a lot of repeat sellers on the platform, so you’ll constantly have to find new sellers… Because if I’m selling my house all-cash for a discount, it’s not a really good business model for me, I don’t think. So it’s not like I’m a big-time landlord; I’m probably someone who’s a motivated seller, therefore I might not be a repeat customer of yours. So how do you plan on growing the side of the business where you’ve got a lot of cash sellers?

Kent Clothier: Well, you actually have a couple different dynamics working. So in order for 35% of the market to be cash buyers right now, cash transactions, roughly 162 billion dollars a year is what this very segmented part of the real estate industry represents today. So in order for you to buy cash, somebody has to be selling cash. So largely, that is a problem that we don’t have to solve. It’s happening right now. What Kribbz is doing is providing a way for a seller to have multiple cash offers, versus getting locked in with somebody that they saw a bandit sign, or they saw a piece of direct mail, or a Google ad, or whatever the case may be.

Instead of having to go through any of that process, they simply put their property on the platform, and in less than 24 hours they will have somewhere in the neighborhood of anywhere from 50 to 100 cash buyers bidding on their property, and we will display to them the top three that they can pick and choose from. They can negotiate directly with the buyer, and/or they can just reject the offer. There’s literally no cost and no obligation whatsoever for them. So that’s a problem that we don’t really have to solve.

But even bigger than that, Joe, is the simple fact that if you think about it, we all are hearing about the iBuyer phenomenon that is taking the industry by storm. So again, just thinking about it from an agent’s perspective, one of the biggest fears you have out there today is that as a listing agent you are now competing — you’re not only competing against other agents for the listing, but you’re competing against these iBuyers like Opendoor, Offerpad, Knock, whoever it is… Coming in and basically trying to sweep this listing out from under your feet, and again, locking into one company.

Well, our clients – not only is it the direct seller, but it is also the real estate agent who can confidently go into any listing and say “Not only can I potentially list your house for retail, but inside of 24 hours I can have three cash offers for you right here, and at no obligation.”

Joe Fairless: Right, “I can guarantee three cash offers.”

Kent Clothier: Yeah. So our go-to-market strategy, as you’re kind of outlining, is the simple fact that we are solving a big problem for multiple people. Not only direct sellers, but also real estate agents that are just trying to figure out how to compete, and we’re offering a really good solution for that.

Joe Fairless: Got it. On the first point, I understood how the sellers benefit, I just didn’t know how you’d continue to get new sellers to come back, because your repeat customer would probably be low… But I get it now, with the second part you mentioned, with the real estate agent, because…

Kent Clothier: Yeah, the agents are having to do it today, right? If they don’t do it, quite frankly, they are a dinosaur. It’s not a matter of if they’re gonna lose, it’s a matter of when. So we are providing a really good solution for them to compete very competitively, in real time.

Joe Fairless: Cool. When is Kribbz available in — I think you said Phoenix?

Kent Clothier: We’re going to Phoenix on September 24th, and then it’ll roll out to Las Vegas, Atlanta, then Dallas, and then by the end of the year we will go nationwide. We’ve got some things to prove in three or four pretty challenging markets, so we’re stress-testing our systems to make sure we’ve got it all lined up, and then the plan is to roll it out nationwide.

Joe Fairless: How did you pick those markets?

Kent Clothier: They are good markets, where there’s a lot of competition from a cash buyer perspective. In my Real Estate Worldwide business we aggregate a great deal of data. One of the software products we provide to the industry, that has 15,000 subscribers now, is a data product where we mine a lot of data, and provide seller leads and buyer leads etc. So we have this 10,000-foot view where we can see where most of the cash transactions are happening, markets that are ultra-competitive, where we can provide a lot of value, and so those are the first four that we can clearly see there’s a lot of competition, there’s a lot of value we can bring right in there very quickly.

Joe Fairless: And why did you pick Phoenix to start?

Kent Clothier: Well, Phoenix is arguably one of the most competitive markets out there right now with cash buyers. Roughly 40%  of the market is being done with  cash, all of the major iBuyers are in Phoenix, including Zillow, and ironically, we are not a competitor of the iBuyers; we are somebody that provides value to them as well. They want the inventory, they wanna buy as much as they can… So we’re very agnostic, we kind of play in-between.

So being able to know that we have a lot of buyers, a lot of demand on one side, while we can also create a lot of supply on the other side is  a very good place for Kribbz to play… And Phoenix represents that in a very big way.

Joe Fairless: What one mistake that you’ve made was a big pivot for you, that then you are where you’re at now?

Kent Clothier: Well, we’ve probably touched on it a little bit the last time we spoke. The single biggest mistake I’ve ever made in business quite frankly is focusing on business versus family… And I know that may not be exactly where we wanna take this, but you’ve asked the question, so I’ll answer it very directly. At the end of the day, when I was a young entrepreneur, from 17 to 30, I was consumed with business. I was that hustler; we all see it on social media, we see all the BS that’s out there about “Go, go, go, go!” at the expense of all – well I was that guy. I wore it as a badge of honor, to sit there and be the guy that was the first one in the office at 5 AM, and the last one to leave at 10 PM. That was by far the thing I lived for, and I loved being that guy.

And without question, without hesitation, without doubt, the single biggest regret and/or mistake that I have — I mean, I learned a lot; I learned a lot about what not to do. I was very, very successful at that. I built an almost two billion dollar a year company by the time I was 30 years old. Seventh largest privately-held company in the state of Florida. But I did it at the expense of family, did it at the expense of friends, did it at the expense of a life, quite frankly. And luckily, I got a second lease on life and figured out that you can actually do both. That there is a way to go out and create passive income, which I know you are a huge proponent of, there is a way to go out there and build the business with the end in mind, there is a way to build the legacy and to have everything without having to sacrifice everything along the way.

So I would tell you that for your listeners, when you are out there — when you’re young and you’re getting into the business, yes, you have to hustle; yes, you have to go; yes, you have to sacrifice… But at some point the tables start to turn, and you start to realize that life is a lot bigger than a P&L, or a checking account, or a car, or a watch, or a vacation. It’s more about the people that you’re impacting and the legacy that you leave, and do you matter, and creating something where — I’ve said this many, many times… That today, as I’ve gotten older and as I’ve built many successful companies now, the pendulum starts to swing and you start to understand that – this is gonna sound a little morbid, but it’s actually what I think about – “Who’s gonna show up at my funeral? Who’s gonna show up and say ‘Dude, that guy mattered. That guy actually made a difference in my life. That guy actually provided value to me and my family, that I’m never gonna have to worry about how to make a buck. He taught me the lessons, he taught me the skills, he gave me the things in my life that actually help me get to the next level.” That to me is much more fulfilling and much more [unintelligible [00:13:50].28] about what life is really about than the P&L. And ironically, when I made that shift – which I made that shift when I was about 40…

Joe Fairless: How old are  you now?

Kent Clothier: I’m 49 now.

Joe Fairless: Okay, so nine years ago you made the shift…

Kent Clothier: I made that hard shift, and it really kind of hit me hard… And when I made that shift, then – here’s the craziest part about it… When I stopped focusing on the money part and started focusing on the actual providing value to people, and really trying to create an impact and all that, the money only multiplied. I’m much more successful now than I’ve ever been at any point in my life, by far, by every measure, not just the money. The money is there, the family, the commitment to my children, the commitment to my wife – all of that, every aspect of my life is better versus 20 years ago, when all I cared about was money-money-money-money, business-business-business-business. I just wanted to prove something to everybody, and I had a big chip on my shoulder. And it got me to a point, but it never got me to the point where I am today, if that makes sense.

Joe Fairless: So can you elaborate and maybe give a specific example of what providing value to people — when you’re like “Alright, you know what – it’s worked to a point, but I’m not fulfilled. I’m going to really provide value to people.” So how did that–

Kent Clothier: Sure. I’ll give you a great example of this. Back in 2008, when the market was shifting, and Memphis Invest — we were very focused on working directly with cash buyers, and the timing just worked out perfectly… We were mining data, we were going to public records, finding people… And the way we were doing this back then was very manual. We were going into public records and looking for all the recent transactions that had just happened, and we were also balancing up against those transactions where a mortgage or a lien hadn’t been recorded at the time of the transfer. So we would deduct; we would say “Okay, the lien wasn’t recorded, the mortgage wasn’t recorded, the promissory note wasn’t recorded… Then that transaction was cash.” We’d take those people and we’d really focus all of our marketing to that person, to nurture them and bring them over to where they would buy properties from us. And that worked beautifully in our investing business.

It’s part of the reason why Memphis Invest became so successful. We were really marketing hard to these people. And I shared it with a few people. Than Merrill, FortuneBuilders – everybody knows Than Merrill; we’re very, very close. And at that time he was like “Man, you have to tell all the people what you’re doing. The banks are not lending anymore, people are going out of business… You have to share this.” And I was petrified of doing that. I had that big scarcity mentality. “Oh my god, I’m gonna share with people how I got and create my customer list. I’m effectively telling people how to go find all of my customers right now.” And he convinced me to do that, and that was a really scary proposition, not only for me, but for everybody around me.

But we built a piece of software that did that, and  went off and basically pulled all of that data from every county, everywhere in the United States, and said “Here are all of the people in your market currently paying cash. You do not have to go out of business. You don’t need banks. These are the people. These are the ravenous buyers in your market right now. Just market to them. In fact, we will actually give you the marketing piece that we use at Memphis Invest, the very letter we use right now, to get them to start dealing with you, so you don’t have to go out of business.”

That was an extraordinarily challenging thing to overcome, as you can imagine. We were basically not only giving people our customer list, “Effectively, here’s all the cash buyers in every market, including our own market”, but “Here’s all the marketing that we use to get them to do business with us. You can see in all of our data every property that we’ve been selling to these cash buyers. Can you imagine going to your competition right now and saying “Here’s my customer list, and here’s my training manual. Just go do it.” That was very, very challenging to overcome…

But in the end, two things happened. 1) We became, in a lot of people’s minds, heroes, for helping them and getting them out of this very desperate situation… And ultimately, that’s what kind of pushed us to the forefront. People believe that we routed for the greater good, which we were. And ultimately, it also made Memphis Invest and our family much, much better, because it made us sharpen our skills, because we clearly knew that our competition had everything. They had all the information they needed to beat us, and in spite of it, we were still not only competitive, but we were thriving, and ultimately excelling and doing much better than all of them made us be better as well. So as the saying goes, the rising tide raises all ships – I wasn’t necessarily a believer of it at that point, but ultimately that’s exactly what happened.

Joe Fairless: Yeah, I get it. Theo on my team does Syndication School where we share the blueprint for how to do apartment syndication, and how we raise capital, and people are very appreciative of it… And a lot of times they’re like “Dude, why are you sharing all this stuff?” I was like, “You know what – a world of abundance. Things work out.”

Kent Clothier: Amen. That’s what it is. And again, it’s hard to make that first domino fall, if you will, but when it falls, it’s shocking how much it all comes around in the end.

Joe Fairless: What’s a recent mistake you’ve made?

Kent Clothier: A recent mistake I’ve made in business… We make a lot of mistakes, I’ll just say that. We make a lot of bad hires, we take a lot of risk in my businesses. I think that’s inherent. If you’re gonna be successful, you’ve gotta be willing to push in on a lot of things, a lot of times, and a lot of them don’t work out quite frankly.

One of the mistakes we’ve certainly made is that a couple years ago we thought we could go in and basically redo search engine marketing. We hired a company to build a platform where we could go off and build a website that was very robust, and we thought we could license it off to a lot of different people and really get good at search engine marketing. We surrounded ourselves with what we believed were all the best people, and in the end none of that played out the way we wanted it to be. It was a  multi-million-dollar — I don’t wanna say it was a mistake, but it was certainly a multi-million-dollar lesson that just didn’t work out the way we wanted it to work out. But it is what it is.

I think that if you’re not willing to push all-in on stuff and you’re not willing to challenge yourself and push outside of your comfort zone, then that’s a very, very limited world. It’s hard to become the best version of yourself or the best version of your company if you’re not willing to push those boundaries.

So we make a lot of mistakes that don’t cost us millions of dollars, but that’s one that I will tell you in the last couple of years cost us multiples of millions of dollars… And getting out there, licensing the brand, licensing the opportunity to a lot of people, we generated a lot of leads, but nowhere near what we believe that we could at the time… So ultimately we ended up having to shut that business down.

Joe Fairless: Anything else that you think we should talk about as it relates to lessons learned and mistakes that we haven’t already, before we wrap up?

Kent Clothier: I would just say this… Lessons learned would be that — I had a mentor tell me a long time ago that there’s only one way to coast, and it’s downhill, if you’re not pedaling. If you’re not going uphill, then you’re going in the wrong direction. I think about that all the time. I think that the lessons that we learned and the mistakes we’ve made are just that – it’s a part of the process. I appreciate you asking the question, I appreciate you really putting out there for people. It’s a valuable part of the journey. When you’re going into the business and you’re trying to make something happen, you have to structure failure, structure lessons correctly. It is not about losing, it’s about just learning the lesson and moving on, and that’s the biggest thing. You have to do it. It is a part of the process, period.

Joe Fairless: I like that… There’s only one way to coast, and that’s downhill. I like that a whole lot.

Kent Clothier: Yeah. I didn’t appreciate it when he shared it with me when I was 25, but now, 25 years later, I get it. I get it completely.

Joe Fairless: Yeah, and I’m thinking — it’s true, just thinking through it even more, because when you’re going downhill and you’re coasting, you don’t have to pedal, and then even as the hill flattens out, you can still coast a little bit, but ultimately you’re gonna come to a stop.

Kent Clothier: That’s right.

Joe Fairless: And that’s so true. That’s not what you want. [laughs]

Kent Clothier: Right? That’s not what any of us want. You’ve gotta be pedaling, you’ve gotta be trying to find the new hill to climb, because if you’re not, then you’re just going in the wrong direction. It’s that simple. And it sounds very straightforward and simple, because it is, right?

Joe Fairless: Yeah. I like it. Well, Kent, thank you for being on the show. How can the Best Ever listeners learn more about what you’ve got going on?

Kent Clothier: Yeah, I’m easy to find on social media. Just go to Facebook and look up Kent Clothier. I’ve got an Instagram, find me @kentclothier, or you can also go to kentclothier.com, or even visit kribbz.com.

Joe Fairless: Kribbz?

Kent Clothier: You got it.

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

Kent Clothier: Thanks for having me, brother.

JF1820: Real Estate Investor & Financial Advisor Helps Us Reach Goals & Protect Assets with Bruce Mack

Listen to the Episode Below (00:26:24)
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Bruce will be talking a lot about asset protection and tax mitigation through trusts. He and his team not only follow their advice, they help others set up the proper structures in their investing businesses too. There are many different trusts, which one is best for real estate investors? Learn that and more in this episode! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“I can’t say they won’t sue you, but I can say they won’t be able to collect from you” – Bruce Mack


Bruce Mack Real Estate Background:

  • Owner and founder of Platinum Financing Group
  • Helps business owners achieve financial freedom and helps them find the right funding option for their business
  • Has been involved with over $92,000,000 in transactions
  • Based in Woodland Hills, CA
  • Say hi to him at https://www.platinumfinancinggroup.com/


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

With us today, Bruce Mack. How are you doing, Bruce?

Bruce Mack: Fantastic. Thanks for asking.

Joe Fairless: My pleasure. I wanna know how you’re doing, so that we set the stage right out of the gate. A little bit about Bruce – he is the owner and founder of Platinum Financing Group. He helps business owners achieve financial freedom and helps them find the right funding option for their own business. He’s been involved in over 92 million dollars in transactions. He’s based in Woodland Hills, California. With that being said, Bruce, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Bruce Mack: Sure. Again, licensed financial advisor. I am an active and have been an active real estate investor [unintelligible [00:02:58].03] period of time. I bought, rehabbed and flipped 160 properties. We had three teams, 28 employees, and we were going like a house of fire. So I understand what it is when it comes to real estate investing, and it’s really my life’s mission to help people from a financial perspective not only attain their goals, but to protect their assets… Because there are so many people that  are predatory, and unfortunately, I’m seeing about 50% of the folks that are real estate investors, at one point in time or another, they’re getting involved with a lawsuit from somebody who wanted to take the hard work that they worked so hard for and put it into their backpocket, unfortunate as it may be.

Joe Fairless: So how do you do that?

Bruce Mack: Great question. I’ve been on the quest for the Holy Grail of trusts for decades, and I’ve been involved with trusts and working in the capacity to see what’s the absolute best trust that’s out there. And what I came to find out was that entry-level trust is a living trust, and you may have heard of it who are on this call, and you may actually have a living trust; that’s a non-grantor trust, and it is good for two reasons. Reason number one – for probate avoidance, and it does a good job at that. Reason number two, for directing from the hereafter where you want your assets to go, who you want your heirs to be. But unfortunately, when it comes to asset protection, there isn’t any, because it is a grantor lease, and it doesn’t have the type of clauses that it needs to and provisions in it for asset protection… And certainly, the other ideal aspect of a properly constructed trust like the one that we have, which is a proprietary and copyrighted document, there is not tax mitigation capabilities or components to that trust as well.

So further research took me to finding about land trusts, which many of you may have heard of, and potentially even have some of your properties in. The land trust idea is not a bad idea. It’s a glorified [unintelligible [00:05:16].21] and it can help. The idea of a land trust is to take the property, and therefore at the recorder’s office your name is not on it, therefore if a predatory lawyer is trying to find you, ideally they can’t, because you’re not on title. However, unfortunately, good lawyers do good research, and they do many more things other than utilizing, say, LexisNexis, and these types of asset search kinds of tools, and they’re gonna find you, they’re gonna tie you to the property, and unfortunately they’re gonna go after you..

The third thing that I’ve also seen is a lot of people mistakenly think that an LLC or a one LLC for one property is a great idea, because you’re gonna contain the virus. Usually though, at the end of the day I come to find out that most LLCs are what we call tightly-held or closely-held entities. They’re held by you, you and a partner, or you, your partner and your wife, which may be your partner as well. But the case is that the unfortunate reality is that the alter-ego approach to piercing the corporate veil can be invoked, and once that is proved to be the case, that you are literally hiding behind the corporate shield and it was really you masquerading as you, as crazy as this may sound, if that corporate veil can be pierced, then the assets can be gotten, and this fallacy of one asset per one entity invokes the ability to shield all of your assets is also quite nonsensical… Because they can’t go after other entities; they can come  after you for future wages and earnings, and this can all become a horrible, horrible scenario.

I know this because I myself was sued for $175,000; it was an unfortunate situation, and it just couldn’t have and/or wouldn’t have happened if I had the type of trust that I am aware of, and that we work with the real estate clients on a day-to-day basis to protect their assets. So the component of having a trust absolutely negates, iron-clad, the ability for  a lien or a judgment to attach to you at any time whatsoever. I can’t say that they’re not gonna sue you, but I can say that they’re not going to be able to collect from you, and/or invade the trust to attach that asset and take that asset away from you, which is a  bold statement and true with the provisions that we have and in the type of trust.

And then there’s the other component, and actually I wanted to take a breath and ask you, Joe – did you wanna jump in for a second? Because I wanted to transition to the other aspect of the trust, which is the tax mitigation position, and the stand of the information that is relative to that.

Joe Fairless: What’s the name of this trust that you’re referring to?

Bruce Mack: We call it the Titanium Asset Protection Trust.

Joe Fairless: What a name! The Titanium Asset Protection Trust. Okay, so I’m not a lawyer. I’m not an asset protection lawyer. Are you a lawyer?

Bruce Mack: I’m not a lawyer. I’m a licensed financial advisor.

Joe Fairless: Okay, you’re a licensed financial advisor.

Bruce Mack: Yes.

Joe Fairless: What would a typical asset protection lawyer call your Titanium Asset Protection Trust?

Bruce Mack: My gosh. They may say a bunch of things, but there are a multitude of provisions that are in there, and the trust was granted 58 copyrights. So they might say some nasty words because they cannot copyright the trust, and the copyrights were granted going back to 1999. There are [unintelligible [00:09:18].05] provisions, non-grantor provisions, [unintelligible [00:09:21].01] provisions and a number of other provisions that are in the trust that give it the absolute impenetrable strength that it’s got, along with the fact that the IRS code 643 has been woven into the fabric of the trust, and as such there are huge tax advantages… And there’s an irrevocability clause I should also mention. That irrevocability clause is one of the pieces that adds the tensile strength of the ability to crack into it. But irrevocability does not mean that you can’t modify it, meaning should you wish to change the beneficiaries, and/or change trustees at any time, you can, with the stroke of a pen. But the other pieces, that IRS 643 has been woven into the fabric of the trust, which offers huge tax advantages for investors.

Joe Fairless: So what approach would you give listeners who are hearing this and they’re like “Wow, this sounds great… But I’m not a lawyer. I don’t know how to validate this and make sure that it is what it’s intended to do, or what Bruce is saying.” Because if a lawyer looks at it, they’re going to see all these copyrights, and they may or may not be able to give advice on “Yes, this is the way to go.” Is that the best way for someone to do their due diligence on if this is right for them, to just have their lawyer look at it?

Bruce Mack: You know, that’s a question I get asked all the time. We went one step further. The law firm that I work with has an opinion letter; we’re delighted to furnish that to any individual when we do a consult with them. And in the opinion letter it also says if there was any issues, they’re willing to take on and shoulder the defense. So that 19-odd years with 30,000 trust clients, not having had, with all the tax preparers that we work with, having had one audit with the trust, speaks volumes as to the integrity and as to the viability that this trust is really something special that the law firm is willing to put the reputation in and the money where their mouth is.

Joe Fairless: And you were able to do that by having them draft if, and then they approved it as a result of them working with you and drafting it [unintelligible [00:11:49].26]

Bruce Mack: Exactly. I have a distribution agreement with the law firm. Most people know that I cannot remarket and sell – nor would I – law work. That’s a big no-no; I could get a major slap on the wrists, and I don’t. Rather, what I am involved with is marketing and selling of the copyrights, which is a  totally permissible act. And as such, I consult with potential clients, I go through a presentation, talk to them about the different components of the trust, including the tax advantage components, and then we move forward from there, get the trust paid for, and then the law firm actually drafts the trust… And then we get them with one of our tax professionals. And we’ve got enrolled agents with the IRS on staff, tax attorneys, we have CPAs… We have a plethora of people, and then those people actually do the day-to-day consulting with the client for one full year if they have any questions, along with doing the tax work; doing the 1040, the 1041, or whatever the other necessary tax work is for the client. So it’s all-inclusive for the client.

Joe Fairless: Yeah, that sounds really intriguing… And you’ve obviously talked about this before, but I’m glad that you talked about the other types of trusts – the living trust, the land trust, and the LLC, and the pros and cons for each of those… And I’m sure a lot of the LLC owners have had a wake-up call for the easy-to-pierce-the-corporate-veil part, because it absolutely it is easy to pierce that corporate veil. There’s all sorts of things that you are likely doing that would allow someone to pierce that corporate veil.

Bruce Mack: I couldn’t agree with you more, Joe… Including, unfortunately — I’ve taken a look at tons of LLCs; about 50% of them are easily pierceable, even without going into this whole ultra-ego and facade scenario, just on the fact that they’re not exercising the correct corporate governance of the LLC, which is a requirement, to keep your records and keep them up to date, and have your minutes, and this and that, and so on and so forth. They’re not doing it, and boom – you’re going to court and you don’t have your LLC up to snuff, you’re done.

Joe Fairless: What else that you work on would be relevant for us to talk about?

Bruce Mack: Well, briefly let me talk about the tax implications, and then I’ll scoot over to that other piece. There’s a tax component which is huge to the trust, and that’s for tax deferral. Most of us are getting hit with long-term and short-term capital gains because we may be flippers, and even if we’re a buy and hold, at some point in time we wanna sell. And usually, most people these days are either contemplating taking [unintelligible [00:14:46].06] and getting the long or short-term capital gains, or they’re doing a 1031 exchange and they’re trying to defer it out, but that’s unfortunately a hamster on a treadmill type of an approach, because you have to stay on it, otherwise you get hit with the tax. Ours is very different, because of the perpetuitous tax deferral component.

We don’t use 1031 exchanges, and/or need to. And when you’re selling properties, we have the ability – because of IRS 643 – to defer out the taxes, as well as the rental and lease income. This is a huge component, guys… In perpetuity. In perpetuity means that the tax does not become due until the trust distributes, and the trust distributes 21 years after the last of the beneficiary’s and the beneficiary’s heirs decease. So I am talking about a huge opportunity for real estate investors to be able to have more access to more cash, because on an annualized basis they’re paying less in tax, because it’s deferred out in perpetuity. And this is the other part of the value proposition of the trust.

But moving from there, we also have our other division. We really have two divisions – we have our trust division and we have our financing division. Our financing division specializes in doing unique types of financing. One of them would be we have a revolving lines of credit program, which features 0% APR for up to 21 months, and it’s a stated program, and there’s no collateralization, so you don’t need to tie up a property or do cross-collateralization.

We have our term loan program, which [unintelligible [00:16:37].06] anywhere from $1,000 to $50,000 and you can stack those; it’s FICO-driven product. Again, it’s not asset-based or asset-driven program.

Then we also have an IRA and 401K rollover program that is very different than your traditional self-directed [unintelligible [00:16:55].19] capabilities. We have checkbook capabilities, but we have the ability because it is a hybrid of one of those programs, where the person does not have the self-dealing restrictions that they normally have imposed on them with their traditional IRA or 401K rollover. You can work with your family, and likewise, you can also do and take on recourse loans with this type of structure with our business directed retirement account… Which again, is a huge win, because in a normal self-directed environment you can only take on a non-recourse loan, and many, many banks — there’s only a few out there that will even do non-recourse loans, and if they do, they’re at higher APRs, as well as the fact that they are also unfortunately only gonna lend you about 50% of value.

So this is another huge win. If you have an IRA or a 401K and it’s rollable, or it’s been rolled to one of the third-party administrators, and you would like to be able to free up that money to be able to use the money for any business purpose – not just highly defined ones like real estate or stocks and bonds, but any business purpose – then this is something else that might be of interest for us to have a discussion on, because it’s a great program and it’s worked for many, many of our clients.

Joe Fairless: What’s the downside to it, relative to the other programs that’s typically used?

Bruce Mack: There really isn’t any downside to it, other than getting it set up. We have our [unintelligible [00:18:30].01] attorney, and they do have checkbook capabilities… So there’s really no downside. There’s a $110 monthly administration cost, but you’re gonna have an administration cost in any event if you’ve got a self-directed. They usually take a percentage of how much you’ve got in there, on annualized fees… So I’m scratching my head on that one in order to come up with a negative. I’d like to, but I can’t, and I haven’t for years, so we keep utilizing and going back to the [unintelligible [00:19:01].14] phenomenal, phenomenal program for clients.

Joe Fairless: Well, taking a step back and just assessing based on your overall experience as a advisor, as well as an investor, what is your best real estate investing advice ever?

Bruce Mack: Wow… What’s my best real estate investing advice ever… To take your deals if you’re a newer investor – take all of your deals to not one, but two people that you highly respect and trust, that are more seasoned real estate investors, and have them tell you why they don’t like the deal, or what is it in the deal that might not work, so that you’re fully apprised and assessed of what it is that you’re looking at, and you don’t have what I would call the financial stardust in your eyes, and are going into the deal without knowing what the potential downsides are. If you do that and you hear those negatives and you flesh them out and you still like the deal, then by all means, proceed forward with the deal.

Joe Fairless: Wonderful advice. I hadn’t heard that. I love that approach. The taking it to two people – I was like “Okay…”, and have them look at the deal… No, no, no. You said “Why they don’t like the deal, and why the deal might not work.” I love framing it that way. Thanks for sharing that.

Bruce Mack: Absolutely.

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

Bruce Mack: Alright, let’s rock!

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

Break: [00:20:40].08] to [00:21:41].13]

Joe Fairless: Best ever book you’ve recently read?

Bruce Mack: Oh, my gosh… So many. One-Minute Manager.

Joe Fairless: What’s a mistake you’ve made in business?

Bruce Mack: Not having a trust and protecting my assets, because I got my butt sued, and boy, did it hurt financially.

Joe Fairless: Did you lose that 175k?

Bruce Mack: I lost the 175k.

Joe Fairless: What happened?

Bruce Mack: I was doing a lot of pre-foreclosures. I was in the Vegas Metroplex. I had a door-knocker who actually was a previous client, who got an equity split and he was out there, pounding the pavement. We found a guy who was a couple weeks away from losing his house; he brought him over to the office, we signed the paperwork, did the tabletop closing… Everything was great, and then I got sued. In the points and authorities the guy alleged – are you ready for this?

Joe Fairless: Yeah…

Bruce Mack: That he was kidnapped, and he was incarcerated and was being held at our office under duress, and that he was also drunk as a skunk.

Joe Fairless: Huh.

Bruce Mack: I had to obligate myself during this time to keep the mortgage payments current, because of course it would have flipped into foreclosure and then Lord knows, it would have been a multi-million-dollar suit… I had to pay the gardener, I had to pay the pool guy, I had to pay the utilities, and I had to deal with this trauma which was the mental anguish of this was worse than the financial anguish, which would have not been there had I had a trust, and this whole thing could have gone away.

Joe Fairless: Hm. What’s the best ever deal you’ve done?

Bruce Mack: Oh, my gosh… Other than some apartment buildings where I was able to receive in excess of a half a million dollars, two very quick deals come to mind. One was a design build… When I was living in Las Vegas I bought the dirt, designed the house (it was a 7,500 sq.ft. house) and did a turnkey for 1.2 million dollars, lived in the house for a couple of years and sold it for 3.4. So it was a really good payday.

And from rehab and flips, on an equity split from a distressed homeowner we turned over $150,000 upon a property, and were able to pay out similarly to the other party, as well as save the guy’s bacon from foreclosure.

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

Bruce Mack: By helping people and educating them, so that they truly can experience financial freedom in all ways, shapes and forms.

Joe Fairless: Best ever way the listeners can get in touch with you and learn more about what you’re doing.

Bruce Mack: Sure. You can email me, bruce@platinumtrustgroup.com. I’m fearful, but I love to talk to people. And should you wish to, I’ll give  you my direct line. Please use it, but I also like to put a caveat – please don’t abuse it. My direct line is 702-371-2345. Likely, your best solution is to get onto platinumtrustgroup.com and book an appointment for a complementary consultation. I’m delighted to sit down and learn about you, learn about your situation and see how we can save your assets, and also help you potentially with it some tax advantages that we’re aware of, that we would like to tell you about.

Joe Fairless: Well, Bruce, thank you for sharing what you and your team have come up with. The Titanium Asset Protection Trust – very intriguing. And also talking through the pros and cons for the other trusts or other entity structures, as well as the tax benefits that you mentioned, and then the best ever advice – regardless of if you’re looking for asset protection, if you’re a real estate investor, take the deals to two people who are more seasoned and ask them what they don’t like about them, what in the deal might not work. That’s a great way to have a litmus test for your deals built into it.

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

Bruce Mack: Thanks so much, Joe, and I really appreciate the opportunity to come on the show today.

JF1770: High Performance Real Estate Investing with Non-Performing Notes with Paige Panzarello

Listen to the Episode Below (00:28:03)
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Paige has started and ran multiple real estate investing businesses, and has been investing in real estate for over 20 years! Today Joe and Paige will have a discussion about her entire real estate story, from losing $20 million in cash to getting back in the real estate game and having more success than ever before with non-performing notes. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“They will focus on assets that are valued over $200,000” – Paige Panzarello


Paige Panzarello Real Estate Background: 

  • Real estate investor and entrepreneur for over 20 years
  • Founded and runs her own non-performing note company
  • Completed over $150 million in real estate transactions to date
  • Based in Simi Valley, CA
  • Say hi to her at https://www.cashflowchick.com/
  • Best Ever Book: Three Feet from Gold


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

Paige Panzarello: I’m great, Joe. Thanks so much for having me on.

Joe Fairless: That is great to hear, and my pleasure. A little bit about Paige – she is a real estate investor and entrepreneur; she’s been one for over 20 years. She founded and runs her own non-performing note company, and she’s also had a construction company. She has completed over 150 million dollars in real estate transactions to date. Based in Simi Valley, California. With that being said, Paige, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Paige Panzarello: Absolutely. Hi, Best Ever listeners. Great to be here. As Joe said, I’ve been in real estate and real estate investing for over 20 years. I started out by default, with some buy and hold properties; I owned a sewer treatment plant and some land. Prior to 2005, and that boom and then bust, I was in my growth spurt. I started out knowing nothing at all about real estate or real estate investing… And I just had to jump in with both feet, and ask a lot of questions, and surround myself with people that were in the know.

Then of course you have to be bold, too. I was very young at that point, so I was somewhat fearless. [laughs] Things have changed a little, Joe, but… [laughter] So I surrounded myself with a bunch of people and I grew really fast. We ended up having 36 employees. I owned my own construction company, and I started it knowing nothing about construction.

Joe Fairless: Wow.

Paige Panzarello: Yeah. We were building our own projects, we were building everybody else’s projects…

Joe Fairless: Where at?

Paige Panzarello: Mostly in Arizona. We had some in California, but mostly in Arizona.

Joe Fairless: Okay.

Paige Panzarello: And we were rocking and rolling. It was great. I held all of our licenses, except HVAC and roofing, and the only reason we didn’t have those is the insurance was too high… And it was prior to 2005, so we were just going crazy with building. Then the crash happened… And I actually saw it coming, Joe. A lot of us did. I foolishly thought it’s not going to happen to me though.

By the end of the day, I was very fortunate in that I did not have a lot of debt. I was only encumbered about 10%. I had a lot of assets that I could sell, and it was really a fire sale… And at the end of three years I was very fortunate that I was able to fire-sale everything and pay everybody that I owed; I didn’t have to go through a bankruptcy dismissal, or any of that stuff. But three years later I lost 20 million dollars.

Joe Fairless: Net worth or cash that was in your bank account?

Paige Panzarello: Just cash that was in my bank account.

Joe Fairless: So you had 20 million dollars cash in your bank account?

Paige Panzarello: Yup.

Joe Fairless: And then it went away.

Paige Panzarello: And it went away.

Joe Fairless: Okay.

Paige Panzarello: Between the cash and the properties that I owned and everything else… Yeah, liquid – it was cash. It went away. But I felt really good, because I was able to pay the people that I owed money to.

Joe Fairless: Absolutely.

Paige Panzarello: To me, integrity is everything. So it was terrible for me, and I don’t like to call that a failure, I like to call that a really difficult learning experience, but I was able to take care of the people that I owed money to, which made it all worth it to me.

Joe Fairless: Absolutely, yeah. And they clearly appreciate that, and you are high on their list of people who have integrity, I imagine, when you speak to them.

Paige Panzarello: Thank you. Yes. I do have investors to this day because of that… And clearly, I went away from real estate investing for a little while; I needed to regroup… [laughs]

Joe Fairless: What did you do?

Paige Panzarello: I was always very entrepreneurial, so I started small, little businesses, but I was never fully satisfied, and my husband said to me “Paige, what are you doing? We need to go back into real estate.”

Joe Fairless: What little small businesses?

Paige Panzarello: For instance, I’m a dentist daughter, so I started a teeth-whitening business, and I actually still own it; I have other people running it for me, but… It was a perfect fit for me, being a dentist daughter… [laughs] But it wasn’t where my passion is.

Joe Fairless: Okay.

Paige Panzarello: So I had to rebuild, Joe. I had nothing when I came back into real estate. Nothing, literally.

Joe Fairless: Well, you had a teeth-whitening business. Was that producing some good cashflow?

Paige Panzarello: It was, but not where I wanted to… And it still is, by the way, but not where I wanted to be in my real estate investing career.

Joe Fairless: Okay, got it.

Paige Panzarello: It was enough to pay the bills and have a little fun, but…

Joe Fairless: There are more zeroes with real estate.

Paige Panzarello: Exactly. So I came back in, and I did what everybody does – I stared out by wholesaling, and fixing and flipping, and I did some tax liens and tax deeds, and all the while I started studying notes. And for me, angels absolutely sang when I got into the note space… And I haven’t looked back. I love the non-performing notes space; I’m actually in a position where I get to help people and do real estate, and those are my two passions. I’m blessed every day that I get to do it.

Joe Fairless: Well, let’s focus our conversation on that, but you’ve mentioned something at the very beginning – clearly, I can’t let that just go by without me asking a follow-up question or two… You said at the beginning you owned a sewer treatment plant?

Paige Panzarello: Yes. [laughs]

Joe Fairless: Okay, so how did you become an owner of a sewer treatment plant?

Paige Panzarello: Okay, so as I said, I started my real estate investing career by default. My grandmother passed away, and she had a very large estate. There was properties that she owned in California and properties that she owned in Arizona. The Arizona properties, which is what I originally started out handling – there were 38 townhome units; we were about 40% occupied, so we were really, really in destitute times… And by the way, the estate was about four million in debt.

And we owned a sewer treatment plant, and we owned land. When I say “we”, my grandmother and the estate, which – long story short, it went to my mom, and then I bought the company from my mom.

But yeah, the sewer treatment plant was a piece of the giant estate that she owned, so I learned a lot about sewer treatment plants, more than I care to share. [laughter] But it was really an amazing experience, because again, I knew nothing, and within three years I was able to turn that four million around and put us back in the black, and we just started rocking and rolling. We did sell the sewer treatment plant to the district, which was great. That’s kind of helped leverage us out of this debt. And then the townhome units, I was able to turn that around, too. I worked with all of my vendors and paid them everything that was due to them… And again, there’s that integrity thing, Joe; I made promises and I kept them… And I’ve built amazing relationships because of it.

Joe Fairless: I’ve never spoken to anyone who owned a sewer treatment plant, so just educate me – how do you turn a non-performing sewer treatment plant around, to be performing?

Paige Panzarello: Like I said, it was a privately-held sewer treatment plant, obviously… And we were only hooked up to about 10% of its capability. The townhome units, like I talked about, were hooked up, and a couple other areas were hooked up, but we were only running at 10% capacity. The district in Arizona where we are – the district was in desperate need for a sewer treatment plant, because everybody was on septic. And we’re right along the Colorado river, so as a result, the Army Corps of Engineers comes in if the septics is running into the river etc. So the county/district was desperate for a sewer treatment plant… So we were able to sell it to them for a decent amount of money, and we also negotiated some irrigation water for a very long time for the properties, which was great.

Joe Fairless: Thank you for talking about that, because I hadn’t ever come across that before.

Paige Panzarello: It is unique.

Joe Fairless: Whenever I come across something I’ve never come across before after interviewing 1,600 real estate investors, I like to ask a couple follow-up questions, because I imagine a lot of people haven’t come across that either.

Alright, let’s talk about non-performing notes. 90% of the listeners know what non-performing notes are, and the general business model… But will  you just touch on it for the minority of us who might not know? And then we’ll get into the meat of it.

Paige Panzarello: Sure, absolutely. Non-performing notes – notes in and of themselves are a promise to pay. So when you buy a car, or you buy a house, you sign a promissory note that you’re gonna pay the bank back the money that they have lent to you in order to buy said asset, whether it’s the real estate, or a car, or whatever. And there’s different types of note investors – there’s performing note investors, which is exactly what it sounds like; the borrower is paying their monthly payments, so you’re getting monthly cashflow being  a note holder, because you’ve become the bank, and you don’t have the headache of tenants and toilets, which is part of what I love about note investing – we get that monthly cashflow and sometimes chunks of cash without the headache of tenants and toilets. Been there, done that, so for me it’s amazing.

Non-performing notes is just what it sounds like – the borrower has stopped paying on their monthly mortgage, so I step in and I will buy that note, meaning I buy the debt; and I’m in the first position, I don’t ever buy second, so I’m the first one tom get paid… I will buy that debt at a very deep discount, and I base my purchase price on the collateral that’s securing the loan. In other words, I do an analysis of the house that is securing my invested dollars. And when I do that, when I can buy it at a deep discount, I’m not building in an equity cushion, and it gives me a lot of flexibility to be able  to work with our borrowers to actually try and get them to stay in their home.

Joe Fairless: What is the discount that you like to buy it at?

Paige Panzarello: Well, like to, or can? [laughs]

Joe Fairless: Both, both. 100% discount, but maybe — what’s typical?

Paige Panzarello: Everybody deserves to make their money and a  little bit of profit, right? My strategy is always “pigs get fat and hogs get slaughtered”, so be fair and be equitable. The discounts that I used to be able to get – we used to be able to pick them up at anywhere between 40 and 55 cents on the dollar. Nowadays it’s more like 55 to 61-62 cents on the dollar. It’s still a pretty big discount, so if the market drops 20%, if you’re a fix and flipper, that’s gonna hurt you, if the market drops that much. If the market drops in note investing and we’ve built in a  45% equity cushion, a 20% drop is not gonna hurt us nearly as badly as some of the other forms of real estate investing.

Joe Fairless: Okay. And on average, how many notes are you buying at once?

Paige Panzarello: It really just depends. We buy small mini-pools. Sometimes we do one-offs, which means we just cherry-pick. Sometimes we buy larger pools. It’s just a matter of what the asset managers have available for us. There is competition in the note space, but I’ll tell you, it’s a very collaborative space and it’s not like scratch-your-eyes-out type of competition, where everybody is trying to climb over everybody else and outdo them. That’s not the case here in the note space.

Joe Fairless: Why?

Paige Panzarello: You know, I often ask myself that question. I think because there’s so much inventory, and life happens to people every single day. And this particular space – like I said, between the asset manager, the loss mitigation team, the servicers – is very collaborative. We all really do help each other, and other note investors. Sometimes there’s a pool buy, meaning we have to buy the whole pool, and us note investors, we’ll get together and say “I wanna carve out this for my portfolio”, and we collaboratively buy the pool, which is really cool.

Joe Fairless: How does that work? How do you structure that?

Paige Panzarello: Each situation is different. Of course, if I’m the one that has brought the tape – and the tape is just basically an Excel spreadsheet of all the assets available for sale; that’s what’s called a tape. So if I have received the tape and I go to the other investor, I will simply say to them “Listen, I wanna carve out all of the Texas notes, or half of the Texas notes. Then we’ll do a lottery on the other half.” Or I will know that they only deal with Ohio, so they want all of the Ohio notes, and we’ll take the Virginia notes. It really works itself out; there’s really not a lot of fighting that goes on, as long as we know what each other’s buy box is.

Joe Fairless: In that scenario, you bring the tape to a group of, say, 3-4 people who are also non-performing note buyers. Do you all ever create one entity that purchases all of them and then you split up ownership based on who puts in what in that entity?

Paige Panzarello: Some investors do do that. I am very fortunate in that the way that my business is structured, I work through a Delaware statutory trust, which most people know through 1031 exchanges, but that’s not the case here. So I work through a Delaware statutory trust, which operates very similarly to a series LLC. So I’m actually able to create series of my DST and give ownership to those 3-4 different investors, so I don’t have to create another entity to do that.

Joe Fairless: Okay. But it functions in the same way, so you all are in one entity together, but you split the profits based on who owns what. Is that correct?

Paige Panzarello: We can do that. It depends on the tape and the assets that we’re buying. Again, if we’re carving out notes where I’m taking all of Virginia or Texas, and they’re taking all of Ohio, we don’t necessarily do that. We just need to have an operating agreement that we’re both gonna put our money together, we go through a purchase and sale agreement, just like you would a house or an apartment building, and then we just divvy up, tell the seller who to make the assignments of mortgage or deed of trust, who to make what entity to make those out to. And that’s just a transfer of ownership document.

Joe Fairless: And the reason why I was asking – perhaps I should have led with this –  is I was wondering if there was an advantage for the person who has the tape, who had that relationship with the asset manager, and then brings it to the group. For example, if everyone invests the same amount of money into the entity that buys all of those notes, then the person who brought the tape would get 10% extra ownership interest because they brought it, and then everyone splits everything else proportionate to the amount of money they invest.

Paige Panzarello: Yeah, there’s so many different ways you can structure a deal, of course.

Joe Fairless: But you’ve never done it that way.

Paige Panzarello: [laughs] There’s so many ways. But again, I think because of the collaboration in this space, if we’re each taking our own separate assets, then there’s no need for me as the person who brought the tape to take an extra 10%. Again, pigs get fat and hogs get slaughtered. I’m just happy that we can collaborate together and buy the whole pool. I don’t need that extra 10%. It’s fine by me.

Joe Fairless: That’s interesting. So if there was a large tape, then the advantage for you to bring it to the group would be that you all would be able to close on it, whereas perhaps you wouldn’t be able to close on it as an individual. So there is the value that they’re bringing to the table. That’s where the collaborative part comes in.

Paige Panzarello: Absolutely.

Joe Fairless: I’m with you now. [unintelligible [00:17:43].12] What type of process do you go through once you have closed on it, and – congratulations, you have notes where no one’s paying on?

Paige Panzarello: [laughs] It sounds crazy, doesn’t it?

Joe Fairless: Nice job getting that one! What do you do next?

Paige Panzarello: [laughs] So we have teams in place… With note investing, I call it  very front-end loaded in terms of your due diligence. The beauty part about once you actually get to the closing table and you close on these – you now take the notes and you pass them off to your team members. I’ve got an amazing loss mitigation team, and they start with the borrower outreach. The beauty part about note investing is that we actually have 23 different exit strategies. And as you can imagine, after 2007 and what happened to me there, I’m very risk-averse. So when I’ve got 23 different exit strategies available to me to dispose of these assets and work with people, I’m in a pretty great place, and pretty happy.

Our loss mitigation team is our point of contact, and they start with borrower outreach. We typically only use four different exit strategies that are typical. We either have to foreclose – which is our least favorite, by the way; we could do a short sale, we could do a deed in lieu foreclosure, which just means that we accept the deed to the house as payment in full for the loan that we just bought, or we get to work with the borrower to get them reperforming… And that’s actually my favorite, because we are able to generate both chunks of money and streams of monthly cashflow, and help somebody to stay in their home.

We have a general idea, Joe, when we are reviewing and doing our due diligence prior to buying the asset what kind of exit strategy we would like to employ… But borrowers are people, so they sometimes tend to surprise us, too. [laughs]

Joe Fairless: Sure, I know. We’ve got some apartment units, and when you have a lot of families living under one roof in a centralized area, then there’s always gonna be something that surprises you.

Paige Panzarello: Oh yes, and everybody’s got a story, don’t they.

Joe Fairless:  Yes, they do. So if you’ve got 23 different exit strategies — by the way, are those written down somewhere on your website, or something?

Paige Panzarello: I don’t want to overwhelm people.

Joe Fairless: Yeah, we won’t go over it on this call, obviously… But is it listed somewhere?

Paige Panzarello: I do teach a workshop and we do go over some of the exit strategies. Again, I don’t wanna overwhelm people, because there’s a lot of information out there and it can be a bit daunting. But yes, if you come to the Building Wealth With Notes workshops, I do teach all that.

Joe Fairless: Okay. But there’s four that typically are your go-to. One is foreclosure – you don’t like that. Two is short sale, three is deed in lieu of foreclosure, so the owner is basically saying “Here, I’m gonna turn the house over to you, and then I’m not gonna get dinged on my credit, or foreclosed on.” And then the fourth is reperforming, so they start paying, whether it’s some workout scenario or not.

So three out of those four are you getting the property, or sales proceeds from the property, whereas the fourth is ongoing cashflow… But then with the ongoing cashflow, the disadvantage is it diminishes over time, because they’re paying down the mortgage. So I just have a hard time understanding – and clearly, it is possible, because there’s a lot of people who do this, yourself included – how you can make a good chunk of money doing this without massive, massive volume… Because there’s gotta be a cost for the loss mitigation team, plus you’re buying it at 40% discount or something, but after the time that’s spent to do this, and then after the foreclosure process, the short sale… How many deals do you need to do to make a million dollars in profit over the course of a year?

Paige Panzarello: That’s a great question. [laughs] It depends on how much capital you have to deploy at any given time. And it depends on the assets in your buy box, what you are looking at. If you only have limited capital and you’re only starting out by buying assets that are lower in value, then yeah, it’s gonna take you a little bit longer to get to the million dollar net profit. If you’ve got a little more capital and you can buy some of the higher-end assets, it’s not gonna take you as long.

There are note investors out there that have a lot of capital to deploy, and they will focus on assets that are valued over $200,000. So if you’re looking between 200k and 500k, if you’ve got capital to deploy that, it’s gonna take you a lot less time to get to that million dollar net profit.

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

Paige Panzarello: Best advice ever is don’t be afraid to fail, really. Successful people are successful because they have failed. If you learn from it, then you can get back up, and hopefully it’s not catastrophic… But so many people are paralyzed, because they’re fearful of failing… And they really need to change that mindset, and look at it like it’s a learning experience. All of us scrape our knees.

Compound that though with doing your due diligence. Due diligence in any form of real estate investing is paramount. It’s crucial. Because when you do good due diligence, you buy your assets well, and that’s when you make your money. You collect it when you exit, but if you do good due diligence and educate yourself about that form of real estate investing, then you really can mitigate your risk and do very well.

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

Paige Panzarello: I’m ready! Bring it on, Joe!

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

Break: [00:23:45].12] to [00:24:27].28]

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

Paige Panzarello: A couple of them. “Seven habits of highly effective people”, Steven Covey. Love it. “Three feet from gold”, Sharon Lechter and my personal mentor, Greg Reid. Love them.

Joe Fairless: Oh, I love that. I think I’ve read the first one… I feel like I have. I’ve heard about it so much. But I love “Three feet from gold.” That truly is a must read. What’s the best ever deal you’ve done?

Paige Panzarello: The best ever deal I’ve done was taking one of our non-performing notes and I was able to help a single mom who she and her husband divorced, and they had a couple kids, and she lost her job… And I was able to help her and her two kids stay in their home, get her to reperform, and they did not have to move. It was the best ever. She wrote us a beautiful letter, thanking us profusely. She was beat up by the big banks and we were able to  help her stay in her home. Nothing like that feeling.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Paige Panzarello: Oh, boy… [laughs] I think that the biggest mistake — we all make mistakes, but the biggest one was in 2007 for me, thinking “This is not gonna happen to me.” Because I did see it coming, and I was naive in thinking that I was only leveraged 10% and it wasn’t gonna affect me. Boy, was I wrong… Because it did. It happened to me right on my head, and caused me a huge loss. But I’ll tell you, that shapes you as an investor, and it teaches you who you are, and how you relate to other people, and to money also, and how you treat money.

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

Paige Panzarello: A couple of different things… Again, I’m very about helping people, so I do teach financial literacy in the form of teaching [unintelligible [00:26:04].20] cashflow game, so I do that. People wanna know what I do, and how to build wealth with notes, so I teach a workshop to help people to create their own financial freedom… And I often get the question “Well, you’re teaching people to be your competition.” Like I said, this space is very collaborative, so I don’t look at it that way. I’m very passionate about helping people to build their financial future, and give themselves financial freedom, so that’s part of my giveback.

And then the other thing is that I’m very passionate about our veterans. I donate a lot of time and money to Operation Gratitude. It’s one of my things, and I eventually am going to be taking some of these REO properties that we are acquiring through foreclosure and I’d really like to be able to set up housing for our veterans across the country.

Joe Fairless: How can the Best Ever listeners learn more about what you’ve got going on?

Paige Panzarello: Well, the best way to reach me is to either direct-message me on Instagram, @thecashflowchick. You can go to cashflowchick.com. If you’re interested in scheduling a conversation with me, it’s free, of course; just go right to my website. And if they’re interested in Building Wealth With Notes, then they can go to BuildingWealthWithNotes.com to learn about the next workshop.

Joe Fairless: I loved talking to you and learning about your approach as a business person, and your focus on non-performing notes. Talking more about that, getting into the details of how you make money, exit strategies, as well as the sewer treatment plant; that was fun, too.

Paige Panzarello: [laughs]

Joe Fairless: So thank you so much, Paige. I really enjoyed our conversation. I hope you have a best ever day, and we’ll talk to you again soon.

Paige Panzarello: You too. Have a best ever day as well.

JF1699: Leveraging Interview Content To Build Your Brand #SkillSetSunday with Brendan Kane

Listen to the Episode Below (00:22:08)
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Brendan has worked with celebrities and personalities, helping build their brand for years. Today, he is sharing some of his best strategies with us. It’s no secret that we’ll need to have a large reach as investors to keep deals and capital flowing through the business. Find out how to organically grow that reach. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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“Keep swapping out different variables so that you can really control your content” – Brendan Kane


Brendan Kane Real Estate Background:

  • Digital strategist for Fortune 500 corporations, global brands, and celebrities.
  • Best known for building a million followers in 100 countries in less than 30 days
  • Based in Beverly Hills, CA
  • Say hi to him at https://onemillionfollowers.com/


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

First off, I hope you’re having a best ever weekend. Because today is Sunday, we’ve got a special segment for you called Skillset Sunday. The purpose of the Skillset Sunday is to help you acquire or hone a skill, so that you can grow your real estate business. Specifically, the skill we’re talking about today is how to leverage interview content to build your brand. With us today to talk about that, Brendan Kane. How are you doing, Brendan?

Brendan Kane: I’m doing great, thanks for having me.

Joe Fairless: My pleasure, and welcome to the show. A little bit about Brendan – he is a digital strategist for Fortune 500 corporations, global brands and celebs. He is best known for building a million followers in 100 countries in less than 30 days. He’s based in Beverly Hills, California. The website is onemillionfollowers.com.

Before we talk about how to leverage interview content to build your brand, Brendan, do you want to give the Best Ever listeners a little bit more context about your background?

Brendan Kane: Sure. I’ve been in digital and technology for about 15+ years, and my background is a bit diverse in the fact that I pretty much have touched every aspect of digital over the years. I started off in the entertainment industry, managing digital divisions for two movie studios, overseeing marketing campaigns and films ranging from 15 to 100 million dollar budgets, which also allowed me to work with the directors, actors and producers [unintelligible [00:03:04].04] their brand online.

Then I quickly shifted into being an entrepreneur and started building tech platforms and licensing them to major media companies such as [unintelligible [00:03:14].12] MTV, Vice, Lionsgate, MGM, to name a few. Those partnerships opened up the opportunity to work with some of the largest celebrities on the planet. For example, with MTV, it allowed me to work with Taylor Swift, and Rihanna, and building technology platforms for them and their brands.

Then from there I dove pretty deep into the paid media space, and helped build one of the largest social paid optimization firms in the world, which means we were optimizing social advertising campaigns on Facebook, YouTube, Twitter and Instagram for the largest brands and corporations in the world.

Then from there I started building my own set of testing methodologies and predictive calculations on top of the Facebook and Instagram platform, that would allow me to test content at scale. That’s what allowed me to build a million followers in 100 countries in 30 days.

Also, one of the clients that I worked with on that that’s kind of poignant to the conversation that we’re having today around interviews was Katie Couric. I worked with Katie Couric for about two years, and really reverse-engineering the art of the interview for digital and social platforms.

Joe Fairless: So let’s talk about the methodologies of how you built a social media following of a million followers in 30 days, and then let’s talk about interviews, because I’m sure a lot of listeners are curious about the former… So how did you do that?

Brendan Kane: What I did is, as I mentioned, I built a set of testing methodologies and processes on top of the Facebook and Instagram advertising platform, and not really using it as an advertising tool or a media buying tool, but as a market research tool, so that I could test content at scale and measure the response in real time to see what content variations people were sharing with their peers at the highest velocity.

What that looks like is — for example, when I built a million followers in 30 days, I tested 5,000 variations of content. And that sounds really daunting and it sounds like a huge number, but the system that we devised makes it digestible and easy to do. We can scale anywhere between 100 to 400 variations in less than 30 minutes. What that looks like is — I look at as a variation as five key elements. The first element is the creative itself; you have a video asset, you have an image asset, you have an article – whatever that may be. And we’ll create different versions of that; for example with the video, we’ll test the first three seconds, we’ll test different burned-in meme cards at the top, we’ll test captions at the bottom… So maybe we do 3 to 7 different versions of  a piece of content.

Then we move to the second element of a variation, which is the headline – the text that describes the piece of content, the text that goes above the video or photo in the case of Facebook, and below in the case of Instagram.

The third is the demographic profile – what is the make-up of that. Are they males, are they females? Are they a specific age group? That can be interchangeable. The fourth is the geolocation – what part of the world to they live in? Down to the specific code you can test. Then the fifth is the interest level – what are they interested in? What types of products and services do they buy? What types of brands or celebrities do they follow?

When you have those five key elements, each one becomes interchangeable. You can take one video and change out the demo, the geolocation, the interest level, the headline… And that creates a new variation. You just keep swapping out different variables, so that you can really control your content and test your content under certain circumstances. What that allows you to do is it allows you to learn very quickly what content format, theme, stories are working. Then once you find that, it dictates both your short and long-term content strategy, and then you can feel growth from there.

Joe Fairless: Oh, wow. I love the analytical approach that you take. I’m on your Facebook page, and… You know this, obviously, so I will just say what I was thinking – it’s clear that your followers are legit. So often I hear people say “Oh, I’ve got ten million followers on Twitter”, or something, and then you go look and there’s absolutely no engagement with their Twitter handle, or on Facebook there’s no engagement… But when you’re doing these posts – I’m looking on your Facebook page – you’re getting thousands of likes and hundreds of comments, in most cases.

Brendan Kane: Yeah, so there’s two sides to that… Because I work with some huge media companies that have very little engagement. They’ll have like four million followers, and ten million followers, and have little engagement. There’s a few reasons for that. First off, you’re fighting the algorithms. With Facebook – and it’s going to become increasingly more… Specifically with Facebook, once you hit a million followers, on average you’re reaching 3%-5% of your audience [unintelligible [00:07:53].29] Twitter is about the same. Instagram is decreasing each day. You may ask, “Well, why is that?” It’s because there’s so much content being pushed to the platform… On Facebook you’re probably following a few hundred, if not 1,000 different pages; same with Instagram or Twitter. So it’s like, how much content can Facebook, Instagram or Twitter put into your feed?  It’s very limited.

So what happens is the algorithms have to weigh that content and determine which content are they going to push to users. That’s where the issue comes in – if you’re not creating engaging content, you’re gonna get into less people’s feeds. That’s where that engagement generally drops. It’s not necessarily that they’re fake followers; there are some instances where people have fake followers, but it’s getting harder, because the systems have cracked down on that… But it’s more about “Are you creating engaging content?” If you’re creating engaging content, it’s pushed into more of your followers’ feeds.

That’s why we test our content extensively, to figure out what is the best way to package the content, what are the best stories or themes to work, so that when we’re publishing content to our feed, we know it’s gonna reach more of our audience.

Joe Fairless: It seems like such a process to go through in order to do a couple Facebook posts… How do you streamline it so you’re not doing analysis by paralysis?

Brendan Kane: It’s a great question. It definitely is a process, and there’s a time investment that it takes to go into it. This is kind of what I do every day, so that’s why we go through this process. We’re testing content not just for ourselves, but for the clients that we work with.

You can get to a point where you start understanding what themes, formats and stories work, and once you get to that point, then you can test less, because you have a base level of understanding of what works and what doesn’t work. It’s more time-intensive in the beginning, of figuring out the best way to package your content, the stories and themes that you should be covering. Then once you have that established, it becomes less time-intensive.

I will also say that once you learn the system — again, it sounds really daunting, and it sounds like a ton of work, but once you get into it and learn it, it gets pretty easy. Honestly, I find it to be kind of fun and interesting to test content… Also, I think it puts you light years ahead of your competitors in the competitive landscape.

Joe Fairless: Do you have a team that works with companies, or are you flying solo and you’re going in and consulting companies’ teams?

Brendan Kane: Yeah, I spend most of my time doing the high-level strategy, and I do have a team that I work with, specifically for my brand. Then sometimes what I’ll do is I’ll base it on the client’s specific objectives and goals… Because I’m a firm believer in that there’s not one strategy that fits all. You have to craft the strategy and approach for each specific client and where they’re at today and where they wanna get to; I think that that’s where a lot of people fall short in terms of hiring agencies or contractors. They’ll hire somebody that will just sell them on what they’re best at, instead of sell them on what is the best approach to take, specific for their goals and objectives.

Joe Fairless: You said you have a team for your own stuff… How many people do you have and what are their responsibilities?

Brendan Kane: Yeah, it’s a great question. I’ll just break it down for you – I have one social producer that oversees the overarching content strategy. We’re creating content for Facebook, Instagram, LinkedIn, and we’re gonna start doing YouTube within the next few months. So she oversees the content we’re producing, and takes content from our videographer that shoots, and breaks it down for our editors.

Then I have three editors that are on staff, that are constantly creating new content… Not just for me, but for our clients as well. Then I have a copywriter that helps generate all of the written materials and written content for my brand. Then I have somebody under me that manages all the content testing and optimization.

Joe Fairless: How many of those are full-time employees, that work only on your stuff?

Brendan Kane: Well, they’re all contractors, because I don’t really build agencies… But they’re all pretty much full-time across my brand and the other clients that we work with. So I wouldn’t say they’re 100% focused on my brand, but they spend a good 30% on my brand. That sounds like a lot of people and a lot of work, but I’m trying to build a personal brand. If you’re trying to build a brand on social, you need to have a team and you need to invest heavily in it. That’s not to say that that’s the only way to grow social accounts and to be successful, but if you really wanna leverage it to build a strong brand and generate a lot of leads for your business, you’re gonna need to have some type of team, whether that’s internal or external.

Joe Fairless: How did you find those team members?

Brendan Kane: A lot of interviewing and trial and error. I’m always constantly looking for new talent and the best in breed, that have proven themselves in the past, and I always kind of test and see how that applies to the work that I’m doing… But in terms of what people can do to find talent for themselves, for example UpWork is a great resource that I’ve hired people off of. You can get referrals from people, you can look at agencies or contractors in your specific area… But I’m just a firm believer that if you are gonna do that, give them short-term tests for specific goals and objectives to hit. Don’t give them six months to prove themselves, give them two weeks, and allow them to be a part of that process of what that objectives and goals are, and give them that flexibility, but make sure that they’re hitting that.

Joe Fairless: Now to what we were mentioning at the beginning of our conversation – how to leverage interview content to build your brand… What are some tips that you have here?

Brendan Kane: I really got fascinated with this world, and obviously with the successful podcast that you have, you understand this better than anybody… But I dove into this in my work with Katie Couric. I spent two years helping her with her strategy when she went from television to a digital-first strategy with a partnership with Yahoo! I got really intertwined with the strategy behind interviews and the power of interviews. I basically had to reverse-engineer the art of the interview for digital platforms, because Katie was struggling to make that transition in the beginning, because Yahoo wasn’t really providing the strategic plan and distribution plan that she was hoping for.

The way that I look at interviews first and foremost, whether it is for yourself and you appearing in an interview, or the way that you can leverage interviews interviewing thought leaders in your specific space – where I think most people fail with interviews, especially when it comes to digital and social distribution outlets is they’re going in with “What are the questions that I’m going to ask?”, versus the way that I look at it is I look at the output in mind; what is the end goal of this interview? And I look at more about it from the distribution of it; what are the strongest hook points or the strongest headlines, that are gonna capture people’s attention to make them want to look at an interview? I kind of take this analogy with all the clients I work with – if you were given the cover of a prominent magazine or newspaper in your niche, what would be the headline that you would put on the cover of that newspaper or that magazine, that literally as your core customer or your core audience is walking down a busy street in New York, they’re passing a magazine stand – what would be that headline, that cover of that magazine/newspaper that would literally make somebody stop, pick it up, buy it and read it? Because that’s how hard it is in the digital landscape. There’s over 60 billion messages sent on digital platforms each day. If you don’t find a way to stand out, then you’re going to completely lose that audience; they’re gonna keep scrolling through their feeds, they’re gonna keep passing by your content.

So the way that we approach it is for any interview we would come up with between five to fifteen different headlines that we would want to get out of that specific interview… Whether that is you interviewing somebody else, but also I think it’s a great strategic plan if somebody is interviewing you, because you need to have a strong idea of what your hook points are, what differentiates you and makes you stand out. Going in with that strategy on both sides of interviews makes the clear objective of what you’re trying to get out of the other person, or what you’re trying to convey to the person that’s interviewing you… Versus where I’d see sometimes questions fall short is you kind of leave it a little bit open-ended, versus with a headline you know what you’re going for and you can craft the question in different ways, or craft specific follow-up questions to hit that specific headline or hook point that you’re looking for.

Joe Fairless: When you are preparing for an interview to interview someone, and you’re thinking what is the end goal of the interview, strongest headline, “How do I capture the attention?”, how do you do that without having done the interview?

Brendan Kane: Yeah, another great question. There’s a few different ways that you can look at it. If they’re a prominent figure, like — with Katie Couric we did 220 interviews, with anybody from Joe Biden, to Jay Leno, to Jessica Chastain, to Chance the Rapper… I would start with their social channels and see if there was a trend on specific topics, through posts that were being shared or engaged with at a higher velocity. But sometimes you’re just not gonna get access to influencers for interviews, so the other approach that we would take is “What is the subject matter that we’re talking about?” and then we would type that into Google search, or Google Trends, to see what type of topics are trending at that specific time. It’s like “commercial real estate in Miami”, or whatever the search terms are, you can enter that into Google Trends or Google search specifically on the News side. If you go on Google News and you type in a specific keyword, you can see which headlines are trending. Then you can start looking at “Okay, which ones do I think are going to be interesting for the audience that I’m trying to reach?”

That’s kind of at a base level. Then once you start getting into the process and creating these interviews and testing the [unintelligible [00:18:03].00] and testing what works, then you’ll start getting a baseline of what works and how you can look at it from a copywriter’s perspective or a copywriter mindset.

Joe Fairless: Anything else as it relates to — and we talked about leveraging interviews to build your brand, but we talked about a whole lot more than just that… Anything else as it relates to leveraging interviews to build your brand, or any additional tips you have on brand building through social that we haven’t discussed, that you think we should talk about?

Brendan Kane: Yeah, in terms of interviews, as you know from your podcast, it’s like – being associated with other thought leaders and people that are very credible in your space or other industries allows you to align your brand with theirs, and it also allows you to provide value to them. That’s a big thing that I’m a firm believer in, in terms of whether that’s business development, or fostering stronger connections with social influencers, or other people in any industry, is how are you providing value to them? By creating an interview process that you can reach out to other people that you wanna be aligned with, that you wanna potentially do business deals with, you’re providing value by saying “I really admire what you’ve been able to achieve, and I’d love to interview you for my podcast or for my video series, or whatever that may be.” By doing that, you’re providing value to them, but you’re getting so much value back in return, and it goes beyond just the interview itself; you’re able to foster a connection with them and build a relationship with them, which I think few people realize when looking at interview-based content.

In terms of building a social brand, I can’t stress enough the importance of testing and understanding how to create compelling content. One of the first places that I always recommend people start out with is look at your competitors – who are people that you’re competing against, or who are people that are reaching the audience that you wanna speak to? Then once you have that list, look at what’s working for them. What types of posts are getting engagement and are being shared? Why did this post over here on my competitor’s page only get ten likes, versus this one got 1,000 likes or 100 shares? And really just trying to be a student of the game and constantly learning and testing and trying new things.

Joe Fairless: So helpful. I am probably the newest owner of your book, because I’ve just purchased it while you were talking, because I could wait… Your thought process is spot on, in my opinion, and you’ve got the personal experience to back that up. That’s a pretty powerful one-two punch.

Brendan, how can the Best Ever listeners learn more about what you’ve got going on?

Brendan Kane: Yeah, so if they’re interested in the book, they can go to onemillionfollowers.com, they could reach out to me directly and e-mail me at b@seakers.com, or they can direct-message me on Instagram as well, at @BrendanKane.

Joe Fairless: Brendan, thanks again for being on the show. I hope you have a best ever weekend, and we’ll talk to you again soon.

Brendan Kane: Thanks so much for having me, I appreciate it.

Guest Jordan Fleming on a Best Ever Show banner

JF1586: Want To Scale Your Real Estate Biz But Need Some Help? #SituationSaturday with Jordan Fleming

Listen to the Episode Below (17:39)
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As a Podio expert, Jordan is constantly working with investors and property managers to help them scale their businesses. He specializes in helping others automate some aspects of their business so they can concentrate on the activities that are most important to their business. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Jordan Fleming Real Estate Background:

  • CEO of Gamechangers, one of the top Podio partners in the world
  • Builds systems for investors to help investors automate tasks, tack data and KPI’s, and accelerate sales
  • Over 50 investors are using their SmrtPhone phone system for Podio (https://www.smrtphone.io/)
  • Say hi to him at http://wearegamechangers.com/en/main/


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

First off, I hope you’re having a best ever weekend. Because today is Saturday, we’ve got a special segment for you called Situation Saturday… And here’s the situation – you wanna scale up; you want to take your real estate business to the next level, and with us today we have a gentleman who will help you do just that, and learn how to do it. Jordan Fleming, how are you doing?

Jordan Fleming: Great to be here, and nice to be talking to the Best Ever listeners.

Joe Fairless: Yeah, looking forward to our conversation. A little bit about Jordan – he is the CEO of Gamerchangers, which is one of the top Podio partners in the world. He builds systems for investors to help investors automate tasks, track the task and the data, as well as the KPI’s, and accelerate sales. Over 50 investors are currently using their Smartphone phone system for Podio, and we’re gonna talk about how to scale up our business as real estate investors with Jordan. With that being said, Jordan, first, do you wanna give the Best Ever listeners a little bit more about your background, just so we have some context?

Jordan Fleming: Yeah, so I’ve been doing Podio systems for a number of years now, and then quite honestly, the real estate market and property management market boomed for us about 18 months ago. Before then we were working with a couple people, and now it’s about 80% of our portfolio. And it’s all about getting that technology in their hands, so that we can get them moving faster, doing more deals, and building the empire the way they wanna do it.

Joe Fairless: Okay, so you are a property management company in addition to a technology company, is that correct?

Jordan Fleming: No, I’m just a technology company, but we do work with technology in both property management and real estate investors.

Joe Fairless: Oh, got it. So that’s what I was missing. So when you say you do property management as well, you’re talking about your technology is integrated into property management software.

Jordan Fleming: Precisely. Yes, sir.

Joe Fairless: Okay, alright. That makes more sense. So what’s your software? Tell us about it.

Jordan Fleming: We primarily build all of our systems on the Citrix Podio platform. Now, a lot of the Best Ever listeners know real estate seems to be  focused on Podio a lot. Podio has become a real staple, because it’s so flexible and it can do so many things. That means we can bring every part, from acquisitions, to rehab, to sales, we can bring in property management elements, we can do the contracting, the leasing – all those sorts of things, all in one platform, with a huge amount of automation, and making sure that you’re efficiently doing all those things.

Joe Fairless: Okay. So what are some ways, taking a giant step back… As real estate investors and listeners to this show, you’re clearly tied into the technology space with investors and property management, so what are some things that you’ve learned that can help us take our business to the next level?

Jordan Fleming: Absolutely. Well, number one – I’m actually gonna focus on data and KPI tracking… And that’s because I think a lot of investors — I am not an investor, but I’ve now worked with guys who are just starting in the game, and I’ve worked with guys who are at the very top. And what I’ve noticed is that the guys at the very top dispassionately look at the data. They try and take the emotion out of the decision-making, and in order to do that you need to get the right data and be analyzing it the right way. So is this deal really the one you’re supposed to buy? Run the numbers, and do it smart. Don’t try and force a transaction because you want it; make sure the numbers stack up. That’s what’s really key about data.

I was just the other day speaking with a group of probably twenty pretty top investors, and it was all about “How am I running these numbers? How am I getting these numbers? How am I making the best data-based decisions?” …either through KPI tracking, so that I can see what are my team doing? Are they doing enough of this? Are they doing it the right way? Or simply being able to use data to analyze transactions and spot the ones they want to know.

To me I think that’s one of the key things systems can do – it can bring this data and this decision-making and they can make it a very dispassionate, sensible one, so that you’re getting the best sort of results, and making the best decisions.

Joe Fairless: Let’s talk about KPI tracking. What are some popular KPI’s (key performance indicators, for anyone who is not familiar with that acronym) that top investors use, based on what you’ve seen with your technology?

Jordan Fleming: Definitely time to follow up on leads. That’s key. Particularly, it seems to me that the market is starting to change again. Everything I’m seeing is indicating that we’re going into a slightly different market over the next couple of years… So speed of action is gonna be critical. How fast and how light can you move? We see a lot of KPI’s around how fast we’re picking up leads, how fast we’re getting back to people, how fast are we actioning those leads? We definitely see that.

We see a lot of KPI’s around the different team efficiencies, because for a great investment company to grow, you’ve gotta have a great team. And to have a great team, you’ve gotta see what they’re doing and make sure you’re giving them the best opportunity to thrive. KPI’s around their activities, around their speed, around what they’re getting accomplished every day are ones that you can see on the wall and measure everyone around.

Joe Fairless: So a KPI on following up… What are a couple other KPI’s that you see a top real estate investor have in there, and really focused on?

Jordan Fleming: Definitely finances in terms of the deals they’re doing. Are they getting the return? Measuring those, so that they’re making sure that every decision they’re making, they’re tracking it against where they want to be, and not just stacking deals up for no purpose. It’s great to have lots of deals, it’s great to have lots of turnover and lots of things happening, but are you getting the profit out of them that you want? And by being able to measure that and aggregate that across your whole portfolio on a real-time basis means you can spot when you start seeing gaps; you can start to see “You know what – my margin, the profit I want, I’m not getting it anymore. Why? What is that? What transactions are taking me down?”, and then hopefully try to avoid them. Definitely finance ones.

Another one that I’ll add in there, that kind of goes into my communication management is KPI’s around identifying good and bad calls. That sounds a bit weird, but one of the things we’re encouraging a lot of guys to do now is every week take a few leads you’ve lost and review the calls. If you’re using a system – which you should be – to tracking those calls against those leads, making sure you manage them all, review them and understand what’s going on, and then place them in the dashboard so you can start to see “Where are we getting the best performance internally? Which of our agents are doing the best? Because if we’re seeing some problems, are they in the wrong seat? Are they in the wrong job?”

Joe Fairless: Okay, that’s helpful. So that’s data and KPI tracking. What’s the second thing?

Jordan Fleming: Automation. Automation is definitely one of the areas where the more time you can save across your organization, the more time you can get people out of the grunt work and back into the sales element, the better. So we see little things like automation of sequence follow-ups. Do you know how many people don’t both following up a lead more than once? It’s kind of frightening. The last three days I was with a bunch of investors, and we’ve sort of asked for a show of hands how many people follow up two or three times… And the higher up you go, of course, the hands start coming down; but the truth is that’s really bad, because a ton of times you’re not gonna win that lead until the sixth or seventh touch. But if you’re not prepared to make those touches, or more importantly, if you don’t have a system that is making sure you do those touches, then you’re probably getting rid of 40% of your potential opportunity, your potential buy.

Joe Fairless: Where do you get that 40% stat from?

Jordan Fleming: From the guys we talked about in this room, the last three days. This was purely just with investors, and these were pretty good guys. We were getting an astonishing amount of understanding around how important the actual follow-up sequences are, and how few people are doing them in the way they should be. And follow-up sequences, some of which can be automated if you use a good system – drip an SMS out there, dripping an e-mail out there, checking in, checking in… Making sure there’s a follow-up. How many times do people assume because it’s under offer from someone else, “Oh, I guess I don’t have to follow that up again.” Well, deals don’t always go through… So being able to make sure you’ve got that follow-up sequence there, so that you’re not letting anything slip – that has been seen, from our client base certainly, as an enormously important part of it.

Joe Fairless: And the third thing to help us take our business to the next level?

Jordan Fleming: Speed of sales. The communication I touched on with the reviewing calls, and of course, I think that’s a really important thing to do that not enough people do. They record the calls, but they’re not actually reviewing them from a quality point of view and for training.

The second part of that is speed. You need a system that allows you to blast through as many leads as possible. Now, whether through an auto-dialer… Our system’s got a four-line auto-dialer, so you can do four calls at once, and hopefully make four times the sales, but even just having a system where you can very quickly go through a series of leads and make those communication calls. The faster you can make calls, the faster you can get guys working those leads, the less they go stale and the more chance you have of hitting them when you have a chance of.

Communication management and the speed of communication is one area where a good system, regardless of what it is, should be really enhancing it, and can really help increase the sales.

Joe Fairless: This is a good segue into your Smartphone phone system. What is that exactly?

Jordan Fleming: Smartphone is a system we launched about a year and a half ago. It’s a VoIP phone system which integrates into Podio, the platform we build on, allowing us to control SMS inbound and outbound, and phone calls. That means that, of course, any time someone calls, if they’re not in the database, they get in the database quick. We can then track every single communication element – a text message, a phone call, inbound or outbound – against there, so we can see and track all those communications our team is doing… But we can also, of course, automate that.

Then the flip side of just a normal transactional is where you’re using something like an auto-dialer. Obviously, I’m sure the guys that are listening have used auto-dialers, we’ve seen them before, but an auto-dialer is an amazing way of blasting through 1,000-2,000 leads. A four-line auto-dialer, what it does is basically it queues up four numbers at once; whoever picks up first gets the call. And the moment you hang up, it starts dialing again. So you’re minimizing that time between calls and maximizing the time your guys are actually speaking to people.

Joe Fairless: Wow. For the people who pick up a second after…

Jordan Fleming: [laughs]

Joe Fairless: You thought about this [unintelligible [00:12:41].29]

Jordan Fleming: Yeah. Well, the answer is — and this is a bit sneaky… Number one, obviously you’ve gotta make sure auto-dialer is FCC-compliant; so if they’ve got a Do Not Call list, or they ask you to take them off the list, then our system takes them off the list and you should make sure that. But for the people who pick up that second later, we’ve got something that’s called a call-back recording that you put in. And I kid you not, that’s usually you going “Oh–yeah–hey–hello–so–I can’t hear–I’ll call you right back.” It’s a bit sneaky, but it is a way of making sure that — then the auto-dialer puts them in to Dial Next.

Joe Fairless: That is ridiculous… [laughter]

Jordan Fleming: You know, it works. You’ve also got voicemail drop, so that if you get to voicemail, you’re just dropping them a voicemail automatically, as opposed to having to leave one.

Joe Fairless: If someone drops you a voicemail automatically, how do you remove them from being able to do that again? Because I get that every now and then, and I wanna stop having them call me.

Jordan Fleming: Well, there are programs that you can get, Do Not Call… When we get a request for Do Not Call, the only way we can deal with that in our system is if you’re on a call with someone and they say “Please don’t call again.” The Do Not Call in our system then basically stops anyone in your entire organization from calling them again. It won’t make the call. And that’s important.

Joe Fairless: Got it. What else that we haven’t talked about should we talk about, as it relates to helping investors set up things in their business to take them to the next level?

Jordan Fleming: I think absolutely critical is if you’re kind of at the starting end of this, what you don’t want is over-complication. There are lots of things out there, and your eyes can be bigger than your stomach… Because you can buy the biggest system in the world, but if you’re not using it, then you’re wasting your money and wasting your time.

I like to make sure that people are thinking very small – what are the things I need to start at? Maybe it’s just simply tracking my leads, actioning them quickly. Maybe I don’t have to bring in rehab yet; maybe I don’t have to bring in a lot of other things. By starting small and picking the one or two things that are gonna massively help you, you can then bring other bits in later, but you can get used to working in this system… Because a lot of the guys we find when they first start, they’re used to using Excel, and e-mail, and phones, and that’s it, and there’s a bit of a learning curve to get into a system which is actually kind of driving you. So it’s much best to start small, and then grow with time.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing and get in touch with you?

Jordan Fleming: The website, wearegamechangers.com. Feel free to drop us a line in there. We’ve got lots of resources, we can send them, and some learning – we can send them too, as well.

Joe Fairless: Well, Jordan, thank you so much for being on the show. Three ways for real estate investors to take it to the next level – one is making sure we have the right data and KPI tracking; you talked about some important ones being the time to follow up on leads, and obviously tracking the finances, and then looking at what calls went well and what calls did not go well, so that you can apply those lessons learned.

Second is automation – tying back to the follow-ups, having an automated system to do follow-ups for you. I’m picturing the room when you’re asking “How many people follow up once/twice/three/four/five/six times?” and as hands keep going down and down, perhaps the people who still have their hands up on number seven, because it’s automated, are the ones who are making more money than the ones who put their hands down after number one… I would certainly bet money on that being the case.

And then lastly, speed of sales, and having some sort of system to help you with that. Really interesting stuff, Jordan. Thank you so much for being on the show. I hope you have a best ever weekend, and we’ll talk to you soon.

Jordan Fleming: Thanks very much.

Michael Zuber on Best Ever Show banner with Joe Fairless

JF1568: From Early Retirement To Helping Others Do The Same with Michael Zuber

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Michael had early success with real estate, retired at 45, and then grew bored. He was sitting around and had to figure out what to do now. He’s using his time to help other people do the same as him and obtain financial independence so they can live the life they want. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Michael Zuber Real Estate Background:

  • Buy and hold investor, spent 15 years buying one rental at a time
  • Now focusing on helping other busy professionals earn financial independence
  • Based in Mountain View, California
  • Say hi to him at mzuberATonerentalatatime.com  
  • Best Ever Book: Principles by Ray Dalio


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

Michael Zuber: Great, Joe. How are you?

Joe Fairless: I’m doing great, and nice to have you on the show. A little bit about Michael – he is a buy and hold investor; he spent 15 years buying one rental at a time, and he’s now focused on helping other  busy professionals earn financial independence. Based in Mountain View, California. With that being said, Michael, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Michael Zuber: I sure will, Joe. Like everyone in Mountain View, California, seemingly, I’ve worked in the technology industry for the last 20-25 years or so, and the reason really I’m on this podcast with you, Joe, is because 15 years ago I realized that I wasn’t the next Warren Buffet and the stock market wasn’t gonna be my way to financial freedom… And I just started buying one rental at a time, a little 3-bedroom, 2-bath, 2-car garage house in Fresno, California, and that one step led to a journey of 15 years, ultimately through multiple different cycles of the real estate world, and exited this year, February 1st, with a portfolio of 175 units, and financial independence.

At the time I was 45, and when you’re 45 and you still have a lot of vigor and you need to do something… I had a couple of great days, when you can run around and tell everybody you retired, and then you kind of wake up and go “Well, what are you going to do with the rest of your life?”

I was either gonna go back and get a job, or I was gonna find something to throw myself into, and I’ve decided to just try to help people understand that they can take the one rental at a time journey and move forward… So that’s what I’m doing; I’ve been doing that all year, at least since February 1st, and it’s been fun.

Joe Fairless: Did I hear that right, 175 units?

Michael Zuber: Units, yes. So that’s a mixture of houses, up through several 18-unit apartment buildings.

Joe Fairless: Okay, that’s what I was gonna ask you. So the largest property is an 18-unit.

Michael Zuber: Yes, three of those. Correct.

Joe Fairless: Three of them, okay. Were they purchased in one transaction?

Michael Zuber: No, they were not. Three different times…

Joe Fairless: Just a coincidence that they’re 18, each of the three?

Michael Zuber: Yeah, just a coincidence. I’ve never looked personally at anything over 30 units, because I guess my mindset was wrong, and that was something I took away from your book. If we were actually on video, I’d flash everybody the book that I have of yours; it’s all noted up, and it has dog ears, and the like… I need to think bigger, but we’re talking about my history, so yeah… I never looked at anything bigger than 30, and I’ve only bought 18.

Joe Fairless: How much income does 175 units spit off?

Michael Zuber: We’ve gotta be careful when we talk terms – are we talking gross rental income, or net cashflow, or what are we talking about?

Joe Fairless: We’ll go both.

Michael Zuber: So we produce about $135,000/month in gross rents, depending on whether or not we’ve done refinancing or the like. We cashflow net north of 20k/month every month for quite a while now.

Joe Fairless: And 175 units over 15 years, with the largest being three 18-units… I imagine most are – what, one-units, or single family homes, or what?

Michael Zuber: I would say the majority of our houses are what you would call in our world commercial, so they’re five units and above.

Joe Fairless: Okay.

Michael Zuber: Well over 100 units are made up of that configuration, five units and above, up through 18; and 18 times three is 54 by itself, so that’s a third… Then we’ve got some a couple of thirteens, some tens, some fives, some eights, a seven… We bought most of those via 1031 exchange money, coming out of the sellers’ market of 2003 through 2008, so looking back we look like geniuses… We just couldn’t buy anything, so we sold all these houses at ridiculous prices, and moved into apartment buildings, because it was the only thing that made sense.

Joe Fairless: Who’s “we”?

Michael Zuber: My wife and I, sorry.

Joe Fairless: Okay. And how do you two divvy up responsibilities?

Michael Zuber: In the beginning, the first decade or so, my job was to find deals and secure capital, and she did the books, if you will, as well as took care of the daily communications with property managers. The other thing that should be known for your audience is we’ve had a property manager since day one; it was always part of our calculation, our cost metrics, and things of that nature… Because Fresno for us is 2,5 hours away one way, so we could never do that — or at least we never thought we could… And then again, I traveled 100 days a year, I did 200,000 miles on an airplane, and I just couldn’t have another job… And property manager – it’s a job, and frankly it’s a really hard job to do well.

Joe Fairless: Yes. So I think you said initially that’s what you all did. Has that evolved up to now?

Michael Zuber: Yeah, so now we’re both retired. The portfolio is not nearly as active as it used to be. We’ve now gone through what I call the passive investing, we’ve gone through the acquisition, we’ve gone through the sort of clean-up and seasoning, and juggling the portfolio to make it where it is, and now a lot of it is mailbox money.

We’ve worked with a property management team after going through several for a decade now, and the time commitments from the wife is much less; basically, once a month review of the reports. What I’m doing now is I’m still in the game looking for deals and the like, but it’s certainly a lot less active than I used to be. We’re kind of enjoying things right now.

Joe Fairless: Approximately how many acquisitions have you done?

Michael Zuber: That’s a good question. I would say we have done probably north of 80, less than 100. Probably somewhere in there.

Joe Fairless: Alright. And where is the equity coming from, or where did it come from, in order to acquire 100 transactions and now you’ve got 175 units?

Michael Zuber: That’s a good question. You’ve gotta stretch this out over a 15-year period… Obviously, in the beginning we started like most investors do, with just personal savings. Our personal savings was not impressive, admittedly maybe it was more than some, but less than others; it was a whopping $40,000. That’s what we had to begin with.

What we did — because again, remember, when we started in ’03, as you might remember, that was a huge sellers’ market and prices went up… So we took advantage of several cash-out refi’s. Our first purchase was done with a standard 80% first, and we brought in 20%. That particular property I talk about a bunch, [unintelligible [00:08:02].25] you can look it up on Zillow. We bought it for 107k, we refi-ed it after a couple years and pulled out 30k-35k, bought something else, and then ultimately 1031-ed that when we sold it for 265k, 267k or whatever, and moved that money into a five-unit building.

We did a bunch of cash-out refi’s. We never had a windfall of money. It was never like “My company got bought”, or anything of that nature.” We just started, and kept active, and used lending when appropriate, and in 18 months we did eight 1031 exchanges, and we went from roughly 8 to 80 units with no new capital; we just took the equity as the down payment.

Then during the crash we had been saving for a while, so we had some capital, probably 50k-60k, but we found a way to use private money, because nobody was lending during that time.

Joe Fairless: Who did you go to? I’m not looking for names, but what was your relationship with the private money person and what were the terms?

Michael Zuber: Yeah, so friends and family, as you might suspect; lots of co-workers and the like had seen what I’d been doing. That’s the beauty when you talk to people. At this point, they’d seen what we’d been doing for ten years — they’d seen us grow from 8 to 80, just to keep the story straight… So they knew what we were doing, and they were like “Well, I’ve got hundreds of thousands of dollars in a savings account earning less than 1%. I’d like to do something with you”, because at the time we were buying properties for land value, so it was very easy to give great security.

We actually paid 10% interest-only. We would buy a property – just to use rough math – for $50,000. That was trashed, right? The REOs at that time seemed to be trashed or vacant. We would buy with our money, cut the check for 50k, go through escrow, all of that. We would then go back to a private investor and sort of refill our coffers with that $50,000. They would then get a deed, a note paying them 10% interest. Then we would repair it, lease it and hold that for a long time, until we wanted to refi it years later and lower the interest rate substantially.

Joe Fairless: How much of the appreciation was from the 8 to 80 units, when you did the 1031 exchanges? Was it forced appreciation through a business plan, versus “Congrats, you won the lottery because you’re in the right area in California.”

Michael Zuber: I wish I had a better story. We were in  the number one market — if you go back and look at Fresno in (I think it was) 2004-2005, it was the number one appreciating market. We got lucky. It wasn’t a business plan.

The only business plan we had is we were never gonna buy what i call an alligator, or  a negative cashflow property; that was intentional. It’s frankly what saved us in ’07 and ’08. We were not doing [unintelligible [00:10:30].08] 2/28 teaser loan, because it just didn’t fit our model. So that saved us… But that was the only business plan – never having a negative cashflow property, and being wise to take the chips off the table via a 1031 exchange when the time was right.

Joe Fairless: When you talk to people about financial independence, how do you talk to them about replicating your model, given what you’ve just said?

Michael Zuber: So really what I see as the most beneficial is you’ve gotta get people a start. So if they wanna talk about the story, I’m happy to share it; it is what it is, right? I have the history to talk about it. But what I spend most of my time doing is trying to get people just to think about getting a floor.

Think about how your life would be better just if you spent the next four years buying one rental at a time, for the next four years. Why four? Because it’s easy to finance four. You can go to Wells Fargo, Bank of America, whoever you want… It’s relatively easy for most individuals to get at least a single rental property.

I think if I can do that, if I can get them just to think about four, I’m gonna help lots of  people. And then for the few that wanna get past four, we can talk about getting to ten, because that’s also possible.

Then after that you’re in the game, you’ve got the DNA, you’ve figured out if this is something for you or not. I’m not here trying to sell some vision that you too can go from one house to 175 units. I’m not selling you anything, I’m just telling stories.

Joe Fairless: What type of financing did you put in place on the properties after your first four units?

Michael Zuber: The first one was a Wells Fargo, just standard 80/20 loan – 80% first, and 20% owner’s equity. Then we started just going through Countrywide, and they financed the first eight purchases. They did their 90% loan package, which was an 80% first, 10% second, and we only had to bring in 10%, which allowed us to do a lot of purchases. There were no limits. Getting financing back then was literally easier than fogging a mirror. That’s how we started.

Joe Fairless: And you said you didn’t buy any negative cash-flowing properties… What’s a property that didn’t turn out as pleasantly as you projected?

Michael Zuber: That first one, it had a sour taste a couple of different times…

Joe Fairless: Okay…

Michael Zuber: First, our story begins — we live in Mountain View, and all the real estate books we read talked about buying in your backyard; you’ve read those books too, right? Be 30 minutes from home, and all that stuff.

Joe Fairless: Sure.

Michael Zuber: Well, the Bay Area has never made sense, and it doesn’t make sense now, and it didn’t make sense 15 years ago, so we were kind of stuck. Then the wife sort of gets kudos for saying “Well, why don’t we look elsewhere?” So we spend quite a bit of time and we finally end up in Fresno, we finally find that property for 170k that rents for $1,095, and we’re ecstatic; we buy it, we’re ecstatic. It rents in a week, we’re ecstatic.

Then lo and behold, two weeks after the tenants move in, they separate. The wife takes off, moves out of state, the husband decides to drink non-stop and refuses to pay rent, decides to destroy the property, and take his anger out on our rental. In California it takes a while, unlike some states, to get people out… So we took almost 90 days to remove this individual. And again, keep in mind, this is our first rental, after a year of “We’re gonna be landlords, we’re gonna take over the world”, and this could have really killed us and stopped our momentum… And lo and behold, it’s been six months and we got that first month’s rent plus the deposit, and then we had an eviction, which costs about $1,000, and then we had about a $15,000 remake once that individual was out.

That hurt. I think about that a lot, because that could have stopped us… But we kept going, and it was because Olivia and I were on the same page, and we just wanted to move on to the next one. We just didn’t see a better way. We weren’t going to invent anything, we’re not athletes, we’re not singers… It was the only thing that made sense to us, I guess.

Joe Fairless: When you’re talking to people and you’re telling your stories, what are some typical questions that they ask you?

Michael Zuber: “Give me a deal! Give me a deal that you don’t want.” I get that all the time. It’s like, “No, deals are created, they’re not found.”

Joe Fairless: What’s an example of when you created a deal, and didn’t just find it?

Michael Zuber: I can talk about what I just did this year… There was a fourplex that an owner wanted to sell; they’d actually owned it for (I think it was) 28 years, so basically it’s been fully depreciated, so their cost basis is zero. They are now of an age where they are far more interested in stable income, versus just being a landlord, and travel; it’s what they wanna do.

A friend of mine, again, in the Fresno area, heard this individual talk about maybe wanting to owner-finance their fourplex, not really knowing what that meant.

A couple of phone calls later we actually agreed to meet at the property, and what I found out through that conversation is what they wanted the building to produce. What they asked for $2,000/month, when the building was only rented for $3,200. I politely let them know that that would be an alligator, and I explained what an alligator is – negative cashflow, and all of that.

After some going back and forth, we agreed to a monthly payment of $1,700, and we agreed to an interest rate of 1%, so I’m paying off a bunch of principal… And we amortized it over 30 years, and we have a 15-year balloon. That’s an example of something we’ve done.

And why is it good for the seller? Because they don’t have a big income tax yet, because I did a low down payment of only $1,500; and then they get to balance their income for tax reasons. So we found a way that was good for them and good for us, and once it was all done, we were afraid they were gonna have to cut a $100,000 tax bill, so we got around that.

Joe Fairless: What was your agreed upon purchase price in 15 years?

Michael Zuber: It was 232k.

Joe Fairless: 232k. That seems low for Fresno… And maybe my view is skewed for all California real estate, and I’m just stereotyping it, but a 4-unit for 232k is — was that below market?

Michael Zuber: It was below market, yeah. I could probably sell it today, having done nothing other than raise rents a little, for like 350k. So I could make, after transactions, 80k or whatever. That’s not what I do. We do have a pre-payment penalty on there to discourage me from doing that.

Joe Fairless: What is it?

Michael Zuber: It’s 50k for the first ten years. So if I sell any time within the first 10 years, I owe them a $50,000 pre-payment penalty.

Joe Fairless: When they initially wanted $2,000 you said “alligator”, and you explained it, and you ended up at $1,700… Will you talk about the dialog back and forth between you two, where you eventually agreed on $1,700?

Michael Zuber: Yeah, it was a phone conversation… I remember because I was out celebrating my birthday with the wife, and I just stepped out from dinner… I said, “Okay, great. Thank you for the phone call. I understand you want $2,000/month. I’ve looked at your property, it produces $3,200/month, and unfortunately I’ve been doing this a long time and I know that that building is not gonna cashflow for me.” Their response was “Sure it will.” And I’m like, “Well, help me understand that, because maybe I’m doing my math wrong.” I said “Do you pay property management?” “No, we do that ourselves.” I said, “Well, understand that I live out of town and I’m not gonna be able to do that, so my property manager is gonna charge me (pick a number; I think I said) $200, to keep the numbers round.” They said, “Okay, great.”

“What about water and garbage?” “Oh yeah, of course we pay that.” I said, “Well, I own a lot of property there and water’s not cheap. That’s probably $225 for a property like that.” “Well, ours is more like $180.” I said, “Okay, fine. So it’s $180.” And we just kept rattling off [unintelligible [00:17:20].10] insurance, and the other one was taxes… So you bought the property for 18k in 1979 or whatever it is, and I’m  like “Well, I’m gonna buy it for 232k, so my property taxes are gonna go up from $12/month to $180/month.” So we just kept rattling off the costs [unintelligible [00:17:36].10] and I remember Paul, which is the seller’s name, sort of stepping back and going “Okay…”, and saying he needs to go back to his wife and think about it.

Another couple of days go by, we have another phone conversation, I come back with a number I would take it — $1,600; he wanted $1,800 or $1,900, and we finally settled on $1,700, because what I saw after looking at the property was a way that I could raise rents roughly $400 inside the first 4-5 months, likely causing no vacancies, because they’re under market… So I could support $1,700 and hold it long-term, which is my intention with most of my properties – to hold long-term and enjoy that positive cashflow.

Joe Fairless: With the management comment, when you were talking to Paul, did he ever say “Fine, I’ll just find someone who self-manages, that way we won’t have to have this variable.”

Michael Zuber: No, he never said that, but I certainly got the impression that he had talked to other buyers, and what became very clear – again, this is my opinion; I never bothered asking him – was that he was getting frustrated with the kind of off-the-cuff comments being made by other buyers. They weren’t fact-based.

I was speaking from a landlord’s perspective, “You know what, I own property next door, or down the street, so I know about the area. I can tell you the cross-street” and he knew that I was gonna be in it long-term… Because you’ve gotta remember, his goal wasn’t to get the maximum price, obviously. His goal was to get $1,700/month for at least 10 years. That’s what he wanted, and it was via listening for that.

I’m sure he had people offering to pay more, but they weren’t listening to what he wanted. He wanted to avoid that IRS hit, and he was comfortable with what I was doing, and understanding, and willing to work with me.

Joe Fairless: Did he initially come out and say that, or did you have to ask questions to get to that point?

Michael Zuber: Sellers are — I don’t know if you wanna call them liars, but sellers are always hiding some cards, so… It was just conversations, and being open. I think real estate is a people business, and the more you listen and ask questions and just be upfront with people, the more you’ll hear and understand. So it was multiple conversations… I probably spoke with him half a dozen times before we actually met at the property, and we probably spoke a dozen times before we met back at escrow and finally signed something and put it to bed.

Joe Fairless: When you speak to him half a dozen times before you meet at the property, what are you talking about each of those six — I mean, obviously, you’re not gonna remember each of the six conversations, but just why six times?

Michael Zuber: Well, the first couple were more about him selling me, because I’m in a situation where I don’t have to buy anything, so it’s a nice kind of place to be… So it was him selling me the property, “Hey, it’s a 3-bed/1-bath, two stories, we’ve done all these great remodels, and this, that and the other thing… Leases are up to date”, and all of that.

The next couple conversations are about me being more inquisitive, because I’m not even thinking about numbers until I sort of meet some certain threshold… And then it was about getting to know each other. That’s kind of how they broke down – him selling me, me selling him, and then getting to know each other… Because essentially, we’ve signed up for at least a ten-year relationship.

He e-mails me every month on the first to confirm he’s got a check, and I send him — I don’t know if we’ll technically be friends, but we’ll probably send each other Christmas cards, because again, $1,700 times 12, it’s 20k/year, so… We’re gonna know each other quite a while.

Joe Fairless: Was the purchase price initially 232k?

Michael Zuber: No, we actually backed into the purchase price based on payment and interest rate. The purchase price wasn’t the most interesting thing to him, hence we got a lower number. It was “I want $1,700/month for at least ten years, and I wanna have a penalty in place”, that doesn’t prohibit (because life happens), but certainly discourages me from selling it and taking an artificial gain.

Joe Fairless: And how did you back into that purchase price?

Michael Zuber: Well, the purchase price – that’s just a simple equation. If you know what your purchase price is and you know what your interest rate is, you can do the math; it’s just a reverse calculation into what the ultimate purchase price is. I basically told him “I can do a $1,700/month payment, you pick the interest rate. You want 1%, you want 3%, or you want 5%.” Obviously, the higher the interest rate, the lower the price. So we just backed into one, and I think 1.9% is what we ultimately did.

Joe Fairless: What does that balloon payment equal out to in 15 years?

Michael Zuber: I think it’s roughly 40% of the purchase, so it’s probably — I don’t remember, I don’t have it in front of me… It’s probably 115k.

Joe Fairless: Got it.

Michael Zuber: Just a guess, but it’s probably pretty close.

Joe Fairless: Taking a step back, based on your experience as a real estate investor, what’s your best real estate investing advice ever?

Michael Zuber: The best real estate investing advice ever is never buy or create an alligator property. We all have heard or read about negative cashflow, but I cannot tell you how many times I have heard someone – and maybe it’s because I’m from California – “Oh, appreciation  is gonna cover me”, and all these other things.

I lived through the crash, I saw people who were worth tens of millions of dollars go bankrupt, and it was all because they had negative cashflow properties in a market that changed suddenly. Never buy, or create – which is the mistake I made; I created an alligator once via a cash-out refi – ever, because it limits your ability to hold it.

I wanna have conservative financing, unlimited hold time… I wanna sell on my clock, not on some forced behavior, and I don’t wanna become a motivated seller. That is my number one thing. It may sound hockey, but it’s absolutely the only way  to stay in this business – to have properties that are conservatively financed and will cashflow regardless of what’s going on.

I lost a lot of money in net worth when the market turned, but actually my income statement went up, because rents got more stable, I was more occupied, and a better quality of tenants, so…

Joe Fairless: Amen, I completely agree. You saw my book, with the three immutable rules of real estate investing… Two of them are “Buy cashflow property from day one” and the other one is “Have  conservative financing”, and then I have a third, which is “Have adequate cash reserves.”

Michael Zuber: Bingo. If I had [unintelligible [00:23:20].18] I would have said that as well.

Joe Fairless: [laughs] Exactly.

Michael Zuber: You don’t wanna have any life event — because again, real estate is a people business. You don’t want some outside force that you can’t control to force you to become that motivated seller that lets something go into discount, or god forbid, you lose it to foreclosure, or a short sale, or whatever, so… Reserves – I totally agree.

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

Michael Zuber: I look forward to it.

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

Break: [00:23:53].21] to [00:25:18].04]

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

Michael Zuber: Principles, from Ray Dalio.

Joe Fairless: Best ever deal you’ve done?

Michael Zuber: The first one. Even though it had that horror story, it got me in the game and I never looked back.

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

Michael Zuber: A mistake I’ve made… Oh, I didn’t go to private money soon enough.

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

Michael Zuber: My YouTube channel, One Rental at a Time. I try to do daily videos, just giving everything away.

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

Michael Zuber: I would say visit my YouTube channel at One Rental at a  Time. Please subscribe – that’s a big deal. If you ever wanna reach out to me personally, it’s just mzuber@onerentalatatime.com.

Joe Fairless: Michael, thank you so much for being on the show, talking about — this last deal was fascinating. I’m glad we got to that one, the fourplex… Owner financing, the negotiating involved, how you got to that point by asking the right questions, listening, and then ultimately structuring it in a way that benefits both of you… As well as your approach for the last 15 or so years, when you first got going, and now where you’re at today.

Very impressive, and I’m grateful that you were on the show, so thanks again for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Michael Zuber: Alright, Joe. Thank you very much, and thanks for writing the book.

Paul Swack with Joe Fairless on the Best Ever Show episode 1554 flyer

JF1554: Division 1 Baseball Player Hits A Real Estate Home Run In First Year with Paul Swack

Listen to the Episode Below (20:38)
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After college, Paul thought that selling pizza and beer at a restaurant he opened was the answer to financial success. While that may work for some people, after 10 years, Paul was about $140k in debt. He always had an interest in real estate so he finally quit the restaurant business and jumped into real estate. Hear how he’s been able to make over $300 in his first 16 months. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Paul Swack Real Estate Background:

  • Has done over $18 million is sales as a real estate agent in just 16 months
  • Ex division 1 baseball player, graduated and lost all his money in the restaurant business, then got his real estate license
  • Based in Pismo Beach, CA
  • Say hi to him at PaulSwack@gmail.com
  • Best Ever YT Channel: Gary Vaynerchuck’s channel

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Do you need debt, equity, or a loan guarantor for your deals?

Eastern Union Funding and Arbor Realty Trust are the companies to talk to, specifically Marc Belsky.

I have used him for both agency debt, help with the equity raise, and my consulting clients have successfully closed deals with Marc’s help. See how Marc can help you by calling him at 212-897-9875 or emailing him mbelsky@easterneq.com


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

Paul Swack: I’m doing great, Joe. Thank you.

Joe Fairless: I’m glad to hear it, and you are welcome, my friend. A little bit about Paul – he has done over 18 million dollars in sales as a real estate agent in just 16 months. What that breaks down to is approximately $300,000 in commission. He’s done about 30 transactions in 16 months approximately. He’s an ex-division one baseball player; graduated, lost all his money in the restaurant business, and then got his real estate license and made 300k over the last 16 months. Based in Pismo Beach – did I say that right, Pismo Beach?

Paul Swack: You got it.

Joe Fairless: Pismo Beach, California. With that being said, Paul, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Paul Swack: Yeah, that’d be great. Thanks again for having me, I really appreciate it. Like you said, the background was I was a college athlete, baseball was my entire life growing up, and kind of my plan on the future as well. I went and had a great scholarship and played division one at Virginia Commonwealth University; I traveled across the country there.

I came back home after college with the idea of trying to get into the real estate business. I was very entrepreneurial-minded. I read Rich Dad, Poor Dad in college, and that changed my perspective of what I wanted to do with my life.

After college, I thought selling pizza and beer was gonna be my road to millions, and —

Joe Fairless: I’d buy it from you. You’ve got one customer over here…

Paul Swack: Yeah… [laughs] I got started and opened a small restaurant here locally where I live. Take-out delivery, small little bar, pizza, wings… I opened up another location a few years down the road. After ten years, I was about $145,000 in debt, never really made a lot of money in the course of any single year. I worked seven days a week… I took off less than probably seven days a year for ten years. It was just a long process, and I finally got to a point at about 33 years old where I kind of told myself if I really wanted things to change, I had to change what I was doing… And I got out of the restaurant business. It was really hard, because it was something that I put so much time and energy into.

My passion and focus was definitely with real estate during those ten years. I did some different seminars, I would read books, but my financial struggle had just always seemed like it was such a stretch away from anywhere that I could possibly be… And I finally just made a change. That’s ultimately what happened.

Joe Fairless: What was the breaking point, or the tipping point? …however you wanna think about it.

Paul Swack: Yeah, it was my age. It was me continuing to be in the same position as time went on, and I have really big goals, and I’m a big thinker, and now it was like “Okay, well, if I keep doing what I’m doing the next five years, I can probably tell you exactly where I’m gonna be”, and that was the biggest change. I felt I was a smart guy, I felt that I have the energy, I felt that I have the work ethic, I just didn’t think the restaurant vehicle was gonna be what I thought it was and what was gonna help me get to where I wanted.

And like I said, in the back of my mind, real estate was always there. It wasn’t that I made real estate — that was an afterthought; it was something that I always was interested in. My family owns property, I knew a lot of people in the business locally… I was always drawn to it, and the real estate decision was one of the reasons that helped me close the restaurants and get out of them, just to make that transition into real estate. So I did that.

Joe Fairless: Did you have a significant other during those ten years?

Paul Swack: I had a girlfriend the first half of that…

Joe Fairless: [laughs] Then [unintelligible [00:05:12].06]

Paul Swack: Yeah, I mean, it’s hard whenever you’re working that much, and basically she was ready to get married and start a family and I wasn’t, and that was the breaking point of that. I just wasn’t feeling it, I wasn’t in a good position for myself, so the next five years I was single running the business and doing all that… And I made that decision just based on — ultimately, I didn’t wanna be 40 in the same position. Like I said, I was just passing by my goals, and so when I would stop and think about where I wanted to be, it wasn’t in line.

Joe Fairless: Okay. What did you do with the two pizza places?

Paul Swack: One of them I closed down completely, lost $131,000 on that one. The other one I ended up selling the business off, and at least recouping a little bit of funds with that, but not much… And they ended up changing the business out into something else. I didn’t want somebody running what I had built, but they ended up doing a different type of business in the food industry, and then I was kind of cleaned out of that, and paying off debt, and that was my focus – to try to get out of debt, get into real estate, hopefully make enough money to live on, and eventually get into what my goals were, which would be real estate investing.

Joe Fairless: So by the end of those ten years you were $145,000 in debt?

Paul Swack: Yeah.

Joe Fairless: So that’s from a monetary standpoint, and a lot of times people – deservedly so – focus on money, from an experience standpoint was that a successful experience or not. What were some positive take-aways that you got from those ten years? Clearly, the money thing – that didn’t work out; but that’s just one way of scoring a venture, assuming that you applied the lessons learned to future ventures… So what are some positive things that came out of it?

Paul Swack: That’s a great question, and I’ve answered that a lot of times, because I honestly feel without those ten years I would have had none of the success I’ve had this last year. I’ve built the best relationships in the area with some of the greatest people. I got to know commercial real estate from doing the restaurants, doing the leases, I was involved in a lot of different things with community-wide events in a couple different towns that the restaurants were in. My work ethic, like I said, was definitely something that I think has helped me on the real estate side, because I was literally working seven days a week, every day pretty much all the hours, because whenever I wasn’t making money, I even took on a job on top of the restaurants to help pay the restaurants. So I was working at a furniture place for five years… It was just a lot of time.

So the character, I think, of building, the struggle that I went through was definitely something that I think added to the character and the drive of what helped me this last year. But to answer your question, I would say the relationships I was able to build, the struggle of having to find a way to make things work whenever there wasn’t an option to make it work, turning on and off your power bill because you couldn’t pay it, and making literally every option of keeping lights on at different times of the year was a game in itself.

Then there were great times of the year… I live in a very touristy area, so summer is great, winter is slow, and you just had to know how to play the game. I don’t know if that answers your question totally, but I do feel that the commercial real estate side of the leases, the relationships I built, the struggle from working so much – those were the main things I think that were the benefits I got out of it.

Joe Fairless: In the last 16 months you’ve made approximately $300,000 in commission. How did you do that?

Paul Swack: Well, like I said, the biggest thing was getting into real estate. I got my license, and I kind of hit the ground running. It goes back to what I said about relationships – I think putting myself in a good position with the people I surrounded myself with (my brokers, my lender), the jump-start that I had with knowing enough people in the area, when I got into real estate, I had people reaching out to me; they were looking for this, looking for that, maybe just interested in some things here and there… I sold a couple properties, which led to a couple referrals, I had a couple open houses that ended up turning into five or six deals out of one open house… And I just kept running with it.

I didn’t know what I was doing, I answered questions the best that I could; I would reach out to my broker and different people that I was working with in the industry and I asked every dumb question there was. I researched everything that I didn’t know, and I just kept going. So I would wake up, and wanna go to work, and $300,000 in one year – I didn’t make $300,000 in ten years at the restaurants, so…

Joe Fairless: You lost half of that though over ten years…

Paul Swack: You’re right. If you even just took tax returns, I don’t think I’ve made 300k over the ten years just in profits in business. So for me, that’s exciting, but then on top of that, I don’t know — whenever you say “How did I do it?” I really think there’s a little bit of luck with some things that might fall your way…

Joe Fairless: Like what?

Paul Swack: I did an open house and I sold six houses within two months on one open house. I don’t think that is very common.

Joe Fairless: You did an open house where — oh, you got new people coming in… I’m not a real estate agent, so bear with me… So you got new people coming in and you used them as–

Paul Swack: I did an open house, I sold that house that day to a client, but I was also the listing agent. The client that bought that house – I sold the house that he had locally in order to buy that house. I met another lady that day that I sold her house and bought her another house, and also her best friend.

Joe Fairless: Wow, you cleaned up!

Paul Swack: Yeah, and that was just a three-hour open house.

Joe Fairless: [laughs] That happens every time…

Paul Swack: Yeah, exactly. So I think that some of that – I also feel that I asked the right questions, I followed up, I put myself in the right position to be able to handle that.

Joe Fairless: What are some of the questions you’re referring to that you asked?

Paul Swack: You know, I’m not a hard sales guy, so for me whenever someone walked in and they were asking me questions about the neighborhood, or they were asking me questions about the home, I do my best to give them the answers that they’re looking for. I do have a lot of knowledge of the area, which is great, because I’m from here… So I feel like I let people talk, I understand what their needs are, and then eventually I ask them if they’re working with anybody that’s helping them look for a home, or if there’s anything that I can help them with. A lot of times they just say they’re not, and I will put myself out there in front of them and say “I’d love to be able to work with you. Can I get your contact information and follow up? What are you doing the rest of today? Can I show you a couple properties that I have in mind that you might be interested in?” and I kind of try to build that relationship really quick.

So instead of letting them leave with either a business card or nothing, I almost try to have another meeting set up, and try to help them with what their needs are and what their timeframes are. I think a lot of people that I’ve talked to get hesitant because they think that’s a hard sale, where I don’t ever feel like it’s a hard sale. I feel like I’m giving them the best service. So I think some of that I definitely do, which has helped me… But I don’t think there’s a right way or a wrong way of doing it; that’s just what’s worked for me.

Joe Fairless: What’s been something that’s been more challenging than you thought it would be as you’ve got going over the last 16 months?

Paul Swack: Learning how to balance being really busy and growing mentally into what my goals are for 2019 and understanding how to get there. What I mean by that is you get started in real estate and you’re kind of learning the process, you’re learning the disclosures… Like I said, my brokers and my lender have been amazing as far as helping me understand a lot of stuff, and I bugged them as much as I possibly could…But as I got busier and would have six or seven deals going at one time, getting to the point of being able to bring on help was challenging, and getting to the point of – I hired a real estate coach to be able to help push me into what my goals are for 2019; it was a big financial commitment.

Joe Fairless: How much?

Paul Swack: How much did I spend?

Joe Fairless: Yeah, invest.

Paul Swack: $10,000 for a six-month coaching program that I’m on month four in, and it’s been amazing.

Joe Fairless: Awesome.

Paul Swack: And it was me having to grow as a person, and investing into myself I think was probably the biggest struggle. It came back to being an athlete – there were many times where I just knew I needed to work on certain things in order to go to that next level, of being a division one player, or whatever my goals were. It’s very similar in business. I think Mark Cuban says it best, that a business is a 24-hour day, seven days a week sport, and someone’s right behind you, trying to take your job. I follow that a lot, I believe in that, so I try to continue working on myself to get to where I wanna go.

Joe Fairless: Based on your experience over the last 16 months as a real estate agent, as well as your experience for ten years prior to that, what is your best advice ever for real estate investors or real estate professionals?

Paul Swack: My best advice ever is definitely investing in yourself. I think that that is ultimately the best thing that anybody can do. For instance, for me listening to your podcast – I could pick any podcast out of your entire bunch and learn something every single time. I think that that type of an investment into yourself – reading a book, going to a seminar, being involved in community stuff that might benefit you and learning things about your industry, investing, or as an agent… The deals – I think we all come across good deals, we all come across ways of how to evaluate a deal, but ultimately it’s what we think about and what we know, and our experience, and I definitely think investing in yourself is the best thing anybody could do.

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

Paul Swack: I’m ready.

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

Break: [00:15:18].19] to [00:16:27].07]

Joe Fairless: Best ever book you’ve recently read? …speaking of investing in yourself.

Paul Swack: Oh man, recently I’ve been so hooked on podcasts and YouTube videos…

Joe Fairless: Alright, we’ll go with that. How about a YouTube video or a YouTube channel that you like?

Paul Swack: I’m big on the Gary Vaynerchuk. I think that the social media technology side of things in investing and as a real estate agent is definitely something that keeps me on the edge of my seat, trying to stay up to date with what direction I think that’s going in our industry; I think it’s huge. He’s not necessarily just in real estate, but I love your podcast, I like the Pat Hiban podcast… I do a lot of audios and I try to do that as I’m doing any type of workout, or anything like that… So I’ve just been hooked on those, and I would say flipping between you and them; I would just continue to do that.

Joe Fairless: What’s a mistake you’ve made on a transaction so far?

Paul Swack: A mistake I’ve made on a transaction? Gosh, I would just say more towards the beginning not understanding some disclosures and having everything buttoned up at the end of a deal. I’ve had to go back and chase my tail on a few things, and not understanding the importance of being organized. I would say that was probably the biggest mistake, and a good learning lesson right away to be able to understand that as an agent you’re kind of like an attorney at times, with all this paperwork and different things that you are responsible for having done right, so… I learned quick that having an organization and having other people double-check some of your work was a good thing.

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

Paul Swack: I love giving back. It’s the number one reason that my goals are so high. I’ll do anything for anybody, but my whole thing is probably a little bit more committed towards the sports world, and kids. I wanna do a lot for the community that I’m in… Like I said, maybe building some different things for kids to be involved in athletics-wise, and helping anybody in the industry that could have results that I’ve had over the next few years for them as well; getting somebody started that is looking for a change in their own life.

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

Paul Swack: I would say Facebook and Instagram. The Swack Real Estate Group on Facebook is the best way to follow what I’ve got going on. I think over the next five years I’ve got a lot of goals very similar to yourself on what you’ve done. I’m gonna try to do my best of video-ing and documenting that process, and trying to keep it into something that people can plug into and watch the growth from the beginning of what it has been the last 16 months, to the next 5-10 years… So that’d be great.

Instagram it’s Paul Swack Real Estate. I do have a website, which is more just based as an agent; it’s not necessarily for someone to follow much… But I would say those two things are the best.

Joe Fairless: Paul, thank you so much for being on the show. I enjoyed our conversation, learning about what you learned, and the assets you got from your ten years in the restaurant business, and how you’ve applied that to real estate. The community relationships and the events that you’re doing, and the relationships that you had with the people, as well as the experiences you had looking at the commercial leases… Certainly very apples to apples applicable.

Then the struggle and the perseverance, and just seeing things through when it didn’t look like you could, but you did, and then applying that to what you’re doing now. Very impressive, and it’s not a surprise that you’re doing what you’re doing, at the level you’re doing it, within a very short period of time relatively speaking.

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

Paul Swack: Thanks so much. I really appreciate it, and let’s revisit in a year and see where we’re at.

Joe Fairless: Deal!

JF1540: Grow Your International Portfolio By Passively Investing In Another Country with Eric Berman & Sam Miller

Listen to the Episode Below (27:09)
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Sam and Eric are partners and working together to grow their own real estate investing business – by helping other investors also grow theirs. If you’re trying to grow your own portfolio, they have an opportunity for you. You can passively invest in vacation rentals in Columbia with their company. They also chronicle their adventures on their popular YouTube channel: https://www.youtube.com/user/samaza. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Eric Berman & Sam Miller Real Estate Backgrounds:

  • Both work to scale and grow their company Lifeafar, which is a collective of visionaries, business experts, and adventurers
  • They are using their success to show how a new lifestyle and investment abroad can work
  • Eric serves as the CIO, he has advised a wide array of lenders and developers on over $2B USD of mixed-use real estate and hotel transactions
  • Sam fled the 9-5 in 2009 when he took off on motorcycle across the Americas
  • Currently Sam is chronicling travel, lifestyle, real estate and investing in Colombia for Lifeafar
  • Based in Columbia
  • Say hi to them at https://www.lifeafar.com/
  • Their YouTube Channel: https://www.youtube.com/user/samaza
  • Best Ever Books: War of Art

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Do you need debt, equity, or a loan guarantor for your deals?

Eastern Union Funding and Arbor Realty Trust are the companies to talk to, specifically Marc Belsky.

I have used him for both agency debt, help with the equity raise, and my consulting clients have successfully closed deals with Marc’s help. See how Marc can help you by calling him at 212-897-9875 or emailing him mbelsky@easterneq.com


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

Eric Berman: Good. How are you, Joe?

Joe Fairless: I’m doing well, and nice to have you two on the show. Eric is the CIO of LifeAFAR, and Sam is the vlogger for LifeAFAR. They will tell a little bit more about that company. Both of you work to scale and grow your company, LifeAFAR, which is a collection of visionaries, business experts and adventurers, and we’ll get into the specifics about what that business is… Let’s go ahead and do that right now. Do you two wanna give the Best Ever listeners a  little bit more about your background and what LifeAFAR is in terms of the actual business?

Eric Berman: Sure, I’ll start off. This is Eric. I began my career as a CPA, and  then spent the next five years doing corporate real estate finance; through that I had exposure to a lot of lending and development advisory on mixed-use buildings and hotel assets throughout the U.S. and Latin America. About three years ago I moved down to Medellin, Colombia, where LifeAFAR is headquartered; I was exposed to real estate opportunity down there.

I’ll let Sam give a little bit of background as well, but in a nutshell, the 30,000-foot level, LifeAFAR is a real estate investing platform that allows investors from the U.S. to find deals otherwise not easily accessible. We do that through the crowdfunded model, which is how we finance a lot of these projects. Sam, I don’t know if you wanna expand on that a little bit…

Sam Miller: Sure. I started in Canada a motorcycle journey through the Americas, found Colombia, saw something special here. I started getting involved in real estate. I eventually partnered up with the partners at LifeAFAR. We came from being a brokerage, a furnished vacation rental agency, and we started listening to what the investors who were coming to Colombia, who were looking at real estate in Colombia, what they really wanted… And they wanted something that would generate passive cashflow for them when they weren’t there, staying in the property themselves. That need has led us to develop the product that we have today, which we can go into.

Joe Fairless: From what I’m hearing so far, it sounds like you all offer an opportunity to invest in vacation rentals in Colombia… And I’m sure I’m not getting it all correct, but from what I’ve heard so far – vacation rentals in Colombia, and the investor can stay there whenever they want, but then when they’re not staying there, they’re renting it out and making some money. What about what I just said is accurate and what part needs clarification?

Eric Berman: I would say all of it is accurate. A lot of our investors actually don’t travel to the properties, but a lot of them are just looking for that passive income, and looking to diversify into different markets. Sam, what do you think?

Sam Miller: It’s fairly accurate. It is vacation rental, but really are taking on the vacation rental market in a different way. We have a lobby, we have our HQ in the middle of our markets… So it’s almost like a decentralized hotel, in some ways, where we’re taking the convenience, the predictability of the hotel world and bringing it to the Airbnb world, which can be a little less unpredictable, but sometimes a bit more chaotic. So we’re kind of blending the best of both of those worlds.

Joe Fairless: Can you give some specific examples of how you blend the hotel world and make it a little bit more conservative with that world, and bringing it to the Airbnb model?

Sam Miller: Sure. The Airbnb experience has some unique local accommodations to stay in; we have that side of it. When it comes to making your booking, when it comes to getting a driver from the airport, preferably bilingual, someone that’s gonna be able to take better care of the guest, professional check-ins, so you’re not coordinating with somebody who has a full-time job and works on the other side of the city, so smoother check-ins… And then an ongoing 24-hour concierge service over WhatsApp; you’re always in connection with the host, who is connected to various tour, travel activities, and they can plug you into the local scene a lot more predictably than a random host. There’s that, and there’s a lot more we could get into, but that’s one of the more visceral ones for the guests who stay in the apartments.

Joe Fairless: Okay. So it’s like more of a VIP Airbnb experience than a traditional Airbnb experience from a guest standpoint.

Eric Berman: Yeah, I would say that’s correct… And if I could just add to that – Sam mentioned we’re responding to the guests’ feedback that we’ve gotten, and our newest project, which is actually in the old [unintelligible [00:07:57].03] of Puerto Rico, is gonna encompass a lot of F&B zones. So it’ll have a rooftop bar and restaurant, on the ground floor will be some sort of high-end food market with (it could be) an independent beer garden, or something like that… And then it will also have a fitness center.

So we’re looking to provide the amenities in these buildings that you would be accustomed to in a hotel, but also the uniqueness of Airbnb spaces, as Sam mentioned.

Joe Fairless: Got it. So I now understand – and thank you for very clearly walking me through – what the experience is for the guest. For your business model with your company, is your customer the guest, so you’re focused on the management side, or is it getting investors to invest in the properties that you all control or you list, and then you do the management side as well?

Eric Berman: Good question. It’s both. I think that’s something that makes us unique and it differentiates us – on the front-end we’re really focused on getting investors, and through that crowdfunded model we acquire properties, we visualize the concept, and then we develop the properties. Then our property management team takes over and we manage the property, we operate it full-cycle.

Joe Fairless: Okay. Cool. Sam, anything to add on that?

Sam Miller: At the end of the day, there’s guests who will come into an apartment; they know what Airbnb is, they know that in general it provides higher returns, and in a market like Colombia, like Puerto Rico, that rings true, as well. So we’re on the ground when we identify a property that has potential for conversion into a building of Airbnb units. We have, very importantly, the data which allows us to predict and forecast and project what numbers in terms of the guest side, and allows us to put together the investment project very confidently.

As we’ve gone through and we’ve done about 14 of these types of projects, we have more investor relationships, so we’re growing on both sides… And I think because we are administering the properties ourselves and we’ve also promised to the investors different returns, we do whatever it takes to compete in those markets. We’re looking at how we are serving guests, how can we take that to the next level on that side as well.

Joe Fairless: How do you identify a property that has potential for a conversion?

Sam Miller: Sure. This market that we’re in — four cities, currently: Bogota, Cartagena, Medellin and Cali. Each one is slightly different. Some of them are more vacation rental, some of them more international tourism. Bogota is a top business destination, so you have different profiles there. So it’s a combination of looking at the real estate trends in the city, but because we’re not necessarily targeting the local market as our primary market, we’re looking at areas that are going to serve the international visitor to the city in the most effective way; that’ll come down to location, that’ll come down to what bars, restaurants, which parts of the town are trending in terms of favorites from the foreigners… And then also the rental rates – it really helps that we have a portfolio of over 200 properties that we manage in our markets, because it gives us a very accurate idea of what we can generate from a particular building.

Joe Fairless: So you’ve looked to see where the international visitors are currently going, and you look to see how much potential rent you could charge them based on the properties you’re already renting in that particular area… What about the in-between of you see a property, and then you know what the end result is, but in order to get there, you’ve got some (I’m imagining) renovations that need to be done. So how do you project the renovation costs and the timeframe that you can do those in?

Eric Berman: Good question, as well. We have an internal architecture and design team, but we really work with local partners in everything that we do, and that’s one of my biggest pieces of real estate advice in general – always work with a local partner, somebody who knows the laws, the language, the regulations, and more importantly, the costs of developing and doing business in that market.

Joe Fairless: Got it. And how do you vet that?

Eric Berman: Experience. Like Sam said, we have a team in each of the cities, and in Puerto Rico, which is our newest market, we have a local development partner there as well, and we’re using all local architects and contractors to lead the work. And just to kind of add on the guest side as well, in terms of identifying a project for our investors, there’s a lot that plays into the potential returns in Puerto Rico, for example; there’s a lot of tax credits and incentives right now, as well as Puerto Rico being designated an opportunity zone… So for investors with capital gains, it’s a huge advantage to take advantage of right now in terms of investing.

Joe Fairless: So you kind of just answered a question I was about to ask, but I’ll still ask it, just to get additional thoughts… The question is, if an investor is looking at a deal — let’s put Puerto Rico aside, because you said there is an opportunity zone, so there are some capital gain benefits there, but there’s also opportunity zones all over the U.S, too… But if an investor is looking at opportunities in, say, Bogota, through your platform, and opportunities in their backyard – and I’m sure you come across this question a lot – there is certainly a perceived risk, and I think justifiably so, investing outside of the country, in an area that they perhaps have not been, versus in their backyard… So what is the counter-point to that argument?

Sam Miller: I’ll say something and then maybe Eric you can jump in. I think that’s huge. Colombia is another country, and in South America — it’s been isolated for a very long time, it’s got a lot of incorrect and outdated associations… I think the best way to really update the reality of the situation is through video, and that’s one of my main focuses on the YouTube channel – “Sam – LifeAFAR” if  you’d like to see first-hand. I try to really give a perspective of what that potential investor would be curious about, about what’s happening, what’s going on, to kind of overcome some of those objections. Once people get here, they understand and they become much more comfortable with it.

Eric Berman: Yeah, I think that’s a good point. I would add that another piece of advice that I like to give real estate investors and the Best Ever listeners is that I would always diversify, in terms of not only asset class that you’re investing in in real estate, but geographically, as well. You never know when, where or how the economic markets are gonna be affected throughout the world. We as a company are founded and based upon our success in Colombia, but we’re now taking that success and looking to replicate it into other international markets that might not be as common for real estate investors to do projects in; we wanna replicate that success and help them do so.

Joe Fairless: And I think I heard Sam say you’ve done 14 projects like this so far, and Colombia is a big ol’ country, so why not just focus on Colombia and do more projects there, versus trying to go to different countries? Because to me that seems like that would increase your risk, versus working with the same proven team members.

Eric Berman: Yeah, it’s definitely a process that we’re taking slowly and gradually, and we’re certainly not going to jump into a new market until we’re confident that we have the right partner to do so, and that we can build upon the success that we’ve already been achieving with our investors. I think there’s  a lot of other great opportunities to be found in real estate in other countries as well, as Colombia, and that’s one of the main reasons — I know some of our feedback from investors is they’re open to seeing opportunities in other countries, other geographies of the world as well.

Joe Fairless: From a business standpoint – I’m just putting myself in your shoes – it seems like it’s a greater amount of effort to find other team members in different countries, versus me just sticking in Colombia if I’ve done 14 projects there; it’s a whole country. Still, there might be greater opportunities in other countries, but is it really that much greater with the risk and the time associated to it, compared to just staying in Columbia?

Eric Berman: I think it also has to do with expanding our platform.

Joe Fairless: Okay.

Eric Berman: The community that Sam was talking about how we’re building, and providing that guest experience – it goes twofold. One is providing opportunities to investors, but also providing new locations for our travelers and guests to stay at and experience.

Joe Fairless: Oh, got it. So do you have a following of guests  who seek out the different destinations that you all have, to experience what you provide, that VIP Airbnb experience?

Eric Berman: I think Sam will probably best answer this…

Sam Miller: Yeah, going to the core of the question (why expand), I think the risk in terms of starting with new partners is mitigated through using the same talent, with the same skills, so when it comes to identifying the deals, when it comes to the finishing touches on the property and what’s that final product gonna look like – those are things that we’re still managing, and it’s a part of the business that we’ve expanded successfully to other cities… And when you have the right team – and we have a significant accounting, administration and legal team – we’re able to make these moves and we’re able to expand our core value, which is [unintelligible [00:18:00].15] integrating this investment process.

Joe Fairless: Sam, when you’re creating the videos about whatever you all are investing in, and you’re thinking about it from a business standpoint, where I imagine the business outcome is to – as you said earlier – proactively address some objections that investors might have, or just simply make them more comfortable and familiar with the surroundings, what are some things that you make sure you do, or film, or experience, in order to accomplish those objectives?

Sam Miller: I really like the vlog style. It’s less scripted, it’s getting out on the street, walking past properties and explaining, “Well, this is what this property is worth, this is how much it’s worth per square meter, this is what the zone was like eight years ago, when I first arrived here, and this is what’s happening now… This is a new restaurant, this is a new bar, this is a new designer shop”, you can clearly see some of those gentrification trends that pass through particular areas as they improve, in each markets. It’s very interesting how each one plays out.

Showing the process, speaking to agents who work in the area as well, showing example properties… Just being as transparent as possible. I get it, it’s like — it’s some new people in a foreign country, that you may or may not have a positive perception of, but at the end of the day, that shared perception, that shared agreement of value of the real estate is what determines the value… So we look for areas that are not always in the most prime locations; we’re looking right on fringes. We’re following basic real estate formulas – looking where the movements are, looking where the expansion is, and getting in on those areas.

We’re very transparent with our process, I think that’s the best way to put it.

Joe Fairless: How do you identify where the international travelers are going, from a quantitative standpoint? Where do you look?

Sam Miller: In the last ten years I think we’ve served about 25,000 guests now, so we have that data. We speak to our property management teams where the new trends are coming. We’re ten partners now, we’re all based here in Colombia; we’ve come from all over the world. Our marketing director came from San Francisco, he was working with GAP up there, and he decided to see what was happening in Medellin, and eventually fell in love and moved a few years later. We all live here, we’re all experiencing it for ourselves, so they’re like our local markets.

Joe Fairless: Such a smart idea, to do the vlog… How long has that been doing?

Sam Miller: About two years now. I saw some movement in terms of what people were doing with video, what people were doing with YouTube, which after all is the second-largest search engine after Google… I’d been writing articles, and I just saw the opportunity in videos, so I thought it was the best way to really show what was going on.

Joe Fairless: Taking a step back, thinking about it from a real estate investor’s standpoint, here’s the question I ask everyone – what’s your best real estate investing advice ever?

Eric Berman: Mine is diversify and find great partners.

Sam Miller: Yeah, great partners, as well as demographics. I think at the end of the day it’s demographics – where they’re moving, what people are  moving there and what they desire.

Joe Fairless: And earlier — I don’t remember which one of you said it, but I wrote this down… You said you’ve done 14 deals in this model, and you’ve looked at data to predict where to go, and Sam, you just talked about how you get that data… One question I have on that is “How has the process of analyzing the data evolved from when you started to where you are today?” And I ask that just to see if certain things have become more or less important as you’ve been looking at the data to predict future success of projects.

Eric Berman: Yeah, I would say that internally, the property management team has certainly grown, and with the increase in sheer volume of data, of course, you have a bigger data pool to analyze, and I know that our team spends a lot of time analyzing trends from the guests, feedback from guests, international traveling trends and traveling trends within Colombia, as well – where the guests are arriving from, how long they’re staying for… Points of that nature.

Joe Fairless: So you’ve got more data, which is a blessing and a curse usually, because then it’s like “Okay, I’ve got all this information, but how do I make sense of it? How do I prioritize?” Is there something that you were prioritizing or not prioritizing at the beginning, that now you either increased the priority of that or decreased it?

Sam Miller: You know, because we are focused on the international travelers in a country which is going through a tourism boom – it’s gone from 2,5 million 8 years ago to 6,5 million international tourists per year, and I think it’s got a long way to go still; the negative perception is still out there, but every single person who comes to Colombia becomes a raving ambassador afterwards… So a long way to go there. But in terms of looking for these trends, it’s looking at, okay, where have they chosen now, and how is that growing?

We’ve been living here for these past ten years and we’ve seen growth, where it starts in particular parts of town, and it grows up, it gets very popular, then people look for an alternative to that popular part of town… It’s really something that we see first-hand. But then you look for the data to back it up, as well.

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

Eric Berman: Let’s do it!

Sam Miller: Let’s do it!

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

Break: [00:23:38].28] to [00:24:32].14]

Joe Fairless: Best ever book you’ve recently read?

Eric Berman: Setting the Table, by Daniel Meyer.

Sam Miller: War of Art.

Joe Fairless: What’s the best ever deal you’ve done?

Sam Miller: Creating a job doing what I love.

Eric Berman: Good answer. I like to think that the deal we’ve just signed up in Puerto Rico is gonna be our most exciting one yet. I think it’s gonna be a flagship property for us. It’s gonna enable us to provide an experience way above what we already do.

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

Sam Miller: What I’m discovering now is opening minds to the reality of the world that we’re living in. It’s coming with a lot of baggage, but I think a lot of people are holding themselves back… I’m discovering one of the most beneficial ways I can give back.

Eric Berman: Yeah, I’ll say the best ever way that I like to give back is through education – education of opportunities, whether that’s in real estate, or giving my time to spend time helping to educate under-privileged children. There are a few organizations that I donate time with in Medellin, and I really enjoy doing that.

Joe Fairless: And how can the Best Ever listeners learn more about what you two have got going on?

Eric Berman: LifeAfar.com is the website, and for investors that are interested in learning of opportunities, investments@lifeafar.com is where you can reach us.

Sam Miller: And if you’d like to see visually what we’re doing, and inside and outside of our projects, “Sam – LifeAFAR” on YouTube.

Joe Fairless: Well, Sam and Eric, thank you so much for being on the show and talking about your business model, how it works, the opportunities and how you differentiate from other business models, in particular having that VIP Airbnb service, as well as you’ve got many boots on the ground, and you’re using that information to determine where to invest next, and to mitigate risk as a result of that… And how you’re building a level of comfort remotely by having the vlog on YouTube, and showing investors the opportunities and familiarizing them with the area.

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

Sam Miller: Thanks, Joe.

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JF1533: From Wealthy To Homeless To Successful Real Estate Investor with Heidi Nelson

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Best Real Estate Investing Crash Course Ever!

Heidi and her family were doing well before it all fell apart around 2008. She was forced to move back in with her parents (with her own kids as well) but she didn’t let that keep her down. Joe and Heidi spend most of the conversation on her story coming back up from scratch as a real estate investor. She’s done some creative deals and has a great story everyone can learn something from. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Heidi Nelson Real Estate Background:

  • Went from single family investing to a 6 unit building
  • Successful in procuring partnerships for the down payment and creative financing to put deals together
  • Buys businesses, all of which have been purchased using seller financing
  • Based in San Benito, CA
  • Say hi to her at https://www.handmpropertymanagement.com/
  • Best Ever Book: Bible

Get more real estate investing tips every week by subscribing for our newsletter at BestEverNewsLetter.com

Best Ever Listeners:

Do you need debt, equity, or a loan guarantor for your deals?

Eastern Union Funding and Arbor Realty Trust are the companies to talk to, specifically Marc Belsky.

I have used him for both agency debt, help with the equity raise, and my consulting clients have successfully closed deals with Marc’s help. See how Marc can help you by calling him at 212-897-9875 or emailing him mbelsky@easterneq.com


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

Heidi Nelson: Hey, I’m blessed, Joe. Thank you so much for having me. I really appreciate the opportunity and you’ve been a huge inspiration in my life.

Joe Fairless: Thank you for mentioning that, and looking forward to learning more about yourself and your background. A little bit about Heidi, and then we’ll get into it in more detail. She just mentioned to me right before we started recording that she was basically homeless nine years ago, so we’ll hear about that. She has gone from buying single-family homes to buying smaller multifamily properties. She has purchased two businesses: a property management company, as well as a pre-school. She buys the businesses, all of which have been purchased using seller financing. She is based in San Benito, California. With that being said, do you wanna give the Best ever listeners a little bit more about your background and your current focus?

Heidi Nelson: Yes, Joe. Like you said, I’m in the Hollister, or the South County area, South of the Bay Area in California; a little bit easier than the  Bay Area to get into this market, but however, it’s still California market, which is a struggle. About nine years ago I was knocked off my high horse, went from living in a million-dollar home, accustomed to a very nice lifestyle, to virtually being homeless and having to take my kids – they were pretty much all I had left – and move into my parents’ house, and try to figure out which direction was up.

With that — you know, when you’re on the bottom, you can’t fall any further down, because you’re already down as far as you can get… [laughs] So it was all up from there. Basically, I had to learn how to pick myself up, figure life out, and how do I do this with no money? Strategies quickly came into play.

Joe Fairless: Let’s see… The first question is what happened where you had a million-dollar house and then you and your kids were having to move into your parents’ house?

Heidi Nelson: What happened was actually — I got married when I was 18 years old. I had no formal college education; I did some college, some technical school kind of thing, but basically what I was was a support wife. My husband was in full-time ministry, so we had pretty much dedicated our life to that, and I was a stay-at-home mom. When your income is derived from ministry and you go through a divorce, you immediately find yourself jobless. So you can go from a nice income, a very comfortable lifestyle, surrounded by wonderful, great people, to immediately not income, no spouse, no college education, and we were in the midst of the 2008 economic downturn. Now, I did have my real estate license at that time, but at that time it was taking nine months to 11-12 months to complete a shortsale, and it was a whole new way of doing business that I didn’t understand.

When you’ve got kids and expenses and everything’s going out and there’s nothing coming in – there’s no alimony, there’s no child support, there’s absolutely nothing – you’re pretty much stuck.

Joe Fairless: What did you do?

Heidi Nelson: I moved in with mom and dad. [laughter] And from there actually doors began to open. I did know the value of hard work; I’d always been raised with “You do what’s right, you trust in God, and you just work as hard as you can.” That was the basis of where it started. I received a phone call from a friend of mine who worked at a property management company, and she said “Hey, the seller wants to sell. Do you wanna meet him?” I said, “Yes.” She said, “When?” I said, “Today, 1 o’clock.”

I met him in a Starbucks in Gilroy, California, I shook his hand for the first time, we sat down, we talked for about an hour, and basically I bought that business on a $5,000 deposit and a handshake. He called me after the meeting around 5 o’clock that evening and he said “I hope you’re serious”, and I said “I am.” He said, “Okay, because I just fired the property manager. You’ve gotta be here at 8 in the morning.” So I took over the next day as owner. We kind of did everything in reverse, where I started, I wrote out the check, and then we figured out how to sign contracts and make it legal.

Joe Fairless: Wow. What did the property management company own that you were buying?

Heidi Nelson: Basically, they just had accounts. When it was originally sold to me, they thought there was about 95 to 100 accounts. It ended up that the person he fired got angry and took about half of those accounts, so I probably in real reality had about 60-65 accounts when it was all said and done… No property or anything like that. It was just the book of business, and the name and the reputation within the town.

Joe Fairless: Why fire the right-hand person prior to you buying it?

Heidi Nelson: She was in a purchase agreement and had not delivered on the purchase agreement, and then at the same time of not delivering on the purchase agreement the payroll for the staff began to bounce… And when he became aware that the employees were not getting paid, he had to immediately terminate and dissolve his association and agreement with her. He was already retired at that point, he didn’t wanna take back up the business, and from there he was immediately desperate looking for somebody, and I happened to be the shoes that could fill that need.

Joe Fairless: How much did you buy it for in total?

Heidi Nelson: I bought it for $55,000, with a $5,000 deposit.

Joe Fairless: And what were the terms of the seller financing?

Heidi Nelson: 5% interest and $5,000 went towards the down payment. $50,000 at 5%, paid monthly.

Joe Fairless: You bought it and you moved in, or you–

Heidi Nelson: I just set up shop… [laughs]

Joe Fairless: You set up shop, okay… And then what did you do with the business?

Heidi Nelson: Well, it was a hard market. A lot of people were pulling their accounts because the market was getting a little bit shaky, but pretty much by the time that I took over, everything that could have fallen off had fallen off, so we had a good core. I just began to work hard… I actually worked for no income for probably the first year and a half, maybe even the first two years, and then at some point I started taking $1,000 a month. So I was doing that during the day, and selling real estate – I continued to sell real estate, because I had a broker’s license by that time – on the nights and weekends, and just pretty much doing anything I could to make it work.

Joe Fairless: You were selling real estate on nights and weekends and you were turning this property management company — maybe not turning it around, but you were…

Heidi Nelson: It was a slow turnaround.

Joe Fairless: Yeah. How come you didn’t focus your efforts on bringing in more property management clients versus selling real estate at night and weekends?

Heidi Nelson: I would say probably the largest reason being is it was a learning curve. I was just doing what I knew to do. I knew how to sell real estate, I knew how to make deals happen by that time, and with the property management it was still something that I was having to learn. At this point, I would probably focus differently – hindsight is 20/20 – but I just didn’t have the mentorship or the direction, the leadership… I was kind of like a little boat in a big sea, trying to figure it all out.

Joe Fairless: We’re all little boats in a big sea, I think that analogy fits everyone… The business was at 60-65 accounts — well, before I ask this, you said hindsight is 20/20 and you might have done some things differently… What would you have done?

Heidi Nelson: Well, I probably would have focused more on the property management with that whole course of it, but in reality maybe I wouldn’t have done something different, because I was doing only what I knew. So if I knew or my knowledge was bigger, then I probably would have been trying at that time to buy more property management companies, or buy accounts from property management companies… But it just wasn’t something that I knew or thought of to do, or a direction I thought to go in.

Joe Fairless: What year was this?

Heidi Nelson: This was about 2010.

Joe Fairless: 2010. Do you still have the company?

Heidi Nelson: I do.

Joe Fairless: How many accounts do you have now?

Heidi Nelson: About 350.

Joe Fairless: Wow! You’ve grown it a little bit.

Heidi Nelson: It’s still a small company… [laughs]

Joe Fairless: Well, you went from 60 to over 300.

Heidi Nelson: Correct.

Joe Fairless: Wow. How did you do it?

Heidi Nelson: Good customer service, follow-up, and I did during that time buy out two other companies’ accounts. One of them was an opportunity in Morgan Hill, which is where I was living at the time. I got a call and it was the seller of the property management company; he had hired a gentleman who was basically stealing some of the trust funds, and it was a bad situation, but at the time that he called, again, I didn’t have any money. He wanted about  (I don’t know) 30k or so for the accounts; I did not have the money and I couldn’t figure out how I would be able to do it and satisfy what he needed and what I needed, so I came up with a plan of if you will turn over these property management contracts to me, then I will give you a 15% referral fee. Basically, if I collect the rents and from there I’m able to collect the management fee, then I will give you 15%.

If you influence the people against me and don’t help me keep these landlords on board and they go somewhere else and I’m not collecting a management fee, then you don’t get paid. So we structured it a little bit different in that aspect, and I did it for the life of the account, which means as we lost an account, he would no longer get paid on that account. If we kept the account, he would get paid.

I don’t know that it was the best way to do it, but it was the only way I knew how to do it at the time, with no money down… And I will say he’s been handsomely paid, because — oh, that was probably about seven years ago, and since that time I have retained every single account with the exception of one. One property was in the middle of an eviction when I took over, and we did lose that landlord. But to this day, seven years later, I have every single property, and that man that sold me that property management company has continued to get paid… Whereas if I had just given him the $30,000, it would be said and done. But it really doesn’t cost me anything at this point. I just figured it as a cost of overhead.

Joe Fairless: Wow, what a creative way to structure that. When you say 15%, is that 15% of whatever property management fee–

Heidi Nelson: Of the management fees, yeah. At that time, I think there was around $7,000/month income, and I took and times that by 15% and he got 15%, we took 85%. So after all overhead and expenses, I think I added about $5,000 a month income to the bottom line.

Joe Fairless: Wow.

Heidi Nelson: Doing what I already did, because I already had an employee that was handling the management for me.

Joe Fairless: And you got into it with no money out of pocket.

Heidi Nelson: None.

Joe Fairless: That’s great. That works out for both. Granted, he’s getting multiples of what he would have been paid out at closing, but time value of money, too – he’s getting it at a later date, and you got into it where you didn’t have any money out of pocket, and you started receiving money at the very beginning, because those were now accounts.

Heidi Nelson: Correct. It helped me to get some income, and then I could get a little bit more than $1,000/month that I was taking from the other company… [laughs] It helped everybody to get what they were desiring, and if I would have known techniques and actually started marketing and looking for more mom and pop management companies at that time, that I could take and implement that strategy… I was just young and green and didn’t have any business experience. I didn’t go to business school, I didn’t have business experience, so I was just stumbling my way through the dark, trying to find some direction.

In hindsight, knowing that that strategy now works, I probably would have just been blanketing anybody that had a property management company and trying to buy their accounts.

Joe Fairless: Yeah. How many accounts did that company add to your —

Heidi Nelson: I think they had 30.

Joe Fairless: Okay, cool. And the first one that you bought with $5,000 down, you bought it $55,000 and you said drama happened with the person who got fired, and you ended up getting about 60 accounts for that.

Heidi Nelson: Correct. And I’ve retained all of them to date, as well.

Joe Fairless: Okay. So you’re right around — what is that, $1,000 an account? Is that how you think of it whenever you purchase a —

Heidi Nelson: Yes, since that time I’ve kind of based it on that formula for our area. I don’t know if that’s industry standard, but I am willing at this point if somebody comes to me and says they have accounts — and I did buy another 27 accounts, I believe, from another individual, and I paid $27,000 for it, again, but I got it over seller financing, the same concept.

Joe Fairless: The 15%?

Heidi Nelson: No. I gave him a down payment, I believe $5,000, and then I collected the monthly management fee and paid them out of that management fee about $1,200/month until they were paid off. And that’s been paid off. But it equated out to $1,000/door.

Joe Fairless: Yeah. It’s fascinating. I don’t think in 1,500 interviews+ I don’t think I’ve interviewed someone who’s buying property management companies, and certainly I have not interviewed someone who used the creative financing that you did to do it. I love hearing about this stuff. What else about those transactions do you think we should talk about?

Heidi Nelson: Well, probably that I should focus more on them, and I haven’t, because distractions come and a lot of things get going… I did have another interesting business buy that may or may not be interesting to you, but in one of the management calls that a landlord wants you to come and talk to them about either selling their property or renting their property out, when I went and I sat down with that landlord, I asked them, like I normally always do, “Why are you looking to lease out your property? It’s a beautiful home.” She said, “Well, I have another business here in town”, and it was the town that I worked in… “I have a business here in town and it didn’t sell. So if I ever need to come back, I would like to be able to just remove the tenant and have my home back.” And I said, “If you don’t mind me asking, what kind of business is that?” She said, “It’s a pre-school.”

What she didn’t know was I had already written on my goals that within seven years I wanted to start a pre-school. My father had been in business in a pre-school, and I had kind of been raised and grew up around that business, although I didn’t really know that business. I knew it was a solid, steady business, and I was just looking for different ways to increase cashflow. So I began to talk with her, not about property management, but “How can I buy your business?” With that one, we ended up coming to a deal of 100% finance at 0% interest, purchase price $75,000; I think there were 27 students at that time. I gave her a $1,000 deposit and I spread the payments out so that basically I could collect the income from the business and then pay her out.

So I started out paying her $1,000/month and then it escalated up, but everything goes straight to principle paydown at 0% interest. So on that one it was 100% financing; I only put $1,000 out of my own pocket, and then the business virtually began to pay her each month. I took that business from 27 students and increased licensing to 60. It took me about seven months to do the turnaround and get the licensing increase, because there were some problems with the Department of Social Services and the paperwork and just the red tape that you have to go through… So it did take me longer to take and expand that pre-school, but today we’re licensed for 60, we have a waiting list, and that business has completely paid her and has become very valuable to myself as a secondary, backup business.

So I’ve kind of taken that same concept and moved it into real estate, because when all of this started I didn’t even own a home. From there, I began to make some purchases and utilizing the same concept of buying businesses, but doing it with real estate… And pretty much every property that I have purchased – with the exception of my personal home – I have used all the power of either seller financing, or leveraging a partnership.

Joe Fairless: Wow. Really interesting how you structured that, and how coincidentally – or maybe not coincidentally, depending on your beliefs, you had that as a goal, and then you came across it. Because personally, I have not come across someone who is selling or was trying to sell a pre-school, but you happened to do it.

Heidi Nelson: [laughs] I had no idea — I mean, I’d just have to say that’s a God thing; I don’t know any other way to explain that. It was on my goals, and this lady called. She had tried to sell it through a business franchise, from what I understand, and that didn’t work, and then she sold it to an employee, and at the last minute they couldn’t come up with a down payment and that didn’t work. She was exasperated, and she hired a director — well, I’m not gonna be a director anyway, so I needed a director… So she hired who she thought would be the greatest director to run the pre-school, locked them all in place, and she would then run it remotely from San Diego.

Well, the way it worked out – like I said, I wasn’t gonna go and be an on-staff person; I just wanted to own the pre-school, so I kept that director in place, and we just figured a way to make it happen. By that time, I think possibly she had come to the reality of the situation that maybe this was the best type of agreement she should take. You’re not the best person sometimes if you’re the first in line. Sometimes if some deals fall out before you get there, you get the cherry on top, so to speak.

Joe Fairless: Or in your case, you’re the only one still in line.

Heidi Nelson: Mm-hm.

Joe Fairless: Which one makes you more money, the property management or the pre-school?

Heidi Nelson: Well, I take my income from the property management, and that definitely takes more time, but the way I look at the pre-school, the pre-school has become a very strong financial arm, and it does have the ability within the community to have a lot of growth, and I am looking to expand that, but it’s hard to balance everything. I’m one person, I’m still a single mom, although my children are to the age of they’re starting their adulthood now, but I still have to keep some perspective and some balance in life as well.

Joe Fairless: What’s your best real estate investing advice ever?

Heidi Nelson: Oh, boy… The best real estate advice would be solve somebody’s problem, even if that means you have to take a calculated risk. Solve their problem. I have done that over and over with some of the property that I have purchased. The biggest element is solve their problem.

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

Heidi Nelson: I sure hope so. Let’s go.

Joe Fairless: Alright, well I hope you are, too; I think you are. First, a quick word from our Best Ever partners.

Break: [00:23:32].22] to [00:24:19].11]

Joe Fairless: Best ever book you’ve recently read?

Heidi Nelson: I would have to say the Bible. I use that as my moral compassing guide. I will say though, I did order your book. It hasn’t come yet. [laughs]

Joe Fairless: Well, I’m not gonna compete with the Bible. Best ever deal you’ve done that we haven’t talked about?

Heidi Nelson: Earlier this year I had the opportunity to purchase a fourplex, so I tied it up and with that wrote an all-cash offer; I did not have the cash, but I knew I could find the cash. As it all kind of worked out, I ended up finding an investor who was willing to put up 100% of the acquisition and rehab costs, and we secured him with the first deed of trust. So we bought it at 655k, we put a first deed of trust on the property at 700k, to make sure that no matter what, he would get paid out. He was also a partner in the fourplex, and two weeks after we closed the escrow, one exact footprint two doors down sold for 980k. So we had about 325k instant equity in that; I have no money out of pocket, just the ability to structure the deal, put that together, find the investor, sell the investor on the concept, and he’s secured, because he’s a first deed of trust plus a partner. So I think that was a pretty good deal for a small person like me.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Heidi Nelson: A mistake I’ve made on a transaction is 1) getting distracted, and 2) having [unintelligible [00:26:00].18] but not having the vision to see the deal. I had a listing on a mini-storage several years back, and this mini-storage – I had the listing probably for six months right under my nose; the gentleman that I bought the property management company, he came in and he sat down at the adding machine in front of me and he began to work the numbers and he said “I’m buying this deal.” He bought that with no money down… I shouldn’t say no money down; it was no money out of his pocket. He did a 1031 exchange out of a bad partnership, put it into the purchase of this, and then got a construction refinance that basically brought money back into his pocket, to the same amount that he was exchanging into it.

So he did a construction loan that ended up giving him his down payment back. He was able to expand that to about 700 units, and if I had been the listing agent on that, I would have been either looking to syndicate that out, or somehow get some sort of partnership in on it. As it worked out, it was a huge, huge learning lesson for me, but it’s a mistake that I don’t wanna make again.

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

Heidi Nelson: I like to give back to my church, and also through missions trips.

Joe Fairless: What’s the best way the Best Ever listeners can learn more about what you’re doing?

Heidi Nelson: They could just give me a call. My number is 408-500-5000, if that’s okay to say over there.

Joe Fairless: Heidi, thank you for being on the show and talking about the creative way that you went from moving back in with your parents, you brought your kids there too, to buying and owning property management companies, and how you bought them; I just find it so fascinating how you were resourceful and put those deals together and made it work, especially the second one. Well, the first one because that’s a big deal because you needed to make things happen, but the second one, how you worked it so you had no money out of pocket, and you gave them 15%, and you acquired more… Because I do know that you make more money with property management companies when you scale, so you get more and more units, that’s when you make more and more; so you’ve got to get it to a critical mass, and you were doing it in a very creative way. Thanks for being on the show, talking about this. The pre-school thing was really interesting, too.

I hope you have a best ever day, and we’ll talk to you soon.

Heidi Nelson: Thank you, Joe. We’ll talk soon.

Joe Fairless and Michael Quarles

JF1510: Fastest Way To Scale A Wholesale Or Wholetail Business #SkillSetSunday with Michael Quarles

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Michael is a well known name in the real estate world. A huge part of what Michael does, and why it can be so attractive to investors, he never sees any of the houses he buys. Every house he buys is done virtually with help of others, in different states. Learn how he has scaled to the point of never seeing the properties he buys. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Do you need debt, equity, or a loan guarantor for your deals?

Eastern Union Funding and Arbor Realty Trust are the companies to talk to, specifically Marc Belsky.

I have used him for both agency debt, help with the equity raise, and my consulting clients have successfully closed deals with Marc’s help. See how Marc can help you by calling him at 212-897-9875 or emailing him mbelsky@easterneq.com


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

First off, I hope you’re having a best ever weekend. Because today is Sunday, we’ve got a special segment for you called Skillset Sunday, where we’re gonna talk about a specific skill that can help you with your real estate endeavors. That specific skill is how to scale your company, and in particular, if you are a wholesaler or a wholetailer – especially a wholetailer – then this will be relevant to you, because we’ve got Michael Quarles on the show today, and he’s gonna talk to us about how he has done that. How are you doing, Michael?

Michael Quarles: I’m doing good, thanks for having me back.

Joe Fairless: Well, my pleasure. Nice to have you back. You recognize Michael’s name because you’re a loyal Best Ever listener and you heard episode number 72. Wow, that’s like 1,500 or so days ago. I don’t know what episode this is airing, but about 1,500 days ago I interviewed Michael. The episode is titled “Why wholesalers wholesale houses is beyond me.” Then I interviewed Michael on episode 564; the title for this one is a little provocative – “How a murder house turned into a deal.” I’m not sure if that’s politically correct or not, but that’s what the title is.

We’re gonna talk today about how you have turned your virtual wholetailing business into a system and how you got a complementary company. Do you wanna catch us up to speed first with your background just a little bit, so we have some context as a refresher, and then we’ll get into it?

Michael Quarles: Sure. I fell in love with dirt as an adult teenager. Gosh, I’m 56, and that was when I was 19, so you do the math – a long time ago… And it’s been fun. I’m a general building contractor in California, a real estate broker in California, and I buy a bucketload of houses… And the cool part about my houses that I buy is I never see them. I never knock on the front door, I never grasp the hand of the seller, I don’t say hello to the closing company or the escrow company… All I do is look at the check that goes into the bank account. And that’s the cool part about real estate investing to me.

Joe Fairless: How do you buy houses without any of that stuff?

Michael Quarles: It all starts with marketing, one form or another. I’m a big fan of direct mail, and a big fan of pay-per-click. Not so much a big fan of the other digital marketing out there, but those two drive someone to call me, and then we have an “Alex and Ryan and Angel” system. Alexes answer the phone. Alexes are typically female, although they could be a male, because Alex is a dual name… And they ask a series of questions. These gals are in their 20’s, they’ve never bought a house, never wanted to buy a house, never imagined buying a house or being an investor… We have just trained them to follow a script, they ask a certain amount of questions a certain way, the response then takes it to either a follow-up cycle, or a Ryan, which starts the negotiation cycle.

The Ryans negotiate for cash or moderate terms. If we find that moderate terms won’t work for us or the seller, we may get some advanced terms and those go to the angels. Again, all of these people are young adults, who have never bought a house for themselves, never intended to buy a house; however, through systematization, we can put someone in a chair and in four hours they can make appointments for someone to buy a house.

We buy one pretty much every day. Now, that doesn’t mean we close on one every day. That means we put one under contract, based upon the assumptions that we have with the seller and their answers to our questions. Then once we have an agreement to purchase, we then go out and hire a realtor, we get a broker’s price opinion for $150… It’s kind of cool, because that person will go out to our house no matter where it’s at in the country, take pictures of the inside and the outside, do a market analysis, tell us what it will sell for today [unintelligible [00:06:56].12] what it’ll sell for in the market conditions in 30 days, and what the possible repairs will be to take it to an ARV model.

We never consider ARV, however, we’re wanting that BPO. From there, we get a home inspection, that home inspector is gonna tell us what’s wrong with the property, and that just justifies what the seller has told us or – or does it? One or the other… And then from there we’re gonna get a full-fledged appraisal form an appraiser in the marketplace, and then ultimately we’re gonna get a preliminary title report that shows us who the seller is, and making sure that the person that signed our contract can actually sell us the property.

It costs me about $1,000, and I can get that done in a week. So within a week of contract, I can now determine if in fact I wanna move forward and buy the house. The moment I buy the house, then I’m gonna start marketing the house… It’s a good plan, and I like it, because let’s face it, I’m buying a house at 65 cents on the dollar. A realtor in each of these markets, they’re working for 6%. So I’m gonna let them work for 6% and let me work for 35%, and I know 35% is better than 6%, and they’re gonna be my boot on the ground; I rely upon them greatly. I don’t get emotionally involved in determining value, because we’re all systemized. And it’s kind of a cool approach.

Now, with that – I keep saying systemized. That’s the big part of it. I’m a big fan that if you have a good system, the system should be better than the person utilizing the system. So we’re not looking for superstar folks, we’re looking for superstar systems, and it just works for us.

Joe Fairless: You said 65% loan-to-value, right?

Michael Quarles: I’m sorry, 65% of as is value.

Joe Fairless: Of as is value… So you’re really working for 29%, not 35%, right?

Michael Quarles: Right, because I’m gonna subtract 8,25%, because that’s what my costs are from the realtor fees and the double-close fees, so I’m gonna have two title policies, two escrow or closing fees, two transfer taxes, typically… Those kinds of things. And that’s 8,25% of the 35%, so now–

Joe Fairless: 26,5%.

Michael Quarles: And I don’t mind that. If anybody wants to argue that point, I can argue it, but it’s a great number to me.

Joe Fairless: A couple follow-up questions… You said Alex answers the phone and asks questions, and then they either follow-up or they pass them along to Ryan, who negotiates for cash or moderate terms. If you need to do advanced terms, then they go to an angel… What are moderate terms versus advanced terms?

Michael Quarles: As an example, moderate terms might be a Subject to. Let’s assume for a second I’m buying $100,000 value piece of property for $65,000. I have a $50,000 underlying mortgage that I’ll take Sub to, and I’ll give the seller $15,000.

An advanced terms would be mixing seller financing, Sub to financing… Maybe instead of a seller carryback we’ll do a wrap, and that’s a little bit advanced for a Ryan. Not advanced for us, but it’s an advanced for a Ryan, so the Angel gets involved.

As an example, to kind of put this in physical terms, the script for the Alex is 16 pages long, because every time the Alex asks a question, depending upon the answer, they have to now go with that answer, so they have a series of questions based upon that answer.

The Ryan script is 23 pages long. The Angle’s script is a book; it’s many, many pages, because every possibility has another possibility. If I’m gathering seller financing on [unintelligible [00:10:27].23] on a 15-year note, a Ryan is not going to do that. When you look at substitution of collateral, when you’re looking at first right to purchase the loan if they indeed sell the loan to an underlying market – when you look at some of those terms, the angels are gonna get involved in those terms.

Really, we’d never wanna do a subordinated deed unless you’re going to fix and flip it or you see something that they have to rectify prior to sell. But in our model, we rarely, if ever, do anything to the property. The most we’ll do is trash out; most of the time we’re not doing that. So we’re buying it as is and selling it as is.

Joe Fairless: With the Angel team members, my initial thought is having a whole book as your go-to reference guide is going to, obviously, educate them and give them some competitive advantages if they were to go and do this theirself… So my question is do you have a higher degree of turnover with the Angels compared to the Alexes and the Ryans?

Michael Quarles: No, because the Alexes start from a temp serv.

Joe Fairless: What’s tip serve?

Michael Quarles: Temp serv, like a temporary —

Joe Fairless: Oh, temp serv. I thought you said tip. Temp service. Got it.

Michael Quarles: So they’re gonna work for us for 767 hours (I think) as an employee of somebody else, and when they’re done with that, we’ll graduate them onto our payroll. Our Ryans are born out of our Alexes, and our Angels are born out of our Ryans. However, to answer your question, keep in mind, these are young adults who never wanted to be a real estate investor. They’re not entrepreneurial-minded. They’re your average individual out there who wants to put widgets in order, or stock shelves, or whatever the mundane thing in life that some people enjoy doing, that’s their mindset. So they’re very happy at what they’re doing; they don’t wanna go out there and be an investor.

I invite every one of my co-workers to be an investor in my marketplace. Some of them take me up on it, some of them choose no, they don’t wanna do that. I’m fine either way. I believe in an abundance and prosperity mindset, so I can’t lose what I don’t have, and all I can do is help someone gain what they don’t have.

Joe Fairless: What’s the compensation range for each of those three positions?

Michael Quarles: None of them are working over $16/hour. However, on each transaction, they get a different split of the transaction. Where an Alex may get $50 for a closing on a set appointment, an Angel might get $1,000 on that closing of that contract, if that makes any sense. And then the Ryan is in the middle of that.

But then I also share with my transaction coordinators and my lead negotiators that are helping with this workflow. In fact, my share is less than 50%, so I share the majority of the deal with my co-workers, because I believe in that, and I believe if you pay your folks well, they’ll stay, and then if you pay them well enough, then they can buy a house, and they can really enjoy the benefit of being in the real estate business, which, like I said, some of them take me up on it.

Joe Fairless: Are they remote employees?

Michael Quarles: No, they’re all here. So I get to say hello… I bought 26 McDonald’s sandwiches for breakfast this morning, and I gave each one of them one. I like it, I shake their hand, I ask them how they’re doing… We have an environment here at my office. We have about 7,000 square feet… We’re just a big family. There’s a room that has  a TV, a room that has a pool table in it, a room where they can play Atari, they have a full kitchen…

Joe Fairless: You’ve got Atari?

Michael Quarles: I guess. I don’t do it.

Joe Fairless: It might not be Atari. Maybe it’s a Playstation. [laughs]

Michael Quarles: They go in there and they sit there and they play these guitars, and it shows on the widescreen… I have no clue what they’re doing.

Joe Fairless: Okay. [laughs]

Michael Quarles: I think that you have to appreciate folks that you work with. I never like being considered the boss. I hate that word; to me it’s a slave term. I never want anybody to believe that they’re that. So we just get along, we have fun.

Is it for everybody? No. We find that an Alex — as soon as an Alex starts trying to figure a better way to do it, they’re no longer an Alex. They can’t be an Alex anymore. Because we’re not looking to change something that’s working really great.

Now, with all that said, again, it’s system-driven. As an example, when my phone rings, for an Alex, it knows who’s calling them… Our phones are built into our CRM, so our CRM pops up as soon as that phone rings; they can hit the correct for that they need to start filling out based upon the type of call that’s coming in, and it’s seamless. All of the communication, be it telephone, e-mail, texting, web forms – any of the communication we have with our prospect is seamless inside of our CRM, so we never lose data… And then it’s all campaign-driven. As an example, when an Alex answers the phone and they go to the Alex script, and they don’t make an appointment for the Ryan, as they close out of that call, it will initiate a series of campaign items. One will be an e-mail back to that seller, one will be a text, and one will be a call follow-up. We send 29 e-mails, we sent five texts, and we called them on 3,5, 7, 10, 15, 30, 60 and 90 as follow-ups, and our system drives all of that stuff.

It’s all calendar-based, so if a call doesn’t come in, they have a call to make out… Because we know that we make seven calls for every inbound phone call on average. The system works great.

One of the things I like about it, and it took us quite a few years to put it together, is I can take someone that doesn’t know anything about answering a real estate phone, and in four hours train them to follow a script. So if my workload gets heavy, I just call my temp serv, and tomorrow I’ll have a person that sits in that chair, and I like that. Then if I go to a new market, I can turn that marketing on, so I can turn my direct mail on. If I go to Florida, I can turn pay-per-click on; I’m in California, so I can market all over the United States and have a pretty good water faucet business.

Joe Fairless: How do you do that four-hour training to get them up and running that quickly.

Michael Quarles: They mirror — so they sit in a chair with a trainer, and they’re both on the phone. The trainer starts the first hour, shows them a system, but then they start listening to the trainer answer the Alex calls… And slowly that trainer starts letting them take the call, and now the trainer is listening to the calls that are coming in. Basically, we have two operators on the same call. The prospect doesn’t know there’s two operators on the same call, but that’s our learning curve where we can talk to the ear of a new Alex without the seller hearing that communication going on… So if an Alex asks the question the wrong way, the trainer can say “This is how you ask that question next time” kind of thing.

Then everything is recorded, and I’m a big believer in our business model today where consumers are okay with being recorded. We play “This call is being recorded” on outbound and inbound calls; everything’s recorded, we use that for training purposes and for reward purposes. As many times as we have to use them for training, we can use them for a reward, because they did a great job.

Joe Fairless: With the comment you made about “if Alex is looking for a better way to do things, they’re not an Alex” – does that mean that they’re now a Ryan, or does that mean they’re out the door, not getting any McDonald’s sandwiches in the morning?

Michael Quarles: Right, they’re out the door. One of the biggest issues that real estate investors have is they try to do it the way they think it should be done. Here’s the analogy – you have a Formula 1 race car; you take the right front tire off of that and you put it on a stock car. Then you have a big truck – you know one of those big trucks that smash stuff at the [unintelligible [00:18:21].02] you take the left front tire and you put it on that race car. Then you take a motocross tire and you put it on one of the back-tires.

Joe Fairless: [laughs]

Michael Quarles: That car is not gonna go down the road, right?

Joe Fairless: Right.

Michael Quarles: Well, when someone starts trying to manipulate the systems, we know that their mind, as good as it is – they might make a great entrepreneur, but we’re not looking for great entrepreneurs in the Alex role. We’re looking for a person that enjoys putting the widgets in a row, whatever it is the task that they have to do… Whatever it is, that they enjoy that. We need those people.

Joe Fairless: With your company, I believe you have a complementary company that ties into this. Is that correct?

Michael Quarles: Yeah. For the longest time we used to use a texting service for all of our texts. One of our marketing media’s types is shortcode, so we used a texting company. We use e-mails, and we use a phone, naturally. We use a CRM… And those were all separate types. So we had to parse all the data together, or use other programs to put it together, and sometimes just manually put it together.

Well, we created Call Text, and with Call Text it is a CRM that inside of that CRM has a phone service, a texting platform, an e-mail platform, all of the web forms, all of the scheduling forms… Anything you need to do to manage a business, it’s all-inclusive, so now when we look at a history with a prospect, we don’t lose data; we know exactly how long it takes from the time a seller calls, to the time on average we’ll get a contract, or how many communication pieces we’ll have to have with that person… Where in the old days we were fighting technology.

We spent about three years solving for it, and people can utilize Call Text, it’s out there; it’s $19/month. For us, it works great, because again, it manages the transaction. When the Alex hits the form when a call comes in, to ask and answer all those questions, it just pops up. We don’t have to do anything, it’s all inside, embedded in the system, and we can buy a lot of houses this way.

The worse thing that we can do is real estate investors or any business owner type out there is write something down and not remember where we wrote it. We’ll write something down and forget about it; we’ll write something down and not remember why we wrote it down… Because the cost of having that phone ring in the first place — everybody should know the cost to that phone ringing, and everybody should know the value of that phone ringing. So there’s a cost and a benefit.

So if it costs $200 to get the phone to ring, but you make $4,000, you would wanna spend $200 as many times as you can. When you spent it, you’d wanna make sure that you captured it correctly, and you did something with those leads that is appropriate, so we developed Call Text.

Joe Fairless: What’s the challenge that you’ve come across with developing a company like Call Text?

Michael Quarles: The hardest part, because it wasn’t out in the world — there were CRMs and there were telephone companies and there were e-mail companies and texting companies, but no one had put it all together… So the biggest challenge was to figure out how you could put it all together. Because a phone works differently than an e-mail, and a text platform works differently than a phone company, even though they’re similar. And of course, then CRMs, and then inside of your CRM, what do you need your CRM to do?

As an example, I use my Call Text to schedule appointments that people wanna talk to me, they can go and use my exterior to schedule a time to say “Hello, Mike.” I use it for all the web forms, so if you go to the website and you wanna sell your house, you can fill out a form. If you go to the website and you don’t wanna fill out a form, you don’t wanna pick up your telephone and call us, you can go and do website chat; we all now chat nowadays, where you wanna know more information about the product you’re looking at, you can just hit the button that says Help, and now talk to someone live.

I’ve bought two houses this year because of chat. I would never think that chat would buy a house, but we have to have the communication style the prospect is wanting to use. That’s our job.

As an example, our shortcode is 818181, so if you text “house” to 818181, you’ll instantly get back a thank-you text on your cell phone. I have now captured your information, because you opted in. You’re gonna get another text that sends you to a web form, you’re gonna fill it out and say “This is the address and this is my contact information.” Once you do that, now you’re in the series of touching you back with e-mails and texts and phone calls… And I have yet to touch you as a human being during that process. Well, we just have to utilize those things because we know that if you go anywhere, most people are using their phone to text, they’re not using their phone for phone. We have to have that ability as well, so we just built it all in.

Joe Fairless: Anything else as it relates to creating a company and creating systems that we haven’t discussed that you think we should, in the last couple of minutes?

Michael Quarles: Yeah, the biggest part of systems is to realize every system creates another need, for another system. All system-oriented businesses have to have someone in systems, because it’s the hardest part about a business, is knowing what an employee should be doing when this or that happens. As you start building your systems, you start someplace and then you back up because you realize “Well, there needed to be a system before I started this system”, and there’s going to be a system after it… So it’s all system-oriented.

Read the book The E Myth. It’s a great book to get you started on the mind frame of systemization. They have some E Myth masteries, and those kinds of things; there’s some programs that you can go through to learn systemization.

The reality is a system is a check and a balance, and you have to write a system in a way that anybody you wanted to that sit in a desk could follow it without knowing where they’re going to. That’s the system. If it takes a personal intuitiveness to know what they’re doing, that’s the wrong system. The system has to answer all of the questions for the person, and once you have that system in place, then your business can multiply, it can have exponential growth. The truest type of passive income is exponential growth, and although I’m not a passive income earner, I have passive earning businesses because I’m a massive earner, and I can predict my result through the systemization. Without Call Text I couldn’t have done it.

Joe Fairless: You decide to walk away from your business as soon as our interview is over, and you never step foot back in the door of your company – how long does your company run without you?

Michael Quarles: Well, it’s always the ego involved in that question? My ego is gonna say “Tomorrow I’ll have to come back.” The reality is if I stop the ego issue, it should run as it should run, meaning as long as there’s a person managing the system, it’s gonna run forever. It’s the truest type of business, and I haven’t talked to a seller in years. I get reports – I think there’s 12 questions you should get a day, kind of thing – about what we did today, but I’m not involved in doing it today. My goal in my life today is to help the person that I haven’t yet met. That’s what I get excited about, and knowing that I have people that are following procedures allowed me to do that. It’s a  great thing.

Joe Fairless: How can the Best Ever listeners learn more about what you’ve got going on?

Michael Quarles: MichaelQuarles.com kind of tells my story, and then it shows all the companies that we have. I’m pretty open. If anybody has a question, they can always reach out. We had a short period of time to talk about 35 years or so of — so there’s a lot to it, that I would hope that everybody wants to push themselves to doing things on purpose. Last thing if I could before we ran out of time…

Joe Fairless: Please.

Michael Quarles: There was a change that happened this last year, and I always try to share this change in life. This last year I’ve decided to stop using four words: want, hope, need, wish… And replace them with the word “require”, because I think a lot of people that wanna become successful get rid of the J.O.B. – they hope they can, they wish they could, they want to, they need to, but they don’t necessarily require it. And when we start requiring action, then success happens. So if people could change their mind frame and just say “I’m gonna get out of the bed today and I’m not gonna HOPE I got to the gym, I’m not gonna HOPE I cold-call for two hours, I’m not gonna WISH I could go out there and meet 20 people that I don’t know, I’m gonna REQUIRE that I do these things”, and success will come a lot faster.

Joe Fairless: Yes, I’ve heard it phrased similarly, where if we hope for something, just thinking about and feel the feelings that we feel when we hope for something, versus when we expect something to happen. It’s just a different feeling, a different mindset, and…

Michael Quarles: There’s a lot of fear when you hope something will happen.

Joe Fairless: Yeah, little butterflies in your stomach, that sort of thing. But when you expect it, it’s like “Alright, let’s make this happen. I will make this happen.” It reminds me of shoulds versus musts. Tony Robbins talks about that – what are you shoulds? Is it a should or is it a must?

Michael Quarles: Yeah, it’s a different mind frame. People wouldn’t be listening to you if they didn’t wanna become super-successful and [unintelligible [00:27:31].17] They just wouldn’t spend the time trying to change their mind frame. It’s a little exercise that’s easy to change… Although, as Tony Robbins said, until the pain of changing is exceeded by the pain of not changing, one won’t change.

Joe Fairless: Right.

Michael Quarles: So it has to hurt, but it has to hurt more if we don’t.

Joe Fairless: Yup, absolutely. Well, thank you so much for being on the show. Very practical advice, as well as you went conceptual, too — which is practical, but it’s also good to work on our mindset… But from a nuts and bolts standpoint, I love the details that you got into, with the Alex, the Ryans and the Angels on your team, how you structure the training for them, how you compensate them, how you structure your company and how it flows from one to another, and then the way you have a complementary business too that you launched because you saw a need.

Thanks for being on the show. I hope you have a Best Ever day, and we’ll talk to you soon.

Michael Quarles: Thank you so much.

Joe Fairless and Oren Klaff

JF1460: How To Assert Power & Influence For Sales And Negotiations #SituationSaturday with Oren Klaff

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Oren has been on the show in the past to tell us about how to “Pitch Anything” which is also the title of his first book which Joe highly recommends. He has a new book coming out soon that dives deeper into the same subject. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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

First off, I hope you’re having a best ever weekend. Because it’s Saturday, we’ve got a special segment called Situation Saturday, and we’ve got a returning guest, Oren Klaff. How are you doing, Oren?

Oren Klaff: Joe, I’m doing well, and I’d like to spend the remainder of the call talking about my feelings.

Joe Fairless: [laughs] I’m sure that would be entertaining, even if we went that direction… But we’re gonna take a slightly different approach; we’re gonna talk about your book, how about that? We’re gonna talk about the User’s Guide to Power. I thoroughly enjoyed our first conversation. That was over 1,000 episodes ago, it was episode 425, and we’re at like episode 1,500 or something now… And you talked about your last book, Pitch Anything; I was obsessed with it, and still am. I highly recommend it to a lot of the people who I come across… And you’ve got a new book out, The User’s Guide to Power. What’s that all about?

Oren Klaff: It’s not quite out yet. It is gonna be out at the beginning of the year, with a portfolio; if you liked Pitch Anything, then step aside, let the man come through. So I’ve learned a lot about writing, a lot of things have developed, in a million copies, or something like that, Pitch Anything are in circulation. It’s in two different dialects of Chinese, Japanese, Russian, French, Italian, whatever. So that was a worldwide phenomenon, and now I sort of had to follow up with some other things that we really see going on in real estate, whenever you’re out presenting and pitching to someone.

A quick review, obviously, on Pitch Anything, was that information goes not from your mind, your neocortex, the smart, linguistic, capable part of your mind, into the smart, linguistic, capable mind of the other person; we talked about that the last time, right? It just goes into the crocodile brain of the other person, and that brain does understand ROI, IRR, and fund development, and real estate economics, and rise in interest rates, or anything like that.

The crocodile brain only understands, “Hey, somebody’s talking, somebody’s moving; I see something happening, what should I do? Is this something I should eat? Is this something I should mate with? Is this something I should kill?” So there’s a huge disconnect in what you’re trying to explain to someone and what they’re actually hearing. And then The User’s Guide to Power goes further, beyond the fundamentals of Pitch Anything, to think about how to communicate something to someone so they understand it, appreciate it, want it and come over to your side and buy it.

Joe, what are you seeing out there? What are the number one problems that people are having today, that you think they need to overcome? Communication, influence, pitching, that kind of thing.

Joe Fairless: I would say with social media it tends to be about me, me, me, and not about the customer, so it tends to be a lot of beating the chest and not a lot of talking about what is most interesting to the recipients.

Oren Klaff: Yeah, so we have a whole chapter on Be Compelling, and some of the things in that is — really the word is context. People come in and they say “Hey, I’d like to sell you this, I’d like you to invest in my real estate, I’d like to give you this 6,5% current pay with a 20% IRR” or “I’d like to provide you 12% hard money”, or anything like that. Is that the language of the people of your podcast?

Joe Fairless: Yeah, that’s the language. You got it.

Oren Klaff: Okay. We’ve got the lingua franca of real estate and finance, right? But the sense is how well do you really know the world of the buyer? I’d like to think about “How can you put what you’re selling in context of their understanding?” How do they appreciate that this isn’t just a cold call, that this isn’t just a packaged sale, that you’re not just trying to move some product, you’re not just looking for an investor? How do they know that you understand what they’re looking for, and that you really understand the topic?

So when you provide context, then you’re compelling to someone. Context is not “Hey, I have a multifamily in infill Houston, that’s got a 4% current pay. We’re gonna improve it, get it up to an 8% current pay over three years, and then exit at a 7-cap assumption for a 20% IRR.” That’s information, but it’s not compelling.

Joe Fairless: Okay. Compelling or context? Or is that the same thing?

Oren Klaff: It’s the same thing. When you can put things in context of what is happening today, where things are likely to go, where are the danger areas, where are the green fields and why, and you can put that in context in a way that is impartial and doesn’t totally 100% just support your position and the things you’re selling, then that starts to become compelling.

Joe Fairless: Will you go through an example, just to bring this full-circle?

Oren Klaff: Sure. In the last three years, you could buy multifamily in Wichita, in downtown Manhattan, on the Canadian border, basically underwater, 300 feet off the coast of California, and you’d get a 6% current pay,  a 12% ROI, and a 20% IRR. But if you look forward – interest rates are going up, sellers are slowing down the pace of selling, inventory is increasing… It’s no longer the case that every multifamily asset is gonna do well.

When we look at the country, here’s what we see changing, and where the red flag areas are, and what is still green, and what looks emerging that’s super-interesting.

We think that if you work a little harder and you focus on the areas where it’s getting super-interesting, and though they’re not obvious, you can do really well. Do we have those? Maybe, sometimes. We’d like to get them. But I think it’s first best to understand the best thing to go for, and then we could take a look for if we have it or not.

So people find it compelling when you can step back and be that third-party, impartial advisor, or provide them information that is not 100% necessarily in your favor.

Joe Fairless: So you tell them a story.

Oren Klaff: You tell them a story. I think that’s a bit of a simplification, but how are things changing, who does that benefit, who does that not benefit, and how do you get into the area of change that’s better, safe and growing? What’s changing, who’s gonna win, who’s gonna lose? Everybody finds that person compelling.

If you go to any Fortune 500 company, who’s the most important person in the company? The CEO maybe, the lead designer/engineer maybe, I think a sales manager, vice-president of sales probably, maybe… But if you drill down, it’s the guy who knows what the sales are gonna be at the end of the quarter. The CEO, the COO, the CFO, VP of sales all wanna hang around with that guy. He’s compelling to be around. And by the way, the guy who knows what the sales are gonna be accurately at the end of the first half, or third quarter, at the end of the year – that guy who knows what is gonna happen most likely in the future and why, is the most interesting, compelling, desirable, wanna be hung around person in the entire company.

Joe Fairless: Got it. That’s helpful, because as real estate investors, we’re likely looking for partners; it just lends itself for partnering up… And we wanna be able to attract partners, whether we’re fix and flippers, or multifamily investors, storage units, whatever. So the components for having that compelling context would be what I wrote down when you were talking – how are things changing? Who will win, who will lose, and what we’ll do? Did I capture that accurately?

Oren Klaff: Yeah, so how are things changing? What are the elements that are actually changing, in a real way? Interpret those. So here’s the facts, here’s the interpretation of the facts, and then project how that is going to affect people like the buyer? Think about a blood test, or a genetic — have you done one of these genetic tests at 23andMe or Pathway, or something like that?

Joe Fairless: I tried, but I didn’t give it enough spit, and the results weren’t conclusive.

Oren Klaff: Okay. Well, let me get my little boy over to your house; he can spit like nine feet, like hit you in the side of the head [unintelligible [00:11:36].17] Anyway, enough of that… So I worked in one of those companies; I worked for them, helped them, I own stock in their equity in one of them… So when you get the genetic data, that’s not what’s actually valuable; it’s the interpretation. What diseases are you likely to get? Of the diseases that you’re likely to get, what would be the preventative courses of action, and if you do get that disease, what is most likely to be the treatment that will work for you? That’s what’s valuable, not the genetic data.

Joe Fairless: Yeah, because you’re taking action on the data.

Oren Klaff: Right. So that is to me what is changing, why is that change important, and then what should you do? Because I think what happens is when we see real estate proposals, it’s “Here’s what we have, and this is what you should do – invest.” It’s ignorant. That route misses the whole step of “What’s changing? How well do you understand that change, and how well are you able to interpret what’s happening in the world for me, the buyer, the investor?”

If I can see guys doing that route more often, I think they’d be closing a lot more equity. Debt is another thing. Equity is the thing we all care about, and they’d be able to put their hands on a lot more equity if they’d put it in context of change.

Joe Fairless: You’ve overseen over 500 million dollars of investor capital from high net worth individuals… You’ve been busy, because the last time we talked, 1,000 episodes ago, it was 400 million, so congrats on that increase… With that experience, what is a scenario that you can think back on that did not follow what you’ve just outlined, and what were the results?

Oren Klaff: Sure. So here’s one that you could definitely run into… We worked on an investment with a — it’s hard to name names, but a billionaire in Southern California. He has lawyers, and he has analysts, and he has an account at McKinsey, and it’s hard to tell him, in context of what’s changing, something he doesn’t already know or something he believes in. It’s just difficult for him to believe that we have better information than he does, because he knows change is important, and he’s buying it… So we couldn’t really lever that kind of expert frame against the power frame.

So I think the next thing is — what I see a lot of people doing is explaining what we’re gonna do, how we’re gonna manage the money, how our third-party is gonna operate, answering question after question… And in that case, the way we got it to work is just saying “We’re the best at what we do. Our track record stands for itself. We do third-party management as well as it can be done. We have a history of returning a 6% current pay. We’ve exited multiple assets at north of 16% IRR. We do this better than anyone else, and this asset is in an area that we’ve invested in before. That’s what we do, and that’s what it is.”

Questions, reduction on fees – no. That’s what it is. I’m gonna put all my stuff in my briefcase and leave. So the next thing, and one of the things I wrote in the book, is stick to your guns. When you stick to your guns, for somebody that has that power frame, somebody who’s very powerful, they find that as compelling. What they don’t like is to see your character shifting everytime they put pressure on you. First you’re the nice guy, then you’re the ShamWow guy, then you’re the angel… “Hey, so what do you think…? Is this something you’d be interested in?”, then objections come out and you’re the wolf, or you’re the sorcerer, trying to spin all this information together, you’re the storyteller… Guys in that powerful position, with that power frame, don’t like to see you go through six or seven different character types, reacting to the pressure they’re putting on you.

So I guess the next thing I would say is stick to your guns theory. You don’t have to explain everything, you don’t have to justify every assumption, you don’t have to answer every question and chase down rabbit holes. “This is what we have, this is the way we do it, this is our track record. We’re the best at it, here’s why. In or out?” Stick to your guns.

Joe Fairless: So in that scenario, because he had access to what’s changing and the interpretation of those changes, you did take the information route versus the compelling context route… Did I hear that correctly?

Oren Klaff: Yeah, I think that’s right. When somebody really understands this stuff as well as it can be understood… Maybe I’d summarize it like this – when you have a power frame, the other guy across the table is very capable of understanding what you have, don’t try and teach, don’t try and educate, don’t try and drill down into the numbers and be reactive to everything they’re saying. Tell them “This is what we do. Again, we’re great at it. There’s no argument online from our references, and our third-party reports, and our fact-write report, and our [unintelligible [00:16:36].06] report, whatever it is. That’s what it is, that’s what we’re doing, and that’s what we’re going forward with. If you’d like to participate, something we’d consider — of course, we need to more about you before we just take a check.”

Joe Fairless: Anything else that we haven’t talked about as it relates to The User’s Guide to Power, your new book that’s coming out, that you wanna mention?

Oren Klaff: I think I wanna mention quickly in the few minutes we have left this idea of plain vanilla. Everybody with a deal tries to contextualize it as sexy, exciting, all kinds of new things associated with it. This happens more in tech, this happens more with developments, not as much in terms of rehab or repositioning… But still, the reason people want to characterize things as new, sexy, different way, different kind of operating model, different kind of fintech platform, different kind of lender, different kind of capital stack with the crowdfunding equity… It attracts attention. You know that, you have a podcast, right? Things that are new attract people’s attention. But I think the deals that get done are the plain vanilla deals that have one thing, that are far improved from sort of the last way of doing it.

There’s lots and lots of big examples of that. We did a deal in Hawaii that was a retail asset… And it was really confusing to understand until we positioned it as “This is just like every other outdoor mall that you would find in Southern California, that you would find in resort areas, but it’s 68 small retailers [unintelligible [00:18:06].26] for an authentic Chinese marketplace.”

So we just made the one thing – the Chinese marketplace, the new interesting thing, and everything else seemed like a basic “Find anywhere in Southern California” kind of mall… Which there were lots and lots and lots of interesting, exciting, different things about it, because it was in downtown Honolulu, but that wasn’t working. We characterized it as one thing being different, then we sold out of it very quickly.

Joe Fairless: How can the Best Ever listeners learn more about your books and what you’ve got going on?

Oren Klaff: If you head over to PitchAnything.com and put in your name, we give a lot of material out; more than I’m certain we should. I’ve gotta get the web guys to go in there and take stuff down.

Joe Fairless: [laughs]

Oren Klaff: Well, because I’ve set it up years ago; when you started, when I started, the thing was “Give as much as you can away. People will love you.” Well, today we give away too much, so… Anyway, head over to PitchAnything.com, put in your name, and we’ll help you get a lot of very useful stuff. I grew up in the real estate business, so most of my examples are in and around real estate equity.

Joe Fairless: A couple themes – one, have compelling context for the people you communicate with, and you boiled it down to “What’s changing? Why is that important, and what should you do?” as speaking to whoever you’re speaking to, the audience. And then in some cases, when there is an individual who has, as you say — when you have a power frame, and if you need more information on how that’s defined, then go check out Oren’s book, Pitch Anything; he talks about that… Then you don’t wanna teach that individual; you don’t wanna educate them or try to educate them. You’ve gotta know your audience.

And then lastly, the plain vanilla approach, where deals are significantly better in one area – focusing on that. It reminds me of a quote that Tim Ferriss mentions, where you want to be different before trying to be incrementally better. That’s much better. I might have misquoted him, but that’s basically the gist of what he said.

Really interesting stuff… I enjoyed our conversation again. We will talk one thousand days from now. It seems like we talk every one thousands days, so I’m looking forward to your third book, but before you get to the third, everyone definitely check out The User’s Guide to Power once it releases.

Thanks again for being on the show, Oren. I hope you have a Best Ever weekend, and we’ll talk to you soon.

Oren Klaff: Alright, cool. Thanks, Joe. Let’s make it 500 days, or something.

Joe Fairless: [laughs] Sounds good.

Oren Klaff: Or nine women have a baby in a month, or whatever the real estate [unintelligible [00:20:35].04] Don’t try and teach people what you do. The more you teach, the less they’re gonna buy, that’s for sure… Okay. Joe, I will talk to you soon. Maybe I’ll have you on my podcast if I can get one started.

Joe Fairless: Alright, sounds great.

Oren Klaff: Talk to you later.

Joe Fairless and Rich Kent

JF1395: Why Focus On Industrial Space? With Rich Kent

Listen to the Episode Below (26:14)
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Rich and his team oversee the industrial commercial division of Avistone’s capital market operations. They love what they call “flex space”. Warehouses with offices in the front and industrial operations in the back, and a lot of small businesses operating in them. Another big advantage to the industrial space is the leases are short term (3-5 years) and allows them to add value over time. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Rich Kent Real Estate Background:

  • Oversees Avistone’s capital markets operations
  • More than 30 years of experience in financial services, real estate investment, and capital markets
  • Completed transactions in commercial properties valued at more than $2 billion
  • Based in Laguna Niguel, CA
  • Say hi to him at https://avistone.com/
  • Best Ever Book: Siddhartha by Hermann Hesse

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

Rich Kent: I’m doing well.

Joe Fairless: I’m glad to hear that, and welcome to the show. A little bit about Rich – he oversees Avistone’s capital markets operations. He has more than 30 years of experience in the financial services, real estate investment and capital markets; he completed transactions in commercial properties valued at more than two billion buckaroos. Based in Laguna Niguel, CA. With that being said, Rich, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Rich Kent: I’d be happy to. Avistone is a buyer of multi-tenant industrial properties nationwide. We’ve been in operation for about four years. We started buying properties in 2014, and today we have 19 industrial business parks, all multi-tenant, in a number of different states, including Florida, Atlanta, GA, Columbus, Ohio, California and Texas.

Prior to starting Avistone, if I go way back, I actually started in the financial services industry as a stockbroker at Paine Webber Jackson & Curtis back in 1979, which obviously is dating myself…

You know, it’s actually a pretty good place to start in financial services, because as a stockbroker in financial services you really get in touch with people’s ideas and needs of investing, and what the different options are, and portfolio management, and optimizing out asset selection… But in the 1980’s I went to work for Drexel Burnham Lambert, and I was in the institutional mortgage-backed securities group, buying up Fannie Maes and Freddie Macs, and hedging out pipeline interest rate risk in the financial futures market.

In later years I worked for Salomon Smith Barney’s Commercial Real Estate Group in New York City, doing commercial mortgage-backed security loans all over the country. After the merger with CitiBank, I went to work for what became Deutsche Bank Berkshire Mortgage making large Fannie Mae loans on large apartment complex and senior facilities all over the country.

During the downturn in commercial real estate about ten years ago I was very fortunate to be one of two people hired by Auction.com, which was then REDC, the large single-family house auction firm. I was hired with Dan Culler who’s one of my partners now, to start the commercial division at Auction.com. We started an online auction for distressed commercial assets, both REOs and loans, and we grew that to several billion dollars in auctions. It was a very successful platform, I really enjoyed working there; it was a really good place to ride out the storm in real estate.

But right about 2013 we saw the market starting to turn around, and the reason we knew that is that we had fewer and fewer assets at auction. We elected to start our own firm and jump on what we believed at the time to be a very good bull market in commercial real estate, which has proved to be correct, and we specialized in the industrial space, for a lot of reasons that we can talk about.

Joe Fairless: Please, yeah. I’m very curious to know why you specialized in the industrial space.

Rich Kent: Well, what we liked — now, everybody is pretty aware right now that industrial is the new darling of commercial real estate.

Joe Fairless: Real quick – maybe not everyone listening knows even what industrial space is, so can you give an example of what that is and why they are, in your words, the darling?

Rich Kent: Sure. When most commentators or financial magazines talked about industrial, they’re really talking about in today’s market what we call the big box or the big bomber spaces that Amazon would be in, Costco, FedEx… Very large distribution, logistic warehouse operations.

After all, look how successful Amazon and the internet has been. That has been a huge boom to industrial properties. But those are the big single-tenant spaces. We specialize in what’s called flex space. Flex space is a combination of office and industrial in the back, and you see them in most major cities, you’ll see this type of properties. They’re not really sexy; they’re single-story, they’re concrete tilt-up… Again, offices in the front, warehouse, roll up garages in the back, but it’s really where small businesses go to grow.

We love that space right now because so much of the economy is based on small businesses. In fact, we were just looking at this the other day… 47% of all employee growth is in small businesses, businesses under 100 people. We like that space, and we like it also because we could buy these properties at a fraction of their replacement cost.

If you think about it, these properties are not expensive to build. They’re single-story concrete tilt-up, but they take a lot of land. So where are you gonna find 30 acres of land along a major highway in Atlanta that you could hope to buy right now at a good price? But number two, even if you could buy it, you would not build this type of product. So everything that we see that we buy was built in the 1990 or maybe the early 2000’s. It is not getting constructed today. So what we do is we go into major markets – we like to buy in NFL-type cities, because when you have a robust city, you have a lot of different economic drivers and you’re not building this property type anymore, typically we see occupancy levels right between 90% and 95% in these submarkets.

And again, because you’re not building it, where are the tenants going to go when their leases come due? So we get a lot of retention on our rollover. We like the shorter-term leases (usually 3-5 years), because that’s what allows us to build value over a period of time.

I know you’re really active in the multifamily space – well, that’s another great market, because every year all the leases come due, so you could adjust your rents to the activity in the market.

Joe Fairless: Yeah, so the business is able to get a good foundation and they’re all set up, and now three years has come up, and assuming that they are doing well, then they’ll wanna stay there and continue to grow and be there permanently.

Rich Kent: Correct. And before we buy any asset, we interview the tenants, and the tenants say to us: “We don’t have very many options where to move to.” We like that. And again, if you’re not building this property type anymore, that puts pressure on rents.

Joe Fairless: Now, with not building this property type anymore — and by the way, I love how you described the flex space… Office in the front, industrial in the back. It reminded me  of you being the real estate mullet, business in the front, party in the back. [laughs] I immediately thought of that. But am I imagining things? I thought that there’s a lot of industrial being built for data centers and things like that.

Rich Kent: Exactly, that is where data centers and the big distribution warehouses – those property types are being built. What you’re not seeing built are these flex industrial business parks.

Joe Fairless: Describe a handful of tenants. What is their business?

Rich Kent: Well, when I say that we appeal mainly to small business, that is true for maybe 75% of our tenants. The other 20%-25% are Fortune 500 companies. I’ll give you some examples. CVS Pharmacy – if anybody orders medicine from CVS online, it probably comes from our property in San Antonio, Texas. They’re one of the tenants in a multi-tenant project there. So that would be an example.

General Dynamics has space with us in one of our Tampa properties. Subaru is a big tenant of ours in one of our Columbus, Ohio properties. So we have those kinds of tenants, but we also have a lot of smaller businesses. If you look at the construction trades – where do plumbing companies set up? Where do carpenters set up? Where do a lot of those supply companies set up?

We also have smaller tenants that have their own online distribution. Maybe they sell a product in retail stores, but when you don’t wanna take it home and you order it, it comes out of one of their spaces in a project like ours. So in that respect, we are the last spoke in that big distribution network of online shopping.

We have medical testing facilities. Some of our projects have dialysis centers, because they’re easy for people to walk in and out of. They’re single-story, there’s no elevator. So any small business that you can think of, from a bakery, to Joe’s pool supply are housed in our properties.

Joe Fairless: I’ve got a lead on a deal for you. I’d like to send it to you, but I’m not quite sure of your criteria. What is it?

Rich Kent: Our criteria – the first major filter is it needs to be in a dynamic, metropolitan area like Dallas, like Atlanta. We find that you need at least 1-2 million people in a metropolitan area to really mitigate a lot of your lease-up risk. That’s number one.

Number two – multi-tenant and in the flex category is a little bit of inside baseball, but if a project is near an airport, let’s say, we like to see it have more a percentage of warehouse space, because after all, why something by the airport? They’re probably in some type of delivery service.

If it’s in a more affluent, residential area, we like to see a higher percentage of office, and that’s because people that live in those areas don’t like to commute downtown if they can avoid it. Maybe they’re an escrow company, maybe they have a law firm, so they will pay up for office space in their submarket if it’s near their house. So it depends on where something is.

We like to see 3-5 year leases. As I mentioned, that gives us the ability to adjust rents to the market in tight-growing markets. That’s another thing – we like to see occupancy at least 90% and stabilized. We don’t worry so much about new construction, because I just mentioned they’re really not building it, but those would be the major factors.

Second, we target maybe 8 to 25 million dollars in purchase price. That’s pretty key, because we like to be above some of the local buyers in the market, the so-called mom-and-pop buyers, but we wanna be underneath the institutional radar. Once you get over 25-30 million in asset size, now you’re competing with some of the big institutions, and their cost of funds is a whole heck of a lot lower than ours. We also like to get at least an 8% cap rate going in, so that we could pair investors anywhere from let’s say a 6,5% to an 8% cash-on-cash from day one. So in other words, we like stabilized; we don’t like a lot of lease up risk. Our feeling is at this point in the cycle, if this type of property has a lot of leasing risk, in other words it’s 30% empty, there’s probably a problem that we can’t solve.

Joe Fairless: Like what?

Rich Kent: Well, we were looking at a property – I think it was in Phoenix. It was a really nice property, it seemed to have a pretty good location, but it had about a 40% vacancy rate. So we’re asking ourselves, “Wow, that seems pretty high.” So we talked to one of the property managers in the area and he said “Yeah, nobody wants that project. They’re all going across the street to the other project.” Oh, okay…

So in other words, there’s always a reason, just like you’d find in the multifamily space – why isn’t somebody going into a certain project? There’s always a reason, and that reason is not usually something we could solve, because we’re in a good market right now. Now, if it was 2008, you could just take a dart and throw it at anything and probably make money on it. So we’re sensitive about how a project has done.

Joe Fairless: Even with purchasing a 90%+ occupancy I’m sure there’s been a challenging property that’s — maybe the tenants weren’t what you thought they were or maybe the economic occupancy wasn’t what you ended up wanting it to be. Can you tell us about a property like that?

Rich Kent: You bring up a really good point. When we buy a project, we do extensive due diligence. But a buyer will never know 100% of what’s going on with the project. We interview tenants, we do all of the appraisals – environmental, physical needs reports – but usually in that first year we’ll find out something we didn’t know, and we expect that, and that’s why we always build a very healthy amount of reserves… It’s a known unknown, let’s just say.

So we just bought a property down in Tampa. Well, we actually bought of two of them and we crossed them in one transaction with one loan. Two great projects, but they were at 88% occupancy in a market that’s about 94% occupied, so we knew there were some problems with the property, and we knew what the problems were.

The current owner that we were buying from was not doing any capital improvements and not fixing deferred maintenance. So one thing that we were a little bit surprised about on that is how upset some of the tenants really were. We lost some tenants, we asked some other tenants to leave, because they weren’t paying their rent or they were behind… But we went in there and we made millions of dollars of capital improvements. We improved the property, we weeded out the bad tenants, and now we’re actively re-leasing the space.

That would be a scenario that does occur and we expect it to occur, and we reserve around it. But to your point, we don’t know what the mindset is of all of the tenants, and we never know when we buy it, but over time, in a good market, we’re able to improve not just the project, but the credit-worthiness of the smaller businesses in the project, because we just look for more credit-worthy tenants.

Joe Fairless: If you hadn’t focused on multi-tenant industrial properties that are in the flex category, what would you have focused on?

Rich Kent: That’s a difficult question, but let me answer it like this. Some of the best advice that I could give people is really look at replacement cost. That’ll tell you whether you’re gonna have competition from new development. So while I really like multi-family, in a lot of markets, like the market that we’re based in, apartments are [unintelligible [00:16:15].04] and as a result there’s new construction all over the place.

I look at retail, and if it’s not a grosser-anchored center, I wonder about the future of retail with online purchases. I know myself, I use Amazon. I don’t like to go to the mall. Suburban office is another product, and the TI/LC (Tenant Improvements/Leasing Commission) in suburban office are maybe ten times what ours are in the industrial space. You’re looking at $20-$30/square foot to [unintelligible [00:16:45].23] maybe $3-$5/square foot.

I’ve always like mobile home parks, but again, they’re [unintelligible [00:16:53].03] So it’s almost like a process of elimination, that we think we picked a really good niche. Now, within our niche we do see some possibilities. Let’s just call it a vertical integration, if you will.

We have a project that we bought in Atlanta, multitenant industrial. We would have bought it even without the concept that we went into it with, and that was to take some of the vacant space in that project and turn it into what we call creative industrial space. Now, everybody is familiar with creative office space, because that’s what the millennial market wants. They want that open area, they want a pool table, they want a little bar, a little waterfall… Well, in this project we are doing that with industrial space, which lends itself to that type of refitting very nicely.

You could take the concrete floors and glass them, you could take out the T bar in the ceilings and make that industrial ceiling look pretty cool… So we do see an opportunity in certain markets, where there’s a large millennial population, to convert some of our make-ready units to what we call collaborative industrial space.

We also see some opportunities in potentially buying maybe abandoned factories, or maybe older industrial properties, and creating training facilities. We know there’s a way with robotics — everybody says robots are coming; the reality is robots are already here, and a lot of people are probably gonna get displaced by automation and the 3D manufacturing.

So we see a big opportunity in creating facilities that are aimed at retraining of large numbers of the population for new skills, in robotics perhaps, or 3D printing. So there’s those kinds of opportunities.

Joe Fairless: When you venture into something like buying an abandoned factory and creating a training facility, how do you test that concept before jumping in and putting some money at risk?

Rich Kent: That’s a good question. What we would look for – and again, this is on a drawing board, and I hope I’m not giving a lot of people a great idea here, but–

Joe Fairless: Well, you are giving a lot of people a great idea, but there’s a high barrier to entry, that’s for sure.

Rich Kent: There really is. Don’t try this at home. There’s a lot of nuances in industrial, and I could talk about that in a minute. A lot of the projects we have purchased, we have purchased from multifamily operators that thought they can get some extra yield in industrial and they didn’t understand what they were buying.

But to answer your question, I think what you’re gonna find is a lot of cities, a lot of municipalities are very concerned about what could happen to the labor force in their markets as robotics take hold. So if we could find cities that have a program, that are teamed up with universities for recurrent training type of operations and partner with some firms that actually provide training, our purchase of that factory — [unintelligible [00:19:56].28] In other words, we would do it if we had the tenant and all the component parts to go into it, and we think we could put that together.

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

Rich Kent: Like a single phrase? Okay, well let me answer it like this… The old adage is “Location, location, location.” When it comes to income-producing properties, I would say the best adage is “Cashflow, cashflow, cashflow.” Concentrate on cashflow. It’ll tell you what the project is worth, it’ll tell you what you’re gonna yield on it, it’ll tell you what kind of loan and what kind of debt service it could cover.

So to us, if you think about the type of product that we buy, it’s pretty boring. It’s single-story concrete tilt-up. There’s no soaring glass and steel structures, but it cashflows. That’s the key.

Joe Fairless: When you look at the underwriting for a deal – I know that’s a whole long conversation, but from a high-level, how do you assess the numbers on the type of property you buy?

Rich Kent: The first thing is we’ll look at historical operating statements from the seller, and we only care about the operating statements by looking at the levels of expense – what the taxes are gonna be, what does it cost you to turn on the lights, what utilities, and that kind of thing. So we’ll look at those historical expenses and we’ll conflate those with some inflation and some of our experience, because typically we’ll buy in markets that we already have property, so we know what it takes to operate these properties.

But when we look at the income line, what you really wanna look at is you wanna look at the rent roll. What is in place right now? And not just the rent roll… What you wanna get are some of the bank statements to see what the collections are. What money is actually being collected for maybe the last 3-6 months, because that’s gonna tell you what that upper income level is.

So now you start to put that together in commercial – and certainly in industrial – you need to have the program Argus, which will run out your expected TI’s and Leasing Commissions every year, and you need to really pay attention to those and put in very conservative assumptions… And they’ll vary, but it’ll compute what your rollover risk is, what are the probabilities of renewal. You really need to understand those numbers before you get down to the NOI number.

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

Rich Kent: Fire away!

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

Break: [00:22:38].23] to [00:23:15].29]

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

Rich Kent: I’d have to say the best ever book I’ve ever read – and that’s a tough one – I would say Siddhartha, by Herman Hess.

Joe Fairless: Best ever deal you’ve done that we have not talked about?

Rich Kent: Well, I kind of like the deal we’ve just bought in Atlanta, called Northwest Business Center. It had every element that I’ve talked about, and it’s in a great area of Atlanta that’s starting to boom right now.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Rich Kent: Well, it’s hard to narrow that down to just one mistake. [laughter]

Joe Fairless: Maybe on the last deal you did, the Atlanta one. I’m sure there’s one thing you’d rather have done differently if presented a similar opportunity in the future.

Rich Kent: Well, we’ve only owned it for about a month now, so I’ll have to get back to you on that. It’s really hard to say… Having been in this industry a long time, I would say just generally the biggest mistakes are not remembering that these markets are cyclical, and when there’s good times, like there’s good times right now, you need to tighten up your underwriting, because it’s not always gonna be good times, and you’re starting to see people do some crazy things… Don’t do it.

The mistakes that I have made in the past – I didn’t think the market could crash as bad as it did in 2008, and you can’t think that’ll never happen again. You have to be prepared for that.

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

Rich Kent: That’s a really important question… Recently, my girlfriend and I filed the paperwork for a non-profit, and we call it Aristotle’s hand. What we see is there’s a lot of kids in inner city schools that are never going to college, but really could benefit from learning a vocation. We’re setting up a scholarship program to be able to get that vocational training that all of those kids are really gonna need for the future.

I think vocational training is a really big hot button. It certainly is with me right now… And I see that in our industrial properties – people are out there and they need skills, and we’re gonna give back by helping some of these people get those skills.

Joe Fairless: How can the Best Ever listeners learn more about your company and get in touch with you?

Rich Kent: Avistone.com. They can find all of this right up there – what we do, how we do it and who we are.

Joe Fairless: Rich, I love our conversation because I love learning about an asset class I know close to nothing about, and you did a great job educating me and I’m sure some of the Best Ever listeners on what you look for, why you look for it, why you’re buying what you’re buying, and business opportunities, not only now, but what you’re looking for in the future.

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

Rich Kent: Thank you so much.

Victor Lund and Joe Fairless

JF1318: Bringing Advanced Technologies To Your Real Estate Biz with Victor Lund

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Victor is a founding partner of WAV Group, they are the leading real estate technology media portal in the US. Focusing mostly working with the large brokers and firms, they have great systems and different technologies to make their companies run more efficiently. Without a doubt every investor can pick up some of the nuggets that Victor drops in this episode. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Victor Lund Real estate Background:

  • Founding partner of WAV Group and CEO of RE Technology.
  • Provided research, strategic planning and analyst services to MLSs, large brokerages, technology firms, and investment banks
  • RE Technology, the leading real estate technology media portal in the US with more 2 million visits a month
  • Published author of an body of work that understands the role of technology in real estate.
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  • Say hi to him at http://waves.wavgroup.com/
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Joe Fairless: Best Ever listeners, how are you doing?  Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Victor Lund. How are you doing, Victor?

Victor Lund: Great, Joe. Thanks for having me today.

Joe Fairless: Yeah, my pleasure, nice to have you on the show. A little bit about Victor – he is the founding partner of WAV Group and CEO of RE Technology. He’s provided research, strategic planning and analysis services to the MLS large brokerages, tech firms and investment banks. Published author of a whole bunch of stuff, and understands the role of technology in real estate, so that’s where we’re gonna keep our focus for today.

With that being said, Victor, do you wanna give the Best Ever listeners a little bit more about your background and the things that you’re working on?

Victor Lund: Yeah, sure. We’ve been a consultant in the real estate industry for 20 years. We work with a lot of people in private equity around their strategies related to their investments in real estate, and provide some pretty excellent insider advice — not insider-insider advice, but inside real estate advice, because we’re working in the field with the largest brokers in America, franchise organizations, the technology companies that serve them…

It’s been a pretty incredible run in the last 4-5 years as we’ve pulled out of the recession in terms of the amount of investment that is going into these companies. We’ve seen [unintelligible [00:03:37].21] go public, we’ve seen the launch of the Broker Public Portal, which is a project that we work on to help real estate brokers return the consumer to their property search solutions and things like that. Anyway, we’re seeing a lot of activity, we’re really thrilled.

Joe Fairless: What do firms hire you to do in the real estate world?

Victor Lund: We do a lot of strategic planning. Real estate brokerages seem like a pretty commonplace thing, and they all do the same thing, but actually they struggle a lot to differentiate themselves… So we kind of pick apart their business model and help them deliver a solution to a specific target audience where they can  really be successful. When you see differentiation in the marketplace between Sotheby’s and Coldwell Banker, and how is Keller Williams different and things like that, we’re kind of the intel inside behind how a lot of these decisions are framing up their positioning in the marketplace, and frankly how they manage the service delivery to the consumer.

Joe Fairless: For a Best Ever listener who has a brokerage not on the level of Keller Williams, but also not just he and his wife and a dog, but somewhere in between, and they’re looking to differentiate and really deliver on that differentiating value proposition – how would you approach that with them?

Victor Lund: Truthfully, I’d tell them to consolidate. The cost of operating  a small real estate brokerage business today is extreme. The expertise that is required to manage your company in this complex environment that’s driven so much by technology and technology adoption can be paralyzing. You spend so much time just trying to get everything set up and not enough time selling real estate.

The costs are variable. An independent small firm, which really in today’s parlance really operates like a real estate team, they may be looking at landed cost of service that’s 25 times more expensive than if they operated their brokerage as a team within a large broker.

We don’t see the small broker as somebody who has a lot of air in the industry today. Their market share is negligible, and their cost of doing business is extremely high, and their liabilities are high.

Joe Fairless: So from your standpoint it makes more sense to consolidate, so join a larger brokerage, versus trying to build something on your own, something to the level of a Keller Williams or a notch below it.

Victor Lund: Yeah, I mean, the people that make money in real estate are the people that are representing the buyer and the seller – primarily the agent. The average split with the broker is gonna be somewhere around 70/30 or 80/20, with the real estate agent or team capturing the larger share, the 70%-80%, or sometimes 90%. if you’re a top-producing agent, you might 90% of the commission fee on a transaction. The broker is living on 10%.

Relative to those basic economics, it’s far more advantageous to just leverage the services of a larger firm, leverage their brand, leverage their digital marketing experience, leverage their transaction management, enjoy the benefits of the E and O insurance they’re able to buy to cover the liabilities on these transactions… It just makes more sense to be part of a larger organization and focus your time on representing the customer, where you get paid the most.

Joe Fairless: Interesting. I appreciate you mentioning that, I didn’t’ see that coming. Now let’s do a similar but slightly different hypothetical situation… I am close to a Keller Williams level with my brokerage, and I come to you and I’m like “Hey, Victor, please help me figure out how I differentiate from the other brokerages of the world.” What’s your approach there?

Victor Lund: Well, Keller Williams – first of all they’re a franchise, so they’re not a brokerage; their mantra as a franchiser is to align themselves as a training organization that helps brokerages manage themselves more effectively by enjoying the umbrella of a strong franchise corporation, as well as providing incredible training to real estate agents.

If you were to ask Gary Keller “How do you define Keller Williams’ positioning in the marketplace?” he would say first and foremost they’re a training company.

RE/Max is a little different. RE/Max is a company that is pretty highly focused on being able to allow brokerages to operate as efficiently as possible. I think the [unintelligible [00:08:00].06] of Coldwell Banker and Sotheby’s and ERA and Century 21 and Better Homes and Gardens Real Estate are really incredible branding agencies.

Each of them define themselves a little different, and I think all of them are trying to contemplate the emergence of companies like Redfin that have gone public. They dominate the online search space. And there’s a variety of new models coming on to the market… Companies like Opendoor that have said “Hey, if you wanna sell your home, we’ll buy it.”

So there’s like this emerging trend where brokerages are owning the inventory that they sell, they’re not just acting as an intermediary during the transaction.

Joe Fairless: Okay, so those are different ways that some of the brokerages like RE/Max, Keller — or you said that’s not a brokerage, it’s a franchiser… But those are different ways that real estate companies are doing it. But now if I were a company and I were to come to you, what is your process for identifying the strategic planning, or at least the differentiation? What I’m basically trying to get at is, for listeners who are listening to this and they’ve got a company, what’s the thought process, what are some questions that we or they should ask ourselves when thinking through how to differentiate in the marketplace?

Victor Lund: It’s pretty standard stuff, and it doesn’t really matter whether you’re in the real estate business or any other business. You have to say, “First and foremost, who am I and what do I enjoy?” Sometimes companies get distracted trying to be something they’re not, or trying to be people they’re not. It’s hard to take somebody with a middle class disposition in life and get them to sell luxury, or try to get somebody who grew up in luxury to try and help people be first-time homebuyers in a low-end market. You have to be who you are.

We try to spend a lot of time helping companies to answer that question – who are you? What’s your persona? What kind of people do you relate with best when you’re delivering your service? Then we start to look at market sizing. We say “How many of those people are in the market? What are their personas like? Where do they go? What do they do? How can you engage with them in the best possible way?”, looking at what we call like a surround sound of engagement. Some of it is digital, some of it is in person, some of it is print.

There’s enormous opportunities to leverage big data, to do reverse prospecting. You can pick a neighborhood or an area where you have a lot of customers and you can actually use data to find out who’s most likely to buy or sell next, and use your marketing efforts to align with that person and to acquaint them with you and your services. All of that pre-planning uses a blend of self-identification along with data and research to kind of come together with a plan that should be effective for you.

Joe Fairless: That’s great, and I appreciate you walking through that. Let’s pretend real estate went away tomorrow; no more real estate on the face of this earth. I have a feeling your company would still thrive, because what you’re doing can be applied to any industry, from the questions you ask and how you approach things. Is that accurate?

Victor Lund: Yes, absolutely.

Joe Fairless: But you mentioned you use data to see who is most likely to buy or sell next – can you elaborate on how to do that?

Victor Lund: Sure, there’s public record data that is event-driven, and I think all but seven or eight states in the U.S. are what we call public record states. My transaction when I bought my home (and other properties that I have) is part of the public record, so you know when I bought it and you can apply some algorithmic assumptions about what trends are available to understand when people move. Well, people tend to move between every seven and thirteen years.

Understanding that, obviously you’re not gonna spend a lot of time engaging people who just bought or who just sold, unless there’s another type of event. If you look at a big data event like file for divorce, or a death, obviously there’s probably a real estate transaction in your future if that’s a part of your future. For most people, real estate is a primary asset and it’s gotta be mitigated along with the estate under any of those circumstances.

But generally speaking, somebody who just bought their house, they probably have a pretty narrowed debt-to-equity ratio. You probably don’t wanna be prospecting on people that are upside down in their home loan; you probably don’t wanna be prospecting with people who have super low credit scores. These are people who may be ambitious to buy or sell, but aren’t gonna be funded through a bank, and as we know, 80% of all properties in America are bank-owned. So those are some ways. There’s more.

Joe Fairless: When you speak to real estate investors… Let’s say you’re at a local meet-up – I don’t know if you attend or not, but let’s just say you’re at a local meetup and you’re speaking to an investor, what do you say you do, and then what’s the typical follow-up question that they have for you?

Victor Lund: We tell them that we’re consultants, and when we speak to real estate investors, a lot of the conversation is usually a lot of head-nodding. We’re seeing a recapitalization in America on who owns property, and we’re seeing that in a lot of communities property owners are moving away from individual investors and more towards institutional investors.

Frankly, the idea of owning a home just isn’t right financially for a lot of people. It’s very expensive to own a home, and there’s an attitude among the millennials that they would rather rent than own. There are some tax advantages – REITs, for example, have some tax advantages when they own massive amounts of property; so we’re actually seeing property moving away from individual home ownership and more toward investor ownership, and that’s a trend that we see extending across America today.

Joe Fairless: And for how long?

Victor Lund: I think it’ll need some kind of inflection point relative to legislated standing. Obviously, there could be impacts, like if interest rates start getting out of control, then institutional investors aren’t going to want to invest in real estate. Today, the capital markets make investing in real estate virtually interest-free… So it’s a very highly incentivized environment for investors… So in a high market for interest rates, you’ll probably see them move away.

Similarly, if the tax advantages — there was a tremendous amount of discussion around the mortgage interest rate tax deduction, and to some extent it was a little gutted by the recent passing of the Federal Tax Law. That could play a major impact as well. If you remove the tax advantages to home ownership, that could also create a variety of shifts, and I think those shifts are gonna happen differently in rural areas versus cities, but… Those are the types of things that are gonna be more disruptive to real estate than anything.

Joe Fairless: What is your best advice ever for real estate investors?

Victor Lund: Keep doing it. I think we saw during the meltdown that people who were too overleveraged, taking too much risk, that were too concentrated in real estate, had poorly balanced portfolios… You need to weigh your portfolio. A lot of the investment that we’re seeing in real estate today is as a result of the run-up in the stock market, thankfully, which just corrected in the last couple of days. But generally speaking, having real estate as a part of portfolio, what’s been referred to since the renaissance as to land banking – land banking is a very good place to put your money. It’s not where you should put it all. You need to have a diversified portfolio… I think I’m preaching to the choir here, but real estate is a very, very good investment, and it’s tangible, unlike Bitcoin per se.

Joe Fairless: Bitcoins come up on the last three interviews that I’ve done, it’s so funny… With your experience and with the team that you have in place for the consulting, what has been the toughest challenge that you all have worked on as a team?

Victor Lund: I think it’s change management. The average real estate agent is 57 years old. They’re in their second career. Computers are not native to them; they’ve learned it somewhere midway through their career. I have a 15 year old daughter who has 30,000 followers on YouTube and 30,000 followers on Instagram. She’s 15; she’s so advanced — like, there’s very few real estate professionals who even know how to use those platforms, much less develop an audience that’s engaging.

Some of these digital things that real estate agents have to do in order to keep up with the millennial buyer today – it’s a big stretch for them. It takes a lot more handholding, a lot more coaching, and it’s challenging, but those that invest the time to learn it and they get it, they’re accelerating. Interestingly enough, when you ask millennial buyers who they would rather use as a real estate agent, they would rather use somebody that’s their parents’ age, somebody that has a lot of experience, than use somebody that’s young and hipster and knows how to use all of their stuff… They don’t have confidence in their peers as much as they do the grey hairs.

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

Victor Lund: Let’s go!

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

Break: [00:17:17].27] to [00:17:50].10]

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

Victor Lund: Othello.

Joe Fairless: Best ever deal you’ve done? You said you’re an investor as well, right?

Victor Lund: Yeah.

Joe Fairless: Okay… That wasn’t your first and wasn’t your last.

Victor Lund: Shopatron.

Joe Fairless: What is that?

Victor Lund: Shopatron is a company that provides a service to brands like Callaway Golf, where you can go to callawaygolf.com and buy a golf club… It gets delivered through Callaway’s local retailer.

Joe Fairless: Okay, you invested in the company?

Victor Lund: I did.

Joe Fairless: What’s a mistake you did on a transaction, or just a business in general?

Victor Lund: Not being aggressive enough. Lots of opportunities where I didn’t go out and leverage the capital markets to raise money; I tried to do it all myself, and I grew the company too slowly, and I missed the opportunity.

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

Victor Lund: We give back on an annual basis and a persistent basis to women and families who are getting out of abusive situations.

Joe Fairless: And how can the Best Ever listeners learn more about your company?

Victor Lund: There’s a wavgroup.com. You can subscribe to our newsletter, our blog… We have a tremendous volume of reports there that you mentioned earlier today, and we’re always happy to answer any calls or questions that people have. Thanks for having me on, Joe!

Joe Fairless: Yeah, I really enjoyed it, and thanks for being on the show. I enjoyed learning about your company’s approach, as well as from a differentiation standpoint, questions to ask ourselves… 1) Who am I and what do I enjoy? 2) What kind of people do I relate to best when delivering my service? Then doing some market sizing, and then as you call it, the surround sound of engagement… And then from kind of a one-off thing, a couple tactical ways to use data to see who’s most likely to buy or sell next; 7-13 years, people tend to move then. Divorce, death filings certainly to take a look at… And then lastly, the shift that millennials are making for the industry where they’re not buying as much, and the two things that could change that in the future – one is the interest rates going out of control, as you mentioned; two would be the tax advantages being further sliced up.

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

Victor Lund: Thanks, Joe.

how to increase your net worth

JF1261: Playing Defense To Increase Your Net Worth with Tim Rhode

Listen to the Episode Below (22:16)
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Tim helps people keep as much money as possible, paying attention to what is going out, what he calls “playing defense”. He is also an investor with a pretty extensive background. We’ll not only hear an amazing real estate investing story, but also receive advice on how to maximize our current assets. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Tim Rhode Real Estate Background:

-Real Estate Investor and Life Coach at 1 Life Fully Lived

-Founder of 1Life Fully Lived and the co-founder of Gobundance

-Has sold real estate for approximately 18 years and sold over 2,500 homes in that period

-Hosts conferences twice a year for those looking to up their game in real estate investing

-Based in Portola, California

-Say hi to him at http://www.1lifefullylived.org

-Best Ever Book: Richest Man in Babylon


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

Tim Rhode: I’m doing great, Joe. Thanks for having me on.

Joe Fairless: My pleasure, and nice to have you on the show, my friend. A little bit about Tim – he is a real estate investor and he is a life coach at 1Life Fully Lived. He’s the founder of 1Life Fully Lived and the co-founder of Gobundance; I’ve got some friends in that group.

He has sold real estate for approximately 18 years and sold over 2,500 homes during that period. He is based in California. With that being said, Tim, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Tim Rhode: Sure. I am the founder of 1Life Fully Lived, and also one of the founders of Gobundance. Got off to a late start in life, found my niche selling real estate, sold a lot of homes from 25 to 40. I think what I did different than most is we really focused on defense. A lot of people don’t look at what’s going out every month, and we looked at what’s going in, how can I have more money coming in, increase our offence, how can I live within my means, play good defense, and then how can I take what’s left over and invest it wisely.

I did a pretty good job at that and I was able to retire from working at 40, and then was kind of a ski bum for ten years, just doing what I call “getting the goods in the woods”, and kind of doing less investing and more switching over to what I call water skiing in other’s wake; let them do all the work and I just invest in what they do, and that freed up my time so I was able to do what I love best, and that’s help others find their best path. We do that through 1Life Fully Lived, and on a mastery level we do that in Gobundance.

Joe Fairless: You mentioned really focused on defense – can you elaborate on that?

Tim Rhode: Sure. What I find is a lot of people make a lot of money, and what they don’t do as much as their incomes increase is really focus on what’s going out, and a lot of them have leakage. A good example is I coached a lady who made a million a year for 15 years, and I coached her three years after she had made all that money, and she had little to show for it. And I coached another that made like 600k, 700k a year and spent somewhere between 500k and 800k; she just wasn’t sure… And when she met with me, she brought up this big ol’ paper bag of all these receipts, like I was gonna go through her receipts and figure out where her money went. They just don’t look at where their leakage is, and then consequently two things happen – they don’t get anywhere, and when the downturn comes and they have a lot of debt, they’re not able to downsize quickly and be nimble and manage themselves when the market inevitably turns.

Joe Fairless: When someone like that comes to you, what’s the process that you work with them on?

Tim Rhode: The first thing is taking an analysis of where they are, just stopping and looking at what’s coming in and what’s going out, what’s left to invest… The best thing for this is Robert Kiyosaki’s CASHFLOW game. Have you played that, Joe? Are you familiar with that?

Joe Fairless: I’m definitely familiar with it. I think I’ve played it; I know I’ve seen it so much, I feel like I’ve played it if I haven’t.

Tim Rhode: So in that game and in Gobundance, our mission is to get out of the rat race and onto the fast track, and I told you I was able to retire at 40 and be a ski bum – that’s what it was for me, that’s what I’d love to do, and everybody has dreams of what they wanna do, but few ever get the opportunity to do that because they’re not doing what Robert Kiyosaki talks about in that game, and that’s to have your passive income out-stretch what it costs you to live on a monthly basis, and when that happens, you’re free to do what you want.

So I’m sure for your listeners, a lot of them are either buying investments, flipping homes, trying to get to that road of financial freedom… The piece that I tell most of the people I know that wanna get there is watch your defense. And like I said, that first starts with an audit of where you are, and then look at where can you increase your income streams, how can you invest wisely, and how can you avoid critical mistakes that I saw a lot of people make around 2006-2008 and get wiped out.

Joe Fairless: What are some of those mistakes that you saw take place and then what do you do to mitigate that risk from it happening?

Tim Rhode: I think one thing is to track trends and to just look at — like, I was a real estate investor in the Central Valley of California, and in 1997 there was very, very little inventory, and I could tell our market was just about to take a turn, because I could see an increase in the amount of buyers looking to buy. And then around 2005 it was just crazy; there was no inventory whatsoever, and everyone was looking to buy.

So in 1997 there was tons of inventory with no buyers, and all of a sudden you could just see some buyers trickling in and the markets starting to change, and that’s when I went on a buying spree and was pretty active for about 8 or 9 years. Then we had the foresight to sell right at the top in 2006, and make some exchanges into triple net lease properties and easy to manage cashflow properties, and that kind of set me up to where I am today, where when the downturn came I didn’t have to worry about it, but I saw people not heeding the warning signs, and even when things were already dipping, borrowing more money to buy more on the dip. That didn’t turn out too good.

Joe Fairless: That actually is a perfect segue into the question I was gonna ask you next, and that is when you were 40 and you spent the next 10 years as a ski bum after you retired, specifically what investments were paying for you to go be a ski bum?

Tim Rhode: My old real estate office is rented out to an enterprise rent-a-car on a triple net lease; I have a building leased to AutoZone… I started a syndicate with three of my friends – David Osborn, Pat Hiban and I were the ones that started Gobundance, and then our good friend Andrew Cushman, we started a syndicate buying apartments in the South called DAPT, and subsequently bought I think 12 or 13 apartment complexes down there. So all of my investments are either passive, or I’m investing in other people’s — like, I invest a lot in my buddy David Osborn’s bad debt funds, and things like that where they’re doing all of the work, and candidly, I spend about 3%-5% of my time on investing. I don’t work, except my work is my non-profit, 1Life Fully Lived, and that’s where I put the bulk of my time and energy, and what I call “getting the goods in the woods.” I live in the mountains on three acres, we’ve got a big ol’ mountain called [unintelligible [00:09:16].10] in my backyard and I spend a lot of time going up and down that, and playing disk Frisbee; this morning I was out ice skating on the river.

So these are the fruits of things when you’re younger, and discipline. What I’m saying is if you want the goods, you’ve gotta do the shoulds.

Joe Fairless: That is true, I like that philosophy. And the approach that you take is you mentioned investing in other people’s funds or the work that they’re doing – then you’re a passive investor and you let them go do the work, and then you’re receiving the fruits of their labor as they are, as well… So how do you identify the deals that you will passively invest in?

Tim Rhode: First of all, I wanna say for anybody that’s in the trenches and working hard today and you’re on your way, this is kind of like the step three of all this. Step one is increase your income and do that audit I was talking about, so you see where you are. Step two is getting in the game and hitting singles and doubles, and every now and then a grand slam, and I’d love to talk about one deal I did back in the day that turned $6,000 into $6,000/month. When you’re in the trenches and you’re working hard and you’re in your 20s, 30s, and for some of you even in your 40s, and some of you even in your 50s candidly, the best thing you can do is do the work yourself and be in the trenches. There’s nobody you should trust more than yourself.

That said, the people that I invest in are seasoned investors that I know, like and trust, and I know they know what they’re talking about, and I know they know what they’re doing by their track record. So I look at a hundred packages every year of people that want me to invest in their deals, and I do do some things and I do some notes for some other friends on their investments, but they’re typically somebody that’s right in my circle that I’ve gotten to know, I’ve gotten to watch and I see that they’re gonna be there tomorrow.

Joe Fairless: Is that the main thing for you, the trust factor and the comfort level with the individual?

Tim Rhode: Yeah, I’d say the three things are the trust factor, comfort level — that’s the same in my book pretty much, but what’s their talent and then what’s their vehicle? If you have somebody that’s super sharp but is fishing in the wrong place… California is a really tough place to invest in, so most of the stuff we’re doing is like apartments in the South… And as I said, David’s bad debt fund is stuff all over the country. But they can be smart and talented and in the wrong at the wrong time and still lose money, so I think timing has a lot to do with all of this also.

Joe Fairless: Let’s talk about that deal that you mentioned – $6,000 to turn it into $6,000/month.

Tim Rhode: This was when I was listing and selling real estate and just transitioning into a realtor, and it was also during a time in Northern California when things were going kind of nuts. There was a timeframe between ’97 and 2005 when things pretty much quadrupled. So I think it was around 2001 I bought a property that somebody called me over and just wanted enough so they could buy a new home, so I gave them $6,000, took over their loan subject to, started making the payments on it, held it for about a year and a half; our market had increased and I’d bought it under value, and right around about a year and a half later I saw a piece of land in the path of growth right near I5, which runs from Mexico to Canada, and it ran right through me [unintelligible [00:12:40].15] California, and I knew that there was a new Hampton Inn coming in, I was tracking the trends in our area, I’m reading the paper, I’m seeing what’s coming in, I’m seeing what’s the news stuff, and I saw a property that had sat there for some time, right near I5, and it wasn’t worth it, wasn’t worth it, wasn’t worth it, and all of a sudden it was undervalued because a Hampton Inn was coming in, and a commercial strip center on the other side of it.

So bottom line is I bought it for 360k, I took the property that I had paid 6k down, I turned that into 120k, used that as my down payment on the 360k, and sold that three years later for a million eighty.

I took that property that I sold for a million eighty and I exchanged it for my AutoZone in Knoxville, Tennessee, which brings me in 6k/month. So in two steps I bought the house for 6k down, and I took the 120k I made out of the house and bought the property for 360k that I sold for a million eight, and then — actually, there were three steps. And by doing that, I took the 6k into 6k/month for 20+ years. That’s what you can do with real estate, that you can’t do with many other investments.

Joe Fairless: What’s a deal that you’ve done that’s flopped?

Tim Rhode: My two biggest mistakes aren’t that flopped; they’re deals I didn’t do. One of them I had in escrow, it was a 25-unit apartment complex and it was right during that timeframe when everything was going up, and I was really busy and I’m selling a lot of real estate, and I’m buying a lot, and I had this 25-unit under contract and it wouldn’t appraise. I was close to my 30-day contingent period and I went to the seller and asked her if she’d [unintelligible [00:14:27].08] 10% mark, because I was having trouble getting a loan… And the thing is that I had the extra 10%, I was just busy and didn’t really think about it. And she said “No. Why don’t you back out? We have another buyer.” And I backed out.

I think I was buying that for like a million and it was probably worth three million within a few years. So that was one, and another one was the piece of property I owned right near the freeway; I owned it for like seven years, I sold it, I took back a note on it, and six months after I sold it, I looked up and there’s a freakin’ billboard on it. [laughs] Yeah…  So I have a note with the guy and I ask him, “Alright, give me the news… How much did you pay and how much does it bring in?” It cost him 60k and he made 2,5k/side. So I would have made my money back in a year and then had the income coming in for perpetuity.

So honestly, I haven’t made too many mistakes with real estate, knock on wood…

Joe Fairless: That didn’t sound like wood, that sounded like glass.

Tim Rhode: Oh, I had a bowl on it.

Joe Fairless: Oh, okay… [laughs]

Tim Rhode: Very good ears, Joe! But those two really stuck in my craw. It’s good to have stuff like that, mistakes that you analyze, and those keep you from making the next mistake.

Joe Fairless: What about on a transaction, what’s a mistake you’ve made on an actual transaction that you either lost some money or lost some time? Outside of those two things where it was missed opportunity, but something more that hits to the bottom line.

Tim Rhode: I sold a lot right at the right time; I would say jumping back in heavily in 2009-2010 up here in Reno, Nevada… If I would have — how can I put it…? If I would have just got off my butt and worked a bit, I could have done really well. But there was a lot of opportunity there, and all over the country, actually. So I’ve just chosen to not play full out in that realm.

Joe Fairless: Okay… Still a missed opportunity, not necessarily a tactical mistake, but I’ll let you off on that one. We’ll keep on rolling. If you think of a tactical mistake you’ve made on maybe a transaction where you’ve lost money on the bottom line…

Tim Rhode: Okay, I can think of one. The same place I didn’t put the billboard, I was the agent when I bought it and I missed that all six units were on one meter, so I was gonna have to pay their electric bill. That one was big.

Joe Fairless: There we go.

Tim Rhode: And what’s funny is I told myself — my wife said “How could this happen?” I said “I know, if I wasn’t my agent, I’d sue me.” [laughter]

Joe Fairless: Is there a  way that she could have sued you?

Tim Rhode: [laughs] She did! …nah, I’m just kidding.

Joe Fairless: What is your best real estate investing advice ever?

Tim Rhode: Get in the game, run your hits out. You’re always looking — you’re gonna do it, you’re gonna do it, you’re gonna do it; you’re looking for what’s wrong, and then if you don’t find it, pull the trigger. But I’m in, I’m in, I’m in, and then if I find something that takes me out, I’m out.

A couple others is buy it right or don’t buy at all, and the biggest thing I’d say is two rules – rule number one, always look for win/wins. Rule number two, I’m not a victim. I’m gonna do my homework. And please don’t try to scam me, because why would you? I’m gonna offer so much value to you; I’m gonna find you more than a win/win… But when you guys are out there analyzing stuff, rule number one is always look for a win/win, maybe in a partnership, maybe in a deal, but really do your homework and think “I’m not a victim, I’m gonna do all my homework and make sure everything’s on the up and up.”

Joe Fairless: Good philosophies for life, as well. We’re gonna do a lightning round… Are you ready for the Best Ever Lightning Round?

Tim Rhode: Boom, let’s go, Joe!

Joe Fairless: Alright, let’s do it! First though, let’s hear from our Best Ever partners.

Break: [00:18:18].03] to [00:19:08].27]

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

Tim Rhode: The Richest Man in Babylon, I’ve read it 15 times. It’s my financial Bible.

Joe Fairless: What’s one takeaway that you got from it that you applied towards your business or life?

Tim Rhode: I just love how they had the community in ancient Babylon where all the wise people come together, and whether you’re a master or whether you’re a slave, everybody learns from each other. That’s the community we’ve created with 1Life Fully Lived.

Joe Fairless: Best ever deal that you’ve done that’s  not your first and not your last?

Tim Rhode: Buying a piece of land right outside of town – not the one I’ve described – that I bought for 50k and sold for 1.2 over like a ten-year period.

Joe Fairless: Did you do anything to it?

Tim Rhode: No, I actually just held on to it and it was land in the path of growth. That goes back to studying trends. They put in a new wing of the hospital that backed up to my property, and the ship came in. I was just kind of waiting for it to come.

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

Tim Rhode: Well, everybody that knows me knows that I run a charity called 1Live Fully Lived. I probably work 60 hours a week on it.

Joe Fairless: And what’s the mission of the charity?

Tim Rhode: To help people dream, plan and live their best lives. Our target is 12 to 21 year old inner city kids, and we have workshops and conferences… We have one with Robert Kiyosaki coming up in 2018, where he’s gonna be with 25 of us, helping us… Robert Kiyosaki, David Osborn and Garrett Gunerson helping people increase their cashflow and play the real estate game better, so we can help inner city kids get theirs.

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

Tim Rhode: Join the 1Life Community on Facebook (https://www.facebook.com/1lifecommunity/), check out 1lifefullylived.org, and our YouTube channel, and then you can get a hold of me at Tim@TimRhode.com.

Joe Fairless: Tim, thank you for being on the show and talking about your approach to investing and life in general; the three steps that you laid out, regardless of where we’re at… Step one, if it’s the beginning, then first do an audit of your expenses going out the door, figure that out, and then increase your income. Then two, hit singles, doubles and sometimes grand slams. You’ve certainly described a couple grand slams that you’ve hit. And then three, get into the passive aspect of things. Then you talked about what you look for as a passive investor in terms of the deal evaluation and the sponsor evaluation.

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

Tim Rhode: Thanks, Joe. I really appreciate it. And go get ’em, listeners!

Best Real Estate Investing Advice Ever Show Podcast

JF1054: Getting Paid to Raise Capital Without Being a Broker-Dealer – With Amy Wan

Listen to the Episode Below (28:33)
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A question we hear all the time, “how can I make money from connecting syndicators with high net worth individuals”? Well Amy Wan is here today to answer this question specifically. The issue is making sure you are not doing what a Broker-Dealer does. We’ll hear today how to separate yourself from looking like a Broker-Dealer. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Amy Wan Background: ‎
-Founder & CEO of Bootstrap Legal and former partner at Crowdfunding Lawyers
-In 2014, named one of 10 women to watch in the legal tech by the American Bar Association Journal
-Formerly was General Counsel at Patch of Land, advised the company on its $23.6M Series A funding round
-Holds an LL.M. in Public International Law from the London School of Economics and Political Science
-Based in Los Angeles, California
-Say hi to her at www.bootstraplegal.com

Click here for a summary of Amy’s Best Ever advice: 4 Legal Ways to Get Paid Raising Money for Apartment Deals

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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.

Today we are going to answer a burning question that I get so frequently because of the business that I’m in and because of the market and how much opportunity there is. Here’s the question, Best Ever listeners – we have an expert to walk us through the process of how to answer this question correctly… Here’s the scenario (and then we’ll come up with the question).

The scenario is I know people who have money. I also know people who do syndications. How can I raise money for the syndicator and get compensated for it? Basically, we’re looking for creative ways to get paid to raise money, without being a broker/deal. With us today to walk through the entire process, Amy Wan. How are you doing, Amy?

Amy Wan: I’m good. How are you, Joe?

Joe Fairless: I am doing well, and I am smiling ear to ear, because I get this question so frequently from Best Ever listeners and from people on Bigger Pockets and everywhere else… I’m really looking forward to diving in.

A little bit about your background for the Best Ever listeners, before we dive in. Amy is the founder and CEO of Bootstrap Legal; she’s also a former partner at CrowdfundingLawyers.com. She knows crowdfunding law. In 2014 she was named one of the top 10 women to watch in the legal tech field by the American Bar Association Journal. She’s based in Los Angeles, California. Say hi to her at her website, BootstrapLegal.com.
With that being said, Amy, take it away, my friend. How do we approach this topic?

Amy Wan: Sure, so there’s definitely a lot of people out there who are able to get compensated somehow for helping other people raise money, but there’s a number of different ways to do it, and there’s also a number of different things you have to look out for.

Before I launch into explaining this entire [unintelligible [00:04:30].02] of law, I just wanna put out there I’m an attorney, so I have to put out a legal disclaimer that none of this is legal advice… It’s all educational, and I’m not necessarily recommending any courses of action. Whatever you do, you should always go and talk to your attorney who’s helping you out and representing you before you launch into this, because they’re gonna be able to look at the specifics of what you’re trying to do.

Broker dealers are people who have a license and they make a lot of money to sell securities of other people. Usually, the way they do this is they’ll take a commission – like, I’ll take 7% commission for whatever capital I’ll bring in. That’s also how a lot of investment banks get paid. But the truth is being a broker dealer is really difficult, especially if you’re not really in the business of doing this every single day and you don’t wanna deal with all the compliance.

Now that we’ve talked about what a broker dealer is, I know that a lot of your listeners don’t want to be broker dealers; they just happen to see people who might have a really good network of investors or of people who have a lot of money. So let’s talk first just a little bit about what it means to be a broker dealer, just so people know whether or not they have to be one.

There’s basically about four things that the regulators look at when they are determining whether someone is engaging in unlicensed broker dealer activity. Those four things… The first thing is actually THE most important – are they taking transaction-based compensation? Transaction-based compensation is basically payments based on the transaction amount, how much money they’re bringing to the table. If you’re not bringing transaction-based compensation, it’s not to say you’re not a broker dealer, but it makes it a lot less likely. Commissions (straight up commissions) – that’s definitely transaction-based compensation.

The second thing is whether or not the person who’s helping the other person raise money – are they soliciting or going out and trying to find potential investors? The third thing is “Is that person providing advice or engaging in negotiations? Are they helping to structure this deal in any way?” [unintelligible [00:07:17].00]

Then the last one that the regulators look at is do they have previous securities deals experience or history of disciplinary action? So was this person formally a broker dealer or are they regularly involved in the sale of securities? Because if they are, they’re probably a broker dealer. If this is like a one-off thing, it makes it less likely.

Joe Fairless: So these are the four questions that are asked to determine if someone has engaged in unlicensed broker dealer activity, correct?

Amy Wan: Yes.

Joe Fairless: The first question is “Are you taking a transaction-based compensation?” Two is “Are you soliciting…” — what was that?

Amy Wan: It’s whether or not you’re soliciting potential investors.

Joe Fairless: Okay… Which you must have to do if you’re talking to people, right?

Amy Wan: Oh, there are ways to do it, Joe. [laughs]

Joe Fairless: Alright, so we’ll get to that. Okay, so “Are you soliciting potential investors?” The third is “Are you helping structure the deal?” Let’s just use a hypothetical example with something that people might come across, and that’s an apartment community deal… So that would be “Are they helping structure…” — is that the transaction of the deal itself with the seller, or is that the structure of the compensation and the waterfall stuff with investors?

Amy Wan: It’s the latter. Whenever you’re buying or selling property, that’s not necessarily a security. When we’re talking about broker dealers, we’re only talking about selling securities. That’s when you’re going out and you’re trying to find passive investors and offering them a return on investor.

We’re not talking about buyer or selling property, we’re talking about basically fundraising… That’s what all of this is.

Joe Fairless: Okay. And then the fourth is “Do they have previous securities experience?” or “Were they previously a broker dealer?” or “Did they get in trouble previously with this process?” Okay, got it.

Amy Wan: Cool. So now that we have the fundamentals down, I think what your listeners are really interested in is how do we get some form of payment while helping people bring investors or raise capital without getting in trouble and without having to become a broker dealer or some sort of other licensed person who can do this?

Joe Fairless: Do you know what it takes to become a broker dealer, what the process is and how much studying or what tests you have to take?

Amy Wan: Sure. You have to take some of the Series exams; it kind of depends on what exactly you want to be doing. A lot of people will take the Series 7, they’ll take the Series 63… Once you pass the tests, you’ve got to change your license at a broker dealer shop. Suffice to just say that basically over the last couple years it’s become a lot, lot harder a) for broker dealers to make money, and b) for broker dealers to keep up with compliance.

It’s not to say that people shouldn’t become broker dealers. There’s still a ton of them out there today, but if you’re just like one person, or a small team of people who only want to just do this one off, I would really reconsider getting into this business, because you really need to have a full-on chief compliance officer, you really should have actively [unintelligible [00:10:48].19] It’s engaging in the stuff that Wall-Street engages in, so if you’re not equipped to do that, you just need to make sure you’re not inadvertently gonna do something that’s gonna get you in trouble.

Joe Fairless: So basically the 99.99% of everyone listening would not want to become a broker dealer, I’m guessing… So now how do we get some sort of payment while helping people raise capital without being a broker dealer?

Amy Wan: Perfect. Okay, so there’s a couple of methods that I see pretty commonly — and again, whatever you do, if you’re gonna go down this road, just do me a favor and check with an attorney first.

Joe Fairless: Are you someone they can check with?

Amy Wan: I can refer them to people that they can check with.

Joe Fairless: Got it.

Amy Wan: So one of the things you might wanna consider is if you look at the definition of broker dealer, it’s someone who’s engaged in selling securities for other people. The question is “Well, what if you are not selling it for others? What if you’re selling it for yourself, the issuer?” What if you, Joe Fairless, who wants to help people raise money – what if you become a member of the management (if this is an LLC scenario) or you become part of the general partners?

If you become part of the issuer – and what that means is you’re not just raising money, you need to be doing other things that are a little bit more day to day… But if you are part of the management or the GP or whatever it is who’s the active sponsor, then suddenly you’re not selling securities for others, you’re selling securities for yourself. Issuers are allowed to sell securities for themselves generally, so what I’ll see a lot of my clients do is maybe they’re a team of two real estate syndicators, they’re working on multifamily, and “Hey, this guy happens to know a lot of people who love to invest in student housing, AND he’s a student housing expert.” If they’ll team up with him on that particular project, they’ll give him a piece of the management (or whatever it might be). So he’s a part owner, he’s part of the issuer.

Maybe the guy helps them set up their bank account, maybe he advises them on what strategies they should use for student housing, or any other area that maybe he can contribute. Maybe he’s helping out with property management, or helping with the monthly distributions… Something that’s not purely just the raising of capital. If he is involved actively in some of the day-to-day AND he’s raising capital, suddenly we’re not raising money for other people, we’re raising for the money for ourselves, and that’s okay.

Joe Fairless: Now, what if the agreement is that he will be on the GP side and he’ll advise on things and bring capital, but what if he doesn’t bring any capital? Is there are recourse for them to say “Oh, actually I don’t know… I don’t think you should be on the GP side now.” [unintelligible [00:14:05].00]

Amy Wan: Usually when I see this happening, it ends up being a very fluid process. I think this comes down to a negotiation between those parties of what role this person’s going to play. You shouldn’t really have it that black and white where “Oh, you don’t bring in money, you don’t get to be a part of it.” You really shouldn’t. You should have them doing a little bit more than that, at the very least adding value or contributing in some way. I won’t say that I haven’t seen it, but then I would say they’re a bit too close to the line.

I think law is not a black and white thing, it’s a grey spectrum. There’s things that you can do that are closer to the edge and things that are closer to safety. So that’s number one, making yourself actually part of the company, so you’re not raising money for other people.

The second thing is very closely related, where for example let’s say hypothetically they’re structuring a syndication, you have (let’s say) two classes of ownership interest. You’ve got class A, which is your investors, and class B, which goes to yourself, the manager, or whatever it might be.

Same concept, expect that this time instead of them being a part of the management, they’re not actually a part of the owner or the issuer anymore, they are a separate entity. You are giving them some of the class B shares, even though they’re not actually part of the management.

The interesting thing here is if we revisit the definition of a broker dealer, they’re looking at transaction based compensation. If you give a guy maybe 5% of whatever the class B interest is, if you make it not transaction-based compensation — maybe he gets 5% regardless of whether he brings in a million dollars or a hundred thousand, that starts looking a lot less like being a broker dealer… And then again, just as with the last example, even if they’re not a part of the management, it’d be nice if they could provide some sort of additional service. Maybe it’s them personally guaranteeing the loan. So even if they’re not bringing capital, they’re helping you get capital from the bank, because they’ve signed the loan documents.

Now, if we’re getting into more creative strategies other than that, you could charge a finder’s fee, but when you charge a finder’s fee you have to be careful about how you charge it… And remember, we don’t ever want to tie the compensation to the amount of money raised.

I see sometimes people are charging finder’s fee, but it’s a flat fee; it’s not based on how much ends up actually converting into an investment… And remember one of the things I talked about earlier, about soliciting investors. When we’re soliciting investors, what we don’t wanna do is to pre-screen or to recommend an investment or anything of the sort. But if it’s a mere (let’s say) e-mail introduction to someone who’s just interested in learning about multifamily apartments generally, and the person happens to know that this guy also happens to be interested in investing in real estate, that on its face is okay.

Now, we don’t wanna be saying “Hey, Joe has this amazing 100-unit apartment complex that he’s raising five million dollars for now… You should take a look at this” – you don’t wanna say that. We’re just doing soft introductions.

Then the last method that I see a lot – and again, we’re not tying this to the amount of money raised – is people who basically negotiate with the issuer to become their consultant. They’ll sign a consulting agreement. The consultant has to do a number of things; one of them could be going out and helping trying to raise capital or make those introductions… But it has to be that this consulting agreement is not merely for raising; what we’re paying the consultant is not based on how much capital this person brings in, and as is the general theme here, they should have some sort of other job, too. Again, whether that’s — I don’t know… If they’re a CPA, maybe they’re the chosen auditor of the books, or something like that… But it really shouldn’t just be the raising of capital.

Joe Fairless: Could that job be e-mailing their investors that they brought into the deal every month, about the status of the project?

Amy Wan: It could be, yeah. Investor relations. The latter two strategies that I talked about – the finder’s fee, the consultant fee – that usually is more so like cash payment upfront or something like that, whereas the first two I talked about it’s usually not monetary compensation upfront, but rather it ends up being that they get paid on the backend. Let’s say if it’s a multifamily syndication with a 5-7 year life or timeline. When the property is disposed of in 5-7 years and they’re selling it and paying back their investors – or honestly, even during operations, they have rental income – that’s when the person is getting paid, and they get paid just as the manager or the GP gets paid. So it’s not cash up front, it’s cash later down the line.

Joe Fairless: On option number two, give a class B interest – assuming there’s class A/class B or GP, LP – will you explain that for me one more time?

Amy Wan: Basically, I would say actually a majority of the clients that I used to work with, whenever they did a syndication, if it’s a smaller syndication and not a huge shop, they’ll choose a two LLC structure where one LLC [unintelligible [00:20:36].20] and one LLC is the manager, and the manager usually gets all the class B units.
Let’s say in the actual LLC that holds the assets 70% of the LLC is owned by investor members as class A units, and the other 30% is owned by basically the manager, affiliates of the manager or whoever’s helping out a little bit more on the management side. Of that 30%, sometimes I see people saying “Okay, so of the manager’s 30%, we will take 28% of it and 2% we’re gonna allocate to this individual for helping us on these specific things.”

Basically, option A and B are very similar, except that in the former they actually become part of the sponsor, and in the latter, they’re a little bit more removed, but are still doing things that add value.

Joe Fairless: This is crystal clear. I’m incredibly grateful, and I know a lot of the listeners are as well, because now every time I get this question I’m going to give them a link to this interview. I have a feeling this is gonna be a popular one. Anything else that we haven’t talked about as it relates to the subject of “How can we become compensated for helping people raise capital without becoming a broker dealer?”

Amy Wan: You know, what I’m about to say is a little bit more obscure, but lately I’ve actually been getting a relatively more frequent number of calls of people asking about AngelList [unintelligible [00:22:31].26] AngelList is basically a tech startup; it’s like a futuristic venture capital firm. They are not a broker dealer; I actually don’t even think they’re a registered investment advisor [unintelligible [00:22:43].15] but they make a lot of money off of helping startups get fundraising. Their founder – he’s invested in companies like Uber, and all sorts of vague unicorn startups.

The way they’re structured is really interesting… They do not make any money on the front end; what they do is they make it on the back end. They use syndicates to basically fundraise. Angel investors in their network who see a lot of deals every day will basically bring a deal to AngelList and say “Hey, I wanna invest in this deal, and on AngelList I have a lot of backers who every time I invest a certain amount of money, they will back my investment, so the investment kind of snowballs”, and it kind of helps them diversify a little bit.

What the angel syndicate gets is a carry; he gets a portion of what the end return is for the investors, for his services. He manages the investors, he manages the relationship between him and the startup, and then communicates what’s going on to the crowd of investors.
AngelList also takes a carry, which means they get paid on the backend. I think it’s like 15%-20%; I don’t know about the numbers anymore.

I’m starting to hear a lot of people who are trying to or thinking about adopting this model in real estate, because I guess a lot of investors only know how to invest in multifamilies, but they might not know how to invest in hotels, or something like that.

That’s really interesting, and it’s another way that people are looking at to be able to help people raise capital based off of their networks or someone else’s network without having to themselves become a broker dealer.

Joe Fairless: You’re gonna laugh, but can you repeat that, but dumb it down for me, exactly what you just said?

Amy Wan: Okay, so basically if people want to for example google the SEC no-action letter, that basically is another way for people to be able to utilize their network, get paid something off of the transaction without being a broker dealer. It is a little bit more complex, it is for someone who is specifically interested in making this their day-to-day job, but it’s something I think worth looking at.

Joe Fairless: There’s the takeaway – we will google “angellist SEC no-action letter”, and for anyone who wants to dig in deep, then that’s the starting place, right?

Amy Wan: Yeah.

Joe Fairless: Sweet. Alright, Amy, anything else that we haven’t mentioned that you think it’s relevant to bring up on this topic?

Amy Wan: Nothing other than before you do anything, go run it by your attorney. [laughs]

Joe Fairless: How or where should the Best Ever listeners go to get in touch with you and learn more about Bootstrap Legal?

Amy Wan: They can go to my website – it’s BoostrapLegal.com – and they can always feel free to contact me personally. My e-mail is amy@bootstraplegal.com, or they can find me on LinkedIn.

Joe Fairless: Amy, this has been such a practical exercise… An interview for all of the Best Ever listeners who are focused on bringing in more capital into their deals or partnering with other people to do deals. The question is “How can we get some form of payment or compensation while helping people raise capital without being a broker dealer?” You gave us four options:

1) Become the issuer, so basically, be on the general partnership side. There’s a lot of disclaimers in between all of these, and I won’t say them all (there’s a transcription of this episode, fortunately).

2) Give class B interest.

3) Charge a finder’s fee, but make sure (I will mention this disclaimer) not to tie the compensation to the money raised.

4) You can negotiate with the issuer to be a consultant, and again, make sure that there is not a transaction or amount raised tied to this compensation.

Overall, if you are on the general partnership side and you’re getting compensated, make sure that you do have additional responsibilities, albeit it could be as simple as sending out a monthly e-mail to investors, so investor relations with deals.

Did I summarize that — I know I didn’t say all the disclaimers, but is that basically the gist of it?

Amy Wan: That’s it.

Joe Fairless: Okay. Amy, thanks so much for being on the show. Did I mention this was a Situation Saturday? I don’t know if I did… I hope you have a best ever Saturday, and we’ll talk to you soon.


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Jillian Michaels Interview by Joe Fairless

JF1050: Morning Routines, Her Best Tip for Accomplishing Your Goals, and More of your Questions Answered With Fitness Expert Jillian Michaels!

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Our guest today is none other than the fitness icon Jillian Michaels. She was nice enough to share some of her Best Ever Advice with us, I highly suggest you make the most of it with pencil and paper ready! Jillian answers many of our listeners own questions along with sharing some of her personal life with us. What a truly inspiring and genuine person, she backs up all of her talk by staying committed every single day to her goals and family. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Jillian Michaels Background:
-World’s leading fitness expert, renowned nutritionist and successful entrepreneur
-Launched new Jillian Michaels fitness app, with hundreds of fully customizable workouts
-International community of followers exceeding 100 million
-8 New York Times bestselling books, an award-winning podcast, The Jillian Michaels Show,, and keynote speaker
-Based in Los Angeles, California
-Say hi to her at www.jillianmichaels.com

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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. We’ve spoken to Barbara Corcoran (Shark Tank), Emmitt Smith (Hall of Fame running back) and a whole bunch others.

With us today, I’m so pleased to say we’re speaking to Jillian Michaels. How are you doing, Jillian?

Jillian Michaels: Hey! Good, how are you?

Joe Fairless: I am doing well, and guess what I just got done doing?

Jillian Michaels: What?

Joe Fairless: I got done doing an advanced ab circuit for six minutes on the Jillian Michaels fitness app, and my blood’s pumping and my abs are burning.

Jillian Michaels: [laughs] Good, that’s what I wanna hear.

Joe Fairless: I love that thing. I just got married; my wife is a personal trainer, and she actually told me about it so I downloaded it, plus in preparation for our conversation, and I love that thing. Props to you on that app.

Jillian Michaels: Oh, thank you. I appreciate it. Are you gonna be doing the dad bod program in there any time soon you think?

Joe Fairless: I did… I have all the pictures. The dad bod one was the one that spoke to me, so yeah, I picked that one.

Jillian Michaels: Right… [laughter]

Joe Fairless: I want those fly abs, but I really want those big muscles, so yeah, I picked that.

Jillian Michaels: Today we’ve got a little bit of time and I thought the best way to approach our conversation with you is not for me to come up with questions, but instead I asked the Best Ever listeners to come up with questions that they had for you. I actually got some questions from Best Ever listeners around the country; whenever I announced a couple weeks ago that we’d be having a conversation, I got a bunch of responses, so I’ve got some questions. We’ll just roll with this if that works for you.

Jillian Michaels: Yeah, of course.

Joe Fairless: Sweet. So I’ll warm you up, because some of them are more in depth, so I’ll warm you up with maybe a quick one… This is from Andrew from Mesa, Arizona – “What’s your morning routine?”

Jillian Michaels: Well, obviously it involves the kids. I’m woken up at the freakin’ crack of dawn by two crazy kids wanting to eat and play and get ready for their day, so… It involves first getting woken up and having coffee; I have to have my coffee immediately. There’s a coffee company that we invested in called Lucky Jack actually, that I love so much we actually bought the company. So I have coffee, then I prepare my munchkins breakfast, they get dressed, and myself or Heidi takes them to camp or school. Then I come home and start my workday, usually. So it’s pretty kid-centric in the morning.

Joe Fairless: Two follow-up questions on that. One, coffee – what are your thoughts on caffeine?

Jillian Michaels: Caffeine – I’m a huge believer; up to 400 milligrams a day. I think (like anything) the right amount and proper quality is gonna be critical. Even if you have too much vitamin A, too much vitamin C, caffeine in the right dosage and the right quality has been shown to inhibit type II diabetes and improve insulin resistance. It’s literally improved cognitive functions, theoretically it helps to prevent Alzheimer’s, it helps to inhibit pancreatic cancer, it’s a performance enhancer in the gym… But if you do too much of it, then it taxes your adrenals, it releases stress hormone… And it’s also the quality of the caffeine.

If you’re getting it from coffee, this is where cold brew and organic is really important, because hot coffee has a lot of [unintelligible [00:05:37].08] and oils and is very acidic, whereas cold brew pulls out the bad oils… Hot coffee can lead to higher levels of LDL bad cholesterol, but if you have it cold brew, it strips out the bad oils and it’s less acidic on the stomach and the teeth and what have you.
You also have to make sure that the coffee is organic, because coffee is the second heavily sprayed crop in the world with pesticides and chemicals, second only to cotton. So it’s very important that when you have coffee, you have organic coffee, preferably cold brewed coffee. Even if you have it hot, the process of brewing is much better for you.

Joe Fairless: The second follow-up question – how old are your munchkins and what’s typically served to them for breakfast?

Jillian Michaels: Five and seven, and they go through their phases, you know? Right now they like Nature’s Path pumpkin waffles, so I’ll give them that with a little bit of grass-fed butter and a drizzle of honey or organic maple syrup. They’ll have turkey bacon, they’ll have eggs, because we have a farm, so we have [unintelligible [00:06:40].01] chickens, and everything… So they’ll have farm eggs with cheese in it, sometimes they have granola – they like this Love Crunch granola on Greek yogurt…

They kind of mix it up. They’re pretty typical. No Lucky Charms, none of that garbage.

Joe Fairless: Alright, now we’re gonna switch gears… This is Osh from Cincinnati, Ohio. He asks “What’s the one thing you could change about yourself to make you even more successful?”

Jillian Michaels: Patience, man. That’s the key, which is also tied up with impulsivity. You have to constantly [unintelligible [00:07:11].25] it’s not personal, it’s business, and you’ve gotta manage your patience and your emotions and your impulsivity. Luckily, when I know that I’ve had it with someone or something, I literally just hand it over to my business partner, who has great patience and diplomacy, and I’m like “I can’t. I’m gonna just roast this person. I’m handing the ball over to you.”

Joe Fairless: Thinking back and as objectively as you can look at it, would you have achieved what you have achieved if you had more patience along the way? And I ask that because sometimes I think that if you had approached it differently, then you wouldn’t have accomplished what you had, because you were in some cases impatient.

Jillian Michaels: I would say no to that one. I think the patience would have allowed me that more persistence with certain issues, or better tolerance of unethical individuals we work with that still have power and control… So I think that that could have helped. If I was to look back on mistakes that I’ve made, it would have been not fighting harder. I do think this is predominantly a female thing, I hate to say, but as a woman they constantly ignore you, they yes you to death, they ignore you, they yes you to death… Then you end up throwing a tantrum trying to get your way, because you’ve tried a million other directions or a million other avenues to get you them to listen, and then you’re difficult, you’re a bitch and all that stuff.

So the one thing that I wish I had done in these instances, where there were times I knew decisions were bad, choices were poor, and I thought “Well, they probably know more than me. They’re a producer after all, or they’re a buyer at this big bucks store, so they probably know better than me”, and then what happens is the project doesn’t work, and everyone blames you anyway. So that’s where you think, “You know what? I should have fought. Who cares if they called me a bitch? If it worked, then we would have continued working on the project anyway”, and instead I allowed these things to go on, even against my better judgment, and it doesn’t work and they never wanna speak to you again because nobody wants to be the owner of a failure, right? Success has many fathers, failure is an orphan.

So I would have fought harder and not cared so much what people thought, and I would have been more patient in working certain deals, and having a bit more diplomacy instead of being like “I don’t care. These people are bad people, I don’t wanna work with them”, whereas my business partner is like “You know what? We need to find a way to work around them.”

Joe Fairless: I love that. Kathy from Atlanta asks “Who do you look up to and why?”

Jillian Michaels: In truth, I find my inspiration in what I call “regular people” in that they’re not privileged, they haven’t been given great advantages to success. To see them overcome obstacles and adversity is very inspiring to me. It’s one thing when you’ve been given tremendous privilege and access, and when you have, I think that the person to whom much has been given, much is required (right?) it’s your job to spread the wealth and make the world more fair. But when I see everyday people overcoming obstacles against all odds, that’s really where I find my inspiration and most of my respect goes. Because it’s easy to be successful when you’re standing on the shoulders of previous generations or nepotism and you’ve been given an unlimited amount of money to make mistakes and to find your way… So that’s really where I find most of my inspiration.

Joe Fairless: Erik from Cincinnati asks “What’s the biggest piece of advice you gave to someone or even yourself that helped remain disciplined and on track with your goals?”

Jillian Michaels: I really help people establish their Why, and I think this has become such a component of mainstream pop culture nowadays… But many years ago I had read a book called “Man’s Search For Meaning” by a guy named Viktor Frankl and he was actually a Holocaust survivor who had kind of taken a Nietzsche quote, and it was like “If you have a why to live for, you can tolerate any how…” – the work associated with the goal.

To me it’s like work with a purpose becomes passion, but work without purpose becomes punishing. So you have to help people find their purpose, because you may never love working out; you may never love putting in 12-hour days at the office, you may never love the sacrifices associated with what you want to achieve, but if you’re passionate about what you want to achieve, it’s worth it. I think that’s the most important thing.

Joe Fairless: And what do you wanna achieve?

Jillian Michaels: My goals are very diversified. Obviously, I have goals for my family and my kids and what kind of parent I wanna be and for how long… The longevity and the quality of my ability to parent my kids, and in fact, my son is home right now with chickenpox, which is why I had to take my daughter to camp today… If you happen to hear that in the background [unintelligible [00:12:12].25] being around for my kids and being an active parent with my kids. That’s important to me for years and years to come.

Also, on a professional level it’s about being a platform and a channel for up-and-coming brands and personalities that I think present affordable and accessible alternatives to better for you options, whether it’s food or boutique fitness, or healthy supermarkets online that thrive, that beat the food desert issue and the affordability issue, and petition to make food stamps available for healthier products… To me, when I look at my brand, it’s “How do I use this platform that we’ve built to shepherd (if you will) young and up-and-coming brands that I think are doing great things in the world?” That’s my business goal now.

Joe Fairless: And then on business goals, Maureen from Auburn, Maine asks “What advice can you give busy moms on how to manage and schedule their time with entrepreneurial endeavors and family?”

Jillian Michaels: I call it the 12-hour rule. My thing is that if you can cut out 12 hours a week for just you, then you can make it work. It will never be perfect, and I think that’s tough, because as Americans we get into this rugged individualism, and “all or nothing”, “perfect or not at all”, and I find the people who are motivated have that mindset, which is really dangerous, because it’s impossible if you have kids; it’s an impossibility, and you’ve gotta get into the “good enough” mindset and you’ve gotta have more patience.

So if you’ve got 12 hours a week – if you’re awake 16 hours/day, seven days/week, the math on that is like 112 hours a week or something of that nature that you’re awake. Let’s say you’re putting in a 60-hour workweek. Now you’re left with like 50 hours, and you take 40 of them and they’re all about your family and your kids, you can still find 10 hours to focus on you (10-12 hours) and you have to schedule it. So over the course of the month, that means you’ve got time to get your hair done, your roots done, your haircut; you got in time for the manicure, pedicure. You have four half-hour workouts in a week; you manage to get that date night in with your significant other where it’s just quality alone time; you’ve got a girls’ night in, or a boys’ night out, and that is the number – it’s 12 hours a week.

If you spread it out over the course of the month, one week is your checkup, the next week it’s your hair, the next week it’s the manicure/pedicure, it’s the massage that you needed, it’s the four and a half hours of exercise, it’s the food prep for the rest of the week… And you’ve gotta appreciate that it doesn’t happen all at once; it’s a slow and steady burn of moving yourself in the right direction. That’s what I do, and look, I owe people answers on things right now… I go “Okay, my deadlines for that” — i put them in order of priority and I’m like “My deadline to get back to you on this book proposal is gonna be Tuesday” and I paste it out, I put them in order, and prioritizing and communication is key.

Joe Fairless: And the last question – this is from Steve in Los Angeles… “Do you use visualization, and if so, how do you feel it has led to more opportunities in your life?” Talking about the law of attraction…

Jillian Michaels: In truth, I don’t necessarily know that I believe in the law of attraction in that it’s like “Think money and money will come.” I do think that focusing on your goals is important, because it allows you to visualize what you want, which I think is gonna generate positive emotion towards it, and that positive emotional connection is gonna help push you through the work and the sacrifice associated with the goal. So I think there’s benefit there.

But you also need to educate yourself about the goal, chart a very deliberate and specific roadmap of informed actions to take towards the goal in order to find inevitable success and learn from the mistakes along the way. But when you get into — the law of attraction makes me a little nervous in that it’s like “Oh, I just focus on it and it comes?” That’s total BS. Complete scam. That whole book The Secret is a total scam, and it really bothers me and I think it’s done a massive disservice to so many people in the world.

Joe Fairless: Well, Jillian, thank you for being on the show, from talking to us about the 12-hour rule for how we juggle priorities, which you are right now – I mean, you’ve got one of your kids with chickenpox and I appreciate you taking some time to talk to us – to identifying what our purpose is… And one of the things that really stood out to me was the patience aspect, where you mentioned if you had more patience at times then you would have more persistence; the patience and persistence connection, I had never thought of.

Thanks for being on the show. I hope you have a best ever day. Where should the Best Ever listeners go to learn more about what you’ve got going on?

Jillian Michaels: I would just say you can go to my social media channel – which is my name, of course – or go to JillianMichaels.com and you can check out the app; it’s available on iOS and Android, and it’s pretty much the hub for everything that we do that’s Jillian Michaels brand-based. So I’d just say JillianMichaels.com.

Joe Fairless: Jillian, thanks for being on the show. Have a best ever day, and we’ll talk to you soon.

Jillian Michaels: Thank you, you too!

Best Real Estate Investing Advice Ever Show Podcast

JF1012: $6,000 POCKETED from His Property Manager and How He Dealt with Fraudulent Activity #SituationSaturday

Listen to the Episode Below (20:39)
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It’s unfortunate, but there are property managers out there that will take money from your wallet…even inadvertently. Because it’s a thankless job, many things can go wrong, and you may be the one taking the loss. Hear about our guest losing big money to his property manager in what he did about it.

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Marco Santarelli Real Estate Background:

– Founder and President of Norada Real Estate Investments
– Host of the Passive Real Estate Investing show, where people like you learn how to build substantial passive income while creating wealth
– Creator of DealGrader™ – a scoring system that measures the investment quality of a real estate investment
– Purchased his first real estate investment at the age of 18 and is licensed broker in California
– Based in Orange County, California
– Say hi to him at http://www.noradarealestate.com/

Click here for a summary of Marco’s Best Ever advice: http://bit.ly/2rfsND4

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how to deal with dishonest property managers


Joe Fairless: Best Ever listeners, 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.

I hope you’re having a best ever weekend. Because it is Saturday, we’re doing a special segment called Situation Saturday, where we talk about a specific challenge that our Best Ever guest had and how he/she overcame it. Today we’re speaking to a he, so how HE overcame the situation.
We’re gonna be talking about, well, if you have a challenge with a property manager that is ripping you off; in this case, the property manager had stolen six thousand dollars in collected rents in one month from today’s guest. How are you doing, Marco Santarelli?

Marco Santarelli: Hey, Joe. I’m doing great, how are you doing?

Joe Fairless: I’m doing well, nice to have you back on the show. Best Ever listeners, you can hear Marco’s Best Ever advice by simply searching Marco Santarelli at BestEverShow.com, and you’ll be able to hear his episodes.

He is the founder and president of Norada Real Estate Investments. He is the host of a wonderful show called “Passive Real Estate Investing”, where people like you learn how to build substantial passive income while creating wealth. He is the creator of Deal Greater, which is a scoring system that measures the investment quality of a real estate investment. He is based in Orange County, California.
He bought his first rental property at the age of 18. You can hear his story, again, on a previous episode. We’re gonna focus today on this challenging situation. But you know what, before we do that, Marco, do you wanna give the Best Ever listeners just a refresher on your background and your current focus?

Marco Santarelli: Sure, Joe, and thanks for having me back on the show, I’m very honored. Just real quick, I jumped into real estate investing at the age of 18; I just knew that real estate was a wealth creator just by looking at other people around that were quietly and slowly creating some amazing wealth. So I just literally jumped in, bought a property, fixed it up, put a sign out in front, took some applications, screened some tenants… I had no idea what I was doing. I was kind of going based on gut instinct, but I leased it, managed it for several years, and then ultimately I ended up selling it, which was my biggest regret, because it was about a $40,000 property at that time, many, many years ago, and it’s about a $400,000 property today. If there’s any takeaway here, it’s “Never sell your portfolio.” Yes, you can transfer the equity and do a 1031 exchange, but never sell. Keep the equity and keep building cashflow.

Fast-forward to 2003-2004, again, to make a long story short, I kind of jumped back into real estate investing full-time at that time, and this will segue into what we’re talking about today, by the way… But I jumped back into real estate investing full-time, and I noticed a need that investors all around me were spending lots of time and money educating themselves and doing a good job of it, but they still weren’t pulling the trigger. At the end of the day, unless the rubber meets the road, you’re not gonna build a portfolio and create wealth for yourself or create financial freedom. So the entrepreneurial mindset is “Find a need and fill it.” Well, the need at the time was helping these investors that wanted to build real estate get into it. That’s how the business was born.

I mention that because that only came to be because I was out there doing it. I was out there finding the deals, negotiating them, putting them together and buying real estate for myself. I bought a lot of property in a very short period of time and I learned a lot from it, but at the same time I made a lot of mistakes.

Joe Fairless: What we’re gonna talk about today – it might be a mistake on your part, but certainly when someone is committing fraud or just stealing from you, then most of the onus is on them for what was going on. Tell us the story… I gave the little teaser of how at one point you had $6,000 in collected rent stolen in one month; can you give us the back-story and just tell us what happened?

Marco Santarelli: We put a lot of trust in our property managers within our company, and on the podcast I always half-jokingly say that “You live and die by your property manager.” The reality is that property management is a thankless job. It’s very important, and you really need to think of your property manager as an asset manager, not just a property manager… Because they’re managing your assets, so it is a critically important position. When you hire them, you need to hire them well.

Well, I kind of side-stepped this whole thing in choosing the right person. I had built trust in a real estate agent in the [unintelligible [00:06:56].17] back in 2003-2004 that I used extensively to help me find and source deals. She kept bringing me opportunities and I really put her to work; I was submitting lots of contracts, a lot of offers on properties to try and find the right deals at the right price that work for me.

She was very helpful, and I grew to know her and trust her, so I took it for granted that she could help me and do a good job in the management side of things. The problem was that she was a full-time real estate agent and a part-time property manager. Yes, she was licensed, yes, she was qualified to do it, but she wasn’t an experienced real estate investor and I don’t think she made a heck of a lot of money as a real estate agent, because for the most part I was buying 40k, 50k, 60k and 70k properties. Real estate commissions are not very large when you’re only making 3% of the sales price.

Anyway, I hired her as my property manager, and she was managing dozens of units for me. Because I was in low-income areas, the tenants paid cash. It was either a money order or cash, so she was collecting cash. You can imagine that when you start to stack up hundreds of dollars or thousands of dollars every month in collecting rents, it starts to look pretty enticing.

If you’re not making as much as you’re collecting in rent for other people i.e. your client (me), I think the temptation starts to grow on you. I didn’t find this out early on, but it started to grow suspicious and become fishy as the months rolled by where I was getting less and less in rent and there were more and more defaults or late payments… So I started to question things and I started to fly out and check on things a little more often. What I came to find out is that 1) those money orders were being given to her nameless or made out in her name. I don’t wanna say her name, but she basically was telling the tenants that “You need to make them out to our company, or the property manager on behalf of the landlord.” Well, no, that’s not what you should be doing, but she did.

Where this all came to a head is in one month where I had my largest collection of rent – and she literally told me this on the phone, she said “I’ve collected $6,000 for this month”, and I said “Great, let’s send it to me…” She told me that she put it in a UPS overnight envelope, dropped it off at the UPS store and I should have it the next day or in two days.

Well, it never showed up. Days went by and still there was nothing, so I called her and I said “Are you sure you dropped that off? Are you sure you mailed that?” and she claims that she did. I can’t believe what she said, because I wasn’t there. Long story short, all I know is that she claims to have dropped it off at the UPS store and went back to double-check and make sure that it was sent. The fact is that either she took it, which is what I have come to believe, or she dropped it off at the UPS store and one of the employees knew what was in the envelope and stole it.

Basically, I lost thousands upon thousands of dollars of rent over the course of a number of months, only because it was theft; it was nothing more than theft.

The bottom line here is you need to work with a professional full-time property manager that is ideally in or part of a bigger company. If you’re dealing with a real estate agent and/or a part-time property manager, it could lead to trouble because there’s no accountability, there are no checks and balances. If you are dealing with a property management company, even if it’s just a company of three people, at least you will have systems in place, you’ll have people that you can contact and they can report back to you. I think that’s the lesson learned here with this mess.

Joe Fairless: So the two takeaways that you mentioned – full-time, not part-time, and part of a larger company. The full-time versus part-time – that makes sense; part of a larger company – that makes sense. Any other tips for the listeners as you look for property managers, how to find the best property managers?

Marco Santarelli: Definitely, and you really hit some key words there… Full-time, not part-time. Professional, meaning that this is what they do as their profession, their living; they’re not part-time this and part-time that. This is really what they do as their career, their profession; this is their expertise. In many states, they need to be licensed in order to do that, so that’s one qualification criteria right there – do they have their real estate license? Whether it’s an agent’s license or a broker’s license. If it’s a one-man show, that probably won’t be your best way to go, because you have no redundancy; there’s a single point of failure. If this person gets sick or gets hit by a bus, what happens? You have no one to contact, you have no one collecting rents; you have one single point of failure, so you need a company that has redundancy.

Here are some tips for finding or hiring that best property manager; for your Best Ever listeners, here’s a way to find the best manager. One thing you wanna find out is how many properties they are managing. If they’re only managing one, two, three, five or ten, this is very much a part-time endeavor. But if they’re managing 100, 200, 300, then you know it’s a serious business. You wanna stick to companies that obviously do this day in and day out and have the network of people in place to manage your property.

The second thing you might wanna find out or ask them is do they own any rental properties themselves? Now, this can go one of two ways… It’s kind of like section 8 – people either love section 8 tenants or they have section 8 tenants. The property manager, if they own their own rental property, then they understand what being a landlord is like and what they would expect as a property manager. They have expectations, so they might be delivering and giving you the service and the communication that they would want as an investor.

The flipside of that, which is arguable, is if they own their own portfolio of properties and they have a vacancy and you have a vacancy, is there a conflict of interest there where they’re going to fill their vacancy first over yours? So that’s up to you to decide whether it’s a good thing or a bad thing whether they own rental properties themselves or not.

A critical component is “Do they inspect or visit those properties on a regular basis?” I think most management companies will go once per year, but if they make it a routine to go once a quarter or once every six months as just either a scheduled inspection or a random inspection where they just drop by just to even look in the door and just say “Hey, I’m just in the neighborhood, I wanna see if everything’s okay.” They can look through the door, maybe they can just say “Do you mind if I come in and just take a quick look around and just make sure everything’s okay?”

Those inspections just keep the tenants on their toes, but it also allows you to find out through the property manager the condition of the property and the tenants and just to make sure things are running smooth.

Kind of a more intangible thing is “Does your property manager try to make you happy? Are they going out of their way to accommodate you and to make sure that they’re meeting your needs and expectations?” If they don’t have time to talk to you or they’re rushing you off the phone or their e-mails are very short, that’s not a good sign. It shows they don’t care enough to take care of you the right way, or maybe they’re too busy for their own good. So when an issue does come up, are they spending the right amount of time to address your needs and concerns and the problems that you’re having with your property? So it’s all about customer service. You wanna make sure that they’re keeping you happy.

This is a very basic one, but do they have systems in place? A lot of property management companies today have cloud-based software, propertyware where income and expenses are reported, notes on your account is captured and reported and you don’t need to call the property manager; you can just literally sign in from any web browser and just see the state of your property and see what the accounting is like and what expenses were made over the last month or the last year. If they don’t use systems, they’re really behind the times, because you have to have these online tools to operate today.

Then just a couple more tips… Their fees – most management companies are 8%-10% of collected rents; 10% – you can call it the street rate, if you’re just walking off the street. But generally, they’re going to be around 8%-10%, and they’re negotiable, especially if you have a larger portfolio. If you have many units, that rate could be driven down. But the important point here is make sure that the percentage that they’re charging you is on collected rent, not on scheduled collections… Not what is expected to be collected, but actually what they actually collect. Then there’s motivation to perform, and if that property is not performing – in other words, if you’re not collecting rent every month, they’re not making a profit.

Joe Fairless: Do they actually try to do a fee off of scheduled rent, not collected rent? I’ve never heard of that.

Marco Santarelli: Yes, some of them do. You have to read the agreement very carefully before you sign a management agreement with a property management company. Fortunately, most of them do it off of collected rent, but some of them will do it on what is expected. If they sign a one-year lease with a tenant and the tenant is paying fine for eight months and then the ninth month comes along, the property management company still expects to be paid, and they’re gonna take it out of your account if they have to, or they’ll collect it once they do collect rent from the tenant going forward. In other words, they always get paid, but you might not get paid. You don’t wanna be in that situation, definitely not.

My seventh tip would be… I guess just know how they’re going to address maintenance issues. Do they have in-house maintenance staff? A lot of them have in-house handymen that can handle most maintenance issues, a lot of them will outsource it. But it’s really more of understanding how they handle it and are they charging you a fee?

It’s not uncommon for them to tack on let’s say a 10% maintenance management fee on top of whatever that bill is on the maintenance issue. So it’s not that that shouldn’t be there, it’s just know what it is before you get into a management agreement.

Joe Fairless: Those are seven tips that will help us, for sure, identifying the right property management company and the wrong property management companies and choosing the best one. Then on top of that, I love the thoughts on the full-time management manager who is working for a larger company, so there’s more accountability.

Marco, where can the Best Ever listeners get in touch with you?

Marco Santarelli: There’s two websites. If they want more information on real estate investing, especially on the passive side, it’s just our podcast at PassiveRealEstateInvesting.com, but all of our properties that are in markets all around the country are on NoradaRealEstate.com.

Joe Fairless: Awesome. Well, the seven ways to screen a property management company… One – how many properties are they managing? Two – do they own any rental properties? Again, you said that could go either way. Three – do they inspect properties on a regular basis? Four – are they gonna meet your expectations? First you have to define what your expectations are – responsiveness, the level of communication you expect to receive, and then are they going to reach those expectations, exceed those expectations? Five is what software do they use? I’ve had management companies that have no software or old-school software, and it was a hot mess; you’ve gotta make sure they have the right software, maybe get some sample reports that they will provide you.

Six – the type of fees. Holy cow, if anyone tries to charge you off scheduled collected, not actually collected rent, run the other direction. Then lastly, how they handle maintenance and the fees that are charged. Make sure you’re budgeting into that. And we already talked about the full-time manager working at larger companies. These by no means are absolutes, but certainly if you follow them you’re going to mitigate the risk for having a bad property manager, one who takes $6,000 or $8,000, or whatever that number is — I think it’s $6,000 in rent, or it just disappears… Regardless of whatever happened to it, it just disappeared either way.

Marco, thanks for being on the show. I hope you have a best ever weekend. I always enjoy having a conversation with you. We’ll talk to you soon.

Marco Santarelli: You too, Joe. Thank you.


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Best Real Estate Investing Advice Ever Show Podcast

JF995: Defer Your Taxes with the 1031 Exchange!

Listen to the Episode Below (25:29)
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You may have heard that you can defer your taxes that are due when you sell a property, also known as capital gains tax. That’s exactly what you are going to learn today! One of the difficult pieces of this would be finding an alternative property to defer the taxes. He’s definitely got the solution!

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Leonard Spoto Real Estate Background:

– Oversees sales and marketing operations for Asset Exchange Company
– Frequent keynote speaker and accredited course instructor on the subject of 1031 Tax Deferred Exchanges
– Presented his real estate and tax workshops to over 20,000 Realtors, lenders, title professionals & investors
– Based in San Francisco, California
– Say hi to him at www.ax1031.com
– Best Ever Book: Olivia the Pig

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advice on defering taxes


Joe Fairless: Best Ever listeners, 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, Leonard Spoto. How are you doing, Leonard?

Leonard Spoto: I’m doing great, Joe. Thanks for having me on your show.

Joe Fairless: Yeah, nice to have you on the show, and looking forward to diving in. A little bit about Leonard – he oversees sales and marketing operations for Asset Exchange Company. He’s a frequent keynote speaker and accredited course instructor on the subject of 1031 tax deferred exchanges, and he’s based in San Francisco, California. With that being said, Leonard, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Leonard Spoto: Absolutely. I’ve been doing this for about 15 years. We are a 1031 exchange accommodator. We work with real estate investors who are using section 1031 within the tax code to defer capital gains taxes. When you do an exchange, when you defer taxes on the sale of your investment property, you have to work with a neutral third party to facilitate the process, and that’s what my company does. We prepare all the legal documents that are required, we make sure that our clients are in compliance with the tax code, and we actually hold sale proceeds until the investor or our clients find a suitable replacement company to invest into. So we’re an accommodator.

Like I said, we’ve been doing it for about 15 years. We do all types of different exchanges, from really simple, standard delayed exchanges to more complex reverse and construction exchanges.

Joe Fairless: Let’s talk 1031 2.0, next level stuff. Let’s assume that our listeners know what a 1031 is and the main components to it… What can you tell us that you would tell more sophisticated people and educate them on topics as it pertains to 1031s?

Leonard Spoto: There’s a few things, kind of next-level 1031 exchange stuff… Like I said, either standard delayed exchanges, one of the things that we work with most of our clients on where they sell a property and then buy a replacement property in that order. But as you and your listeners probably, right now one of the biggest challenges in the real estate market is finding good, suitable replacement property. I don’t care what market you’re in, whether it’s here in the West Coast or where you’re sitting on the East Coast, Joe, there’s just not a lot of inventory and the good properties are getting gobbled up quickly. So one of the challenges that a lot of our investors have is if I’m gonna put my property up for sale and I’ve got a limited time to reinvest, I may not want to actually sell because I might not have enough time to find a suitable replacement property within that very tight timeframe. So a lot of our more sophisticated investors are asking us about what’s called the reverse exchange.

The reverse exchange allows an investor to buy a replacement property first. As the name implies, you’re doing an exchange, but in reverse. You’re buying a replacement property first, and then you have 180 days to sell; provided that property sells within 180 days, that sale will be tax deferred.

Now, these exchanges aren’t for the beginner investor, they’re not for the unsophisticated first-time investor because they are a lot more challenging. When you do a reverse 1031 exchange, you can’t actually own the new property that you plan on buying AND the old property at the same time. An exchange is going from one to another; you can’t just go out and buy something and call that a reverse.

With a reverse exchange, we actually become the buyer for you. We are signing your contract, we become the buyer for that property, and we warehouse the purchased property until you can get yours sold.

Joe Fairless: You become the buyer for the property that I’m going to buy?

Leonard Spoto: Yes.

Joe Fairless: Okay. Do you put up the funds to buy the property that I’m going to buy?

Leonard Spoto: Yeah, good question… We don’t. I’m not in the business of giving you money and buying property for you, so what happens is… Think about it – you haven’t sold anything, right? And you don’t necessarily have that big pile of cash that most exchangers have, because the building you wanted to sell hasn’t sold yet. We do not buy the property for you with our cash, you’ve gotta do it. And the challenging thing about reverse exchanges as well is, let’s say you do have enough for a down payment on the property you wanna buy. So you’ve got $200,000 in your piggy bank and you’re gonna go out and buy a million dollar property. You plan on getting a loan from a traditional lender like Wells Fargo or Bank of America, and then you tell the lender “Well, by the way, I’m gonna borrow $800,000 from you, but Asset Exchange Company, the 1031 exchange company, is gonna be the buyer.” You can imagine how that goes over like a lead balloon in the underwriting department at that bank.

So getting a loan on a reverse exchange is tough, so most of the reverse exchanges we do are with clients either paying all cash, clients using non-traditional lending sources like private money lenders, or if the seller of that property is willing to seller-finance the deal. If one of those things are available to a client, then the reverse exchange might be an option. And to be honest with you, 90% of the reverses that we facilitate are with clients who are just paying all cash. They’ve got a big, giant lump of cash maybe that they can use from the stock market or just a big piggy bank that they’re able to access, and they’re able to buy a replacement property without getting a lender involved. It’s an all-cash purchase, we become the buyer, we sit on that property as the owner until there’s sells. Once they get their property sold, then we transfer the new property to them.

Joe Fairless: That’s an interesting concept. What type of documents — I know you’ve got all the documents, so that’s why I’m curious… What type of documents do you have in place for your client and you? Because they’re putting up the money, but you’re the owner.

Leonard Spoto: Obviously, there’s a pretty lengthy agreement that we all sign, and we are the owner in exchange — as what’s called an exchange accommodating title holder, only it’s not in our interest to become the owner of that property for the long term. We’ve got a pretty iron-clad agreement that specifies that as the client completes the exchange by either selling their relinquished property or exceeding the exchange timeframe, which most of your listeners probably know is 180 days… When one of those two things occurs – either they complete the exchange by selling their property, or going beyond the 180 days, the property we are warehousing for them automatically transfers back to them.

So we’re not in the business of obviously owning property; we only go on title for the accommodation of the reverse exchange. In fact, when we are on title to that property, we also entered into a triple-net lease with the client who’s doing the reverse exchange, and that lease will give the investor (the exchanger) all the burdens and benefits of ownership. So even though I’m on title to facilitate the reverse exchange, if there’s tenants in that property that you were buying in the reverse, you are gonna deal with those tenants, you are gonna collect the rent from those tenants. If there’s leaky toilets, you’re gonna go out and fix them. I’m not in the business of managing those properties for you. We are only on title in name and only for that reverse exchange.

Joe Fairless: And only for 180 days, right?

Leonard Spoto: For only up to 180 days. Hopefully a lot less, because hopefully it takes you a lot less time to actually get your relinquished property sold.

Joe Fairless: So the reverse exchange would make the most sense if I have cash or access to cash via a private money lender or seller-financing, and I am concerned about finding a replacement property or I have identified my property, I need to buy it now, but I haven’t sold the property I’m exchanging it from.

Leonard Spoto: Yeah, that is correct. Sometimes people get forced into a reverse exchange. You did your homework, you got your property on the market to sell, you had a buyer that came in, the buyer looked great, so you went out and made an offer to purchase something. You got into contract to purchase, you’re gonna time it so that your sale closes today, your purchase closes tomorrow, but then all of a sudden, that buyer for the property that you are selling all of a sudden just disappears, they go away for whatever reason. Now you find yourself in contract to buy something, you thought you had a buyer for the property you’re selling, but that guy took off, so you’re forced into a reverse exchange – not an ideal scenario, but that is something that happens as well, where people find themselves in a reverse exchange.

Joe Fairless: Let’s talk about some stories that you’ve either experienced yourself or heard from others, where a 1031 didn’t go according to plan and it went sour. Can you tell us a couple stories of what you’ve come across?

Leonard Spoto: Within the last 3-4 years, the biggest reason why an exchange goes sour is because they simply can’t find a suitable replacement property in the timeframe. When you’re doing an exchange, if you sell a property you have 45 days to identify what you’re thinking about buying and a total of 180 days to purchase and close on that replacement property.

So the biggest challenge in today’s market is finding that property within those 45 days, because it has to be identified within 45 days. We’ve had clients who sold their property, went to Hawaii for 2-3 weeks to celebrate the sale, came back and said “Jesus, there’s nothing on the market. What am I gonna do?!” That’s just poor planning, and exchanges blow up all the time because people just fail to plan properly.

That’s one thing – you’ve gotta do your homework if you’re gonna get into the 1031 exchange. There’s a lot at stake. My clients routinely have tax liabilities of hundreds of thousands of dollars; occasionally, those tax liabilities can get into the millions of dollars for some of our big clients… So if you are not doing your homework, you’ve got a lot at stake if the exchange fails. The government’s gonna come in, and in high states like California where we operate out of, you’re looking at about a 33% effective tax rate between state and federal government. Like I said, it can be hundreds of thousands of dollars, sometimes millions of dollars for our clients. So the biggest mistake some of the clients make is just not planning properly.

Now, there are occasions where people plan properly, they know what they’re gonna buy, they go out, they get into contract on something within the first 45 days, but then of no fault to themselves are not able to purchase something… Whether the deal falls through, maybe the financing falls through… Those are somewhat unavoidable, but in those cases what we always counsel our clients to do is have a backup. You’ve got your first choice, you think it’s a slam-dunk, but it’s always smart to identify a backup property, do some research, find out what else is on the market that might be a suitable option if your number one choice does not come through. Have a backup.

I’ve seen clients who just don’t do that. They only nominate one property on day 45, they’re already in contract on it, they think it’s a slam dunk, and then something happens. So it’s always good to make sure you’ve got a backup there.

Joe Fairless: And just a point of clarification… Do the 45 days run concurrently with the 180 days?

Leonard Spoto: Yeah. Day 45 is within the 180 days. You close escrow on your sale – that’s day zero. The first 45 days are what’s called “the identification period.” On day 45, no later than midnight of day 45 you have to submit your identification letter, stating in an unambiguous manner the properties you’re considering acquiring, and then you’ve gotta purchase and close on at least one of those within the total 180-day period.

Joe Fairless: Obviously, once our property that we’re selling is under contract, and maybe even a little bit before if we put it on the market, then we should be identifying the property; that way we’re not tightening that window unnecessarily.

Leonard Spoto: Absolutely. One of the things that my clients do, especially on the bigger deals, is they will get into contract to sell – you’re gonna sell a five million dollar apartment building, you’re gonna close escrow, and that triggers the timeframe, the beginning of your exchange. Some of my more sophisticated clients, they will work with the buyer to have a flexible close of escrow date. So instead of closing in five days with the all-cash buyer from overseas who’s anxious to get ownership of this property, they say “Yeah, I’ll sell you this property, but I don’t wanna close in five days. In fact, I want to close in 30 days with the option to extend another 30 or even 60 days, so that I have time to find that replacement property for my exchange.”

Joe Fairless: Does your company get compensated more if it’s a higher price point for the property that is being exchanged?

Leonard Spoto: Good question. No, we don’t. We just charge – and most exchange companies throughout the country are like this – a flat fee on the sale side and a flat fee on the purchase side, and the exchange fees are really reasonable. Our company has $750 on the sale and then $250 on the purchase, so most of our clients are selling one, buying one, and they’ll simply pay a $950 fee.

Joe Fairless: Obviously, you all must make money another way. I”m guessing that it is by investing or making dividends on the money that’s sitting in the exchange account?

Leonard Spoto: We are not allowed to actively invest funds; the funds have to be held in a cash-equivalent account, so that is a money market account. We currently keep the float on those funds as part of our fee. In higher rate environments, 5-7 years ago when money market accounts were yielding 5%, that yield was split with the client, but right now it’s less than 1%, so the entirety of that yield is taken as part of our fee as well.

Joe Fairless: With the exchange, is there anything else that we haven’t talked about that’s 2.0 level that you wanna mention?

Leonard Spoto: With some of the more sophisticated investors, one of the biggest issues right now is what we call in our industry a “drop and swap.” Many times investors will pool resources to go out and buy a large property. Let’s say you’re gonna buy a ten million dollar apartment building… Very few individuals will just do that on their own; they’ll typically bring on partners. And when you bring on partners, if you form an entity to own that property, such as an LLC or a partnership, it’s very important when you sell that property that the taxpayer who’s on title is the taxpayer that does the exchange. So if you have a multi-member LLC, the LLC will become its own tax-paying entity. The LLC is actually the entity that’s selling the property and the entity that’s eligible to do the exchange. So LLC will sell the property, LLC does an exchange and LLC has to buy the replacement property to complete the exchange.

Now, that works well provided the members of the LLC all wanna go forward together. Now, 9 times out of 10 though, when a property sold after X number of years, a lot of the members will wanna take some cash, do their own thing… It’s very rare that all the members wanna go forward together after X number of years of owning a building together. But what happens is you can’t go out and just take your cash and do your own exchange if other people are gonna pay taxes, because you don’t have several taxpayers on the title, you only have one – an LLC.

So one of the big issues with our more sophisticated clients is planning for an exchange a year or two prior to the actual sale. You’ve gotta get that LLC off title, you’ve gotta get the individual members of the LLC on title as tenant in common owners, so that they are taxpayers on title to the property, so that when it comes time to sell it, they can take their proceeds and exchanges their own taxpayer, or pay taxes, if they so choose. So planning on an exchange a year or two in advance is gonna be very helpful, because what you don’t wanna do is get an escrow to sell a property and be ready to close in two weeks, and all of a sudden learn that some of the members wanna cash out and pay taxes and some of the other members wanna do an exchange, because then you’ve got a big problem.

Joe Fairless: That makes sense. The drop and swap is referring to the switch from the entity that was previously to tenants in common, correct?

Leonard Spoto: That’s correct.

Joe Fairless: Another way to do that – to simply buy out the members in the LLC’s ownership interest and then allocate accordingly for whatever they would pay in taxes…?

Leonard Spoto: Yeah, you could do that. So if you have an LLC that owns let’s say a five million dollar building and you’ve got one member who doesn’t wanna do an exchange and several who do, the people who do want to exchange could simply buy that guy’s shares of the LLC. That would be a taxable event, but it gets the non-exchanger out of the deal, and then the rest of the group can then go forward with the exchange… That is another way.

Now, a) you’ve gotta have the funds to be able to pay that guy out, so if liquidity is an issue, that might not work. But the other thing is that now you also still have an obligation to replace the full value of the exchanged property.

Joe Fairless: That LLC is still on the hook for 100% of the taxes, even though you bought someone out.

Leonard Spoto: Exactly. So the LLC eventually, if it does cash out, is still on the hook for 100% of the tax liability.

Joe Fairless: Based on your experience as a 1031 exchange expert, what is your best advice ever for real estate investors?

Leonard Spoto: Plan. Especially in today’s market, due diligence is important, doing your homework is very important; building the right team to support you during the process is very important, so planning, planning, planning. You only have a window of 180 days to get these deals done. And as I mentioned, inventory is tight all over the country, so the sooner you start planning for your exchange, the higher chance that it will be successful.

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

Leonard Spoto: I am.

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

Break: [00:21:49].15] to [00:22:37].15]

Joe Fairless: Best ever book you’ve read?

Leonard Spoto: Best ever book I read? That’s a tough one… I’m gonna have to pass on that, I can’t think of anything off the top of my head. [laughs] I’m sorry, Joe… The only books I read right now – I’ve got a two-year-old and a five-year-old, and the only books I read are Olivia The Pig and Humpty Dumpty, so we’ll go with Olivia The Pig.

Joe Fairless: I’m going to include that in the notes… That’s probably the biggest smile that I’ve had on my face while typing the book that someone says. Olivia The Pig – alright,  done. Best ever way you like to give back?

Leonard Spoto: We donate to a couple of really good causes that are near and dear to our heart. Hydrocephalus Foundation is one of them, and the Ronald McDonald Fund.

Joe Fairless: What’s a mistake you’ve made on a business transaction or just in business in general?

Leonard Spoto: Not effectively communicating. You think everybody is on the same page, and this just happened to me the other day, where you think everybody is on the same page, but they’re not… So aligning everybody’s goals and making sure everybody understands the goals and making sure that you understand what you think your partners are gonna be doing.

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

Leonard Spoto: Two ways – telephone is 877 471 1031, and then we’re on the web at ax1031.com.

Joe Fairless: I’m a big fan of your phone number.

Leonard Spoto: It’s easy and it’s appropriate.

Joe Fairless: [laughs] Well, Leonard, thanks for being on the show. We went over a lot of information in a very short amount of time, and that’s exactly how I like to do it. You were really informative, from drop and swaps, which pertains to my business (multifamily syndication and large deals, as well as other syndications) and reverse exchanges, which is a potential solution to not finding the replacement property in time; do the reverse exchange… Gotta have access to cash, and you need to plan accordingly if you aren’t gonna be within that 180 days. And the plan-plan-plan advice that you have  – that’s pretty straightforward and it’s something that we need to pay attention to the business model in advance. That way something like a 1031 exchange where we don’t find a property – that doesn’t happen because we’re planning and preparing prior to that. So thanks for being on the show, I hope you have a best ever day, and we’ll talk to you soon!

Leonard Spoto: Thanks a lot, Joe. Thanks for having me.



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JF971: Why and How to COMMIT to EXTREME Wealth #SkillSetSunday

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Want to be, hope to be, or wish to be wealthy? Why not just commit to be wealthy? It starts with your head. Our guest is about to lay the basis for having a mentality of extreme wealth!

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John Bowen Real Estate Background:

– Founder of four multi-million dollar businesses, including CEG Worldwide and AESNation.com
– Host of Accelerating Entrepreneurial Success Podcast
– Founder of Financial Advisor Select, an organization that matches customers with vetted financial advisors
– Author of more than 15 books and a regular columnist for The Huffington Post and Financial Planning
– Based in San Martine, California
– Say hi to him at http://www.aesnation.com

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extreme wealth


Joe Fairless: Best Ever listeners, 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 podcast. We only talk about the best advice ever, we don’t get into any fluff. We’ve spoken to Barbara Corcoran from Shark Tank, Robert Kiyosaki, the author of Rich Dad, Poor Dad and a whole bunch of others.

With us today, John Bowen. How are you doing, John?

John Bowen: I’m doing fantastic, Joe. I really appreciate the invitation and I look forward to helping your listeners be even more successful.

Joe Fairless: Well, that is a wonderful thing, because I would love for my listeners (and myself) to be even more successful.

John Bowen: This is one that we’re all aligned. You can’t be too healthy or too wealthy.

Joe Fairless: Exactly. It reminds me of one of my favorite book, Crucial Conversations, where you start out with a mutual purpose, and then you build up from there, which you just did… So I love that.

A little bit about John – he is the founder of four multi-million-dollar business, including CEG Worldwide. He’s the host of Accelerating entrepreneurial success podcast, he is the founder of Financial Advisor Select, which is an organization that matches customers with vetted financial advisors. He’s authored more than 15 books and is a regular columnist for The Huffington Post. You can say hi to him at his website (it’s in the show notes page) and he’s based in St. Martin, California. With that being said, John, do you wanna give the Best Ever listeners a little bit more about your background? And then we’ll dive into the focus of our conversation.

John Bowen: Well, Joe, my whole professional career is in financial services, but I grew up in a small town upstate New York, and my parents were entrepreneurs. My dad and my uncle owned a cast iron foundry, and I was always being groomed to be a key part in it and ultimately take over. I can still remember a call in my junior year I got from my dad… I was kind of the rich kid in the small town, and in my junior year I got this call, and I’m waiting, because my dad every year would give me a call before the summer break to tell me what job I was gonna get. He was one of those big believers, hard knot, so he would give me the worst jobs, but I thought this year I might get an air conditioned office job, and he calls me up and he goes “John, I’ve got some bad news…”

The founder, which had been employing 400 people, is going under, and I’m gonna go get a job because we’ve got nothing. Your uncle is gonna wrap it up and go through bankruptcy, and your mom and I have decided to get a divorce, and you don’t have a summer job. That was a turning point in my life, Joe, because I remember taking a step back, and I go “Dad, are you gonna be okay?” and he said, “I don’t know.” That was when I committed to being in the financial services; I had the  privilege of being a financial advisor to really almost every walk of life, but mostly business people, real estate investors like your listeners… I’m in Silicon Valley, so high tech has been a big part, and then at one time I had a [unintelligible [00:05:07].20] business as well.

We had 600 of the highest profile — I mean, most of your listeners would know well over half the clients’ names, and we had the largest collection of NFL quarterbacks, for instance.

I saw over and over again, Joe, and you know this from your real estate experiences, people make costly mistakes along the way and they don’t need to. If we’re gonna build personal, really serious wealth, then we gotta stop those mistakes.

Joe Fairless: Yes, we do; we’ve gotta stop those mistakes. You had mentioned something before we started recording, that your group has been doing a study, all in an effort of both stopping mistakes and also creating long-term wealth. Can you tell us a little bit about the study?

John Bowen: You might know Dan Sullivan of Strategic Coach, Joe Polish of Genius Network… Dan is one of the most successful entrepreneurial coaches; Joe is more of a marketing mastermind, he’s got a mastermind group… Probably one of the most successful in that. And the three of us got together, and I can make available, Joe, it’s at our website, AESNation.com, we have The State Of The Entrepreneur. We did a big study of 3,500 successful business owners, and we look and said, “Okay, how are you being successful? What’s working? What’s not?”

We saw their big financial concerns number one was making smart decisions about their money; whether it’s traditional financial assets or real estate assets, they wanted to do that. They also wanna mitigate taxes, take care of the errors, protect the assets from litigation and divorce, and charitable.

We did that study, and that got us on a journey of going deeper and deeper. What we found was that 88% of the business owners, quite honestly, are disappointed in their professional advisors – financial advisors, accountants, attorneys, in they’re not being proactive; they’re missing the solutions. So what we do is we coach financial advisors, we train the top tier wealth managers on the [unintelligible [00:07:14].20] of what the super rich (people with 500 million or more) are doing.

My partner in this is a guy Russ Alan Prince, who’s written 50 books, writes for Forbes, has a whole bunch of millionaires, consulting engagements, family offices, that type of thing. And what’s been missing so often, Joe, is there’s so much of this — what people who have, for the most part, unlimited resources and access to talent and solutions, they have that, and so many of us as individuals don’t. But you can bring those down now, because the networks, the cost of technology has brought them down, so that really more average folk can do this, and it accelerates your success, your ability to build that personal wealth up.

One of our goals is to have everybody that really wants to build wealth to become seriously wealthy. We define that as 20 million dollars financial assets, personal – not in your business. I would count real estate as a business. You know, it’s never quite passive; there’s a little work involved in this stuff, but building those passive assets so you can fund whatever quality of life you want… When you have 20 million, there’s enough for private jet money.

Joe Fairless: You mentioned you all did a study on what people who have 500 million or more are doing… What are they doing?

John Bowen: One of the things that’s kind of interesting in all this is they are going ahead and they’re being very deliberate about building their wealth. When we think of it, the whole process of this – I’m gonna pull up so I get the seven rules right in order for you here… So when we did the study of the 500 million and above, what we found was there’s seven things they do; I’ll just go through them fairly quickly, because of our time.
Number one is a commitment to extreme wealth. This is that mindset, Joe, that you talk about… You have to decide that you wanna do it, because it’s gonna take a fair amount of work. Second is engage in what we call “enlightened self-interest.” Capital markets work because of enlightened self-interest. Whether you voted for president Trump or not, he wanted to put America’s self-interest first – it’s that type of thing. Those people are doing it.

Now, what’s key – and I’ll come back to that – is you’ve gotta take care of everybody, but the first rule is commit to whatever your number is that you wanna build; number two, engage in enlightened self-interest, and number three – and this is a big one, and this is one of the reasons, Joe, I’m sure you’re involved in real estate – is put yourself in a line of money.

If I’m gonna look at the largest wealth that’s being built around the world, it’s coming from business owners. It’s coming from real estate. Those are the two drivers of wealth out there. Number four – and this is a key one – is you pay everyone involved. One of the things – you think so often that the people that are building these huge net worths, that they’re cheap… They’re not. They’re very deliberate on who they hire, they work with the top talent, and they make sure they’re taken care of. And then they are big networkers.

One of things… I spent over a hundred thousand a year in mastermind groups. Why? The old line of “Your network is your net worth.” It’s not networking, it’s the network that you build, and they are unbelievably connected, and it’s connected deliberately on creating value that can result in economic gain.
Number six is they’re fine failing. I’m in Silicon Valley; it’s fail quick, fail fast. But they use failure to refine and refocus.

And above all, rule number seven is stay focused on that extreme wealth. We go in a lot of detail… We’re actually just finishing a book, so I’m pulling up that book that we’re writing. This is on those at the high level, that we see.

Joe Fairless: “Your network is your net worth” – is that number five?

John Bowen: Yeah, number five.

Joe Fairless: Okay. Enlightened self-interest, number two – what does that mean exactly?

John Bowen: There’s a lot of nice people out there, and what you wanna do is you wanna be deliberate in what you’re doing; you wanna define your own criteria for success. Joe, you and I define our success differently. There’s no one right or wrong answer. We’re at different times in our lives, and all that stuff. Everyone has to define it for your own, and then what you wanna do is you wanna determine what your counterparty – whoever you’re gonna do the deal with, you’re negotiating with, you’re partnering with – what is their criteria for success, too? And then you’re gonna find that and leverage it to use it.

Joe, if we’re looking to create economic glue, and we’re gonna do a deal together… I’m the first to make sure that whatever I’m doing is going to be aligned for my success criteria, then I’m gonna try and gain a better understanding of what you want to accomplish; can I help you advance what you want to achieve, and will that move me toward my success? Then I’m gonna go ahead and negotiate in good faith to have that happen. That’s really what it’s all about.

You never wanna burn the counterparty, whoever you’re working with, because we’re in it for the rest of our lives. You wanna make silence, and one of the things you’ll find about billionaires is they’re silent a lot. They’re letting you do a lot of the conversation, and one of the biggest risks of all is so many people negotiate with themselves; they’re going through all these mind games. What we wanna do is hear from the counterparty how we can we help them be successful, and then how can we design it to achieve that mutual success in our own enlightened self-interest.

Joe Fairless: I’m gonna go through the seven, and I’m going to elaborate on how I interpret them, and then feel free to correct me or elaborate on what I mention, just so I can make sure I’m understanding.

One – commitment to extreme wealth. We need a quantifiable goal. You mentioned earlier you define seriously wealthy as 20 million dollars personally, not including real estate owned property. Is that correct?

John Bowen: That’s correct. Liquid financial assets. And real quick – what’s your number? That’s what we’re asking. Commit to extreme wealth – just determine whatever that means to you. For some people it’s a million dollars, for some people it’s a billion. It’s everywhere in between.

Joe Fairless: Okay, good. So it’s quantifiable and it’s personal. Two, engage in enlightened self-interest. You need to know what you want first, and then you need to structure the partnerships accordingly, so that you can get what you want, as well as identifying what your partners are seeking, and have alignment there.

John Bowen: Yeah, you wanna gain the advantage in negotiating and use that leverage, but make sure both parties win.

Joe Fairless: Put yourself in the line of money. Earlier you mentioned real estate and business owners; so the number one way according to the research you’ve done with 500 million net worth individuals or families and above is they’re making their money either in real estate and/or as a business owner…

John Bowen: Let me just give you a number. People with 25 million or more of financial assets, 9 out of 10 made it being an entrepreneur (business owner). And even at a million dollars in financial personal assets, one out of three made it as a business owner. Now, I’m counting, Joe, real estate as a business in that definition, too. That is really important. What we have is an opportunity here…

Once we know that’s where the money is — it’s like, you and I could decide to be social workers; we could make a huge difference in the world doing that, but we’re never gonna become wealthy. That’s not in the line of money.

Joe Fairless: I think the majority of the listeners are shaking their head and saying, “Hell yeah, that’s why I do it, baby!”

John Bowen: If you’re gonna be successful, you wanna be successful on purpose, and this is a big one… We find so many people — if you’re gonna do a nine to five job and you’re gonna do it well, you can have a great life; I don’t wanna ever say that — it’s different things for different people, but you’re not gonna become extremely wealthy, you’re not in the line of money. Unless you have an equity ownership, you’re not in the line of money.

Joe Fairless: Number four, pay everyone involved… And really, it’s pay everyone involved who has a high area of expertise in their field very well, correct?

John Bowen: Yeah. You wanna motivate that talent to be inspired… One of the things I love – I’ve got about 50 people in my companies; I have a virtual business in place… I love getting up every morning knowing 50 fellow entrepreneurs are really working hard to try to help me be even wealthier. Now, I am paying them well to do that as fellow entrepreneurs, too. This is at alignment. That’s that economic glue I was talking about.

Joe Fairless: As far as the compensation for other team members – are you heavy on incentives, or are you more on salary, or is there an approach you take?

John Bowen: I’m not big on salary. You wanna build something – particularly the key talent, you’ve gotta provide an opportunity for them to be successful, too.

Joe Fairless: Number five – network is your net worth, it’s self-explanatory there. Do you make a concerted effort to identify the closest people around you? Because I’ve heard some people say “Hey, you should have six people who are in your closest people, and those six people will be able to determine your net worth based on the average.” Do you look at it as granular as that?

John Bowen: No, Jim Rohn, a great motivational speaker – his was five, he always said. I think in today’s world, you can have high network and loose ties, both personally and in business… But what we find is there are very few networks that are bigger than about a hundred. I have LinkedIn, I know the number – I have over 5,000, and I think about the same on Facebook… I don’t have 5,000 friends. I have a database with between business owners and advisors of around 400,000. I’d like to believe everybody knows who I am, or they wouldn’t be on our database, but that’s not a network.

The network is somebody that I can get on the phone, and we can have a conversation and create value together in our collective, enlightened self-interest, and we’re gonna maintain that relationship over time. We see at the most it’s usually about a hundred people, and more typically we’re seeing somewhere between 10 and 50. But these are not your best friends’ network; these are business people that you’re working with, that are going to help you advance to whatever your number is, but you’re gonna do it with them as well.

To me, this is probably one of the most important things. A lot of it is strategically stumbling, I call it. You and I are just meeting, we were introduced by Jessica Rhodes of Interview Connections, and this is a great way, I found — I do podcasts because I love  meeting the people who are doing podcasts, like yourself, are drivers, and so often out of this type of things conversations happen; it could be we develop synergies, we may not. Putting yourself out and then really watching that network to create value is so important.

Joe Fairless: Is there a particular tactic/approach you use to stay in touch with someone that you desperately want to stay in touch with after you were introduced to them?

John Bowen: What I do is I try to create value. When I meet them, I’m always looking to see what the value is. I’ve had the privilege of starting a number of businesses and I’ve been pretty successful and I have a bit network. There’s almost always something I can do, a quick connecting there, and then following up – I make sure that I follow up within two days of any event that I’m doing, and then three weeks later.

I don’t know what the benefit will be down the road, but I know this is a cool, talented, knowledgeable person I want to stay in touch with. I’ll also include them if I can help them on my networks, bring them out and share them, whether it’s virtually in some of the events I do, or live events… And then things happen.

Joe Fairless: Number six, did you say “refine failing”? Did I write that down correctly?

John Bowen: Failure to refine and refocus.

Joe Fairless: Okay. Will you elaborate?

John Bowen: The key here is “I screwed up. I tested something.” The nice thing in today’s world, the cost of testing anything has gone way down, whether you’re creating products, the ability to 3D print, whether you’re doing it electronically, the internet, buying a few ads digitally… It’s very low cost. Good business people always mitigate risk; we’re not big risk-takers. But what we wanna do when we fail – we wanna fail quickly, and then how do we avoid making the same mistake repeatedly? And more importantly, doing an autopsy so we can see “Is there some value here that we can capture and tweak it, refine, it refocus it to create value?”

Joe Fairless: Can you give an example of your own business, how you’ve used failure to refine, refocus and then ultimately come out ahead?

John Bowen: I had a business coaching top financial advisors, and we have about 500 advisors in our one-year coaching programs. Of those 500, 200 are in a mastermind group. They pay anywhere from 18k to 24k/year. These are the top wealth managers, not only in the U.S., but around the world. I have a great guy, he’s one of my key educational development people, PhD from Berkeley, and Dr. Bob came and goes “John, you know what? We should teach the next tier down, how to get to the level.”

The average income in this group is about $700,000; very successful individuals, many making over a million a year… Targeting kind of the $200,000 threshold. I said, “Okay, I’ll give it a shot…” I had some concerns, both with the branding and positioning, as well as how hard it is — successful people are easy to coach, because they just take the ideas, run with it if it works, and they continue, and it’s great. People who are unsure of themselves and don’t have that confidence – much more work.

We ran a pretty big project for our company, Bob and I. Did it work? The answer: marginally. We said, “Do we wanna do it again?” “No.” Why? Because it was so much more effort than working with the top tier. We only have two solutions for our company for our financial advisors: one coaching program and a mastermind group. There’s all kinds of temptation to do more, and I can tell you, Joe, we tested a whole bunch of things, we came back – and we’ll probably test some more things down the road, but it’ll always come back to “Fail quick.”

Joe Fairless: And then number seven, stay focused on extreme wealth. So number one, we committed to extreme wealth, and then number seven, we’re staying focused. What’s a tool or technique to stay focused on our original plan?

John Bowen: It’s always keeping number one in place. One of the things I like to do, Joe, is to take a look, from the standpoint of “Where are you spending your time, your money and your energy?”, because really time isn’t a finite resource, it’s energy. And take your calendar – I’d encourage all your listeners to take their calendar and look at it for a week. We can really get caught up in going ahead and thinking because we’re so busy, we’re doing well; what I find over and over again (and it’s one that I struggle with, too; and many business owners and entrepreneurs do) is it’s so easy to lose track of what’s working and get defused… And as we get defused, boy, we’re in trouble. So it’s focus, focus, FOCUS.

Joe Fairless: Well, I love this title — it’ll definitely be a title: Seven Ways 500 million dollar net worth individuals…

John Bowen: We call them The Money Rules – How To Join The Ranks Of The Super Rich.

Joe Fairless: Yeah, how they build wealth… Or the Money Rules, even more succinctly. Anything else that you wanna mentioned that we haven’t talked about as it relates to that topic?

John Bowen: I think the big thing to think about is we live in a great world; it’s a time of abundance, it’s not a zero-sum game… For you to become wealthy, somebody else doesn’t have to lose money. We can create wealth. In financial markets it’s really easy; in the first 40 days of the president Trump, I think we’re approaching two trillion dollars of value created. Nobody was taken money from, it’s that value.

Now, what we wanna do then is not only create that value – and you can go to our website and download the book The State Of The Entrepreneur, get on our mailing list so you get access to this stuff… But what happens, Joe, is it’s what you get to keep and making those smart decisions along the way.

Joe Fairless: John, where can the Best Ever listeners get in touch with you or your company?

John Bowen: The best place for business owners and successful entrepreneurs – we have a website called AESNation (Accelerating Entrepreneurial Success) and we are launching a whole bunch of new books, and stuff. At the time of this recording, we’re a couple months away from — everything’s gonna be launched in June 2017, but there’s a bunch of resources there, too… I’d recommend everybody download the book that I wrote with Joe Polish and Dan Sullivan, called The State Of The Entrepreneurs. You can see how you’re doing, and then there’s a scorecard where you can look at “Are you really maximizing your personal wealth?” and if not, how you can get a second opinion to see how you can accelerate it even more.

Joe Fairless: John, it’s been interesting and educational talking to you. I appreciate you spending some time with us and walking us through the money rules, the seven ways 500 million dollar net worth individuals approach building wealth. I won’t go through all seven again, because we just walked through them. A lot of lessons within those seven…

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

John Bowen: Thank you very much, Joe.

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JF951: The Big Boy Passive Approach to Investing

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Accredited investor? This episode is for you! Our guest only works with accredited investors who want to inject capital into a passive machine that renders returns! Realty Shares executive will walk us through the types of opportunities they offer and who’s investing, so learn about debt raising an equity raising and turn up the volume!

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Amy Kirsch Real Estate Background:

– Director of Investor Relations at RealtyShares
– Over 10 year of financial services experience
– Worked in wealth management for Merrill Lynch, Dearborn Partners, and JP Morgan’s Private Bank
– Based in San Francisco, California
– Say hi to her at www.realtyshares.com
– Best Ever Book: Shantaram

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passive investing with Amy Kirsch


Joe Fairless: Best Ever listeners, 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.

We’ve spoken to Barbara Corcoran from Shark Tank, Robert Kiyosaki, the author of Rich Dad, Poor Dad, a whole bunch of others… With us today – Amy Kirsch. How are you doing, Amy?

Amy Kirsch: I’m doing well.

Joe Fairless: Nice to have you on the show, and looking forward to getting to know you a little bit. Amy is the director of investor relations at Realty Shares. She has over 10 years of financial services experience. She worked in wealth management for Merrill Lynch, Dearborn Partners and J.P. Morgan’s private bank. Based in San Francisco… With that being said, Amy, do you wanna give the Best Ever listeners a little bit more about your background and what you’re focused on?

Amy Kirsch: Absolutely. Thank you so much for having me today, it’s great to be here with you. I had been working, as you mentioned, about a decade in wealth management, and I learned a bit more about real estate crowdfunding. I was very excited about the opportunity, got to know Realty Shares a bit more, and just was very excited about all they were offering to investors, the opportunity to invest in a whole new way, and that’s what brought me over here.

Joe Fairless: Cool! So what do you do? What’s investor relations mean?

Amy Kirsch: I work with investors pretty much all day long, answering their question, helping them to understand real estate better, helping them through both the sales and the relationship process as they go through in any investments that they have with us on the platforms.

Joe Fairless: Can you get a little bit more in detail as far as maybe what are your specific responsibilities, what are some challenges that you came across, things like that?

Amy Kirsch: We have a team of seven; as we’ve grown, our investor base has become several thousand, so as you can imagine, we have all realms of the spectrum of investors. We’re guiding them, and often times just introducing them to real estate investing, and helping them to understand what it might look like if they did purchase a piece of an investment, what the returns would look like, what the risks are inherent in this sort of investing… That would be the introductory part.

Then, over the life of the investment, keeping them updated, helping them to understand if things are going well, if they’re not going well, if they are payoffs, and keeping them informed over the life of it. So it’s really a combination of both a sales and relationship management role for me and my team, and we have probably a thousand inbound questions a week from various investors that we’re responding to, which really completely range from about the company to about a specific investment. Anything you can imagine, we’re answering it pretty much every day.

Joe Fairless: A thousand inbound questions a week.

Amy Kirsch: Oh yes, easily.

Joe Fairless: Seven people.

Amy Kirsch: Seven people, a thousand questions.

Joe Fairless: Sounds like a blog post title, right?

Amy Kirsch: [laughs] A little bit, yes.

Joe Fairless: Seven people, a thousand questions a week… Everything from guiding them as far as the pros and cons of real estate, and then also working with them and communicating with them throughout the investment. This is interesting stuff, because you basically do what I do, and I’d love to learn more because you’re doing it on a much higher volume than I’m doing.

Let’s talk about who you’re speaking to. Are they all accredited investors?

Amy Kirsch: They are. Everyone that’s on the Realty Shares platform right now is an accredited investor. We have non-accredited investors asking us questions, and we’re hoping that we’ll be able to show them an offering sometime in the near future, but for now we’re only working with accredited investors.

Joe Fairless: Okay, so they’re all accredited investors. It sounds like you’re at the front end of the deal before they sign up to fund a portion of the project or you guide them in real estate investing. Are you giving them input on the actual investment itself, or the pros and cons of investing in real estate?

Amy Kirsch: A bit of both. As I mentioned, we have people who have never invested in real estate before in the platform, so they often have more rudimentary questions… They haven’t seen a waterfall before – what will that mean for them? What does a preferred return look like? Those kinds of questions, trying to understand the sponsor a bit more and the ABCs of real estate… So we’re talking about the platform at large, and then also specific investments, helping them to understand… Honestly, we can get into “What is the difference between debt and equity?” We answer that question all the time.

Joe Fairless: So your role is both the particular investment, as well as just education in general, on real estate?

Amy Kirsch: Absolutely. It’s absolutely a combination of both, and we really take a lot of stock in making sure investors are educated. We want them to really understand what they’re investing in prior to getting into an offering.

Joe Fairless: You said one of the common questions that’s asked is “What is the difference between debt and equity?” What’s your response to that?

Amy Kirsch: Wow, you’re getting me on my toes here… [laughter] [unintelligible [00:07:03].19] like you’d see at a bank, where you’re receiving… You’re acting like the bank; you can expect an interest rate payment monthly. It looks like a balloon mortgage, where you can expect a principal after the life of the loan. So that’s how I explain debt.

On the equity side, you look more like a business owner. You’re participating in the upside or the downside participation of the property, and should things perform well, you’ll have unlimited upside. Should things go poorly, you will part-take in that as well. With that comes a lot more risk, but a lot more reward, whereas on the debt side you know exactly what the outcome is likely to be, because there is a stated interest rate and you’re not gonna earn any more than that.

Joe Fairless: Are they secured the same way with debt and equity?

Amy Kirsch: That’s a great question. The debt is secured by a first lien loan, where should something go wrong, we’re able to foreclose on the property. If our assumptions are in line, then we should be able to fully recoup all investor money. On the equity side there is no lien on the property. Our measures are a bit different in what we could do should something go wrong. We would maybe able to kick out the partnership, we may be able to take over the property… It truly depends on what the underlying property is.

Joe Fairless: Okay, it makes sense. After I did my first deal, I was talking to some people and they were like, “Did you raise debt or equity?” I was like, “Um, I just raised money. I have no idea.” [laughs] I was so stupid at the time. I had already done one deal, that shows how green I was at the time… And people like you have educated me along the way, thankfully.

Amy Kirsch: Yeah… Like I said, it’s important for investors to understand the worst-case scenarios, just as it is the best-case scenario, when people are first participating in real estate, and we encounter a lot of people like you.

Joe Fairless: What are the most common risks? I mean, sure, there is about 20 pages in a PPM that outlines some obscure risks… But what’s the most practical couple risks that could come up in a real estate investment?

Amy Kirsch: I think the risks are a bit different for the different types of products, like I mentioned before for debt… And truly, our debt holders are often a little bit less experienced than our commercial, which can be great and bad, because we have that foreclosure opportunity should something go wrong. But what would happen there is that the sponsor (or the borrower, in this case) is not able to execute, and what happens then? They’re not able to sell it for the price that we thought, so they can’t pay off the loan in full. That would be the risk there, often times.

I think almost all of the time we have personal guarantees on our debt, so if they do not return money in full, then we can pursue them personally. So I think that’s a risk – the sponsor is not able to execute. A more likely risk is that the market turns around, so the market isn’t able to deliver what we had expected.

Joe Fairless: Let’s talk about equity, going into an equity example. I really think this applies to both debt or equity, it doesn’t really matter how it’s structured. Let’s just say the borrower isn’t able to execute and perform under business plan, and let’s just say – because I know you do different asset classes – it’s a single family house. What is a common reason, based on your experience, that they’re not able to execute the business plan? What do they overlook or not account for most of the time?

Amy Kirsch: I wanna start by saying that we have done – I believe the number now is 550 deals, and in that time we’ve had under ten where we’ve had significant issues with borrowers or sponsors on any side of the fence, debt or equity. So what we’re talking about now is very rare… But to your point, the reason I think sponsors most often don’t execute is simply from inexperience. They thought costs would be X, and they ended up being Y, and they were significantly more. I’d say that that’s what most often accounts for not being able to execute, and the way that we try to avoid those sorts of situations is by our due diligence process upfront, where we account for track records and look for the kind of experience that they have in the past, both with either their current company or in the past, as well as getting to understand what their business plan is.

Joe Fairless: Yeah, thanks for putting it into perspective. I was curious about why it wasn’t working, but thanks for giving some context as far as “Hey, this isn’t happening very often.” But as I know you know, that’s just a question that comes up for all of my deals – “Hey, what are the risks here?”, so I was just curious how you discuss those.
Now, on a different path, what’s the most common reason why an investor doesn’t decide to invest with you all?

Amy Kirsch: You know, I hadn’t thought about that too much. I’d say the most common reason is because the parameters of the offerings that we have in a marketplace at that time don’t meet their investment objectives. That’s most often what — the hurdles often find upfront that we’re often able to overcome are the inexperience of the investor… So getting them to understand (as we’ve talked about earlier), educating them properly. But I’d say that’s most common – they’re looking for a 12-month offering, and we’re showing something that’s 8 years; they’re only looking for debt, we have equity…

Mostly, what we find is people take a month or two to review the platform if they don’t have any real estate experience, and then they invest after, in 30-40 days.

Joe Fairless: One thing I’ve found with investors who don’t invest is they wanna be active and not passive. They want control, they want to have their hands in it, they wanna be more involved, and I’m just not set up that way. They are passive too when they invest in your stuff, right?

Amy Kirsch: Yeah. We have heard that from investors before, but I hadn’t really thought about that as a common objective. What we find more often is that people are tired of being actively involved in the investment process. They don’t wanna manage the property, they wanna do it, so that’s why they’re coming to us. But I could see it on both sides… If they do wanna have a heavier hand in the process, we don’t offer that as well.
For pretty much everything else, if you are looking for passive investment, you can come to us and get whatever kind of offering you’re looking for.

Joe Fairless: You’ve just hired employee number eight on your team, congratulations! What do you wanna make sure that they know?

Amy Kirsch: What’s very important to us is that we went through a broker-dealer, and compliance is extremely important to us. Making sure an investment is suitable for an investor is, from day one, what we’re talking about. The second thing is getting — some of the members of my team have real estate knowledge, some don’t, so getting them up to speed on what kinds of deals we’re offering… We work very closely with the investments team, so working together with them to get a really good understanding of what we’re offering to investors – those are both imperative to being successful on the team.

And of course, being able to be patient, getting the same question over and over again. That takes a lot of… You have to be steadfast for that.

Joe Fairless: Yes, especially if you’ve got a thousand coming in per week. As far as the compliance goes, maybe I’m not thinking of it properly, but isn’t that already set up through your software, so if they come to you and your team, then they’ve already been qualified through the software?

Amy Kirsch: To a certain extent they are qualified up front; a part of it is qualification, but the other part is suitability, so making sure they’re an accredited investor is just 50% of the equation. We have investors that make very substantial investments with us – half a million, a million dollars concentrated in a deal. With that comes a lot of risk, simply because of concentration risk. So if they’re making a million dollar investment but they have 50 million dollars, we’re less concerned about that than if they are making a single one million dollar investment and they have two million dollars.

We’re really just trying to understand the objectives of the investor, and that they are properly suited for that particular offerings. That’s what we’re focused on when we’re reviewing deals or reviewing investors. It’s very important.

Joe Fairless: What would be the pros and cons when comparing investing in a crowdfunding platform like your company, versus a syndicator who has his own company, like mine? So if an investor were to come to you and be like, “You know what, Amy? I’ve got 100k and I wanna invest in one thing. I’m trying to decide between the deal that Joe’s got, where I know I can go directly to him and he is a one-company thing, versus a crowdfunding platform like yours.” What are you saying that would be a pro over what I’m offering?

Amy Kirsch: The largest pro is that we’re gonna have a more diverse set of offerings, because we’re dealing with sponsors all over the country in diverse product sets. So while a syndicator may specialize in a particular asset class or a particular geography, we’re gonna see that same thing repeated over our offerings, 20-something million dollars worth of opportunities over the course of a month, with a very diverse background of sponsors, geographies, asset classes, product classes. I think that’s a major differentiation you’ll see, and we’re being a low-fee provider… So with some of that relationship where you know the syndicator probably a little bit better, maybe you’re willing to pay a bit of a premium for that. We offer pretty low fees to our investors across other crowdfunding platforms, or one of the lowest.

Joe Fairless: And what are your fees?

Amy Kirsch: We charge 1% asset management fee across the board, and that goes to investors. On the sponsor side we charge in origination fee between 3% and 4% on equity and 2%-3% for debt.

Joe Fairless: And you don’t take any cut of the deal?

Amy Kirsch: We don’t take any cut of the deal, we take no participation fees.

Joe Fairless: So 1% asset management fee, and 3%-4% on debt that’s paid by the sponsor.

Amy Kirsch: Right.

Joe Fairless: And did you say something else? Was there another fee? Or is that it.

Amy Kirsch: Just the 1% asset management fee that’s charged to investors annually, as we provide the services… For updating you, K1’s, managing the property after the fact, after you’ve invested.

Joe Fairless: Those are very good fees.

Amy Kirsch: Yes.

Joe Fairless: What’s the plan for your company from this point forward?

Amy Kirsch: The plan is to expand what we’re currently doing. We have a lot of opportunities to grow in the various marketplaces that we’re in; I think that’s very important to us. The other thing that we’re really focused on is automation and tech. We’re a financial technology company; a lot of what we bring to the table is breaking down a business that’s pretty archaic and bringing it to the future. I think both of those things are what we’re really focused on, and we’re really excited about some of the new expertise that we’re bringing into the marketplace in 2017. Those are our two major focuses.

Joe Fairless: What is your best real estate investing advice ever?

Amy Kirsch: I would say… Let me think about this for a second. My best real estate investing advice ever is to think about your investment objectives and diversify. If you execute in that regard, I think you really have a great shot at being very successful in real estate investing.

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

Amy Kirsch: Oh, sure! I guess so…

Joe Fairless: [laughs] Well, we’re doing it either way, so I’m glad that you guess so. First though, a quick word from our Best Ever partners.

Break: [00:18:32].03] to [00:19:13].14]

Joe Fairless: Best ever book you’re read?

Amy Kirsch: Shantaram.

Joe Fairless: What’s that about?

Amy Kirsch: It’s about a criminal who gets lost in India. I was just there, and it was so incredible to see what he had — just kind of hiding throughout the streets of Bombay. It’s the coolest book ever and it’s based on a true story.

Joe Fairless: Shantaram… Okay, cool. Best ever personal growth experience and what did you learn from it?

Amy Kirsch: That would be moving from traditional wealth management into the fintech space. It is kind of exciting to go from the most archaic business of all time into breakthrough measures of doing everything. I’ve learned so much in the last two years… More than I have in the previous ten in the same(ish) industry.

Joe Fairless: What’s one specific thing you’ve taken away from it?

Amy Kirsch: That you don’t have to think small; there doesn’t need to be so many levels of red tape, and if you’re working with the right people, you can get a lot accomplished in a short period of time. You don’t have to do things the way they always have been done just because that’s what people say needs to happen.

Joe Fairless: Are you an investor? Do you invest in real estate, too?

Amy Kirsch: I do… I own property, but we’re limited from doing it on the Realty Shares platform.

Joe Fairless: Oh, of course. [unintelligible [00:20:26].10] Well, best ever deal you’ve done personally on a real estate front?

Amy Kirsch: I have flipped out of apartments in Chicago, and I think that’s because that’s where I’ve lived, and I’ve been successful in that regard.

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

Amy Kirsch: Part of the reason that I was in India was that I’m involved with a national philanthropic organization that gives money all over the world to help people recognize that they can be successful. This particular group gave money to women in India to help them be independent, so that their kids could go to school. It’s called the Gabriel Project and I’m really happy to be associated with it. It’s just doing wonderful things for empowering women in a very impoverished area.

Joe Fairless: Thinking about some of the deals that you’ve personally done, what’s been a mistake you’ve made on a particular deal?

Amy Kirsch: I think one of the things I’ve learned is to not be too emotional. This goes to investing in general, but very particularly with real estate. You can get too involved, hold on too long… Something I’ve learned over time is to try to be less emotional when it comes to any kind of investing. I was investing in the markets in 2008 – not in real estate – and then found that some of my clients as well were making decisions because they couldn’t see through the trees… I think that’s good to overall investment advice.

Joe Fairless: Where can the Best Ever listeners learn more and get in touch with you?

Amy Kirsch: They can come to RealtyShares.com, or e-mail us at invest@realtyshares.com. We answer a thousand questions a week, so we’d be happy to answer a couple hundred more.

Joe Fairless: [laughs] Pile them on, baby! Well, Amy, thanks for spending some time with us talking about your role and the challenges you come across, as well as your responsibilities, from you and your team — what were you gonna say?

Amy Kirsch: I just wanna say thank you so much! It’s so exciting to talk to others in the similar space, and it’s just great to be here!

Joe Fairless: Yeah, especially with your particular role… It fascinates me, because I’m doing similar things to what you’re doing, but not on your volume – by no means am I doing the volume of a thousand inbound questions/week; that’s insanity. But because you’re doing the volume, it’s interesting to hear the varying degrees of questions, from what is a waterfall and preferred return, to the difference between debt and equity, all the way to the risk associated to it, and maybe more sophisticated things like “How is my money secured if this scenario does happen?” and you talk through all that… As well as your focus on compliance when you hire a new team member, and just getting them up to speed on the business model and the different opportunities.

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

Amy Kirsch: Thanks so much, Joe.

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JF 928: How He BOUNCED Back after Losing MILLIONS #SituationSaturday

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He lost over a million in cash, and it didn’t come back…at least not in that deal. Hear the son of previous CEO of Odesk share his account of losing money, transforming his mind, and bouncing back from loss to prosperity.

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Jeff Slayter Real Estate Background:

– Best Selling Author, Trainer, Speaker, Entrepreneur:
– The Next Wave of Human Potential & Business Psychology
– Built multimillion-dollar corporate training company Speaker to over three million people from twelve different countries – Shared the stage with other thought leaders like Sir Richard Branson, Robert Kiyosaki, and Tony Robbins
– Based in San Francisco, California
– Say hi to him at http://www.JeffreySlayter.com

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JF912: How to Buy SIGHT UNSEEN

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Trust others? Well you’ll have to if you buy a property sight unseen! You also need to know then numbers extremely well. Hear how he’s doing it and what his strategy is now!

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Fat Taylor Real Estate Background:

– Professional photographer and video producer
– Real estate portfolio includes a condo that he lives in & three unit in Michigan and two single families in Louisiana
– A hands-off investor, bought two of his properties sight-unseen, and three years later hadn’t been to either one
– Currently on a three and a half month trip around the world with his wife while she is pregnant with their first child
– Founded and eventually sold a functional fitness lifestyle and entertainment blog.
– Based in Long Beach, California
– Say hi to him at http://www.AdamTaylorPhotos.com
– Best Ever Book: Secrets of the Millionaire Mind

Click here for a summary of Fat’s Best Ever advice: http://bit.ly/2mjptYF

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JF908: How to be INCREDIBLY PERSUASIVE #SkillsetSunday

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Dr. Phil and Montel have had him on a their shows, he is extremely persuasive and you will hear how he does it! You can use this in your real estate business, and of course in your life!

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Ross Jeffries Real Estate Background:

– Author, writer and television personality
– Featured on programs as The Dr. Phil Show, The Montel Williams Show and self-described speed seduction expert
– Works with high-powered entrepreneurs, salespeople, and professionals to teach them his persuasion blueprint
– Over 30 years experience in teaching his technique in persuasion and featured on CNN, Fox, NBC, and more
– Based in San Diego, California
– Say hi to him at http://www.persuasionmasterysystems.com/free

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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real estate pro advice

JF883: How to Buy Investments with ZERO Debt

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That’s right, no debt! How does it work? You’ll have to tune in and take notes. He also covers why if he doesn’t have the right property manager, he won’t buy the deal.

Yousif Abudra Real Estate Background:

– Managing Director of BENA Capital, a private equity real estate investment fund
– Responsible for the sourcing and execution of investments, raising fund capital, and investor relationships
– Investments are 100% equity based and do not utilize any interest-bearing debt
– Previously, he was an investment banker and consultant for $10MM-$1B businesses
– Based in San Jose, California
– Say hi to him at www.bena-capital.com
– Best Ever Book: Investing in Real Estate by Gary Eldred

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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JF868: How to SNAG Deals from BROKERS and What Questions to Ask

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Real estate investors should not look at brokers as competitors, but resources rather. Today’s guest was able to find commercial properties by speaking with the ultimate gate keepers, brokers. In fact attached to the show is a link where you can check out the questions our guest asks the brokers in an area he wants to invest in, he looks for brokers with multiple listings. Hear his story and how he jumped into multi family investing.

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Andrew Cushman Real Estate Background:

– Principal/Manager at Vantage Point Acquisitions, LLC
– Full time multifamily investor
– Purchased 1,566 units in the last 5 years
– Chemical engineer for 7 years before quitting job in 2007 to flip single family houses full time
– In 2011, purchased first apartment complex, which was 92 units, 2,500 miles from where he lived
– 20 questions to ask a property management company: http://bit.ly/2jsVxHZ
– Based in Los Angeles, California
– Say hi to him at http://vpacq.com/
– Best Ever Book: How to Win Friends and Influence People

Click here for a summary of Andrew’s Best Ever Advice: http://bit.ly/2jLP3Bf

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

Questions to ask property management companies when searching for an investment property: http://bit.ly/2jsVxHZ


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JF860: CREDIT CARDS are OKAY to Use as Leverage If…

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“Credit cards always get you in trouble,” said your mom, dad, or even a financial advisor… But today’s guess is about to disrupt that thought. He used credit cards and it worked well for him. Learn how you can use credit cards as your venture capitalist and how to mitigate risk by not using any of your own money.

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Sensei Gilliland Real Estate Background:

– CEO of Black Belt Investors, an education, consulting and investment firm
– Featured on the cover of Real Estate Wealth Magazine in 2013
– Over 2 decades of real estate investing experience
– Specializing in creating cash through quick-turn real estate investing
– Honored as one of the top martial artists in the U.S. for five years in a row
– Based in Mira Loma, California
– Say hi to him at https://blackbeltinvestors.com
– Best Ever Book: The Bible

Click here for a summary of Sensei’s Best Ever advice: http://bit.ly/2iloT6u

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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JF847: How He’s on Track to Flip One Home PER WEEK in 2016!

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He’s new, but he is a matchmaker extraordinaire connecting investors and sellers together. In fact, his forte is just to connect whole sellers to fix and flip entrepreneurs while being in the middle. Yes, those were wholesale deals. Turn up the volume and grab a pen and paper and let’s see if you can flip one house per week in 2017!

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Amir Suleman Real Estate Background:

– Acquisitions Director at Clear Vision Investments, a real estate investment group
– Flipped 37 homes in 2015 with a gross income of $423k
– On track to flip 52 properties this year, which is about 1 per week
– Has only 1 requirement in being a self employed investor, just do it!
– Did not complete high school or college and broke by age 32, but hear his comeback story
– Based in Irvine, California
– Say hi to him at https://www.instagram.com/realestatepd/
– Best Ever Book: The 48 Laws of Power by Robert Greene

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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real estate pro advice

JF845: How to Identify and CRUSH Fear Barriers #SkillsetSunday

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Fear paralyzes young and hungry entrepreneurs. Not knowing how you are going to last in your niche is scary, but today’s guest is about to show you how to conquer that fear. Do what you do and do what you love without being afraid of failure.

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Dave Daley Real Estate Background:

– Entrepreneur, Keynote Speaker, Author, The Monster Motivator! At ‎Dave Daley Enterprises, LLC
– Creator of the Knock Out Fear in the First Round program
– The Monster Motivator is his popular speaking leadership series that business book him all year around
– Built and sold three companies in three very different industries
– Based in San Diego, California
– Say hi to him at www.davedaleymm.com
– Best Ever Book: What to Say When You Talk to Yourself by Dr. Shad Helmsetter

Click here for a summary of Dave’s Best Ever Advice: http://bit.ly/2hOxpQ6

 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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JF842: His First Property Purchased in High School, Financial Planning, and Why He Feels a Need to Share His Knowledge of Wealth

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He was 17 and in high school when he bought his first place! As financial planner assisting others invest millions, our guest feels empowered to share a financially fit message to the world. He even wrote a book! Tune in!

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Adam Torres Real Estate Background:

– CEO of Century City Wealth Management LLC, a firm dedicated to the needs of families, organizations, foundations and public funds.
– Featured in major publications such as Forbes, Investor’s Business Daily, and The Street
– An international speaker and upcoming author
– Based in Los Angeles, California
– Say hi to him at www.centurycityview.org
– Best Ever Book: Rich Dad, Poor Dad by Robert Kiyosaki

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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real estate pro advice

JF841: Million Dollar Relationships, Helping the Homeless, and Wholesaling Apartment Complexes

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Real estate is honestly about who you know and marketing, and that’s exactly what our guest did. He started off just by showing up and looking the part. He later found opportunities to help the homeless, wholesale properties, and even apartment complexes! Hear about his deals!

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Brian Collins Real Estate Background:

– President/Founder of BPC Investments & Development LLC
– Began buying and selling real estate in 2007, specializes in rehabbing houses that are abandoned or foreclosed
– Consulting to over 200 investors about system discovered and teaching strategies
– Based in Los Angeles, California
– Say hi to him at www.bpcgroupllc.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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real estate pro advice

JF838: How to Form a SUCCESSFUL Pitch #SkillsetSunday

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When pitching you need to understand your audience, the problem you’re solving, and tell a story. Our guest shares his best advice on how you can get started intriguing others to learn more about your product or service, and stop being invisible or insignificant.

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John Livesay Real Estate Background:

– Hosts The Successful Pitch podcast, with investors from around the world
– Funding strategist helping start ups craft a compelling message to get investors and advertisers
– Partners with Judy Robinett in Crack The Funding Code, which gets founders funded fast
– Pitch Mentor at Startfast.net, the number one accelerator in Upstate New York
– Author of The Successful Pitch book
– Based in Los Angeles, California
– Say hi to him at sellingsecretsforfunding.com

Click here for a summary of John’s Best Ever Advice Part 1: http://bit.ly/2hSj0i4

Click here for a summary of John’s Best Ever Advice Part 2: http://bit.ly/2hXcG9d

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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real estate pro advice

JF834: Cheap Boise Developments and an Apartment Services AUTHORITY

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Thinking about developing some 4 Plexes? You may consider Boise Idaho of all places, the cost for building is worth it when you see the rents. Hear how our guest developed the most widely published magazine on apartment servicing and how he is helping others cut costs and earn more.

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Dan Faller Real Estate Background:

– President and Founder of the Apartment Owners Association of California
– Founded in 1982, AOA has become one of the largest apartment associations in the United States
– Publisher of the Apartment Owners Association News and Buyers Guide, the most widely circulated monthly apartment industry magazine in U.S.
– Servicing landlords for over 25 years
– Based in Los Angeles, California
– Say hi to him at www.aoausa.com
– Best Ever Book: The Bible

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


Subscribe in iTunes and Stitcher so you don’t miss an episode!

Best Ever Show Real Estate Advice from experts

JF825: The “Investor’s Inspector” Help You See EVERYTHING with a New App

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And idea was brought to life when a costly mistake occurred on a transaction that could have been avoided with the right inspection process. Dubbed as the “investor’s inspector” our guest has created a mobile application for his team to thoroughly inspect the property using a smart phone that is not even available to the public. Hear how he does it and how it can benefit your business!

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Michael Brown Real Estate Background:

– Partner and co-founder of “The Bottom Line” the first all digitally captured building inspection
– Currently partnering with international asset manager and flipping properties in Southern California
– Based in Anaheim, California
– Say hi to him at 714-587-0486
– Best Ever Book: Think and Grow Rich by Napoleon Hill

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


Subscribe in iTunes and Stitcher so you don’t miss an episode!

Best Ever Show Real Estate Advice from experts

JF818: Tom Ferry’s Approach to Systems, Coaching, and EXPLODING Your Brand and Real Estate Business

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Tom Ferry, The world’s number one real estate coach is here to share his best advice ever! He shares his knowledge of systems, having teams instead of being a solo entrepreneur, the markets, starting a coaching firm, being a consultant, and how to identify the needs of an individual and help them excel! This is an episode and you cannot miss!

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Tom Ferry Real Estate Background:

– ‎CEO of Tom Ferry – Your Coach, an International Real Estate Coaching and Training Company
– #1 Real Estate Coach and Speaker, NY Times Bestselling Author of Life! By Design
– Over 10,000 hours of personal coaching experience
– Based in Orange County, California
– Say hi to him at http://www.TomFerry.com
– Best Ever Book: Bold: How to Go Big, Create Wealth and Impact the World
– Zillow Group Report – http://www.zillow.com/research/zillow-group-report-2016-13279/

Click here for a summary of Tom’s Best Ever Advice! – http://bit.ly/2gCUovV

Sponsored by:

Door Devil – visit  http://www.doordevil.com and enter “bestever” to get an exclusive 20% discount on your purchase.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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Best Ever Show Real Estate Advice from experts

JF817: How to DIVERSIFY Your CASH and Stay Passive #SkillsetSunday

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Putting all your eggs in one basket can be very dangerous in real estate investing, so today you’re about to hear a plethora of ways to push your money into passive passive cash flow systems. From mobile home parks to multiunit syndications you’re going to know what’s a good deal and what’s not a good deal.

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Jeremy Roll Real Estate Background:

– Co-Founder of For Investors By Investors (FIBI) and Advisor for Realty Mogul
– Manages a private investor group of over 1,000 investors
– Currently an investor in more than 50 opportunities
– Passive cash flow investor for over 14 years
– Based in Los Angeles, California

Click here for a summary of Jeremy’s Best Ever Advice: https://joefairless.com/importance-diversification-passive-real-estate-investing/

Sponsored by:

Door Devil – visit  http://www.doordevil.com and enter “bestever” to get an exclusive 20% discount on your purchase.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF806: How He Adds $30,000 Equity to a Cheap Home by Doing This One Thing

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Adding value to a property can be extremely difficult, but our guest does it with one simple tactic. He uses many investing strategies including the famous BiggerPockets BRRR strategy. Here why he is anti-property manager and decides to make big cash as well as the passive income.

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David Greene Real Estate Background:

– Realtor at Keller Williams Realty and a successful real estate investor
– 8 years experience buying, selling, managing, and renovating properties
– Purchased first investment property at 25 years old
– Offers coaching for real estate investing
– David is also a full-time police officer
– Based in San Francisco, California
– Say hi to him at http://www.GreeneIncome.com
– Best Ever Book: The Richest Man in Babylon

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.

Click here: http://www.adwordsnerds.com to schedule the appointment.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips: https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF791: Why You Shouldn’t Always Trust Your Gut When Deal Making

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Yes, trusting your gut is a good piece of advice, but not when your eyes are bigger than your brain! Our guest was suckered into a deal without considering all due diligence, and wound up in a Ponzi scheme! Hear how she now evaluates every detail before completing the transaction!

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Gabrielle Dahms Real Estate Background:

– Real Estate Broker at Premier Properties
– Came to real estate from a marketing background
– Real estate license since 2001 and broker’s license since 2013
– Based in San Francisco, California
– Say hi to her at http://www.sanfranciscoresidentialhomes.com
– Best Ever Book: One Writer’s Beginnings by Eudora Welty

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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Best Ever Show Real Estate Advice from experts

JF785: Door Knocking to $20 Million in Sales Volume and How He Built a HUGE Following

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While being on track to rake in $20 million in sales volume our guest also purchases about three homes a year! Ex pro basketball player has found a competitive niche in real estate and is claiming even a larger team of sales professionals, hear how he built such a great following!

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Bryan Casella Real Estate Background:

– Broker Associate at I Heart Real Estate Inc
– 3 years in the real estate business, on track to sell $20 million in volume this year
– Ex-professional basketball player in Europe
– Based in Los Angeles, California
– Say hi to him at http://www.bryancasella.com
– Best Ever Book: How to Develop a 6 Figure Income by Mike Ferry

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.

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JF770: ATTENTION Expert Investors, It’s Time to DEVELOP!

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You may hear that you shouldn’t choose the reward over risk in real estate, you are about to learn how to mitigate your risk even better. Our guest is a pro The product that allows you to understand your risk in developing and better negotiate the transaction and process with your partners. This is a must listen!

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Brian Barbuto Real Estate Background:

– CEO of Infobrij LLC, a private equity firm for commercial/residential real estate investors/sponsors
– He has 40 years in Real Estate Development
– Has has designed an innovative investment model that is poised to change the way real estate investing is done
– Completed over 1,000 residential units and worked through over $100M in real estate project funding
– Based in Orange County, California
– Say hi to him at www.infobrij.com

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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JF768: What You CAN and CAN’T Do with Self Directed IRA’s #skillsetSunday

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You’ve wondered what you could and couldn’t do, now you will know! Cure all your doubts about this this peculiar little entity and hear why you should have one. You can’t miss this one!

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Kaaren Hall Real Estate Background:

– President, uDirect IRA Services, LLC
– Helped thousands of Americans invest their IRA into real estate, land, private notes & more
– Educating individual investors and professionals is the cornerstone of uDirect IRA
– Based in Orange County, California
– Say hi to her at www.udirectira.com

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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JF753: Why Buying a 92 Unit Apartment Building WITHOUT a Final Walkthrough is a Bad Idea #SituationSaturday

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The one thing she failed to do before buying a 92 unit apartment building was so simple, yet extremely important…a final walkthrough. Hear what she missed and who’s money was at stake.

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Kathy Fettke Real Estate Background:

  • CEO of Real Wealth Network based in Walnut Creek, California
  • Author of best-selling book, Retire Rich with Rentals
  • Active real estate investor and agent and host of the popular podcast, The Real Wealth Show
  • Been named a Top 100 Most Intriguing Entrepreneurs by Goldman Sachs two years in a row
  • Say hi to her at www.realwealthnetwork.com

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.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:

Subscribe in iTunes  and  Stitcher  so you don’t miss an episode!