JF1351: From Bartender To Millionaire Real Estate Investor & Entrepreneur with Melanie Bajrovic

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Melanie was lucky enough to have parents who taught her about money, and how to save it. By the time she was 22 she had a “nice nest egg”. Looking for guidance with what to do with her cash, her dad suggested investing in real estate. Starting with single family homes and then moving into commercial real estate and opening her own business in a piece of property she bought. Hear what it takes to improve your quality of life substantially through real estate investing. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Melanie Bajrovic Real Estate Background:

  • Serial Entrepreneur, Real Estate Investor, International Best Selling Author, Speaker and Educator
  • Became millionaire at the age of 27, is an inspiration for those who have a vision for what they want in life
  • Author of The Wealthy Barmaid: From Minimum Wage to Millionaire
  • Went from being a waitress to owning multiple investment properties   
  • Based in Niagara Falls, Canada
  • Say hi to her at https://www.melaniebajrovic.com/
  • Best Ever Book: 7 Laws of Spiritual Success by Deepak Chopra

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Edna Keep and Joe Fairless

JF1232: From Subsidized Housing To Multi-Millionaire Investor with Edna Keep

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From nothing to $47 million in real estate using other people’s money. Edna tells us how she has been able to own so much real estate without investing much of her own money. Hear how she got her start, and what she did along the way that took her business to another level. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Edna Keep Real Estate Background:

 


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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, Edna Keep. How are you doing, Edna?

Edna Keep: I’m doing great, Joe. How are you?

Joe Fairless: I’m doing great, nice to have you on the show. A little bit about Edna – from a single mom at age 16, living in subsidized housing, to a multi-millionaire real estate entrepreneur… She has purchased over 47 million dollars worth of real estate using other people’s money, so we’re gonna stay focused on that, certainly.

She’s based in Saskatchewan, Canada. With that being said, Edna, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Edna Keep: Sure. As you already mentioned, my background – I kind of started when I was 16 years old, I had a child and it kind of limited some of my options, like a lot of people said. I was also a C student during school, so I never went on to university or anything like that… So our claim to fame is we’ve been able to purchase 437 doors, or 47 million dollars worth or real estate, using other people’s money. I think that my biggest ability to be able to do that is my background as a financial advisor for 15 years.

Joe Fairless: Okay. Let’s start with the financial advising and then we’ll work our way into the real estate, because it’s related… How did you get into that without a college degree, and then how did you achieve success in that field?

Edna Keep: Well, I actually started studying to be a financial advisor part-time while I was working as an office administrator. Years ago you were able – in my province, not everywhere – to get into studying and even working at it part-time without having a degree. So I studied and then I got my designation, which was certified financial planner, all while I was working at it part-time.

Joe Fairless: And then you mentioned your background with that is what helped you become the real estate investor that you’re at now, the level you’re at now. Can you elaborate on that, how that helped you?

Edna Keep: Sure. We took our training through the Rich Dad education group, which a lot of people do, and it was excellent; we learned so much. And I just started working at it, and we had set a goal of having 50 doors in five years, we thought. $5,000/month, which is kind of what we were led to believe, if we could get $100/month cashflow per property, we could have our $5,000/month goal. We were able to do that in 18 months.

How it came about is people just started asking “How did you do that? We’ve been doing this for three years, we can’t get that.” I realized then that it was my ability to talk to investors that I’d been trained on for 15 years raising capital for mutual funds. And we talked about it a little differently, but really the big thing is getting to understand what your clients are looking for, what your investors need, and I think most people in the real estate world – and even now because I train on it – a lot of people think “Well, why would people give me money to buy real estate?” Well, it’s not just them giving you money; you’re providing a very valuable service, and that is helping them get into real estate without them having to study it for years and years, taking a lot of the risk for them.

In our case, what we do is we partner with our investors. So we bring them in, partner with them, and they’re silent investors, but we know how to make sure that we talk their language. A lot of people think in real estate that if you tell the returns that we’re able to get, that every investor will be all over it, but it’s not true. Investors are more concerned with getting their capital back, they’re concerned about the return OF their principle before they were able the return ON their principle. And it’s like anything, if you start talking 25% returns, it scares people off.

Joe Fairless: Agreed. And with the first 18 months, because it sounds like that’s where you were able to really establish your track record in real estate… You said you were bringing in at least $5,000/month in real estate. Can you elaborate on what you purchased and how that was made up?

Edna Keep: Sure. Our very first purchase was actually a condo. We were quite fearful when we started. We were scared of tenants, and toilets, and just about everything. So when we were going around shopping with our realtor, he took us to some rental properties that actually had just been condominiomized and told us they were for sale… And it just so happened that my oldest daughter had just moved into one of them, so I said to him “Is that one for sale?” He goes, “Yeah”, and I said “Well, I’ll take that one then, because my daughter is a tenant and I know she’ll be a good tenant.” [laughs] So that took a little bit of the fear away.

We ended up buying the one right next door, because Donna had got to know the couple right next to her, and they lived there for 17 years, so we were thinking “Oh my gosh, there we go – we don’t have to worry about two tenants. They lived there for 17 years, they’re not going anywhere. So that was kind of our start, and we got that to happen.

Then our third purchase, which was really where other people’s money started coming in – we were able to talk a lady into leaving the down payment of the property in with the property. We got what was called “cash back at close”, I don’t know if you can do that anymore. Then we paid her an interest rate. So we talked to her two or three different times and really liked the property. She was still working on it; we wanted to make sure we got it, but explaining to her what a vendor take-back was, which is really partial vendor financing, and how it could work to her advantage, it made sense to her, so she invested in her own property, and we still own that property today. We make over $1,000/month on that one property. It’s an uptown duplex. The payment is less than $400/month, I think taxes are $50; all the utilities are separated, so the tenants pay them. So that property alone got us $1,000/month.

When we first started, we were taught if you can get $50 to $100/door, buy it; all day long, buy it if you can do that. So we bought a couple more like that after that, and then we bought a 24-unit. So in one purchase, we basically doubled what we already owned, and that’s how we got to our 50 doors in 18 months.

Joe Fairless: How much were the first two?

Edna Keep: The first two were 129k. You know, it’s funny that a person still remembers… There’s other properties we bought I don’t remember what I’ve paid for them anymore, but those first two – 129k. And you know, in the market that we were in right at that time, Saskatchewan had a really big boom between 2002 and 2010. We bought that in 2007, and within the first year we were able to refinance – or at the end of the first year, because we got a one-year mortgage… We were able to refinance and pull all of our money out of those deals, too.

Joe Fairless: How much did they rent for?

Edna Keep: When we first got them, they offered a rental pool, which was another thing that kind of made sense to us, because we were such newbies and we were scared of being stuck with these all by ourselves… And they were offering $700/month rent. I found out that my daughter was actually paying $740 rent, and I thought “You know what? We’re not gonna go in the rental pool; we’re just gonna collect the $740/month rent ourselves.” But that went up very quickly, and we’ve actually had those units rented out as high as $2,500/month when they were furnished. Right now they’re not furnished just the way that things are going in the market. They’re both two-bedrooms and they rent for — one’s at $1,400 and one’s at $1,200.

Joe Fairless: How do you know if you should furnish or unfurnish a condo?

Edna Keep: You know, that’s a good question. At the time for us it was, again, 100% about the market demand. There was a lot of employees moving into the city; the city was expanding a lot. There was just a need for it. People kept asking “Hey, do you have any furnished units?” and we went “Yeah”, and then we made them furnished.  [laughter]

Joe Fairless: Smart. Because clearly, the rent discrepancy is incredibly large with furnished versus unfurnished. Did you buy the furniture or did you rent it?

Edna Keep: We bought, because we found that going on Kijiji and different places like that, we could get some really nice leather furniture, which is what we like to have, because then you don’t have to worry about cleaning them all the time; you just wipe them down.

We found that we could get some really nice leather furniture for way less than if you bought it brand new, so that’s what we did. Then we would buy the beds brand new, because we always thought that that was important… But that’s what we did – we saved ourselves a lot of money. We could maybe furnish a two-bedroom place like that for $5,000.

Joe Fairless: Let’s talk about 47 million dollars worth of real estate… You said it was 437 doors, which is approximately $107,000/door. So those are higher price point units, relative to at least what a lot of people buy. What’s the business plan with a unit that is worth 107k? Are you buying it for roughly that amount, or is there a different business plan in place?

Edna Keep: Well, we’ve been buying now for ten years, so some of them were less and then some of them were more. The very first apartment building we bought, we paid $75,000/door. Right now, the average apartment building in our sweet spot, which is kind of the older buildings,  -1968 to 1980 – are selling around 120k to 150k/door right now. So it just kind of shows you what’s happened over the last 10 years.

The prices that I give you – some of them have increased a lot, and some of them we’ve purchased just in the last couple years, and our markets actually dropped a bit in the last couple years, so I just value it at the same price we paid for it. But our business model is we go in and we’re always looking for undervalued buildings that give us an opportunity to force appreciation, either through rent increases or renovating so that the properties are back up to more modern, because a lot of people just let their buildings run down.

Then the other key when we’re working with investor capital is to do that as quickly as possible so we get the investor capital back to them, and then we can use their money all over again.

Joe Fairless: You cash them out after a certain period of time, or are they long-term equity owners with you?

Edna Keep: We give them equity ownership, but we still try to get their money back as quickly as possible, because we don’t share in cashflow until the investors are fully paid out.

Joe Fairless: Got it. And what type of structure do you have in terms of when you enter, just the overall preferred return or ownership split, things like that?

Edna Keep: Our general MO is 60% to us and 40% to the investors. That’ll change up or down, depending on what our hold time is. For example, right now we’re working on one where we know we can get 75% of their principle back at the end of the first year, so we’ve only offered 35% ownership out to the investors. Because even after they get all their money back, they maintain their ownership, their cashflow, their equity appreciation, all that sort of stuff, and then of course, their profits if we sell. So yeah, a lot of it will depend on what our plan is with the building.

Joe Fairless: How do you get 75% equity back after the first year?

Edna Keep: We’re buying in some areas that the builder went in and built some really nice condo units expecting to sell them as condos, and he wasn’t able to sell them. Instead of renting them out — well, he started to rent them out, but he did a terrible job. It was really a case of a builder trying to be a manager; they didn’t know what they were doing, they were just kind of looking to stop the bleeding, so they were moving people in, charging them $800/month rent, brand new buildings, covering all the utilities, and they were just hurting.

So we actually got those buildings under agreement for sale, and what we were able to do with them, because the builder is in trouble and we kind of have a middle man who’s helping out the guy who invested with the builder, helping them out getting them sold… So what we do is we go in and we work on the appreciation of the building. We get it fully-tenanted at good rents. He was renting them at $800-$850/month; we’ve got $1,200-$1,250/month, and they’re paying all their own utilities. Sometimes we’re able to furnish those units, and then increase the rent to $2,300-$2,400/month.

So that’s our sweet spot. We know we can do this so fast it’s unbelievable. But we found out through just talking to the local people that a lot of them didn’t even know they were for rent. They thought they were only for sale, because that’s how they started out being… So once we started marketing properly, it only takes us a year to get everything up and running and smoothly running, and we’ve done it in a few different areas already, with the same builder.

Joe Fairless: So instead of selling the condos, you’re renting them.

Edna Keep: We’re renting them, yeah.

Joe Fairless: But what’s the big liquidation point where you’re able to return 75% of the original money that was invested?

Edna Keep: Well, because of the price that we’re able to buy them for is a lot less value than what we’re able to finance them for, once we get them full. In one case, Joe, there were three rooms rented out of twelve in one of those apartment buildings.

Joe Fairless: Wow. What are you able to buy them for per unit?

Edna Keep: They were built in 2014, so they were almost new, so we paid $127,000/door for them.

Joe Fairless: And what did you rent them for?

Edna Keep: The unfurnished ones go about $1,200-$1,250/month and they’re all two-bedrooms, and then if they’re furnished, it’s anywhere from $2,000 to $2,500, depending on demand.

Joe Fairless: Okay, so you’re renting them – let’s just say it’s unfurnished – for $1,250/month, and you buy them for $127,000… So how do you get the 75% of the money back after year one?

Edna Keep: The very first building that we did this with, when we bought it we paid 1.54m, and it was appraised at finance at 1.9m, so that’s how we get it back so quickly.

Joe Fairless: You’re doing a cash-out refinance.

Edna Keep: Yeah.

Joe Fairless: Got it. That’s what I was missing.

Edna Keep: Well, it’s not exactly a cash-out refinance, because we’re buying it under an agreement for sale, so we buy it at a certain price, we increase the value, and then we actually finance it for the first time with an actual lender. The agreement for sale is still a financing term, it’s almost like a vendor take back; they’re holding all the financing until we can get it to worth the value it should be.

Joe Fairless: With the structure — and I know it varies, it sounds like, for deal-to-deal, depending on what the deal looks like… You do 60/40 in a lot of cases; 60% general partnership (you all), 40% limited partner investors… Do you take an acquisition fee or asset management fees or anything like that?

Edna Keep: We will do a small acquisition fee upfront just to kind of keep everything running, but we pay a property manager to manage; we don’t do the management ourselves. But we don’t take a management fee during the time of the hold… Once the investor is fully paid out, that’s when we get our share of cashflow and all that sort of stuff. In the meantime, we’re kind of building up our sweat equity.

Joe Fairless: Makes sense. And what’s the acquisition fee typically?

Edna Keep: Generally, 1%-2%. When I’m working with my students, what I tell them is “You’ve gotta make it work for you.” At the beginning we didn’t take any acquisition fee because we were making good money and it wasn’t a focus. Our focus was long-term wealth. But here we are, ten years later, the whole long-term wealth is totally taken care of, so now we focus more on giving away higher ownership to our investors and taking the acquisition fee upfront. So I tell everybody “It’s your choice. If you give away more of your deal, you can charge a higher acquisition fee, and if you wanna own more of it, then charge less of an acquisition fee.” Generally, anywhere between 1% and 2%.

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

Edna Keep: Take action. There’s so many people out there that take all the classes, and all the classes, and all the classes, and go to all the events, but they never actually pull the trigger… And you know, you can’t be successful 100% of the time; there’s always gonna be mistakes, but you don’t take them as “Oh my gosh, that was a mistake!” That was a learning opportunity. And just keep moving forward.

So educate yourself – absolutely; work with a mentor if you can, and then take action.

Joe Fairless: You mentioned earlier raising capital for mutual funds helped you understand what people need and how to have conversations with investors… What are some tips that you can give to the Best Ever listeners as it relates to raising funds for their projects?

Edna Keep: First tip – show the investor how they’re gonna get their principal back before you start talking to them about the return on their money. Second tip, don’t talk too high. Sometimes we know we can make 40% a year on our return, but you tell an investor that who’s not familiar with what we do, and they’re gonna automatically say that that’s too high a risk for them. Go ahead and tell them a lower return and go ahead and deliver, because then they’re locked in with you for life.

The other thing is treat those investors like gold, and they will invest with you again and again and again. I see people make the mistake all the time of — if something is not going exactly right, they don’t report, and then people, because they know (they know what’s going on in the market, especially if it’s a market condition, which usually it is), they think you’re sticking the head in the sand and they all of a sudden start thinking all these terrible things are going wrong, when really a lot of times if you’re just staying in contact with them and letting them know what’s going on, then the trust is never broken. But if you ever break that trust, they won’t come back and your whole business model, if it’s predicated on that, it will never work; you’ll spend all your time looking for new investors.

Joe Fairless: What are some specific examples or ways that you treat your investors like gold, other than the most important thing, delivering on the projects? Any tactical things outside of the project that you do with your investors?

Edna Keep: Well, the reporting is a big thing. We report quarterly. Then once a year we get together in a group and we usually have all-day meetings for two or three days and back-to-back we’ll talk with specific investors, report to them live, and then have a dinner together where all the investors can hang out together. Birds of a feather like to flock together, and they like to know that there’s other people out in the world doing the same thing they are, which is really trusting other people with their money, and when you can bring them together like that, we find they really appreciate it.

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

Edna Keep: Sure!

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

Break: [[00:21:22].07] to [[00:22:10].02]

Joe Fairless: Best ever book you’ve read?

Edna Keep: Why Do A Students Work For C Students, And B Students Work For The Government, Robert Kiyosaki.

Joe Fairless: Best ever deal you’ve done that you have not mentioned?

Edna Keep: That’s one of my favorites! We bought 144 units all at one time, four apartment buildings, small town, 3,000 population, raised 1.2 million dollars (it was about 40k/door). Two and a half years later we refinanced out, had everybody paid back, ourselves and our partner, got a $75,000 acquisition fee, got our partners paid out in 2,5 years, went on to buy two more buildings. At refi, we each got a $400,000 payday, and we make 10k/month in cashflow.

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

Edna Keep: We’re currently living through one. We bought one building and we paid the same price six months later when we bought another building. It was the same seller, so we had a good experience with him, but we went into a market where we were increasing our rents when we should have been decreasing our rents. We just missed that window, we weren’t paying attention good enough, and we ended up with a whole pile of vacancies all at once, so we ended up putting money into our deal, when we’ve never had to do that before.

Joe Fairless: Are you putting it in along with your investors, or is it just you, or is it just the investors?

Edna Keep: In the ten years we’ve been running, we’ve only ever had two cash calls, and they’ve both been market-related. One with a partner, who’s kind of in control of the money, so I didn’t have a say on it. This one, I own almost 50% of the deal, so I just went, “If I’ve gotta put in 100k, and I’ve gotta put in 50k anyway, I may as well just put in the full 100k, save my reputation with the clients and just ride it out.”

Joe Fairless: What’s the conversation like with investors during that situation?

Edna Keep: I just stay in touch with them all the time, and I’ve told them, I’m not really sure — lots of times we’ll get that building full, and then next thing it starts being vacated again. So our plan is we’re just gonna sell it. We’ve had it for three years, it hasn’t performed for us, so we’re just gonna put it on the block and sell it. We’re not gonna sell it at a loss, we’ll hang on to it because it’s not costing us any money right now, we’re breaking even on it, but we can’t get it to the point where it works like it should work.

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

Edna Keep: I love sharing my knowledge with other people. We’ve been able to build a really nice lifestyle in ten years, and I love sharing that with other people, teaching them what we did, what worked for us. I run a mastermind and I have a couple programs, and I just love seeing the light go on for people going “I did exactly what you told me I could do!”

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

Edna Keep: They can reach out to me on my website, and that’s EdnaKeep.com. Or they can e-mail me at Edna@EdnaKeep.com.

Joe Fairless: Edna, thank you for being on the show and talking about your experiences, the lessons learned as you’ve scaled your real estate business and company, the way that you structure  deals with investors, the types of fees that are charged, as well as the types of opportunities that you’re working on, and what happens when things don’t go right, the cash calls and how do you approach that from a communication standpoint, as well as tips for raising money for projects for the Best Ever listeners, those three tips – one, show how investors will get their principal back; two – be conservative, and three, treat investors like gold and they will invest again and again and again.

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

Edna Keep: You’re most welcome, Joe. Thank you very much for having me.

Best Real Estate Investing Advice Ever Show Podcast

JF1114: How To Do A Successful Land Development Deal with AJ Hazzi

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When the opportunity to buy a piece of land presented itself, AJ took his first step into the world of developing. It was his first development and he was successful with it, profiting about $1.4 million over a 5 year span. Hear exactly how the deal came about, how he was able to envision the sub-division on the land, getting the planning commission to agree to re-zone, and why he decided to also become a new home builder for the development. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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AJ Hazzi Real Estate Background:
-Founder & Associate Broker at The Vantage West Realty Kelowna
-Portfolio includes development property, resort property, rentals, fix and flips and cash flow properties
-The #1 recommended Kelowna real estate agency by Barbara Corcoran
-Winner of the Kelowna Chamber of commerce Young Entrepreneur of the Year award
-Based in British Columbia, Canada
-Say hi to him at www.vantagewestrealty.com/
-Best Ever Book: Millionaire Real Estate Investor


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TRANSCRIPTION

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 of that fluffy stuff.

We’ve spoken to Barbara Corcoran from Shark Tank, Robert Kiyosaki, author of Rich Dad, Poor Dad, Emmitt Smith (he plays football and he does development), and many others. With us today, AJ Hazzi. How are you doing, AJ?

AJ Hazzi: I’m doing fantastic, thanks.

Joe Fairless: Nice to have you on the show. A little bit about AJ – well, we’ve got the winner of the Kelowna Chamber of Commerce Young Entrepreneur of the Year award. He is the founder and associate broker at the Vantage West Realty Kelowna. His portfolio development property, resort property, rentals, fix and flips and cash flow properties. He’s based in British Columbia, Canada. With that being said, AJ, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

AJ Hazzi: You’ve got it. Well, I got into the business when I was 19 years old and I became a real estate agent shortly thereafter. This was just going into that boom that we had from 2002 all the way up into 2008. I caught the bug early and was just really feeling that I had found the right business for myself, because I hadn’t experienced any downturns yet, so I was collecting real estate as fast as I could get my hands on it, doing a lot of flips to try to build up my capital.

By 2007, I had about 15 doors and was doing pretty good; then, obviously, the downturn happened and [unintelligible [00:02:21].13] a couple knocks, but weathered the storm pretty good because the bulk of my portfolio was all cashflow stuff. Like I said, I still have my real estate company here, a property management company, and since then I’ve been doing a lot of development stuff, buying some multifamily apartment buildings, that kind of thing.

Joe Fairless: What is your project right now that you’re focused on?

AJ Hazzi: I’ve got a few different projects. We’ve got a small lot subdivision, 13 modern green-built homes near the city center; we’ve also got 14 villas at the golf course [unintelligible [00:02:50].26] and I’ve got some projects downtown, some work/live lofts that we’re building, 10 units down on South Pandosy Village.

Joe Fairless: Why the evolution from buying existing properties to buying dirt and then building the properties?

AJ Hazzi: It wasn’t necessarily that I switched. I still purchase regular residential property. I’m just all about trying to add value anywhere we can add value, and there were certain pockets and certain opportunities that came to me that warranted a good, hard look, and at this stage in my career the access to the capital needed to do these types of things is there, and that’s why we’ve gone that route. But the bread and butter stuff, the multifamily, the duplexes, the houses – all those things are still a focus.

Joe Fairless: It’s one thing to want to add value by identifying an opportunity to build, it’s another to actually execute on it. How did you find the team members to surround yourself with since you hadn’t done it previously?

AJ Hazzi: You just hit the nail on the head there; you need a team, 100%. You can’t do it all. A gentleman that I know worked at a consulting firm, and these guys helped developers put together plans specifically, all the way through project management. So my first project there would be a small lot subdivision. I was foolish enough to think I could project-manage it myself, and I had these guys do the engineering side of it and the consulting side, and then I project-managed it. I would never do that again. I always wanna do a project manager… Give up the 8% and let somebody else do it.

Joe Fairless: What were some specific lessons learned when you did the project management of it? And what development was it?

AJ Hazzi: The subdivision I did up on modern way. One of the things that stands out to me was in negotiating the contract for the underground services. In the proforma they did for me they had sort of given me a number, which was 100k, for putting in the shallow utilities and the deep underground utilities. So me not knowing how it all works, I didn’t negotiate that contract well. I called somebody that I knew, I had them come out, and then in the end there were all these types of loose ends as to who is paying for what in terms of materials and rental of equipment that was needed, all the contingencies… We ran into everything – rock and water and all the things that you can run into, and there were no contingencies built into the contract, of course, because everything was fairly loose, because I didn’t really know how to write an MCD contract at the time. That’s why you hire a project manager.

Joe Fairless: In my mind that’s half experience, but the other half is having an attorney who has experience with those types of contracts and makes the clauses are in there.

AJ Hazzi: For sure. And you can get some boilerplate agreements for sure, and you can hire an attorney to go through it, but I don’t think anything is gonna replace the know-how of somebody who’s managed successfully multiple projects from beginning to completion. That’s invaluable.

Joe Fairless: Let’s hone in on one of these developments. Which one do you wanna pick?

AJ Hazzi: Let’s stay with the one we’re talking about.

Joe Fairless: Okay, what’s the size of it?

AJ Hazzi: 13 lots. It was a three-acre piece that I rezoned and carved into 13 50×120 lots, and we went through and not only created the lots and built the street, but we pioneered Kelowna’s first green street, which was kind of a different thing… There’s no curbs and gutters; we use these little bioswales… It’s a very funky street. But now we’ve actually went and became a new homebuilder as well, and we’re building right through to the end product.

I’ve hung on a little longer to this project that I had initially intended to – I was just gonna sell lots – and then when I saw where the market was going I thought “Why not become a new homebuilder as well and just build the end product?”

Joe Fairless: Okay, so let’s start from the first time that you had the idea to buy the piece of land, the three acres… It wasn’t zoned what it currently is zoned, because you said you went to rezoning; what was it that attracted you to this lot and what was it zoned for when you purchased it?

AJ Hazzi: It was currently zoned agriculturally. There was a house on the property that was totally dilapidated. It was brought to me by a friend of mine, actually. She mentioned that her grandparents had passed on and they were gonna look to settle the estate, and she came to me and asked me if I wanted to sell it on her behalf. They also told me that there was another realtor that was offering them an amount for the property and I essentially said “Yeah, I think I’d be interested in doing something with you guys on this”, and then I called my friend who was the consultant, and him and I signed a sheet of paper, we stood there at the lot, drew where the road would go, and pasted off and figured out whether or not this thing could be curbed into 13 lots. Then we went down to the city and we said “This is what we’re thinking about doing”, and brought in the planning department into the picture at this point, and they all said “Yeah, we’d support that”, and away we went.

Joe Fairless: What’s the key to get support with the planning department on a rezoning?

AJ Hazzi: You wanna understand what their goals and initiatives are and give them something that meets their goals. You can look at the official community plan of any place and you can look at what the initiatives they’re trying to achieve — if they’re trying to densify an area… You wanna go with the grain with the OCT, in my opinion. There are people who wanna reinvent the wheel… My opinion is to find parcels of land and give the city what they wanna see there in the future.

Joe Fairless: And they were looking to make it more dense, correct?

AJ Hazzi: They wanted to increase their tax base in certain areas. That area was future zoned for regular residential homes, so we were just sort of accelerating that. They’re getting frontage improvements and development cost charges… There’s a lot of benefits to the city when development happens, so provided you’re not asking for something that’s outside of their plan, you can usually gain support fairly quick.

Joe Fairless: Did you two go to them and say “We’d like these 13 lots?” or were there more or less initially?

AJ Hazzi: No, we got exactly what we were after?

Joe Fairless: And why did you have 13 lots, 50×120 versus two lots or 26 lots?

AJ Hazzi: It really just comes down to — two lots, the proforma wouldn’t have worked… At the time, we were thinking “Okay, $150,000 a lot (this is going back five years now; they’re over 200k), 13 lots – that’s 1.8 million”, and we figured it was gonna cost about a million too to develop it, and we just sort of did the rough math and figured out what we could pay for the land and still make a decent margin. So two lots wouldn’t have done it, and 13 was the maximum that we would have gotten based on the minimum parcel sizes, so we just went for the max… But it was still inside their by-laws and their rules.

Joe Fairless: The minimum parcel sizes according to that county or that municipality…

AJ Hazzi: Yeah, we were taking them to R1, and we looked at the minimum parcel size for R1 and figured out once you take away the road how many lots you can get.

Joe Fairless: As far as taking away the road, that’s where your buddy was coming into play, right? Because that would be a tough thing for me to pencil in…

AJ Hazzi: Yeah, we’re staring at this thing – it’s covered in trees, there’s a mound in the middle… We were looking at it and he’s picturing the mound gone and the trees gone, and he was telling me “Okay, we’re gonna have this S-bend road that’s gonna go in, it’s gonna have a cul-de-sac right up at the top, right towards that tree off in the distance…” He’s seeing it, because he’s done this before [unintelligible [00:09:46].17] I said “Okay, that sounds good.”

On a piece of a paper, when you draw it, like 300 feet wide by 1,000 feet deep, and I go “Okay, so I’m gonna have about a 700 foot deep road; okay, that’s about seven-tenths of my piece of paper…” You know, you can kind of pencil it out and you can visualize it if you’re looking at a two-dimensional piece of paper, but when you’re standing on the lot – having one of these guys that’s got the experience, who can look at something and say “Okay, this is how it’ll look after we’re bringing these big machines through…”

Joe Fairless: With not having done it before, how do you have a checks and balances between you two to make sure that what he’s saying is accurate? Because everyone makes mistakes.

AJ Hazzi: For sure, and there were mistakes made. The amount of fill that we brought in initially was based on some calculations that he had done, and in the end I ended up having to truck a whole bunch of that fill out… It was a huge trucking cost because the calculations were not exact, but it’s never gonna be perfect; it’s development, you don’t know what you’re gonna run into, but somebody with a good track record, someone that you trust, that’s not going anywhere, they’re not fly-by-night…

I put a lot of faith into the engineering, and in the end it worked out great… But were there some missteps along the way? 100%. Luckily, a good market… We absorbed them.

Joe Fairless: You said you did the first green street in that area… What made you think of doing that and what were the additional steps that needed to be taken in order to pioneer that?

AJ Hazzi: Initially we were trying to figure out how to create a way to get the cost of the road down, and there were some projects in Victoria that had done these curbless, gutterless roads that were narrower, so less asphalt, no curb and sidewalk for it either… So if you’re doing these plantings and these little bioswales — your landscape material is more, but it also added a nice aesthetic, because the properties all appeared to be 15 feet deeper and had these really nice landscape berms in front versus having curb and sidewalk… It’s kind of like a zero edge road.

I saw pictures of it, it’s gorgeous, plus it’s also less expensive to produce, so we said “Okay, we’ve gotta get the city on-site for this.” So we went down and we started talking to different council members and different people from planning and just explained our idea and asked if they would support it. Many were in favor, and when we had enough of them on-site, we decided to put it in front of council and go for it.

Joe Fairless: Do you have pictures of that on your website?

AJ Hazzi: Not on my website, but I can send you a photo.

Joe Fairless: Okay. I’ll give you an e-mail address later after we get done, and then we’ll post that in the show notes link so the Best Ever listeners can check that out.

And then the last question and then we’ll move on because our time is limited – the numbers, that little detail… How much did you acquire it for, what was the all-in price and where are you at now?

AJ Hazzi: We paid 630k for the property back in 2012, and it cost us about 1.3 million dollars to develop it (some cost overruns over the initial thought process), and then we sold the land component for 2.6, so we’re up to 200k per lot now in the land component… So we got 2.6, which was better than our initial proforma. And then on each of the homes we are at a 10% of build cost to the developer as well; we’re building homes in the 600k-800k range for the most part, so there’s a 60k-80k edge for each property as well.

Joe Fairless: Very cool. So you sold the land for 2.6. All-in you’re at about 2 million to get to that point, and then for every house you’re making about 60k-70k… Ish.

AJ Hazzi: Yeah. I think the total profit on the project is about 1.4.

Joe Fairless: Over about five years?

AJ Hazzi: Yeah, it’s been a five-year project.

Joe Fairless: Got it. What is your best real estate investing advice ever?

AJ Hazzi: Best real estate investing advice ever is to — actually, I looked at the question and there’s sort of three answers to this. Number one, you get what you negotiate. Don’t be afraid to ask for terms other than price. It’s not always about the price. Sometimes you can get very favorable terms. I’ve gotten myself into so many deals that I had no business getting into because I didn’t have the cash, but I gave the person the money and I got the terms that I wanted.

Number two, don’t do what everyone else is doing. Don’t follow the crowd. What everyone’s doing is usually the wrong thing.

Number three, you can protect yourself by always buying for cashflow. All the mistakes that I made were always based on speculating, versus investing in cashflow-producing properties.

So I have multiple things…

Joe Fairless: No, it’s great. One follow-up question on that, and then we’ll go into the Lightning Round. you said you can get better terms and you get what you negotiate… You said you got into deals where you didn’t have any reason to be in the deal, but you just got the right terms. What would be an example of that?

AJ Hazzi: Sure, there’s one recently. We have a commercial property in a very high traffic area here in Kelowna, and the price they wanted for the property was a little rich and it had been sitting on the market for a period of time… I did some investigating, found that these guys owned it nearly for cash and was able to strike up a win/win deal where they vendor-financed the lion’s share of the down payment required to buy this property. My total cash outlay should have been half of a million and it ended up being 150k. I was able to get into a property for essentially 7%-8% down, versus having to put 35%, which is what you would typically have to do on a property like this.

That deal, for example – it’s going to be a great holding property. We’re eventually gonna move our business and our office there, and it would have been too cash-intensive at the time for us had we not negotiated the terms… But most people would never think to ask that, so it’s out on the market for days.

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

AJ Hazzi: Let’s do it.

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

Break: [[00:15:27].22] to [[00:16:29].15]

Joe Fairless: Best ever book you’ve read?

AJ Hazzi: The Millionaire Real Estate Investor.

Joe Fairless: Best ever deal you’ve done that you haven’t mentioned?

AJ Hazzi: 18-unit apartment building. Bought it for 1.6, put 300k into it, refinanced it for 2.7, got all of our money back plus 200k, and the thing cashflows 10k/month.

Joe Fairless: A mistake that you’ve made on a transaction?

AJ Hazzi: Speculating on condominiums in pre-sales at the end of the market. Lost 300k on two units. Never speculate, that’s the bottom line.

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

AJ Hazzi: I like local charities, local causes, supporting local sports teams… That kind of thing.

Joe Fairless: And how can the Best Ever listeners get in touch with you or your company?

AJ Hazzi: Send me an e-mail: info@ajhazzi.com.

Joe Fairless: AJ, thanks for being on the show. Thanks for talking through the anatomy of a ground-up development deal, the challenges… 13-lot, three-acre piece that was rezoned, and your whole process that you went from start to finish, with the numbers, as well as your best ever advice, a 1-2-3 punch: you get what you negotiate, don’t follow the crowd and protect yourself by always buying for cashflow; never, never speculate.

AJ, thanks for being on the show. I hope you have a Best Ever day, and we’ll talk to you soon.

AJ Hazzi: It’s been my pleasure! Thanks, Joe!

Best Real Estate Investing Advice Ever Show Podcast

JF1033: Buying Properties With $0 Out Of Pocket!

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From Africa to Canada, she can buy and teach her methods across continents! After starting with buy & hold properties, Thembi realized she needed money sooner than they could provide.  When she began with Rent to Own, she never looked back!

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Thembi Bheka Real Estate Background:
-Founder of Real Estate Real Riches, an education platform for individuals in Africa to invest in real estate
-CEO and Real estate investor at Infinity Housing Solutions
-She came to Canada from Zimbabwe with $5 in her pocket
-Mentor with Kelowna Community Resources, a government organization to help immigrants
-Based in British Columbia, Canada
-Say hi to her at http://realestaterealriches.com/
-Best Ever Book: The One Thing

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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.

With us today – Thembi Bheka. How are you doing, Thembi?

Thembi Bheka: I’m doing great! Thank you, Joe, for having me today.

Joe Fairless: My pleasure, nice to have you on the show. A little bit about Thembi – she is the founder of Real Estate Real Riches, which is an education platform for individuals in Africa to invest in real estate. She came to Canada, where she currently resides, from Zimbabwe, with five bucks in the pocket. She is the CEO and a real estate investor at Infinity Housing Solutions, as well. With that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Thembi Bheka: Yes. Hello, Best Ever listeners. I hope this will be the best ever show for you. I came to Canada, as you said, in 2001; I trained as a registered nurse. However, during that time I realized that I wanted some financial freedom and I also wanted some time to spend with my children. I started investing in real estate in 2008.

When I started, I started as buy and hold, basically buying properties for the long term, and I realized that wasn’t going to give me what I needed quite fast… So I transitioned into what they call rent to own and agreements for sale.

Joe Fairless: Are you doing rents to own now?

Thembi Bheka: Yes, I do mainly rent to own and agreements for sale, which I believe in the U.S. is known as seller financing.

Joe Fairless: Okay, and what is it called in Canada?

Thembi Bheka: Agreements for sale.

Joe Fairless: Agreements for sale, okay. Cool. You’re from Zimbabwe, right?

Thembi Bheka: Yes.

Joe Fairless: What is the program that you have? Do you have something with people who live in Zimbabwe to help invest in real estate?

Thembi Bheka: Yes. So what I have is a training platform where I help people in Africa to find out how to get properties with no money down, using seller financing, which is also agreements for sale, as I said… Because what I found [unintelligible [00:04:22].14] and people would just stay forever until they’re 70 years old before they even own their first home, trying to save money. And most of the banks, even if they are banks, do not qualify easily as you would anywhere else in the world.

That’s when I realized that there was a need, there was that gap where we could bridge the financing gap between individuals who are selling and individuals who need to buy a home.

Joe Fairless: Let’s talk about the last agreements for sale/seller financing deal that you did. Can you tell us the number son it?

Thembi Bheka: Yes, it’s actually what I’m working on right now; it’s three properties, all with one seller. This is in Canada. The seller needs 182k/property for a townhouse, and he wants really no money down. All he wants me to pay him is this one, which is listed with an agent, and he wants agent fees for that one, which is going to be about 20k.

It rents for about $1,400 in the area. Currently, the mortgage is $600/month and condo fees are about $300, so I will be cash-flowing probably about $400/month, and I’m not putting any of my money.

Joe Fairless: So you’ve got a seller who’s got three properties, each of them $182,000, and he’s agreed to sell them to you for no money down… What type of financing terms do you give him?

Thembi Bheka: I’m taking over the mortgage from the bank. He has a mortgage already at the bank, so basically I am getting in and taking over the mortgage. They agreed to extend the mortgage for another three years, so we have a five-year term with that mortgage.

So I’ve been taking over the mortgage, the property taxes, the interest and the insurance, and just getting into this property.

Joe Fairless: And why is this a good deal for him?

Thembi Bheka: Because he just wants to get out of the property. He’s tired of dealing with tenants.

Joe Fairless: But why wouldn’t he sell them traditionally? Because there is no equity in the deal?

Thembi Bheka: There is equity… There’s about 25k in each property, but once you pay the realtor fees and you pay all these legal fees and you pay the cancellation fees for your mortgage, he really was gonna walk out with nothing. So this is a good benefit for him… At least he doesn’t have to go through the pain of trying to sell it. And the market is not great right now in Edmonton – this is a property in Edmonton. The market is not that great for him to sell.

It could stay for six months without finding a buyer right now… So this is a fast way for him to let the property go.

Joe Fairless: And how do you give him the confidence that you will pay the mortgage in particular, so that he doesn’t get foreclosed on and hurt his credit?

Thembi Bheka: Our company is a reputable company; we’ve been doing this for a long time, so that also gives us the confidence and it gives anybody the confidence. But even then, we do have an agreement with the lawyer.

We don’t just sign this in the backyard, we sign it in front of the lawyer. We have an agreement which obliges me to do this; if I don’t do this, he could go after me and sue me.

Joe Fairless: Okay. And that is for all three properties?

Thembi Bheka: For all the three properties, yes.

Joe Fairless: How did you come across him?

Thembi Bheka: He called me from my website. I have a website which I haven’t advertised forever, and I just got a call a couple of weeks ago… He actually said, “I only have one property and I need to sell it because I’m tired of managing the tenants and it’s empty right now. Then as we got to speak, as I got to know him more, I found out that he actually has three, and then he was willing to let me take the three as a package.

Joe Fairless: What is his situation where he doesn’t want to just continue to sit on these properties? What’s the life circumstance?

Thembi Bheka: He’s tired. As an investor sometimes – especially if you buy without the right fundamentals, it is easy to get tired, especially if you don’t have the right training of what kind of tenants to put into your property… You get all these tenants who come and trash the place. Then you clean it up and then another tenant comes and trashes the place and you clean it up…

Without a good knowledge and without a basic foundation of where you’re going to go, it’s easy to [unintelligible [00:08:42].25] and it’s easy to get tired. That’s why you need a solid foundation in real estate and solid education, to be able to screen your tenants properly.

Probably what has happened with him is he’s just had all these tenants coming, trashing the place and leaving. This property is newly renovated; he just renovated them and he didn’t put anyone in them. He probably just decided “I do not want to deal with a tenant anymore. I am just exhausted with this and I want out.”

Joe Fairless: Wow, what a find. Congratulations on that one!

Thembi Bheka: Thank you!

Joe Fairless: Tell us about your least favorite deal that you’ve done.

Thembi Bheka: It’s the first property I ever bought, in 2008. I bought it because it was pretty. I didn’t look at the numbers, and I didn’t screen the tenants. I didn’t know anything about screening the tenants. I just got it and said, “Oh yeah, I’ve got a property and somebody’s looking for a place to rent. You’re in!”

What happened is those tenants stayed with me for five years, and I never did any checks. I didn’t know that you’re supposed to go check the property. After five years I went in, because they started not paying rent, and I kept giving them longer and longer periods to extend… I think it was after six months of not paying rent that I went in and the place was a mess.

Joe Fairless: How so?

Thembi Bheka: It’s funny, because when I went in, Joe, I went in with a potential renter. I advertised it to say, “Oh, I have another property if you wanna come and see…”, before even looking at this property. First of all, you come by the door, there’s garbage everywhere. Garbage!
I’m like, “Oh, this is embarrassing. I should clean up the garbage real quick before these other potential tenants come in.” As soon as I finish cleaning up the garbage, the potential tenants come in, and I open the door, and this smell… I can never get rid of it even up to now… It hits me! I can smell it just talking about it! It just hits me in the face.

I didn’t know what it was, but it turns out that when you have many cats and they just pee in the house for five years, it really gets it in a mess. The smell was so bad… We had to rip out everything. So I learned a lot…

Joe Fairless: Yeah, I’ve been in a similar situation when we were doing due diligence on an apartment community and there was a hoarder who had just stuff stacked to the ceiling in some cases, and not only did they have cat pee and poop everywhere, but they had dead cats, two of them, that had been decomposing in the closet. It was just a terrible, horrific scene. And the smell – holy moly…

The inspector would not go in there until he got a hazmat suit. He literally was in a marshmallow suit with a visor and the head gear and everything whenever he went in to inspect it.

Thembi Bheka: Wow… That’s probably your best deal.

Joe Fairless: [laughs] We did end up buying it, but they had to get it fixed before we ended up closing. So this 2008 pretty property – how much did you buy it for?

Thembi Bheka: 285k.

Joe Fairless: And where did you end up with it?

Thembi Bheka: I still own it up to now, and I’ll tell you what it’s worth – 240k.

Joe Fairless: Yeah, it happens sometimes, huh?

Thembi Bheka: Yeah… And I have put in at least 10k in that property. As I said, I just bought because I had [unintelligible [00:12:14].02] real estate you can be successful, and I just didn’t think of the fundamentals.

Joe Fairless: How do you run the numbers now when you look at a deal?

Thembi Bheka: I calculate basically what the mortgage is going to be, and everything… When I calculate my mortgage, I put in a buffer because we know that interest rates go up and down, right? Right now our interest rate is kind of very low, about 2.5%.

Joe Fairless: 2.5%?! Oh, man… Lucky you!

Thembi Bheka: Yes. So when I calculate a property, I don’t calculate with 2.5%, I calculate with 5%. I put in a buffer for that, because I know they’ll go up. Then I add in the property management, which is something I never used to do before. So I add in the property management, the vacancy rate, which I calculate for one month’s rent (which is 8% vacancy rate), and maintenance fees, because the property needs to be maintained, and I usually put 10% for maintenance fees.

So I add in all those as a buffer… Not that it’s gonna happen, but just in case it happens, I have some money in the bank.

Joe Fairless: With the interest rates being as low as they are, and then you’re projecting 5% — why are you projecting 5%, unless you’re doing a variable versus a fixed interest rate on your properties?

Thembi Bheka: I try to go variable as much as I can.

Joe Fairless: Oh, really? Why?

Thembi Bheka: Because long-term research has shown that when you go variable, at the end of the day – usually not just in a year, but over 25 years – you actually make more money than when you go fixed. And I also like the fact that I don’t have to be tied down too if I have to get rid of the mortgage or cancel a property.

Joe Fairless: I remember interviewing someone – I forget who it was, but he talked about how it does make sense to do variable interest rates in certain scenarios, and it’s interesting that you’re doing it in every scenario when you can.

Thembi Bheka: Especially right now, with the way the economy is. The rate is so low, it makes sense to do variable. But having said that, I do have a [unintelligible [00:14:21].14] creeping up, sometimes I could lock in, but usually, I try to go variable.

Joe Fairless: Do you find that you’re at a competitive disadvantage sometimes when you’re making offers on properties and you’re running the numbers in this way where you’re doubling the interest rate, and others probably are not running the numbers that way, therefore they might be able to pay more?

Thembi Bheka: Yes, I do, but it makes me sleep at night. For me the most important thing is having sleep at night and spending time with my children. What I found, especially with the first property where I just assumed things were going to stay constant [unintelligible [00:14:59].21] fees will never go up, I found myself being stressed, not even being able to pay a property manager because I don’t even have the money to pay a property manager upfront. So I’d rather have a big buffer, than have less.

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

Thembi Bheka: Start with your why. In any transaction, when you have to do with a seller or you have to do with a buyer, just find out what is their big WHY. Why do they want to sell this property? Instead of focusing on the financial aspect, you’d be surprised how much you can [unintelligible [00:15:30].24] when you focus on the why.

Joe Fairless: Can you tell us a story of when you have focused on the why and it has helped the transaction?

Thembi Bheka: This property of land – 10-acre land – which I made an offer on and it was 450k… The realtor had listed this land and he kept saying “Oh, the seller wants the money, the seller wants the money.” Then I asked if I could meet with the seller, and I spoke to the seller and I asked him “So what do you need the money for?” He says, “I just wanna put it in the bank account.” Then I explained to him that “You do realize that when you take this money upfront and you put it in the bank account, you’re going to [unintelligible [00:16:07].01] capital gains, and also you’re going to be getting very little interest.”

What happened is I gave him options to say, “Well, maybe what I could do is I could give you just a little bit upfront, and then pay you over a certain number of years, that way you don’t have to pay that much in capital gains.” That seller was so happy and I ended up getting the deal.

Joe Fairless: Beautiful! Thank you for sharing that. That should be in everyone’s tool kit that’s for sure. Regardless of what type of deal we’re working on, we should always have that conversation.

Thembi Bheka: Exactly.

Joe Fairless: Now, are you ready for the Best Ever Lightning Round?

Thembi Bheka: Yes!

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

Break: [[00:16:49].26] to [[00:17:41].17]

Joe Fairless: Best ever book you’ve read?

Thembi Bheka: The One Thing.

Joe Fairless: Best ever deal you’ve done?

Thembi Bheka: I guess the three deals I just spoke about – the agreement for sale deal.

Joe Fairless: What’s a mistake that you haven’t mentioned so far that you’ve made on a deal that comes to mind?

Thembi Bheka: Using emotions when dealing with tenants.

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

Thembi Bheka: Teaching other people to invest in real estate.

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

Thembi Bheka: RealEstateRealRiches.com.

Joe Fairless: That will be in the show notes page, so Best Ever listeners, you can click on the link and check out her website.

Thembi, thank you so much for being on the show and sharing your experience starting from scratch, coming from Zimbabwe to Canada… You started out as a registered nurse, and then decided that you wanted to focus more on long-term wealth and spending your time how you wanna spend it.

Then the properties – the three properties that you’re working on right now, with the seller who is just tired and wants to get away from the deals, and the value exchange that each of you are providing… More so he’s providing to you than you’re providing to him, but I think if we were to ask him, he would say you’re providing a lot of value too, because it’s a peace of mind.

Also, talking about the agreement with lawyers that you have in place so that he could come after you if you don’t adhere to what you said you would do; that’s an important part, I’m glad that you mentioned that… Because when people hear that story, initially at least, I think “Well, what’s the catch?” So it is drafted up and there are some repercussions if you don’t live up to what you will be doing.
Also, the 2008 pretty property that stunk really bad after five years of tenants living there, lessons learned and then how you run the numbers now with the interest rate padding, the vacancy, the maintenance fees… And start with the WHY questions that you want to know for every transaction – Why are they selling? And you gave the wonderful story of how you were able to work yourself into a deal with a little upfront and money over a period of time, versus more money upfront.

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

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Best Real Estate Investing Advice Ever Show Podcast

JF999: World Class Author, Coach, and Thought Leader Sheds Light on Why the Successful RE Pros are Succeeding #SkillsetSunday

Listen to the Episode Below (22:26)
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Have you ever asked yourself what elements make up a successful real estate investor? This episode is about to unveil what exactly makes an individual excellent in whatever they do, especially in real estate!

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Kim Ades Real Estate Background:

– President and founder of Frame of Mind Coaching & JournalEngine™ Software 1995-2005 President of Upward Motion that unveiled the Real Estate Simulator, web based assessment tool
– Recognized as one of North America’s Top 50 most influential women in real estate
– Author, speaker, and mother of five
– Based in Toronto, Canada
– Say hi to her at www.frameofmindcoaching.com/
– Best Ever Book: Ask and It is Given

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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, Kim Ades. How are you doing, Kim?

Kim Ades: I’m great, how are you?

Joe Fairless: I am doing great as well, nice to have you on the show. A little bit about Kim – she is the president and founder of Frame Of Mind Coaching and Journal Engine software. She has been recognized as one of North America’s top 50 most influential women in real estate. She is an author, speaker and mother of one, two, three, four, five kids, and she’s based in Toronto, Canada. With that being said, Kim, do you wanna give the Best Ever listeners a little bit more about your background and what you’re focused on?

Kim Ades: Sure. Right now I coach people, I coach the highly-driven population, those people who typically have four things in common – number one is that they are highly driven and they have incredible goals that they wanna reach. Number two is they’re good people, they wanna make a positive difference in the world, they tend to get involved in charity communities, they donate, those kinds of things. Number three is they are big livers, so they wanna have the best of everything: they wanna have a nice home, they wanna have a nice car, they want to travel to nice places, they want to have great health, great relationships etc. And number four is they’re frustrated, overwhelmed, stressed, exhausted and find themselves bumping up against the same problems over and over again. That’s what I do, I work with those people.

Joe Fairless: Sweet. Well, let’s talk about your real estate background, and perhaps that will bring to life the coaching stuff in more context. Tell us about your real estate investments from beginning to where you’re at now.

Kim Ades: Real estate investments are very simple – I used to own property, as a landlord. That was years ago when I was first married in my first round of marriage, when I was 20. I started young, and over time I’ve still just been purchasing my own properties, without mortgage etc. But my involvement in real estate is not really so much focused on my real estate investment; I’m not anything extraordinary more than any other average person, but I was really interested in what is it that makes a real estate professional better than any other real estate professional. That’s how I got involved in the real estate industry – I studied what makes a top performer. That’s where my career brought me to really getting involved in the real estate career and going out to all the conferences and events and learning what drives real estate professionals.

Joe Fairless: Alright. I certainly want to get the answer to that question, but I do wanna back up a little bit… You said you have been buying properties without mortgage – why without mortgages?

Kim Ades: I’m not a big fan of debt. I prefer to purchase and be clean and clear, and then whatever it is that I do with those properties in terms of rental income or my homes over the years, it just has felt a lot better. I love living debt-free, it’s a good way for me to live without any additional stress or headaches.

Joe Fairless: Okay. And you’re an active real estate investor now?

Kim Ades: Yes, absolutely.

Joe Fairless: And are you investing in Toronto or other areas?

Kim Ades: Primarily locally.

Joe Fairless: What’s the last deal you did? Not necessarily when you did it, but just what are the numbers on it?

Kim Ades: It’s a little bit personal; it involves some players, so I’d rather not get into the details, but I’m involved in some family investments etc.

Joe Fairless: Okay. You told me before we started interviewing, you’re like “The harder the interview, the better”, so I’m bringing it.

Kim Ades: You’re right… I didn’t think we were gonna go into my financial situation [unintelligible [00:05:43].09]

Joe Fairless: Every interview I ask the guest “What’s the last deal you did? Tell us the numbers on it”, and 99% of the time they tell me. How about a deal that wasn’t the last one, but maybe a previous one, just to give us the numbers so we have an idea of what you’re buying.

Kim Ades: A while ago I bought investment property in Ottawa; they were a single vendor of apartments, and at the time we had mortgages, but low mortgages, so they were covering the mortgages. Then we sold them for about a 20% profit. When you own a few over time, it kind of adds up.

Joe Fairless: Alright, I can tell by your short responses when I ask those questions that’s not a territory that you wanna focus on… So I do wanna know – and I’m sure the Best Ever listeners are curious – you mentioned you were studying what makes a real estate professional better than other real estate professionals, you went to conferences… What were the insights that you got from that investigation?

Kim Ades: Well, normally you would think that a really great real estate professional is one who has really strong real estate related skills – maybe they are good at building rapport, maybe they are good at closing the deal, maybe they’re good at identifying different options available on both the buyer and the seller side of the equation… Well, what we discovered is that all of that is very important, but it’s not critical. Really what’s critical is if a person has a high degree of emotional resilience. What does that mean? As a real estate professional, if you lose a deal, what do you do when that happens? And even as an investor, what do you when you lose a deal? What do you do when a deal goes south? What do you do when you’re actually losing money on a deal? What do you do? How do you bounce back from that? And the person who has the ability to bounce back with greater speed and agility, that’s the person who’s going to be much more likely to succeed.

Very often when we interview possible real estate professionals to represent us, we wanna know about their wins; my recommendation is don’t only ask about their wins, ask about their losses and what they did with those losses. That’s interesting – people are uncomfortable with that? That’s okay. But the losses are where we really learn how a person has the ability to take a bad situation and turn it into an advantage.

Joe Fairless: On that note, let’s talk about a deal for you that didn’t go according to plan, how did you handle it? Can you tell us a story of it?

Kim Ades: Absolutely, I can tell you a personal situation; it wasn’t real estate oriented, but I mentioned to you that I used to own property when I was young, with my first husband (I’m remarried now). One of the things that happened to us is we owned a company together, and as our marriage unfolded, I ended up selling my shares. I didn’t know much about tax law or anything like that, and I made a huge error in the way that I sold my company, and a couple of years after the sale I ended up getting a call from our government (CRA) letting me know that I owed them $300,000 in taxes… So not quite the real estate story you wanted, but still, definitely an investment that kind of blew up on me, and it was a scary time. But luckily, I had the money, so I just paid it off and right after that I just really scaled back. I stopped going to get my hair done at the hairdresser’s, I learned to color it myself. I just took care of things a little bit differently and stopped living very frivolously, and just kind of scaled back until I recalibrated and kind of felt more comfortable again, but it took me a couple of good years until I got back on my feet after that.

Joe Fairless: I know we have some Canadian listeners; in fact, it’s about 7% of the audience that lives in Canada – what was a specific mistake that you made, so that they don’t make it?

Kim Ades: There’s a way that you sell your company where you get a $500,000 tax exemption from the sale of a company, and I didn’t sell it that way, so I didn’t get that benefit, so all of it was taxable. I didn’t know, and because I didn’t pay that on that amount for a few years after that, not only did I incur a tax bill, I also incurred a bill on the money that wasn’t paid.

Joe Fairless: Alright, so your recommendation would be to speak to an accountant before you do that?

Kim Ades: Yeah, speak to an accountant, and even a tax lawyer would be really helpful. Don’t just sell your shares… Understand what you’re getting into and make sure you’re taking the right steps from a legal standpoint and understand what the tax implications are. Taxes are a big deal.

Joe Fairless: Taxes are our number one expense.

Kim Ades: Yeah. The other thing I would recommend on the business side of the equation – we’ve been audited here, and I was so happy about how squeaky clean our books were professionally speaking, that the revenue agent – she took our books for close to nine months and just sat on them. We would kind of review and say “Hey, what’s up? What’s happening? Can we get an update?” and finally she came back and said “I don’t see anything wrong here, it’s all clean.” There was not a single adjustment that had to be made… So really, keep clean books – that’s another recommendation.

Joe Fairless: Congratulations on that, by the way, the squeaky clean part; that’s a challenge of most investors and just most entrepreneurs in general.

Kim Ades: For us, there’s two things: pay your bills fast, and make sure to be on top of your collections.

Joe Fairless: I wanna go back to what you said – you said the difference between real estate professionals and the best of the best real estate professionals is a person who has a high degree of emotional resilience. That reminds me, just simple stuff – it’s gonna be a little ridiculous, but I’m on a softball team, and when someone has an error in the field, I can tell the people on my team… I don’t even have to know them and I can tell which ones are successful in business and which ones are not, because the ones who are not successful, they moan, they complain and they let the error that someone else made just upset them for about seven or eight more pitches, whereas the people who are successful in business, they’re like “Okay, that happened. We can’t do anything about it now, so let’s just move on to the next pitch”, and it’s such a metaphor for what you’ve just said, emotional resilience, because we have to just be resilient enough – as you said in your $300,000 example – to just take your lumps, get it done and then move on.

Kim Ades: Yeah, you have to move on, and the faster you move on, the better. I will also say that if you can do something with your experience, turn it into a positive, somehow then not only are you just moving on, you’re leveraging it, you’re winning from it. You’re not just losing and learning a tough lesson, you’re actually winning.

Joe Fairless: So know what just happened, identify what you can do to mitigate that from happening again, and find an empowering meaning within that learning experience.

Kim Ades: Yeah, and again, not just find an empowering meaning, but use it to your advantage somehow. The idea is there’s always a silver lining, but a lot of people aren’t used to looking for that; a lot of people just assume it just simply doesn’t exist, and I will tell you that that’s not true.

I’ll give you a perfect example, it’s a business example… Years ago, we used to own this software company, and we went to our first ever trade show and FedEx didn’t deliver our booth. We were a little bit upset, because it was our first trade show, so how do you show up to a trade show and have a booth with no actual booth? There was nothing there. So what we did is we went to Walgreens in the states and we bought a Bristol board and some markers and some tape and we made a sign; the sign says “FedEx didn’t deliver our booth, so now we’re forced to give you 50% off just to attract your attention.” Man, there were line-ups at that booth…

Normally, when you go to a trade show, you go just to show up and say “Hey, we’re here”, but we didn’t do just that. We sold product right there on the floor, and that was unheard of in that scenario. So don’t only just take your blow, say “How can we turn this into something good?”

Joe Fairless: Boy, I think you’re gonna find a lot more booths that say “FedEx didn’t deliver our booth. We’re offering 50% off” after this episode airs. [laughs] I think everyone’s gonna conveniently forget their booths and just knock on FedEx and UPS, those poor companies, after hearing this. That’s a great idea.

Kim Ades: Right. And if you do and it works, please send me an e-mail and let me know.

Joe Fairless: [laughs] Take some pictures. Kim, what is your best advice ever for real estate investors?

Kim Ades: Best advice ever is don’t be afraid to walk away from a deal, that’s number one… And really, don’t be afraid to walk away from anything, because there’s another opportunity right around the corner. Don’t think this is the only thing and the only one, don’t get attached to any particular outcome. Now, that concept is related to all of the coaching that we do, whether it’s a particular outcome in a relationship, in a business arrangement, if it’s a particular outcome with a real estate investment or a product that you’re building – whatever it is, don’t get attached. When you remove your attachment, all of a sudden you’re able to think of grander solutions, you’re able to solve problems with greater ease, and you’re able to see new opportunities as they arise, instead of really keeping your eyes peeled on this one idea. That would be my greatest piece of advice.

Joe Fairless: How do you know that there’s another opportunity around the corner?

Kim Ades: There are so many of them you can’t see them. You don’t have the capacity to see all the opportunities that are coming at you every minute of every day… So it’s not “How do I know?”, it’s “How do you open yourself up to what’s coming at you?” That’s really the question. There’s an unlimited amount of opportunities, we just don’t have the capacity to see them and embrace them.

Joe Fairless: And how do you have someone embrace that philosophy? Because it’s still not a “Okay, I got it”, it’s still “Believe me, there is more opportunity!” How do you know “Well, you can’t see them, but there’s more.” How do you have someone embrace that?

Kim Ades: How do we teach people to look at things that way? Number one is we look at their history. So there’s a philosophy; the philosophy is this – we always look for evidence to support our beliefs, so when we believe there’s just one opportunity and if we blow it, lives get blown out of the window, then that’s the belief we live by and that becomes true for us. If we believe that there are lots of opportunities, then they just show up. But one of the things we do is we help someone look backwards and we say “Look at all the things that have happened and let’s look at how they showed up.” We’ll start to show people that they have been involved in a huge number of opportunities over time, but they never thought of it quite that way.

We start to show them the evidence of the opportunities in their own lives up until this point. And opportunities can look like “Hey, where did you meet your spouse?” It could look like “How did you end up buying that car?” It could end up like, “How did you meet your best friend?” or “How did you start this business?” or “How did you buy this house?” or “How were you introduced to this particular idea?” or “How did you get to this dentist who really did a great job for you?” and you’ll notice that oddly enough a lot of things are lined up for you perfectly and serve you with a million opportunities. We just don’t think of it that way.

Joe Fairless: Yeah, unless we’re forced to look back and then reverse engineer how we got to that point. That’s really interesting.

Kim Ades: Right? The other thing is look at how so many awesome things happen to you all the time, every single day, that we just take for granted. Like this morning – did you have a hot shower? You probably did, and you don’t kind of stop and take notice. Or if you go into a building and you go up in the elevator, do you know how much planning went into that elevator for you, how many people were involved in creating the building, creating the structure that allowed you to get into that elevator that day? We don’t think of getting into an elevator as an opportunity, but it’s pretty massive.

Joe Fairless: Great perspective, that’s for sure. One thing that I do with my fiancée before every meal is we mention something that we’re grateful for, so that it triggers that in our mind; it would be something like a hot shower, or an elevator, although I haven’t specifically mentioned those two things. Now I’ve got two more things to add to my list.

Kim Ades: I can give you an endless list of lists.

Joe Fairless: Yeah, I hear ya. Are you ready for the Best Ever Lightning round?

Kim Ades: Let’s go.

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

Break: [[00:17:57].11] to [[00:18:51].00]

Joe Fairless: What’s the best ever book you’ve read?

Kim Ades: It’s a book called “Ask and it is given”.

Joe Fairless: Best ever personal growth experience and what you learned from it?

Kim Ades: Coaching. I learned that I am responsible for the way I feel and everything that happens to me.

Joe Fairless: Probably my number one takeaway from attending Unleash The Power Within with Tony Robbins – exactly what you just said. We are in control of the emotions that we have; it’s very empowering to think of it that way.

Kim Ades: It’s a game changer.

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

Kim Ades: Best ever deal I’ve done… This house, the house I live in.

Joe Fairless: Why?

Kim Ades: I was supposed to buy it, and then it got pulled out from under us and we ended up buying it afterwards at a lower price than our original offer.

Joe Fairless: Did you have to wait a couple of years, or was it in bankruptcy or foreclosure?

Kim Ades: No, it was a matter of maybe a month or so… A month or so later, with a new agent. Things had changed, and we found a bit of a loophole that allowed us to get us a lower price.

Joe Fairless: What’s the loophole?

Kim Ades: The loophole was the size of our balcony. Our balcony is oversized, and apparently because it’s oversized, it had to be ripped down, so we asked them to pay for the tear down theoretically, and they took that amount off the top of the price.

Joe Fairless: Do you still have your balcony?

Kim Ades: Yes, I do.

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

Kim Ades: Coaching. It’s just what I do.

Joe Fairless: What’s the biggest mistake you’ve made on a particular deal?

Kim Ades: Yeah, I mentioned that one. The biggest mistake was not knowing tax law.

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

Kim Ades: Best place is FrameOfMindCoaching.com. There’s all kinds of information there, there’s audios, there’s blogs, there’s testimonials, and best of all, there’s an assessment that you could take that will allow you to assess your frame of mind right here, right now.

Joe Fairless: Kim, thank you so much for being on the show. Thanks for talking about and educating us on what makes a real estate professional better than other real estate professionals, that is if the person has a high degree of emotional resilience. We have to learn from it, find an empowering meaning and use it to our advantage somehow. You gave the perfect example of the FedEx delivery – it didn’t come to your trade show booth, so you have a sign on the booth that said “We’re offering 50% discount to attract attention because we didn’t get our booth delivered by FedEx”, as well as if we are second-guessing if there are other opportunities, then let’s be honest with ourselves and take a look at how we got to this point, how we have accomplished certain things that we have in our lives, whether it’s a significant other or some sort of business thing, or as you said, maybe how did you get your car, or your best friend… And then look at those through reverse engineering as opportunities.

Thanks so much for being on the show. I hope you have a best ever weekend, and we’ll talk to you soon!

Kim Ades: Thank you!

 

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Best Real Estate Investing Advice Ever Show Podcast

JF992: How to Develop and Scale Your Team #SkillsetSunday

Listen to the Episode Below (26:50)
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Are you a one-man show? You may collect all the checks, but you’re not going too far. Today you will learn about how to build and develop a team, but more importantly, why you should have a team.

Best Ever Tweet:

Shawn Casemore Real Estate Background:

– CEO of Casemore and Co Inc.; A global consulting firm for CEO’s and businesses
– Author of “Operational Empowerment: Collaborate, Innovate, and Engage to Beat the Competition”
– In past two decades worked with organizations such as Pepsi Co, CN Rail, Tim Hortons and Spectra Energy
– Published over 1000 articles, booklets and resources on improving individual & organizational performance
– Based in Ontario, Canada
– Say hi to him at www.casemoreandco.com 

Click here for a summary of Shawn’s Best Ever advice: http://bit.ly/2rW8o5Y

Made Possible Because of Our Best Ever Sponsors:

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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 Sunday, we’ve got a special segment for you – Skillset Sunday. By the end of our conversation today with our Best Ever guest, you will know how to develop your team better than how perhaps you’re currently developing your team, and creating your team better than how you’re currently creating your team.

With us today we’ve got someone who has 17 years of developing his own team, and he currently helps entrepreneurs develop their own team. How are you doing, Shawn Casemore?

Shawn Casemore: Hey, Joe. Thanks a lot for having me.

Joe Fairless: My pleasure, and nice to have you on the show. A little bit more about Shawn – he is the CEO of Casemore & Co., a global consulting firm for CEOs and businesses. He’s the author of “Operational Empowerment: Collaborate, Innovate and Engage to Beat the Competition.” He’s published over 1,000 articles on improving individual and organizational performance. Based in Ontario, Canada. With that being said, Shawn, do you wanna give the Best Ever listeners a little bit more about your background and your focus just to add some context to our conversation?

Shawn Casemore: I’ll try and stay as focused as possible on your audience, Joe. My experience was about 17 years in different corporate environments, different companies, different [unintelligible [00:03:40].21] different sectors, and I always had a team, since the age of 23. I’ve had unionized, non-union, two people working in remote locations, up to 95 people in one location… That experience of over 17 years lead me to wanting to launch my own business, and what I’ve specialized in and what I’ve kind of found that my specialty is is in helping entrepreneurs/business owners understand how they can get more out of their team. And when we say ‘team’, I realize some of your listeners may have not had employees, or maybe some that just have a team of folks that support them to run their own business from a marketing standpoint… So what we’ll talk about today and some of the tips I’ll share really addresses your own employees, if you have a team in that regard, or if you have multiple teams in your business, but also if your team is not so much full-time employees as it is contractors that support you, these tips, techniques and ideas will be applicable.

Joe Fairless: Yeah, I undersold what we’re gonna learn… It’s not just about team development as you said, it’s how to get more out of our team – even better. So it directly applies to the bottom line. How do we wanna structure this conversation, how do you wanna lead it off?

Shawn Casemore: I guess we could start with this – if you could give me some of the challenges you think your listeners face (one or two challenges), what I can do is probably tie that back to their team and how to overcome those challenges.

Joe Fairless: Okay, cool. One would be people who are looking for deals – so it could be a fix and flipper… Someone who buys a house, fixes it up and flips it to someone else. Their challenge might be either finding enough deals or finding the right contracting partners, so the people who are doing all the work. Those would be a couple challenges I could think that they have.

Shawn Casemore: Let’s start there. So in this case let’s look at the team. I’ll address both of these, but we’ll start with the contractors. The team – if you’re gonna be successful in fixing and/or flipping, obviously you need a team of different contractors, although you might have a general contractor. You need that team to support you, so they need to be able to drop everything and come running when you need them, although in their own business they might have to sustain other business and other customers, which means they’re not always there for you. The cost is always a factor – the more you pay them, the less profit you have. And the last thing would be when you look at your contractor as a team, you’re trying to get on the same page. This is your bread and butter; to them it might just be another job. So how do you get more to that relationship?

Step one – when you think about any contract at your business, and by contract I don’t specifically mean a general contract, but any way that you pay an hourly or by job basis, you have to realize those folks have their businesses and have their own priorities, and therefore you need to somehow make your business their priority. I’ll say that again, you have to make your business their priority. Now, the logical ways that we’ve seen this done, even if you watch some of the shows on TV, is that the investor goes out and they beat up on the contractor, they yell and scream and rant and rave and threaten to pull business… That looks good for TV and that’s why that’s on TV, but in reality that’s not the way it works.

So you have to figure “How can I make things in my business just as important as their business?” You can do that obviously through leverage – the amount of business you give them – but more importantly you wanna make them feel like they’re a part of something. For example, when you’re going out to take a look at a property, you bring your contractor – we’re talking like a general contractor – with you. Do you involve them in the decision-making? Do you actually give them the chance to take a look at situations and provide potential solutions, and when they do, do you thank them for it and you take some of their advice?

I see it in myself, I’ve been involved in real estate now for probably only about 5-6 years as kind of a side venture, something I enjoy, and really to build that team when I’m kind of a solo investor, it becomes trying to ensure that other people who support me, although they’re not an employee, they feel like this is also their business. That comes back to building a relationship, which includes things like trust, honesty… And you’ll find that a lot of contractors will be very receptive to that, because everybody else treats them like crap, so they’re happy to work with those who actually treat them like a human being, respect their ideas and viewpoints, and treat them as if they’re part of your business.

Joe Fairless: I love that. Involving them… One thing that I do with my team – I’m not a fix and flipper, but I have teams for my company, and I always make sure that I mention it’s not MY podcast, it’s OUR podcast. I have that mentality because it truly is ours; it’s the team, it’s not just me, and I think that has a psychological benefit as well. What do you think?

Shawn Casemore: Absolutely, it does. It really comes back to — I think in business sometimes we end up running over those who support us, and maybe inadvertently, because we’re so busy, we’re so fixated on the next deal, the next opportunity, cash flow… Those things absorb, I’m sure, much of the time of your listeners. But the problem is in doing that many of us, because we’re so focused on those things (they call it stress), we can come off as jerks, and then that inadvertently can be then thrust upon those who support us. And notice, we’re talking about a contractor here, but if you had employees on your team, the same thing can happen; you’re focused on cash flow, you’re focused on sales, you’re focused on the next deal, but that stress then when you turn to answer some questions of your employee or your contractor comes out that you’re a little bit of a jerk… And then what do they think of you? They think you’re a jerk, so are they gonna stand behind you, are they gonna be there when you really need them? The answer is no, and you’re probably gonna wonder “Hey, why is that? I’ve given them a solid job and I’m paying them for years, I’ve been trying to include them as a team…” So it becomes very difficult for the entrepreneur or the investor in this case to have a couple different mindsets going on. Number one – the business mindset, which is “the next deal, cash flow, profitability”, but also the separate mindset that is “Hey, in order to be successful, I can’t do this alone. I need people, be it employees or contractors or otherwise”, and people are receptive to other people. People are receptive of being treated fairly, being treated honestly. In fact, I can actually warm people up a little bit if I start to maybe go that extra mile or if I drop off a coffee. When I’m [unintelligible [00:10:09].04] I always try to grab some coffee for the guys.

Here’s a funny situation… I had a contractor and his team working last summer on this property that I had, and it was a really hot summer day, which believe it or not, despite the snow [unintelligible [00:10:20].25] I’m coming in, I’m rushing in, I’ve got a few minutes to stop by and see how it’s going and move on to the next thing, and I think “You know what? If it were me, here it is Friday at [3:30]; I’m hoping they’re gonna stay and finish the job”, so I stop and grab some beer. I brought it back and I said, “Hey guys, I hope this is okay.” I can tell you the contractor that lead that job became my friend immediately. Instead of bringing stuff to my house after house, dropping off stuff… “Here, I forgot to give you this. Here’s a deal on that…” Suddenly, he’s my best friend, and all I did was take a moment to step out of my agenda, my schedule, and start to think about them as people and realize “Well, what would I want if I were them? It’s a hot Friday afternoon, I’d want some beer”, right? It’s that mindset.

Entrepreneurs and investors need to focus on two mindsets: the business mindset and mode, but there’s also the people mindset and mode, which oft times is very similar to how you would deal with your customers. We’re suggesting you deal with contractors, employees with a similar tone and ideas that you would with your customers.

Joe Fairless: I imagine that the principles that you teach and work with your clients on through your consulting firm are similar principles that we as real estate investors can employ, so what framework do you use with your clients, when you’re working with them to get the most out of their team?

Shawn Casemore: Typically, what I would do is — every team is different, every organization is different. For example, I was just speaking with a client this morning; we are working with kind of a subset of a small group of people in the organization. We identified some very minor changes to something, and this morning we sent that out to the broader team before it went live and said, “Hey, give us your feedback. What do you think?” and interestingly enough, out of about 15-20 additional people this went to, two were just hands-down “This is crap, this is not gonna work.”

Joe Fairless: Fire them. Nah, I’m kidding… [laughter]

Shawn Casemore: Well yeah, but [unintelligible [00:12:17].14] they’re senior people, they’ve been around for a while. So the fun thing was leading up to this, everybody in the subgroups I was working  with said “Oh, there’s gonna be some barriers, there’s gonna be some problems”, and I said “What will they be?” “Oh, can’t tell you.” Well, it became very clear what they are – some senior people that realistically are just at a point in their career where they don’t wanna change.

Now, the one mindset is, as you suggested, Joe, fire them, get rid of them; they’re not gonna accept change, I don’t have time for this. But on the flipside you’ve gotta realize they’ve got – how many decades of experience here? This may be a matter of “I can invest a little more time with them to convince them”, but also on the flipside, “What am I maybe missing here?” So rather than let my desire say “Hey, screw them, let’s just move forward with this. This isn’t necessary”, I’ve gotta invest a little bit of extra time.

When you go back to “What’s the framework?”, step one is understanding that everybody on a team is an individual; they’ve got their own life experiences, which includes their personal experiences, their own work experience, their own ideas, and everybody wants to share those ideas and experiences. Some people will speak up and slap you upside the head with it, and the next person might not say “Boo!”, but everybody does have that information. So if you wanna create a stronger team and a better business, you need to really understand that everybody’s an individual, and deal with them on an individual basis to get the most out of them, to get these ideas that help them feel like they’re part of something. When you create an environment where that happens, powerful things begin to happen, people begin to feel happy at work, which we all know means they’re actually more productive, they start to share ideas more frequently, which as an entrepreneur we can’t think of everything.

So it really starts as simply as understanding that everybody is an individual, has their own ideas and viewpoints. Some of them might not be valid because they don’t have all the background that I do or others do, but a lot of people just wanna be heard. If you can listen to them and start to capitalize on some of those ideas, you’ll build a very, very strong team.

Joe Fairless: How do you treat everyone as an individual and hear their ideas, while still scaling a company?

Shawn Casemore: Here’s how we’ve handled it in the past – we put in layers of management. So your team starts to grow and you say “Well, I need a general manager to manage this team” or “I need a supervisor for this group.” And that’s okay, but the problem is when we hire those people, we usually pick the best person. You’ve heard that old saying, you get the top sales person and you make them manager of the sales department, now you’ve got two problems – number one, you’ve [unintelligible [00:14:39].03] your best sales person, and number two, that person may not be a good people person.

If you’re gonna put these layers in, you wanna pick leaders who are people-first, who are good with people… Because I can train any skill, I don’t care what it is. It might take me time, but I can train a skill, I can develop somebody’s skills. I can’t make everybody good with people. So when we’re adding these layers, that’s what you wanna consider, that’s step one.

But on the flipside, let’s say you’re not gonna have layers. You’re still small enough that you can scale for a while before you put leaders into place… You need to calendarize some time where you’re only dealing with your people, whether it be contractors or otherwise. This isn’t a stop by a property and just “Hey, how’s it going? What’s new?” If you’re gonna do it that way, schedule time to spend time with people. Make a point and realize it that as a business owner, as an entrepreneur, the people that are in this business are as important if not more so than me, because they’re making it happen. I may be putting the  deals together and shaking hands, but they deliver… So I really have to invest some time.

I tell leaders all the time: “Stick it in your calendar every Friday to spend the afternoon or the morning going around and just talking to people.” You might not hit everybody every Friday, but make a point of doing that, and what you’ll find is you’re able to better understand everybody as an individual, therefore when you’re positioning things, ideas, viewpoints, asking questions, you can position it from a perspective that they personally appreciate.

Joe Fairless: Let’s say we have a remote business… A lot of real estate investors have remote team members. Let’s say we follow your advice on scheduling time with our remote team members; we just jumped on the call, they say “Hi”, we say “Hey, how’s it going?”, we do the initial pleasantries… How do I approach that call? What questions do I ask?

Shawn Casemore: Well, step one, don’t have a call. If you look at the technology we’re using today, Joe, Zoom, Skype – there’s all these tools out here today that allow for face-to-face interaction. So preference number on  – and you can use mobile for it – I have a face-to-face interaction. Because think about any call you’re ever on; if somebody calls you, what are you typically doing?

Joe Fairless: I’m picking my nose right now while you’re talking.

Shawn Casemore: You write notes, you’re answering e-mails, you’re trying to type quietly so nobody hears… So if you get them face-to-face, you’ve got their attention, even if it’s for a short span, and you get a better feel for where their head’s at; are they really interested in this or not? It goes back to the old saying, body language is the most powerful communication tool we have, and yet in today’s highly technologically driven world we’re missing that piece. We’re wondering, “Why do I have to send 32 e-mails to get the point across?” Well, why didn’t you go see them? That would have saved you a lot of time.

So if you’ve got a remote team – and I have the same in my business today – I schedule time (if they have Skype, or Zoom, or something) where we get face-to-face. Maybe it’s only once a month, maybe it’s once a week, depending on how important that person is to the business and how frequently you can interact. And I can change that. If we start at once a month and that’s not enough, I pull it up to once every two weeks, and I set this [unintelligible [00:17:33].25] with the individual that “Look, I think it’s important that we stay connected. I prefer face-to-face, because it allows for both of us just to have a more meaningful conversation” and if they push back and say “I don’t want that, because I’d rather be at home in my PJ’s right now”, tell them “Just put a better shirt on and let’s go face-to-face. Give me the chance to give it a try first.” Face-to-face is key with those remote people to ensuring that you’re having a valuable dialogue.

Joe Fairless: Okay, alright. We’re seeing them electronically, via Skype or something, or we’re in person. Now what questions do we ask? How do we structure that conversation?

Shawn Casemore: It depends on their role. You start with pleasantries; that might sound so simple and stupid, right? You say “Hey, how’s it going? What’s new?” but the change that I would suggest a lot of entrepreneurs make when they ask that question is to actually pause and wait for an answer… Rather than just “Hey, how are things? Great! Anyways, here’s what I need from you…” – that’s typically how that conversation goes. So we’ve got in our mind going into this, “Hey, I’m spending 10-15 minutes, maybe 20, just trying to find out what’s going on in this person’s life”, so if they focus heavily on business, I’m gonna go there with them, but I’ll ask them how are things going personally. If they focus heavily on the personal side of things, I’m gonna go “Great! How are things going in your job? What’s going on right now?”

So it’s just that time to have a dialogue, and there doesn’t have to be a fixed agenda. The point is if you’re an effective leader and you’re dealing with people just like you would with a customer, you’re gonna change your approach. Think about this again from a customer standpoint – if you’ve got a customer that’s pounding his or her fist on the table, demanding answers, do you sit back and crack a smile and light up a cigar? Probably not, right? You’ll get them the answers quickly. Same if you have an employee that’s direct like that, I’m gonna respond directly. Or if I’ve got somebody who’s more thought-provoking and they wanna sit back and analyze things, I’m gonna mimic the same, because that’s how I break through that barrier of the fact that “Hey, I’m human just like you. Yeah, I’m your boss, but I appreciate you, I care about your ideas and viewpoints” and that starts to open up people to providing new ideas, being more creative and more supportive to my business.

Joe Fairless: So far what I’ve written down for takeaways for how to get the most out of our team is 1) make your business their priority by going the extra mile, making them feel like they are part of something, and/or involving them in the decision-making process. Another is don’t be a jerk – pretty simple. A third is to get feedback for what you might be missing. When you use that example of sending it out to 15 or so people, a couple of people who have been there for a while said “What’s going on? I don’t like this” – well, what might you be missing? And the fourth is everyone on the team is an individual and they want to share their experiences, and scheduling time with them in person as much as possible. I don’t think it’s “as much as possible”… I think as much as it’s required to get you your sweet spot probably, and then if you can’t do in-person, then do it via Skype or Zoom or something like that.

Anything else that we haven’t talked about that you wanna mention, that will help the Best Ever listeners get the most out of their team?

Shawn Casemore: I guess the last point I would bring up Joe is the idea that, again, if you realize that everybody’s an individual, you have to realize that recognizing people, thanking them has to also be individual. For example, let’s say you’ve got a few people on your team and you have a great year and you do the cliché send them all a jacket or give them all a ball cap. That’s fine, but if you’ve ever received the jacket from maybe a business you were working in at some point, some people love that jacket, some people would rather have the cash, some people didn’t like the color, some of them got their names spelled wrong… So when you look at recognition or just thanking people, that also has to be individual, so sometimes that’s a matter of with you, Joe, because we’ve got a great rapport and we get along well, think very similar, you may be a similar personality as me – I know I can pick up the phone and give you a call, and say “Hey, Joe, I really appreciate your hard work in that” and I send you a gift certificate for Dunkin’ Donuts, or something.

Somebody else, I’m gonna see them on the site, so I’ll go over and give them a pat on the back. Somebody else, I’ll drop some beer off to him. If you really think about that recognition and thanking people is also individual, because that’s the only way I can make sure it’s valuable to the person. If you do that, again, you’re gonna find people are more appreciative and more supportive of you and your business.

Joe Fairless: I know you’re gonna say it depends on the individual, but I still would like for you to tell a story of one of the best ways that you’ve seen or done personally the individual thank you approach.

Shawn Casemore: Personally, my experience has been — and everybody disagrees with me on this, or pushes back… But my personal experience has just been walking around, going to see people and just thanking them. Now, I’m not gonna say the same thing every time; I’m gonna change it up based on the situation. But hands down, most people just want a thank you.

Again, that thank you will vary depending on the individual. If it’s a shy person, I’m not gonna go over and pull them up in front of the team and make a big announcement, because that’s gonna piss them off. I’m gonna go talk to them at their place at work, their desk, or get on Skype with them and say, “Look, you put a lot of effort into that – notice I’m being specific about my thank you – and it was done on time, and that’s the best we’ve ever done… Just wanna tell you, I really appreciate that. I know you put some extra hours in to get this done.”

It’s that personalization that is absolutely key, but again, it’s just that face-to-face recognition. Most people, if you give them money, they just want more. That’s something I can use once in a while, but taking time out of my day when most people recognize as an entrepreneur you’re busy — so if you take time in your day to specifically go see somebody and say “I’ve got nothing else on my agenda, I just wanted to stop by and say thank you”, people are probably gonna be shocked at first, and after a while come to desire that kind of feedback, which again is a good thing, because you can build on that. You can start to take that to “I’m thanking you, and by the way, what other ideas do you have? How might we replicate this success again?” You just start with thanking them on a one-on-one basis.

Joe Fairless: Shawn, thank you for being on the show and talking about how to ultimately get the most out of our team, but it’s deeper than that… It’s also how to have a more enjoyable relationship with our employees, so that we all achieve larger things together. Because when we’re implementing the tactics that you mentioned – that I recapped already, other than that last piece of thanking the individual – then we will enjoy ourselves much more than if we are doing the opposite or not doing it at all, I promise you that. No one likes being a jerk, I don’t think, and asking ourselves better questions like “What else might I be missing?” and having conversations as much as is needed to reach that sweet spot of efficiency with our team members, in person or where we’re seeing them – that’s something I don’t do, and I will test it out and see the change in the results.

I have a daily call with my team at 8 A.M., Monday through Friday. They’re all local, but we don’t do Skype, we just get on the phone call, and I don’t see some of them very often in person. So I’m gonna implement that.

And then also making your business their priority – when we step outside of ourselves and we step in someone else’s shoes and we make it their priority, then ultimately our priorities are gonna be addressed and then some. I love your example of just paying $20-$25 for a case of beer to the contractors and all of a sudden guaranteed you’re making your money back that you invested in that case of beer and then some. Plus, you just feel better. I mean, come on, we’re on the journey together, why not enjoy each other’s company?

So thanks so much for being on the show… Where can the Best Ever listeners get in touch with you?

Shawn Casemore: Again, thanks Joe for having me. The best place to find me is on the web, www.shawncasemore.com. You’ll find a lot of tips, resources, everything there about how to further develop your team. Also, you can google my name and you’ll find me on virtually every social media channel out there.

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

Shawn Casemore: Thanks, Joe.

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JF846: Buy Out of State, Because Your Surrounding Market May Be a TERRIBLE Investment

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He bought homes not only out of state, he bought outside of his country! Today’s guest is a Canadian who fancies the long-term buy-and-hold wealth strategy. Be sure to understand his equation for purchasing a home and why he decided to purchase outside of his own country.

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Jeff Rombough Real Estate Background:

– Associate Realtor at The Real Estate Company/Mortgage Specialist at the Mortgage Resource Company
– Currently owns and manages 27 doors with rental incomes of just over 32K per month.
– Started investing in 1992 with $12,500 and has grown portfolio to over 4 million dollars
– Based in Calgary, Canada
– Say hi to him at www.Romboughproperties.com
– Best Ever Book: How to Win Friends and Influence People

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JF828: NOTHING Out of Pocket Lease Options with Big PAY DAYS!

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Lease options are all about matchmaking, and it’s on a whole new level when you have nothing out of your own pocket. Our guest is able to create passive cash flow streams and massive pay days, even a hefty consideration on the tenant buyer’s option deposit, and he does so with a high energy team that supports the tenant buyer in purchasing the property within the term. Hear it and learn!

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Jon Simcoe Real Estate Background:

– President of the Canadian Association of Rent-to-Own Professionals
– By beginning of 2017, he has raised over $17,000,000 of private capital for real estate projects
– Best known for the tenant-first rent-to-own strategy, and uses other strategies to help his joint venture partners
– Nominated for the Canadian Real Estate Wealth Awards Joint Venturer of the Year 2016
– One of the youngest Canadians to ever retire
– Based in Alberta, Canada
– Say hi to him at http://www.lionopportunities.com
– Best Ever Book: The Art of Raising Capital by Darrin Weeks

Click here for a summary of Jon’s Best Ever Advice: http://bit.ly/2hgbQX8

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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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JF826: How to Stay HIGH and Produce During a Hard Economic Times

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When we mean high, we are not talking about the herb! Our guest has an incredibly positive attitude and has proven to be honest even in the toughest times. Hear how he made it difficult decision and what he’s doing now to stay ahead of the curb during this rough recession in Canada.

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Benjamin Loates Real Estate Background:

– Real Estate Agent at Realty Executives Leading
– One of the top realtors in Spruce Grove
– Professional skateboarder
– Based in Alberta, Canada
– Say hi to him at www.haroldsellshomes.ca
– Best Ever Book: The Bible

Click here for a summary of Ben’s Best Ever Advice: http://bit.ly/2gOndp4

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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JF824: The 5 Reasons You Are Not Scaling Your Business and 5 Keys to Push to the Next Level

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It’s time to take all your plagues that keep you from growing your business in real estate and throw them out the window! One of our favorites, Trevor McGregor, is here to share what five roadblocks stop real estate investors from growing. He also has five keys that you can apply today to turn your operations up a notch.

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Trevor McGregor Real Estate Background:

– A Master Coach with the Tony Robbins Group
– has done over 10,000 hours of coaching
– Based in Vancouver, Canada
– Real estate investor who has done fix and flips, buy and holds and wholesaling
– Visit him at www.trevormcgregor.com

– Listen to his Best Ever Advice here: https://joefairless.com/blog/podcast/jf320-the-three-ss-of-real-estate-investing-that-you-need-to-know-skillset-sunday/

Click here for a summary of Trevor’s Best Ever Advice: http://bit.ly/2gvgLAe

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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JF684: 3 Steps to Turn an OPEN HOUSE Into a ROCK CONCERT!

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Marketing and event expert Louie La Vella is here to share his techniques to creating the hype you need for your next open house! He shares his success on branding, pre-selling, and staging. This is an episode you will not want to miss if you’re serious about creating a large following!

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Louie La Vella Real Estate Background:

– President of La Vella Nightlife and Events
– 20+ years in nightlife consulting
– Author of Nightclub and Bar Marketing: http://amzn.to/2a0fb5u
– Based in Toronto, Canada
– Say hi at http://louielavella.com

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

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
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JF676: Mind Tricks to Overcome ANY Unfavorable Situation and How to Think #situationsaturday

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Today’s guest had a high-profile listing appointment but no means of transportation to get there. After getting over the frustration of not having a vehicle at the time, he shares the one question that allowed him to begin seeking solutions instead of wallowing in his fear of not making it. This is an impressive episode!

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Rock Thomas Real Estate Background:

    – Was previous guest on Episode 314
– Owns 4 Keller Williams franchises
– Based in Montreal, Canada
– Say Hi at http://www.rockthomas.com
Listen to all episodes and get a FREE crash course on real estate investing at: http://www.joefairless.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. Learn more at http://www.fundthatflip.com/bestever.

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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