JF1609: Successful Entrepreneur Invests In Real Estate For Tax Advantages with Dan Handford

Many entrepreneurs have the issue of writing big fat checks to Uncle Sam every year for income taxes. Dan was in that situation and knew that investing in real estate could help him keep some of his money, and make it earn more money too. We’ll hear more details on the overall benefits of real estate investing, we also get to hear a case study on a 130 unit property that Dan just recently closed on. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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Dan Handford Real Estate Background:

  • Dan Handford is the founder and current president of five specialty medical clinics located throughout South Carolina
  • He has investments in over $125,300,000 worth of real estate and currently has 1,353 apartment units in his portfolio located across the United States
  • He is the founder of the Multifamily Investor Nation with 34 groups and 2,300+ members across the World
  • He is also the co-host, along with his wife, of the daily podcast called Tough Decisions for Entrepreneurs
  • Based in Columbia, SC
  • Say hi to him at www.toughdecisions.net and www.handfordcapital.com
  • Best Ever Book: The 10X Rule by Grant Cardone

 


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TRANSCRIPTION

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

With us today, Dan Handford. How are you doing, Dan?

Dan Handford: Doing great, Joe. Thanks for having me on.

Joe Fairless: My pleasure, nice to have you on the show. A little bit about Dan – he currently owns several online businesses, as well as five specialty medical clinics in South Carolina, with a business portfolio value at over 16 million dollars. He’s a trusted advisor to physicians across the country, he’s also a founder of Handford Capital, which is a 100+ unit multifamily syndication team. He just had a recent closing, we’ll talk about that… He’s the host of Tough Decisions for Entrepreneurs and Real Estate Investors Podcast. Based in Columbia, South Carolina. His website – toughdecisions.net, you can go check that out. With that being said, Dan, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Dan Handford: Sure. As you mentioned in the intro there, I have five specialty medical clinics. They’re non-surgical, orthopedically medical clinics. We do a lot of regenerative medicine, prolotherapy, PRP, stem cell and some sports medicine. We have just about 50 employees now and 50 team members in that particular organization, and earlier this year I stepped away from doing that full-time and moved into multifamily real estate full-time.

I was in multifamily as far as doing research and educating myself for probably a year prior to when I stepped out, so it’s been a good year-and-a-half, two years that I’ve been kind of diving into the multifamily arena, but never really found the time to be able to focus on it until I stepped away to not have to focus on those clinics.

It wasn’t that I just completely ignore the clinics now; I still have a 30,000-foot view and oversight on those clinics, and I have a good CEO in the position there, and also look at financial reports on what I call my “Monday morning reports.” So I have three different departments in the company that sends me those reports, and then I also have  a two-hour corporate director meeting once a month with my team, and then I also have – like you had mentioned – a couple other online companies. I’ve had those for a little over ten years now, and those continue to produce a pretty significant cashflow as well.

Joe Fairless: What are the online companies?

Dan Handford: The main one is one called Shop Anatomical, and we sell skeletons and skulls and brains and hearts and anatomical models and various things like that. We also have a company that we sell portable chiropractic tables, and we also have one where we sell chiropractic supplies.

Joe Fairless: Okay. And why move into multifamily when you have these ventures that are doing well?

Dan Handford: I’ll say that the main reason is because of the tax advantages of it. Whenever you’re sitting there, starting to generate some good income for yourself, you start to have to write six-figure checks to the government, which is where my position was, and I was to a point where I was just getting frustrated with that… And I knew that real estate was a way to reduce some of that taxable liability and to be able to have that money start working for you, because of depreciation and various things like that.

So I knew real estate was what I wanted to go do, but I didn’t know for sure which asset class was gonna be the best one. With multifamily, as you know, being able to do cost segregation, and being able to do accelerated depreciation and bonus depreciation, buying cash-flowing properties that the day you close you’re making money, and then at the end of the year showing a loss due to the depreciation, which can offset other gains in other areas… Obviously, I’m not a tax advisor or accountant or an attorney or anything like that, but there’s definitely some advantages to investing and with that depreciation being able to reduce the taxable liability.

Joe Fairless: So you founded Handford Capital, which buys those properties, and you syndicate the deals with your investors… Why found a company and be active, compared to enjoying those tax benefits as a passive investor in deals?

Dan Handford: Well, in my arena I had a coaching business at the same time, and I still do it today, where I coach and mentor other physicians to build clinics like I have done… And because of that, I have a lot of people in my circle that also want to be able to do these types of investments. We’re gonna talk a little bit about this deal we closed in Greenville, South Carolina a little while ago (in December), but I don’t have the ability to just write a check for 2.5 million dollars to take a deal down… But I wanna be able to allow other people that I’ve worked with, and family and friends and various acquaintances to be able to take advantage of these same things that they don’t have the time to do it, because I didn’t have the time to do it. But now that I can step away from my business and it still runs the way I want it to run, it still continues to produce cashflow, and now I can also start another entity… Because I’ll be  honest, Joe, I tried to retire; 35 years old, that was how old I was in 2018, and I tried to retire for about a week and a half. I stepped away from the business, everything was going on, it was all passive, and I was doing nothing, and I was bored to tears.

Joe Fairless: Yup.

Dan Handford: Obviously, everybody loves to be able to say, “Oh, I retired early” or whatever, but for me, I’m retired; this is just something that I’m doing to benefit me, and my family, and my friends, and acquaintances, and various things like that… So I don’t have to do what I’m doing; I can stop what I’m doing today and I will be fine, my family will be fine, but it’s a matter of keeping myself busy with something that I feel like is gonna be bigger and better and greater than what I’ve already done, but can also help a lot of other people at the same time.

Joe Fairless: Well, with the deal that you mentioned in South Carolina – tell us about that and what are the details on that one?

Dan Handford: Sure. I really like this deal a lot. I’m originally from Greenville, South Carolina, that’s where I grew up. I drove by this property — not drove, but I’ve been by this property as I was growing up for the first 27 years of my life… So to say that I know this property and I know this market – I know it very, very well. One of our other partners in our group also live there for 15-20 years, somewhere around in there, so we’re very bullish on Greenville and like it a lot. This was a deal that came across our desk and we started doing some research on it, and it was one of those ones that we got very emotionally attached to… And it’s very hard sometimes to stick with your numbers and not try to overinflate your numbers when you’re really passionate about a project. That’s why you sometimes — not sometimes, you should always remove the emotion part of it from the actual decision-making part of it. You have to base it off of logic at the same time.

Joe Fairless: Yup.

Dan Handford: And that is one thing that we did properly on this one. Obviously, we were very emotionally attached to it, but my background in business and being able to remove emotions from things – I have the ability of being able to do that… And it’s also good, because at the time we had just two of us in our group, and so we both balanced each other out and made sure that we didn’t go over our numbers.

This was a 130-unit property in Greenville, South Carolina, and it’s a C-class property in an up-and-coming B-neighborhood. So it’s kind of a C+, B- neighborhood going up, and kind of turning in another direction. When we got this property and started doing the research on it – one of the things we always look at on a property is “What are some hidden value-add pieces to it that not a lot of people are looking at?” Because it’s those hidden value-adds that can really be a game-changer as far as the numbers on a property, and to whether or not a deal can actually make sense.

We were told that on this property if we were gonna be in the best and final that we needed to make sure our offer was between 8.4 and 8.8 million. So we’d gone in and we were like, “Well, the numbers work at 8.8. We don’t wanna go in right at 8.8”, so we went in right at 8.75. So our first offer on it was 8.75, and we were putting $100,000 earnest money deposit down that went hard day one, after signing the PSA.

Joe Fairless: Is that typical in that submarket, non-refundable day one?

Dan Handford: I would say it’s not usually, but in the market the way we are right now, it is.

Joe Fairless: Okay, so you weren’t the only group doing that…

Dan Handford: No, no.

Joe Fairless: Okay.

Dan Handford: I don’t think all the groups that were offering were doing that. It was one of the benefits of us getting into the best and final round… So we put the offer in, a week goes by, we hear back from the broker, we’re in best and final. There’s like 35-40 bids on that property, and we were in the top five, so we had gone into the best and final round on this… And they changed things up on us. Originally, they told us 8.4 to 8.8, and originally the broker said “If you offer 8.8, that gets it done.” So we got the word back that we’re in best and final, and the broker says “New pricing guidance.” [laughs] They’re like, “Now the new pricing guidance is 9.1 million.” So they went up from 8.8 to 9.1, an additional 300k.

Of course, the whole thing about going into best and final, Joe, is for me that I look at these and I go “Is the broker just making me compete with myself? Am I the only one who’s in this position, or are there other people that are actually higher than us, or that would actually offer higher than us?” You don’t ever really know, so you’re kind of playing that psychological game in your head about “Where should we actually put the numbers?” You’d basically have to just go back to your underwriting and run the numbers and run the scenarios and see which number works.

So you have to, again, remove that psychological component and not worry about 1) what the seller paid for it, because they’re gonna make money off of it, otherwise they wouldn’t have bought it to begin with, right? At least hopefully they are… So you can’t just look at that number and you can’t look at “What is somebody else going to possibly do?” You have to look at it and say “What can I do on this property?” and just make your best offer.

So we ran the scenarios back and forth, and ended up putting in a best and final offer at 8.9 million, and still kept the hard money day one at $100,000. Then a couple days went by, and sure enough, we got outbid. I believe it was a publicly-traded REIT that got in front of us, and they were putting up $200,000 earnest money deposit hard day one, and of course, offered $300,000 more than we did, so they obviously got the deal.

Of course, we’re looking back at our numbers the day we hear back from best and final that we didn’t get it, and we’re going, “Let’s see if 9.2 works, or maybe we can increase our hard money… What can we do to make this work?” and that was the emotional piece of it.

My partner at the time – he’s still my partner in these deals – Brandon, and we have another partner with us now as well, but it was just Brandon and me at the time, so we’re going back and forth, going “We could make it work at 9.2″ and blah-blah-blah. We’ll stretch it a little bit, make things a little bit tight, but we could make it work. I wonder if we should go back.”

We both had to step back, take a breather, know the number works really well at 8.9, great returns for investors. We don’t wanna go up from there. Let’s move on to the next property, because there will be other properties that will come along, and we’ll find the next one.

Joe Fairless: Yup.

Dan Handford: So that’s what we did. We basically just washed our hands from that one and moved on to the next deals, and started doing some more property tours, and submitted some more offers. Four weeks later we get a phone call from the broker on that deal… And I knew exactly why he was calling. He was calling on my cell phone; when I saw his name on there, I’m like “I wonder if he’s calling about that deal…” [laughter] And sure enough, I pick up the phone and he’s like “Hey man, the original buyer we offered it to couldn’t get the deal done, so I’ve talked to the sellers, and there’s a couple of people ahead of you that have a little higher bids, but they really feel like you guys have the track record to be able to get the deal done and that you can actually close the deal.”

Joe Fairless: Why did they say they feel like you have the track record, if this was the first deal?

Dan Handford: Well, we had partnered with other groups to be capital-raising partners on other deals. So being able to do that —  because when we’re raising capital for other deals, we’re able to jump on the general partnership of those deals and now it’s our deal; we can kind of show brokers, show sellers and other investors that we can close other deals. So that in and of itself I think is what at the end of the day helped us get that deal… Because they saw that we closed 400-500 units already this year, and they’re like, “Well, these guys can get the job done”, and I think that is really what helped set us over the edge and bring us above what the other highest bidders might have been.

I don’t know what [unintelligible [00:13:36].21] of it was. Maybe they didn’t have any hard money, and we did, and even though we were a little bit lower, they felt like we had a better track record, more risks, and they knew we can get it done… So we got the deal. We got the offer, and the LOI signed.

One of the biggest things I was curious about was — I’m a businessman, right? So I have this slant to me of wanting to be a negotiator; I wanna make sure I get the best deal, so that was my biggest question, “Should we pull some string? All the levers are on our side now, because they’re coming back to us. Should we lower our earnest money, or should we lower our offer price?” And we decided not to do that. We decided to just make that broker’s life easy, and being able to make that broker’s life easy, it’ll pay us back down the road and it’ll pay in dividends.

I actually got a phone call from that broker thanking us for the ease of closing this deal… Because they were wanting to get it done within 60 days, and we had never done a full raise before, just ourselves. So of course, we’re going back and forth, wondering if we can get it done in 60 days, and thankfully we were able to negotiate an extension of 30 days if we needed it… But they really didn’t wanna do that.

Joe Fairless: Did you need it?

Dan Handford: No, we didn’t. Oddly enough, about three weeks before closing we get a call from the broker, and the broker is like “Can we push back the closing by another week? Because the seller wants an extra week.” I think it had something to do with their payment date and their pay-off period, and something like that. We basically went back to our lender on the deal and said “Is this something we can do?” and they were like “No, not really. Not unless we have to modify a bunch of stuff, and it’s just gonna be a lot more work on our end.” So we basically had to tell them, “No, we wanna close on that date, December 14th.” Sure enough, they were fine with that, and they just thought they’d ask just in case.

Everything went smoothly, but it was definitely a lot of work to do it, especially being the very first deal that we put together ourselves for our team… But thankfully, we have a good team put together and we were able to raise the amount of money we needed in a  period of about 4-5 days. It was about 2.5 million.

Joe Fairless: What are some things you learned from that experience?

Dan Handford: Always have back-up investors. When you get to a point of raising money for a large deal like this, you think “Okay, within 4-5 days we raise 2.5 million”, right? Well, those are all soft commitments, and that doesn’t mean that they’re all gonna fund. I think one of the things that we’re doing moving forward is even though we might have to raise 2.5, we’re gonna set that bar at like 3 million, and make sure that we can have enough people on back-up that if somebody does drop out… Because that was probably one of the most stressful things for us – a week before closing we had one of our investors that was bringing in about 10% of that have a lawsuit against him, so he decided that he didn’t wanna put any money in the deal, but he didn’t tell us until a week before closing. So now we’re stuck with trying to come up with another $250,000 before closing, and it’s seven days before. It puts a little bit of a heat behind you…

We were able to do it. We had the money to close and we had everything done by that time, but it just created a lot of extra angst that we didn’t really need, and if we had some back-up investors, we could just say “Hey, this person dropped out. Do you want in now?” and be able to have that as a back-up I think would be a big step in the right direction to reduce the amount of stress involved in the whole situation.

Joe Fairless: How do you structure your team? You mentioned you’ve got a couple business partners.

Dan Handford: Sure. I’m a big believer in always being out, and networking, and being a part of various groups, because as you start into this business of multifamily syndication, you’re gonna need to have a team around you. And yes, when we talk about teams — some people talk about a team as being “Oh, you need an attorney for this, and an attorney for that, and an accountant, and a broker, and a property management company”, and all those pieces… And yes, you do need all of those, and those are all part of your team, but at the same time, when you start to do these larger deals like this, one of the things that I found is that I can’t do it all. There’s no way that I can always be focusing on raising money, and always be focusing on trying to find the next deal, and always be focusing on the due diligence, and all this kind of stuff that has to happen on the deal we’re closing right now.

It’s a lot of work, and I would say that I could probably do it, but I couldn’t do it as well if I had a team, and I wouldn’t be able to scale. For example, if I’m sitting here trying to do the due diligence, and working with the lender, and working with the attorney, and trying to get a deal closed, I’m gonna be neglecting the fact that I need to continue to look for investors and find more capital, and I’m also not gonna be able to have the time and energy and efforts to be able to find the next deal. So you lose the ability to raise enough capital for that deal or future deals, and you also lose the ability of not being able to find that next deal. So you can’t scale, you can’t get to that next level by scaling as fast as you wanna scale.

My team is built up of three people. I have one gentleman, Danny Randazzo, who is our financial side of things; he’s a former financial analyst, and he loves spreadsheets. I’m not the type of person that likes to sit there and take the T-12 and the rent roll and pull them apart, and piece-meal them and put them in a spreadsheet, but I do like to look at the finished product. So he goes in and does all of that, and then we can actually sit down and have a conversation about the finished product, and then I can pull it apart. That’s kind of what I do with my own businesses now – I get financial reports every week, and I can sit there and look at them, and look at the summaries, and pull them apart, and pick them apart, and find areas of improvement. That’s what his role is – he does the underwriting piece of it.

On this deal in Greenville, South Carolina, the 130-unit one, he was working with the attorneys to get him all the documents for closing, he was working with the seller’s attorney, getting them documents that they need; working with the property management company that we have and looking through all the financials on the property, and doing the financial due diligence side of things… So he was very active in being able to do that.

Also, when we’re doing due diligence in other areas, he’s active in that. And then also the post-closing stuff, the actual asset management, looking at the spreadsheets on a monthly and a weekly basis is really what he’s been doing.

Then our other partner, Brandon Abbott, he works primarily — his background is in construction and property [unintelligible [00:19:43].13] He has a background of being able to do good estimates, and inspections, and various things like that. He kind of does what I like to call our pre-LOI inspection; he can go in and tour the property, and throw a drone up in the air, do 3D modeling of each one of the buildings, see what it’s gonna cost to paint the whole thing if we need to, or replace the facade, or look at the age of the roof, and really be able to get down very granular into what it’s gonna actually cost us to do any of our cap-ex items. So he has that in his background, and he’s right now very active in the Greenville property, trying to  get some of that stuff done, because we know that market very well, we know a lot of the contractors there… He used to do construction in that market, so he’s pulling some strings on some of his personal contacts, which has helped us be able to get some better rates on some of the labor, and some of the material, and various things like that.

Then of course myself, I’m primarily in the investor relation side of things. I’ve put together all of the marketing materials for each property that we do, and working on the conference calls. Also, on the investor relation side of things, I’m always looking for additional investors, so I’ve created a platform to be able to do that as well.

Joe Fairless: As you look back on your transition from what you were doing, to now being fully focused on real estate and multifamily in particular, what’s something that has been easier during this transition than what you initially thought it would be?

Dan Handford: I would say that finding investors has actually been the easiest piece. I don’t say that in the fact that it’s like an easy process, but to be able to put yourself in a position of authority, and building credibility, and being able to meet somebody one time and then the next week being able to continue to build that relationship with them, but then being able to talk to you about a deal and then actually put in money…

I’ve had many people that I’ve been communicating with via e-mail, or Facebook, or LinkedIn, and then I do a meetup, and I go and visit with them, and the next deal we have they put $50,000, $100,000 into it, and to me, I looked at that — when I was first starting, I was like, “Man, that’s actually quite easy.” I don’t even have to call them up and explain it to them; they just saw the deal, and committed to it, and wired the money.

Obviously, it’s always a constant process of trying to find investors, but once you find the investors that really trust you, I thought that was actually an easier piece, especially — even some of my close family and friends… Just yesterday or two days ago I was on the phone with an investor that I worked with like ten years ago. And he saw some of the stuff on LinkedIn (since we were connected on LinkedIn) that we were doing with the multifamily investing, and he messaged and said “Hey, what are you doing? I thought you were a chiropractor. You’re not doing that anymore?” So I got on a phone call with him and started talking about it, and he goes, “Man, I’ve got a lot of cash in my account. I have some IRA’s, and 401K’s, and I’ve got stuff in the stock market… I would love to be able to invest with you, so put me on your deal flow list.” I’m like, “Yes, absolutely.”

So that to me has been quite an easy process.

Joe Fairless: What has been harder than you thought it would be?

Dan Handford: I would say a lot of people that I talked to before getting into this space really deep – you go to events and they kind of sell you on the fact that it’s just an easy process. There’s just so many deals out there, and so much cash, and so much this and so much that… It’s easy, you just find the deal and close it. But really, going through the full process, this is a full-time job. There’s a lot of work to get involved with this.

That to me I think was one of the reasons why I really am enjoying having other partners that are helping in other areas, because I don’t have the bandwidth, nor do I want to be able to put the bandwidth towards just doing this full-time. I don’t want to have to do that… Even though right now it’s pretty much a full-time gig that I’m doing, I still feel like I’m in a position where I could and go away for a week or two weeks, or even a month. I could step away and just do nothing. But to be able to have that flexibility and freedom – I think it’s what a lot of people are looking for. So yes, this type of business can provide that to you, but I don’t think you’d be able to do that if it was just you doing all of the deals yourself.

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

Dan Handford: Always be looking for the next deal and your next investor, because that’s how you’re gonna continue to grow your portfolio, especially in this large multifamily space of 100 units or more. You’ve gotta be looking for that money to be able to put into the deal. And I think that another important key distinction that a lot of investors appreciate about our group is that we don’t just look for other people’s money, we’re putting our own hard-earned money into these deals and into these projects, and they wanna see that. I think that’s probably one of the biggest things – when you start to do this, try to have enough capital that you could put it in yourself, as well.

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

Dan Handford: Go!

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

Break: [00:24:43].13] to [00:25:31].16]

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

Dan Handford: Best ever book that I’ve recently read… I would say that the 10X Rule by Grant Cardone.

Joe Fairless: Best ever deal you’ve done that we have not talked about before? It doesn’t necessarily have to be a real estate deal.

Dan Handford: I would say me paying for a coach that helped me get to the next level.

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

Dan Handford: Does it have to be real estate related?

Joe Fairless: Let’s do two. The one you’re thinking about, whatever that is, plus a real estate one. So what’s the one you’re thinking about?

Dan Handford: Sure. The one I’m thinking about is where I actually paid $25,000 for a mentor, and ended up only working with him for two weeks, and he basically still stuck it to me and told me I had to continue to pay, I had to be able to fulfill that obligation; and I did, because that’s what I originally told him, but I’m gonna talk to him for like two weeks and that was it. So that was probably my biggest mistake.

Joe Fairless: And what about on a real estate deal?

Dan Handford: As far as real estate, I would say when we were building these medical clinics we were, of course, looking for commercial property, and one of them we signed a lease on that I had a personal guarantee on, and I realized very quickly that I didn’t wanna do that. I don’t do personal guarantees on any of our leases anymore.

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

Dan Handford: Well, I’m very active in our church, and there’s a lot of different activities that happen around our church, so that’s one of the things that from a charity standpoint — I donated quite a bit of money to our church, and various opportunities through our church.

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

Dan Handford: You can go to our website, HandfordCapital.com and find out more information about our group. If you wanna join us, be one of our investor partners, just reach out to me. We also have a group called Multifamily Investor Nation; you can go to multifamilyinvestornation.com and find out more information about that as well.

Joe Fairless: Well, Dan, thank you so much for talking about the transition you’ve made, and the focus on multifamily, and the deal that you did, and the lessons learned on that one… I hear fairly frequently people missing out on deals, but then 3, 4, 5 weeks later they get a call from the broker, being awarded the deal. So there’s certainly opportunities to still be awarded the deal if we don’t initially get it, plus the lesson learned with the investors and having investors on back-up, as well as just your overall approach to really focusing on your strong suit, and having the right team members around you, who like to do what they like to do, and complement your skillsets.

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

Dan Handford: You too.

JF1525: Leverage A Mentor & Scale Faster with Dakarai Towns

Dakarai had done a couple of wholesale deals on his own and more with a mentor. He was able to partner with someone with more experience, learn the ropes, and build his own business while in school full time as well. We’ll hear breakdowns of some of his best deals and how he made them happen, as well as how he was able to work with a mentor. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

 

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

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

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


TRANSCRIPTION

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

Dakarai Towns: I’m doing great, Joe. Thank you for having me again, and hello to all the Best Ever listeners.

Joe Fairless: Well, I’m glad to hear it, and you’re more than welcome. I’m looking forward to learning from you and learning about what you’ve got going on. A little it about Dakarai – he is a 24-year-old senior and real estate investing entrepreneur. He’s been working in real estate for two years while getting his BA in interdisciplinary studies. He has done a couple deals independently, and then he has partnered up with a mentor and done many more. He’s based in Columbia, South Carolina. With that being said, Dakarai, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Dakarai Towns: Sure. A little bit about me – I’ve been in real estate for two years, as you’ve said before, and I started wholesaling real estate and single-family homes. I did a few single-family home wholesales, and I just started to see that my time could be probably spent a lot more into bigger deals, so that’s when I discovered apartments, and I wanted to wholesaling and apartments and combine those strategies together. Then I also discovered apartment syndicating.

Joe Fairless: Okay. So the two deals that you did, those were single-family homes. How many additional deals have you done with your mentor?

Dakarai Towns: We did about ten deals, and basically it was him showing me the ropes, showing me how to calculate deals, how to look at the rehab and give good numbers upfront, before ever sending it out to anybody, and just making sure that they made sense. That’s how that went.

Joe Fairless: Were those single-family as well?

Dakarai Towns: Correct.

Joe Fairless: Okay. It sounds like you are no longer focused on single-family, because you said you were wanting to do larger deals… Or did I misinterpret that?

Dakarai Towns: Well, yes, I am currently taking some time to study the multifamily deals, but I am doing single-family on the side still, so when they come about and if I have a deal, I don’t do it as aggressive. But if I do see some potential deal, then I would still stop by and get some contact information and try to make something out of it.

Joe Fairless: Alright, let’s talk about the two deals you did on your own. Can you tell us about each of them?

Dakarai Towns: Sure. Those were really impactful deals experience-wise, I would say, just because prior to those two deals I looked at probably close to 15-30 homes almost, and the majority of them fell through, but that was just walking and trying to get the experience all I could; I just had to get out in the field.

For the first deal – it was actually a deal out here in Rosewood; it’s a popular area here in Columbia, South Carolina, and it was something that I came across through Craigslist and looking through a few platforms that I used, or free leads. As I came across the deal, I contacted the owner, and he said “Hey, I just wanted to see how this would work”, and I was very transparent with him… I let him know how wholesaling worked, and who would be helping me into closing the deal, and he said “Okay, great. As long as we get it done, I’m fine with it”, and I said, “Okay, great.”

It took about a month and a half, because there were some discrepancies and some smaller things that we encountered during the due diligence…

Joe Fairless: Like what?

Dakarai Towns: There used to be termites in the wall, and they had a whole termite situation on this entire wall next to one of the main bedrooms… So we said, “Alright, we’ll really have to get someone out here for a termite inspection of that nature”, and basically learning how to get all the facts first, and being able to come up with a solution… He was like, “Okay, I’m all for it. Let’s do it.”

One of my buyers that I presented the deal to, he actually sent out a few inspectors, and I actually had another close inspector of mine come through and look at it… They said, “Yeah, this would be done in XYZ.” Down the line we found out that it did have some minor foundation problems, so bringing all those facts in together, I presented it back to the seller to let them know “Hey, this is not gonna be a great deal unless we are at this price point”, just because of the foundation repairs, and that whole wall needed to be taken down and rebuilt, and it was gonna hit my buyer’s pocket pretty hefty.

That deal – I made about, let’s say, $1,250 on it, and that was the first deal. It was about $1,250.

Joe Fairless: $1,250 or $12,500?

Dakarai Towns: Yeah, $1,250.

Joe Fairless: Okay.

Dakarai Towns: That really humbled me, just because of looking at all the seminars, and watching wholesaling videos…

Joe Fairless: You were supposed to make $20,000 a pop, right?

Dakarai Towns: Yeah. [laughs] I was supposed to make this crazy amount spread, and I’m just like, “Okay… Well, this is great! This is a great profession to be in!” So it was really nice to see the satisfaction from my investor, as well as the seller… Because I found out that the seller was actually moving — during the whole process I found out that they were actually moving to another home in Lexington and they closed on another home that same month, I believe… So everything worked out for them, and then even though they didn’t get what they were asking — they were asking $55,000, so I ended up getting it down to around $28,000.

Joe Fairless: Wow… Holy moly!

Dakarai Towns: Yes, it was a crazy deal… So I was satisfied with that.

Joe Fairless: Wow, so you had it under contract at 55k?

Dakarai Towns: Correct.

Joe Fairless: And then it was renegotiated based on termites and foundation to 28k… Wow. What did they want initially? Or was it 55k initially?

Dakarai Towns: That’s what they wanted initially. I said, “Okay, let’s put it on paper. That’s fine.” I’m all for giving people what they want, but at the same time, when I come and find things that will diminish either profit, or somewhere along the lines of my investor’s pockets when it comes to the rehab, I have to bring the facts in, and they can’t argue with the facts. It’s truth. So when they look at the truth and they’re saying — when you hear those first three words, you’re already like “Okay, great. We got them down.”

It took about two times, because they went down to about 45k at one point, and they ended up coming all the way back down to — oh, I’m sorry, it wasn’t 28k, it was 22k, actually… [laughter] The second deal was 28k.

Joe Fairless: Wow. But they did start at 55k?

Dakarai Towns: They did start at 55k, correct. That is very true.

Joe Fairless: Huh… And when it starts at 55k and then it goes down to 22k, was your fee initially $1,250, or was it a percentage?

Dakarai Towns: No, my fee was initially 5k. That was my fee, and during the conversation between me and the seller as well as me and the investor, they were both giving me very tight numbers. So I did my coming down, because I wanted the deal to work out and I wanted this guy to sell his home, and I wanted my investor to have a good investment property, and this area that it was in — I lucked out and ended up getting a very good property in a very prime area. It’s actually a historic area, and most of those homes around the corner from it go to maybe I would say 150k… So at the end of the day, the owner was like, “Alright, let’s settle on this”, and then my buyer came back and said “Hey, I can only do this”, and I said “Okay, great. Well, that matches up, and that works out for me. It’s $1,250 spread, and it works out, so I’m fine with it.”

Joe Fairless: You said homes sell in that area for much higher… When you got it under contract for 55k, how much did you think it was worth as is?

Dakarai Towns: As is, after I did a little bit of homework, I thought it was worth around 40k-45k. So I was like, “Okay, maybe 55k is good–” because I went back again and I checked my numbers about 3-4 times, and then had one of my agents that I was working with, and she ran comps as well, but sometimes the agents like to do the high-end… So she was giving me comps and telling me “Hey, this could actually sell for around 90k.”

Joe Fairless: Uuh… Jackpot. That’s a big difference from 45k.

Dakarai Towns: Yeah, exactly. [laughs] But that was the great thing though – I was just like, “Well, do you mean 90k at the end as retail?” and she said “Yeah.” I was like, “Okay… Well, it should work out then. If I get it at 55k, it should still work out.” So I ended up getting it at 55k, and jumped it down to about 22k, and once we jumped it down to 22k and [unintelligible [00:11:14].11] my buyers came and picked it up. Once they picked it up, they ended up selling it — and I think they actually sold literally like two weeks ago, for 93k.

Joe Fairless: So she was right!

Dakarai Towns: She was right! [laughs]

Joe Fairless: How much did they put into that puppy?

Dakarai Towns: They put in about 37k for rehab.

Joe Fairless: Okay. Well, I hope they took you out to dinner afterwards.

Dakarai Towns: Yeah… Well, the funny thing too is this investor actually — they’re two guys from Israel, so when they came across one of my ads on Craigslist, they gave me a call, and this was six months before we even closed on any deal. I had no deal under my belt. So these guys were very loyal to me when I had nothing, when I was first starting off. They said, “Hey man, you really sound like you’ve been doing this for a while…” I was like, “No, not really. I’ve been doing this for about a month now.” So they still gave me the chance.

Around six months, that’s when we actually came across the first deal, and we did the whole deal, they liked it, they ended up selling it, and then they actually came to visit Columbia last week and we went out to dinner, went and had some beers and had some dessert, and I took them downtown.

Joe Fairless: Awesome. And they paid, yes?

Dakarai Towns: Yeah, they paid. They had me down. [laughs]

Joe Fairless: Good. What about the second deal?

Dakarai Towns: The second deal is almost the second exact scenario, in a sense. The second deal was in a higher-end area in Columbia; it was a bit North. We contracted it for — it was a 3/2, it was about (I wanna say) 1,200 square feet, and this one wasn’t really a big rehab; it was for a rental, so that’s what I wholesold it as. We got it around 65k, initially…

Joe Fairless: Who’s “we”?

Dakarai Towns: When I say “we”, I’m really referring to my team, but I really was the one who [unintelligible [00:13:02].19] I established a big team and a foundation before actually going on to the second deal. We moved to the second deal about two months after the first one. We ended up contracting the first, 65k initially… And I told him, “Hey, this is too much, because none of my comps are matching up”, the numbers weren’t working out. So he came literally about three weeks later… He called me back, he said “Hey man, I know the other number was pretty high, so how about we do 55k?” I said “Okay, let’s do 55k.” At the time, 55k was around the number I was at for the sale, and I ended up getting the guys out there in literally the same scenario.

We had some due diligence done, we had it contracted, and once the guys came out, they said “Hey man, this would need some repairs for the chimney, and it has some cracks in the walls, paint etc.”, things of that nature. So they’re hitting us with some of these facts, and I just laid the facts down on the owner. He trusted me, and he said “Yeah, man… I feel like you’re a good guy and I feel like you really are being patient with me…” Because at the end of the day, there were so many different schedule modifications, because he had to work, and I’m here, and at another property etc.” So I was really trying to work with him so he can sell his home. And just like the other owner, he had another home he was wanting to close on in another part of Columbia, so he really needed this to sell.

Once we got it contracted and once had due diligence and I was showing him the facts, we ran the number back down, and he said “Okay, how much can we really sell this for?” I said, “Look, there’s not much room because of the repairs, and the rehab is really extensive.” They had a very old kitchen. So what happened was I didn’t end up selling this to an investor, I ended up selling this to a hedge fund actually. So it took them a little minute to really come back with the correct amount that I was actually willing to agree to. They came and bought it for 38k. On that one I made about $7,500.

Joe Fairless: Wow!

Dakarai Towns: Yeah.

Joe Fairless: That’s incredible. That’s great stuff.

Dakarai Towns: Thank you. I couldn’t take no for an answer on that one, because I’d just been working with them for too long for them to not come out on top with it.

Joe Fairless: How long?

Dakarai Towns: It was about a month the first time, just to see if the numbers would work out, and if they were really willing to sell, and they weren’t motivated at the time, so they came back three weeks later… So it took about almost two months to sell this one.

Joe Fairless: You said your team… Who was on your team when you were starting out, and how did you recruit them?

Dakarai Towns: Sure. On my team there was a financial broker, and they actually reached out to me. She basically went to a seminar and learned about how to go about loans, and working with these big groups who would help with financing, and things like that. So I said, “Okay, great. This would be great for some of my investors who don’t actually have all the financing for the deals. They even financed rehabs.” So I said, “Alright, this will be awesome.”

So she also unfortunately couldn’t work physically at a job because she was in a car wreck, so she had all the time in the world to stay at home, be on the computer and actually work on deals. And I said, “Alright, I think that would be a  great partnership, while I’m actually out and I’ll physically look at the properties that you send me.” Basically, she looks at properties, analyzes them and she would send them to me, and I would analyze them again and let her know whether or not it would be a good deal or not. And if it is a good deal, we’ll move on it. And for those two deals that I worked on, I had brought those deals in, but she would continuously shoot me over deals.

Another part of my team was a real estate agent. She was not as versed in the wholesaling strategy, but I ended up explaining it to her, I ended up explaining how we get things done, and she was okay with it; she was great, she was really transparent with me, and really wanted to get things done fast.

How I met her was I was just pretending to be a buyer at one of these homes that I looked at that was actually on the market, and figured out that it wasn’t a good deal, but she ended up staying in contact with me and I told her what kind of deals I was actually looking for. And she said “Oh, wow, we can get those deals all day”, and I said, “Okay, great!”

From there, we just all partnered up and we said “Okay, anything that we make, we pretty much will split it 1/1/1, or we’ll just figure something out at the end of the day”, but we all came into a contract and then made some money along the way.

Joe Fairless: For the second deal, that $7,500, was that split a third each?

Dakarai Towns: Actually, no. That one was split — I forgot her contract… The agent has to make at least a thousand, so it did eat up some of the profit, but I wasn’t complaining, and then I gave my other partner a thousand. So I personally didn’t pay myself until after everything and everybody else was paid. I kept the rest for marketing and business infrastructure, let’s say.

Joe Fairless: You have two deals under your belt. One you made money (you didn’t lose it), not factoring in marketing costs and your time… And then the second one you made almost seven times more than the first one. Then you partnered up with a mentor – let’s talk about that quickly, and then we’ll talk about something else I wanna ask you… But first, help us understand how you came across a mentor and that structure.

Dakarai Towns: Sure. My mentor [unintelligible [00:18:26].19] Craigslist. It’s a very powerful system. He actually came across one of my old ads that I put out in the Columbia area, about “We buy homes. We’ll help you sell your home pretty quickly”, things of that nature. So he actually reached out to me through one of my Craigslist ads, and he was giving me filler questions… He was acting as if he was wanting to sell his home, and he wanted to see what kind of a response I would give him

After the end of the conversation, he was like “Well, I have a confession.” I was like, “Okay…” [laughs]

Joe Fairless: “Where is this headed?”

Dakarai Towns: Right, exactly.

Joe Fairless: Maybe it’s a murder or something, if [unintelligible [00:19:05].11]

Dakarai Towns: [laughs] Right. It’s like, “Okay… What’s up?” and he’s just like “I’m very intrigued on your conversation, and I really like you a lot. You sound very genuine, you sound very transparent.” I was just like, “Wow, thanks! That’s what I’m shooting for, to kind of give off the natural kind of transparency.” So he said, “Yeah, so I really wanna mentor you.” I was like, “What?” He was like, “I wanna mentor you.” I was like, “Okay, great. I was actually looking for  a mentor.” And at the time I was just stunned, because I’m like, “Okay, this is another deal. Hopefully we get this deal done…”, but at the time I met my mentor, and then after that he started showing me a whole bunch of different software, or a whole bunch of different tactics and strategies that normal people who are in the real estate game and are wholesaling aren’t really doing.

Joe Fairless: Like what?

Dakarai Towns: Basically, almost like a thought leadership platform that you always talk about on the Best Ever Show, it’s something of that nature. He was basically telling me, “Yeah, you need to make this like a video, or a commercial”, and at the time I wasn’t really well-versed in how to market. I wasn’t well-versed in how to really get my name out there like that, and how to really get people to know that I’m here and willing to help them sell their home, or vice-versa with the investor.

He basically told me “You need to get on social media, you need to make an Instagram account, you need to make videos and specify them to yourself, and not only for what you can do, but to yourself as a person.” I said, “Wow, that’s genius.”

It’s funny though, because he’s a very elderly guy, and he’s not really well-versed in technology as I am… So what he did is he had me go on his different social media sites, or kind of took some of the data that he had from his computer and let me run it… Because I’m on the computer 24/7, I’m in college, so I’m always on my laptop. And at the times I’m not doing anything, I’m like “Okay, let me go ahead and run these numbers for these leads that i have in.”

From there, he took me on  different journeys of real estate, and journeys of how to be more open-minded about different solutions… Because I was always tunnel vision on “Let’s get a deal done. Let’s get it done”, but I wasn’t clear on the different ways that I can get it done.

Joe Fairless: What’s an example of that?

Dakarai Towns: I would say, for instance, just to make it really simple, the fee. I was not thinking about bringing down my fee for a deal, but then when I thought about it, I’m like “Well, why would I bring down the fee? I’m not getting paid as much, and then I can’t do this, that and the third”, but he was reminding me “You started from nothing. You started from literally zero dollars”, and that’s literally what happened… I started from zero dollars, and took a small seminar, took some tidbits from that, and I just kept going with it. And once we met, he started to tell me “Just let this deal flow. This is the first deal, so don’t let this define you as a person and don’t be greedy.” So that’s really what happened, and I ended up coming down on my fee.

He also showed me that you can help some of these investors have money by financing through loans… Because he’s an official underwriter and a loan officer, and I believe an official broker. So he’s really well-versed in the real estate and in the vintage real estate game. So he’s not well-versed in the technology yet, but he showed me a lot of things that he did in the past. He would go out, put poster boards up, put bandit signs up, and he would actually not say “Hey, cash for your home”, he would say stuff like “I have a rental available” or “I have a 3/2 going for this price”, and people would give me calls. It was endless. So that’s pretty much what our marketing strategy was.

Joe Fairless: Did you know him before your first deal?

Dakarai Towns: No, I didn’t know him.

Joe Fairless: Because on that first deal, you took that advice without having known him, right? You lowered your fee…

Dakarai Towns: Well, I lowered my fee and I did know him before — because he ended up becoming my mentor before my deal. So after that deal, he started to tell me more situations and different strategies I could go without having to lower my fee. Then once I lowered it, he said “Okay, this isn’t the end of the world. This is your first deal. This is what it would do for your investor and their pockets, and this is how it will make you look. At the end of the day, you’re not being greedy.” He just basically taught me the ways of not being greedy versus profiting. Because everybody would say “Oh, you took a hit…”, but you still made money, so you technically didn’t take a hit. You just made a little bit less than what you thought.

Joe Fairless: Sure. So you’ve got this momentum with wholesaling. Why shift the focus to, as you said, larger transactions with apartments, larger deals?

Dakarai Towns: I just saw that with the timing and with me being a student, it worked out, if I were to do something that did take a little bit longer. But at the same time, I’m not limiting myself to just apartments, but I see the potential. It took about two months to close both of those deals, and before that, like I said, I was going in to about 15-20 homes and they all fell through, so I would take tidbits and learn from each one that fell through and I would bring it to the table. So during those two deals I was still learning, and it took a little bit more time, but at the end of the day I was able to close those deals successfully.

Joe Fairless: For someone starting out, what’s your best real estate investing advice ever?

Dakarai Towns: Sure. My best ever advice to all the Best Ever listeners out there is to create genuine long-term relationships and bring something to the table… Even if it’s just as little as “Just go visit this property for me.” Because the small things count, and they look at that and they say “Okay, great. I can really depend on this person.” And once the bigger things come, they would at least entertain it. It’s not a guarantee that they would actually go through with it, but your relationships are definitely the definition of who you are as a person.

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

Dakarai Towns: I think so, let’s do it.

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

Break: [00:25:09].06] to [00:25:59].22]

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

Dakarai Towns: Currently it’s the Best Ever Syndication Book.

Joe Fairless: Oh, there we go! What’s your favorite part?

Dakarai Towns: My favorite part is the ending questions. I haven’t dug as deep as I want to, but I did skip around for what you had mentioned I believe in the Facebook group. It said something about exercises, so I wanted to check it out and I looked at the exercises, so it gave me a good SAT prep kind of feel; I’m really enjoying that.

Also, how to create the platform, and giving me the advice that I needed to understand what a real thought leadership platform is.

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

Dakarai Towns: One of the mistakes I made on a deal was letting my seller drive all the way down from — I can’t remember where it was… It was from either Florida, or somewhere like that. But he basically drove all the way down just to hear that he couldn’t do the deal because of the numbers. And what I did was I ended up having one of my partners, which was the financial broker – I ended up having them do the numbers for me, because at the time I was busy with other properties, so I didn’t have time to run the numbers and get back with him with the offer price, so I needed someone else to do it.

By the time I got back, I get a call from the seller saying “Hey, we’re on the way”, and I’m like “Oh, crap… Alright. Well… Yeah, I’ll see you in a bit.” And then I get a message from my financial broker saying “Hey, we can’t do this deal. The numbers are too high.” I said, “What?! We’ve literally waited an entire day for this and you’re just now telling me this? Literally, the guy is on his way.” So that’s what happened, and it was just a big flop from there.

Joe Fairless: So you heard that, and then what did you do?

Dakarai Towns: What I did was I made a few changes to how we operate the business, and also I take it upon myself to do the numbers.

Joe Fairless: I’m more interested in the drama. So you heard that from him, and then did you call the people who were on the road?

Dakarai Towns: Yeah.

Joe Fairless: How did that conversation go?

Dakarai Towns: It didn’t go great. [laughs] They were driving down… He actually didn’t answer my call. I texted him because he told me that he was going to be coming in in about an hour, and he said “Really, dude? You’re gonna wait this entire time?” and I said “From the deepest heart of my heart, I apologize.” If you come now, let me see what we can do; let’s talk it over, let’s figure out if this is really what it’s gonna take…”, because at the same time, the biggest issue was he had a pool in the backyard. The pool in the backyard was gonna take a lot to have construction come in, fill it in, things like that. And like I said, I told him this as well before we ended our discussion the first time… So while he was on his way back, I said “Hey man, let me take you to dinner and let me talk to you, talk the numbers out.” He was just not going for it, he was not interested at all at that point. He was just like, “Alright, we’re done here.”

I ended up losing a potential deal, and it was definitely a lesson learned, to really make sure you don’t hold people accountable too much. So that was just a big lesson right there for me.

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

Dakarai Towns: Sure. They can get in touch with me on LinkedIn and Facebook at Dakarai Towns… As well as my e-mail, dhomesrealestate@gmail.com. And just a small advice for getting into wholesaling apartments – it’s really hard, so make sure you contact the syndicator. For example, if I hadn’t contacted Joe, we wouldn’t be on this interview right now, so don’t be scared to contact them and have some face-to-face talk with them sometime.

Joe Fairless: Well, Dakarai, thank you so much for being on the show, talking about how you did your first two deals, as well as the nine after that. We got into the specifics of each of the two deals; I love getting into the specifics and the twists and turns of each deal. I hope you have a best ever day, I’m really grateful we caught up, and we’ll talk to you soon.

Dakarai Towns: Sounds great. Thank you, Joe. I appreciate it.

Best Real Estate Investing Advice Ever Show Podcast

JF1056: He Made $20,000 in His First Two Weeks After Listening to THIS Podcast! With Brent Moreno

He was driving for his full time job when he heard his friend on our podcast. Brent Decided to reach out to his friend and learn what he was doing. After thoroughly educating himself on how to wholesale, he went out and made $20,000 in less than two weeks!  If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Brent Moreno Real Estate Background:
-Founder at Cash Homes Carolina Studied real estate business after a friend was on the show and started posting checks
-Studied for 2 months how a past guest made his money in real estate
-Began 1 month ago and landed his first house and had it sold in less than 24 hours
-Based in Columbia, South Carolina
-Say hi to him at www.cashhomescarolina.com
-Best Ever Book: Richest Man in Babylon

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Brent Moreno Real Estate Investment

 

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

Brent Moreno: I’m doing fantastic, Joe. Thanks for having me on the show.

Joe Fairless: Yeah, my pleasure. Today, Best Ever listeners, we’re gonna get a different perspective from a guest, like we usually do. Today Brent is just starting out. He has done two deals, and he’s working on two leads on two more deals, so we’re gonna hear about his first couple deals, how that happened, and we’re gonna talk more about the beginning aspects of getting into real estate obviously, because he’s just getting started.

A little bit more about Brent – he is the founder at Cash Homes Carolina; his website is appropriately named – CashHomesCarolina.com. He studied the real estate business after a friend was on the show and started posting checks. He studied for two months and he has since, as I’ve mentioned, closed two deals. He’s based in Columbia, South Carolina. With that being said, Brent, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Brent Moreno: Yeah, so currently I’m mostly focused on wholesaling. I’m looking for the right deal to actually fix and flip, but like you said, I just got started… I actually launched the business in May; I was actually at home for about a month — or actually not even a month, I was home for like a week, and I got two deals done in that week’s time, which brought me about 20k… But I didn’t have any background, I just saw my friends doing it, and I heard my buddy on the show, [unintelligible [00:03:50].08] Once I saw those checks posted and heard his interview, I was like “I’ve gotta dive into this show some more and learn everything I can, because the thing is really promising.” So that’s where I got to, and that’s where I’m at now.

Joe Fairless: And by “show” are you talking about this podcast?

Brent Moreno: Yeah, the Best Ever Show.

Joe Fairless: Oh, wow, that’s cool.

Brent Moreno: Yeah, I really dove deep. Basically, I drive a lot for my current job, so I basically just listen to and catch up on all the podcasts that I miss, and I do them over and over and over.

Joe Fairless: So you were listening to this podcast and you heard Max Maxwell being interviewed, and you knew him already and you heard that he was making the money? Or you got introduced to him by listening?

Brent Moreno: No, so I knew Max from several years ago; we both worked in the same field of event marketing, and we had worked a couple events together and just kind of stayed in touch. I’ve always kind of kept up with him via social media and what he was doing. He had posted the link to this show, and I called him up and I was like, “Hey man, I wanna do what you’re doing. This seems really promising. Can you give me some pointers?”

So I drove up, met with him for a day and I got some pointers, and really took off from there, and just kind of buried myself in books and podcasts, and like I said, I officially launched in May.

Joe Fairless: When you met with him, what were some of the pointers?

Brent Moreno: I’m like everyone else that thinks you have to have a lot of money to get started in real estate. I’ve always thought that and I’ve always been interested in real estate, but I always assumed that if you don’t have like 100k in the bank, then you’re probably not gonna really get anywhere, you’re not gonna be able to find a good deal and put some money into it and make [unintelligible [00:05:24].07] I never knew about the wholesaling side and the fact that I could walk in and put $100 down on a contract and find an investor… That was really new to me, so it was really exciting to know I could do that.

His pointers were “Read this book, listen to these podcasts, and once you get some money, set up your website, get your LLC, and go out and drive for dollars” – he said that’s the best way to get your first deal, it’s to drive for dollars… So that’s what I did.

My first deal actually came from an Uber driver, which is — I don’t know about a lot of people doing that, but I run a Uber Facebook group in Columbia, South Carolina, so I basically asked the question “Hey, would you like to make some extra money? $500-$1,000 extra/month.” I had a bunch of people interested… No one did it, but one girl came through and just was sending lead after lead after lead [unintelligible [00:06:11].15] because I’m out on the road, I can’t be there.

So she’s sending me lead after lead and I’m like “Okay, I’ve gotta start calling these people.” Sure enough, the very first person I called — I ended up calling him probably around eight or nine times, just having a bunch of different conversation with him, and [unintelligible [00:06:27].22] he just didn’t have time to fix it up. It needed about 30k with the works, and I got it for 27k and within 24 hours I sold it for 39.9k.

Joe Fairless: Congratulations on that!

Brent Moreno: It was a pretty good deal. I literally laid up in bed all night, thinking “What am I gonna do if I can’t sell this thing? Who am I gonna call?” But I went to a foreclosure auction and that’s how I found my buyers. I sat in there, listened, and found the people that were spending the money, found out where they were buying at [unintelligible [00:06:57].17] It’s five minutes from the University of South Carolina. It’s a good spot, and literally the first person that I called and showed it to, took it. It worked out great. I didn’t expect it to work out so great.

Joe Fairless: Do you physically went up to the foreclosure auction?

Brent Moreno: Yes, I physically went to the foreclosure auction, just to meet buyers.

Joe Fairless: Alright. Do you drive a car or a truck? I’m guessing truck.

Brent Moreno: I drive a truck, yeah.

Joe Fairless: Yeah, I knew that… I could tell. [laughs] You just pulled up in your truck… You get out, you shut the door, you walk up to the foreclosure auction – what did you do?

Brent Moreno: It was inside of a courtroom, so I just walked in and sat down, and I had the list of all the pre-foreclosures or all the houses that were going up for auction, and I just sat there and listened, because after every sale, the buyer has to state the name of their business or their name… And I would just write down all their names and then try to introduce myself to as many of them as I could after the auction was over.

The ones that I didn’t introduce myself to, I went back and just googled them and found their phone number and added them to my buyers list. I called them and said, “Hey look, I’m a wholesaler. I’m working on getting some deals in place. What areas are you interested in? What’s your criteria?” and I filled my buyers’ list that way.

Joe Fairless: Bravo! That’s what I’m talking about. That’s some resourcefulness, take action in an intelligent way. Did the buyer who ended up buying it meet you in person at the courthouse, or was that someone you didn’t have a chance to meet and you googled later?

Brent Moreno: That was actually somebody I did get a chance to meet. It was pretty quick, even whenever he came to the property. He just basically was like “Boom, boom, boom! Okay, what do you gotta have for it?” I had it listed for like 41.5k, and I said “I’ll take 39.9.” He’s like “Okay, deal. We’ll have 5k earnest money and we’ll close in seven days.” I was like “Wait… Did that just happen?”

Joe Fairless: [laughs] Oh, man… What’s he gonna do with it?

Brent Moreno: He actually assigned it for $4,500 more, so I was like “Damn, I could have gotten more money…”

Joe Fairless: No, no… That’s okay. [laughter]

Brent Moreno: I was like, “That’s good, man. I’m glad you did that.” The great thing is that I have my fiancée back at home and she handles a lot of my closings for me because I’m constantly traveling. [unintelligible [00:09:07].11] and then he asked if we had another property. Well, I just got one under contract, and he actually bought that one, too.

Joe Fairless: Same guy.

Brent Moreno: Same guy.

Joe Fairless: Did he assign that one?

Brent Moreno: No, he didn’t assign that one. The end buyer for the first house that I bought was the one that was assigned on the contract, too. He’s the one that bought from me that time [unintelligible [00:09:26].02] I was like “Yeah, I could have saved you $4,500.” [laughs]

Joe Fairless: Alright, so let’s talk about that part of it. Is there any stepping on toes issue where you’re now skipping the guy who helped you make the 10k or so on the first deal?

Brent Moreno: No, not at all. I talked to him… They actually had the first [unintelligible [00:09:46].17] it was a very big property; it was like a $325,000 property, but it needed about 70k-80k worth of work, and was on a private golf course.

I sent it over to them and said “Hey, is this of any interest?” They went and looked at it and they were like “Oh, it’s just a little more than what we wanna spend on rehab, but thanks for the offer.” It just so happened that the next guy in line was good, so I basically sent it over to them first and gave them the first chance to look at it because I enjoyed having everything work smoothly and close in less than a week.

I told them “If you guys can do that with all my properties that you guys are interested in, I’ll just keep sending them to you.”

Joe Fairless: Just so I’m on the same page in terms of how you found each of them… You said you got the first deal being an Uber driver – will you just summarize that for me again? Because I was trying to follow and I’m not sure I followed.

Brent Moreno: Okay. Like I said, I used to drive Uber, just because when I’m home — my fiancée’s in law school, and I’m like “I’ll drop you off at school, and then I’ll try to make some money for the car payment just because I don’t wanna stare at the walls.” So I started a Facebook group for everybody to share information on events coming up and stuff like that.

I posted on there about finding a bird dog, basically. I posted on there to find a bird dog. I got one person, like I said, that was really interested and really motivated. She found my first house, and I gave her $1,000 for finding it. Basically, what she does is she just drives around, takes pictures of vacant houses and send me the addresses, and then I research them.

Joe Fairless: Okay. And you started a Facebook group… What’s the Facebook group’s name?

Brent Moreno: It’s Ride Sharing Community of Columbia South Carolina. It used to be just “Uber of Columbia South Carolina”, but now there’s Lyft and all that stuff, so I just changed that. I’m not really active on there anymore – like I said, I stopped driving Uber, but…

Joe Fairless: I’m just curious, who joins that? What’s that for? Is it just for other Uber drivers who want to stay in touch with each other?

Brent Moreno: It’s more just about “Hey, this is what’s going on in the area. These are the concerts going on, these are the football games going on…” or “What’s the best areas? What do you think about sitting at the airport?” It’s not a very huge market, as far as like a major city would be. It’s a small group of like 150 people who are on there, who just share information with each other to help each other out to make a little bit more money, sharing where the events are, and stuff like that.

I thought about it as “Well, they’re Uber drivers… All they do is drive around all day.” I was like, “If you see a vacant house, take a picture of it and send it to me. If I close on it, I’ll give you 1k.”

Joe Fairless: It’s a no-brainer for an Uber driver to be a bird dog. That’s great. So this is a much deeper and more impressive conversation than I thought we would have, because you’ve done tactics that people who have done maybe 10-20 deals would be doing, and you did these on your first couple deals. I’m really impressed with your approach.

You said earlier when you met with the gentleman who was on this podcast (Max) he said for you to read a book… What book did he ask you to read?

Brent Moreno: Actually, it wasn’t him that suggested I read the book… It was my friend in Mississippi that’s doing the same thing. He’s like “This was the one I started off with.” It’s called “Flipping Properties”, and it was like $4 on Amazon. It’s the second edition; it’s kind of old, but it’ll give you a good idea of where to start.

I read that book, and he’s like “Just come back to me with any questions.” So I’ve shot questions to my buddy in Mississippi and to my buddy Max [unintelligible [00:13:14].29]. They’ve both been helping me out and they’ve both been giving me really good information, because Max won’t talk about the technology side of things, and I’m a bit of a techie… Whereas my buddy in Mississippi likes to call it [unintelligible [00:13:25].26] So I’ve been trying to help him with this technology side of things, but he’s been kind of giving me some old school, grassroots [unintelligible [00:13:39].03] how to go about finding these deals and finding these buyers and stuff. Both of them have been very helpful to me and they’ve been someone I could lean on, and I highly suggest to anyone that wants to get started to find somebody that’s doing it in your area or even anywhere remotely close to you that you can drive, and will spend some time with you.

I spent maybe three hours with Max and I’ve probably spent two days with my friend Adam in Mississippi (which is where I’m originally from), just riding around and [unintelligible [00:14:05].29] and looking at records, and going through the computer systems there in the courthouse… He’s got a really good system going down there that he’s doing 4-5 houses a month and he’s not using really any technology platforms. He doesn’t even have a website, and his e-mail address is Hotmail.

Joe Fairless: Oh… At least that’s a step up from AOL. [laughter]

Brent Moreno: I think it actually might be AOL…

Joe Fairless: Okay, there we go…

Brent Moreno: Actually, I think it is AOL.

Joe Fairless: [laughs] The second deal that you closed – remind me how did you get that one?

Brent Moreno: I found it actually driving for dollars with my buddy from Mississippi. He came up [unintelligible [00:14:42].16]I picked him up in Mississippi, stopped off in South Carolina for a few days to hang out and look for some properties. We were just driving around in the neighborhood and I was like “Man, this one [unintelligible [00:14:53].29]” so we jumped out, took a look at it, and I skiptrace the owner and it was an older lady who was living in a townhome. I couldn’t get a hold of her; I tried calling all the numbers I could find, but I found her next of kin…

Her next of kin was her son that was a developer in South Carolina. I look him up, I find him on Facebook, I notice we have a mutual friend… I hit the mutual friend up after talking to the guy, and I’ve called him, probably.

He said he was interested in selling it. I said “I’m out of town right now, but I’d love to take a look at it next week, when I get back in town.” He said, “Okay, that works. Call me when you get back in town.” Well, I was only gonna be in town for a week, and I called him immediately when I got back in town – no answer. I sent him a text message – no answer. I called him the next day – no answer.

I was like, “Well, maybe this guy got the cold feet”, but I kept calling and calling and calling, so that’s when I went to Facebook and I found that we had that mutual friend, so I hit him up. I said, “Hey, how well do you know so-and-so?” and he’s like “Well, it’s my boss’ son-in-law.” I was like, “Oh, really?” I actually had worked for his boss and those guys before in the past. I was like, “Could you tell him I’m trying to get a hold of him? If he doesn’t wanna sell it, tell him to let me know and I’ll quit bugging him”, but I just stayed on his case and finally, the day before I had to leave, I went and saw the property.

He wanted 195k, I got him down to 175k. The house, like I said, is worth like 335k. I was really worried, because I didn’t really get it for the typical 70k minus repairs, minus my fee and all that jazz, but I knew it was such a great property, it was in such a great neighborhood  that if somebody wanted to come and put an extra 500 square foot on the property and really dump some money into it, that could increase the value about 100k and they’d really, really make some good profits on it.

So I took that chance and it worked out for me. I was kind of stressing, because the first one went so fast; the second one took like four days.

Joe Fairless: Well, that’s pretty quick turnaround. You said he wanted 195k and you got him down to 175k – how specifically did you get him down $20,000?

Brent Moreno: Well, my first offer to him was 136k. I was gonna say 136.5k, and then my buddy in Mississippi was like, “No, 136.581k and some change. It makes it seem like you did some calculations.”

Joe Fairless: Oh my gosh…!

Brent Moreno: I was like, “No, I don’t really wanna do that…” [laughter] But then I was like “You know what, what do I care?” I was like “If I could get it for 150k I’d be happy”, so I started at 136k, and I really thought I could get it at 150k. So we just went back and forth and I finally — he said it was too low of a number for him, that he would just do it himself, but he had already said that he was tired of fighting with his mom about doing the rehab, because it was his mother’s property… He didn’t wanna deal with it anymore, he just wanted to offload it and get rid of it.

I finally called him back after we went back-and-forth a couple times; he wasn’t really budging, and he went from 195k to 185k. I was like “Well, I’m at 145k [unintelligible [00:17:46].18].” I just called him and I said, “Look, I really don’t wanna beat each other up over prices, I don’t wanna go back and forth and waste all that time… What is the absolute most that you have to have for the house?” He said, “You know what? Since you got the ball rolling and everything, I’ll have the deal at 175k.” I was like, “Okay, I think I can make that work.” Just persistence, that’s all.

Joe Fairless: And what did you assign that for?

Brent Moreno: I assigned that for 187k, I believe.

Joe Fairless: Great stuff. Over what period of time did you get your first two deals done?

Brent Moreno: Most of those deals were done within a week and a half of each other.

Joe Fairless: And how long did it take you once you had that first conversation with Max, after you listened to him on this podcast, to actually get the deals done?

Brent Moreno: I wanna say Max was on there in February or March (I can’t remember). I really started studying in February, and I wanna say it took three months of just studying, and then literally I put everything into action beginning 1st May, as soon as I got back home. I think I was home for two days and I went and looked at some properties, and then I started making all the phone calls on the leads that were coming in, because she was sending me 10-12 leads every three or four days… And I was like “This is a lot.”

I go very deep into the research. I wanna make sure my numbers are right and I wanna make sure that I know what I’m doing. I don’t wanna make a mistake right off the bat and sink my ship immediately. I guess I launched everything at the beginning of May and I did those deals before 17th May, so it took 2-3 weeks until I really went after it, to get my first two deals.

Joe Fairless: Based on your experience, starting out right out the gate quickly with these two deals, what is your best real estate investing advice ever for someone who wants to do what you’re doing but hasn’t started?

Brent Moreno: I would say find somebody that can answer your questions, study as much as you possibly can, and be persistent. I’m like a shark; if there’s blood in the water and I feel like somebody’s interested in selling, I will not let up; I will try every means possible to get in touch with you, or to get in touch with somebody that knows you, and figure out if we can make a deal or not. I’d say persistence in the follow-up – I think that’s what most people probably don’t do, or maybe they’re scared of cold-calling somebody.

I just really kind of [unintelligible [00:20:05].01] after listening to my buddy on the phone and just kind of going after it. I was like “I’m gonna talk to him like I’ve got a million dollars in the bank, because that’s how I have to be.” So it’s about being persistent and following up. Follow up, follow up, follow up. Do not let up on somebody that’s interested in selling their home quickly and needs to get rid of it quickly.

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

Brent Moreno: Absolutely. I’m looking forward to it.

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

Break: [00:20:36].07] to [00:21:32].29]

Joe Fairless: Best ever book you’ve read?

Brent Moreno: I would say the one that got me started years ago is one that everyone talks about, obviously – Rich Dad, Poor Dad. But most recently, one of my favorites is “The Richest Man In Babylon” that I just read, and “The Subtle Art Of Not Giving a F*ck”

Joe Fairless: I haven’t heard about that one. Another one I think you’d like is Three Feet From Gold.

Brent Moreno: Three Feet From Gold? I haven’t heard of that one.

Joe Fairless: I think it’s a Napoleon Hill Foundation book.

Brent Moreno: Okay.

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

Brent Moreno: I would say right now I’ve honestly been kind of talking to a lot of people who I know have the same kind of mentality and drive that I have. I’ve traveled all over the country, I’ve met a lot of friends, I have a lot of friends all over the place, but I see them in the same routines that I am, just getting really nowhere. We have great jobs and we have a lot of fun, but there’s a point in time where you realize you’re not gonna get much higher than when you’re are at; you don’t wanna always be gone, so… I’ve been giving those people advice and they all seem to be taking it very well and they’re all interested in getting started.

Where they go with it — I don’t have answers to a lot of people’s questions, but I like to give back by trying to at least be that person that Max was to me, even though I’m just starting out. I feel like I have a fresh perspective on just starting out and helping somebody get off the ground… So that’s how I like to give back.

Joe Fairless: What’s a mistake you’ve made on either of the first two transactions, that when presented the same situation on a future transaction, you’ll approach differently?

Brent Moreno: I would say a mistake that I really still think of, even though I turned a really good profit on that house — I really still think I should have got it for 150k, honestly. It just wasn’t in the parameters; I had a lot of people look at it…

Joe Fairless: The second house?

Brent Moreno: Yeah, the second house. This wasn’t in the parameters that I feel comfortable with, but I had a gut feeling that I could get it done if I had just really busted it and met somebody and got it done. Fortunately, it worked out; it was the same person I had sold the first house to… But I had a bunch of people go and look at it, and no one was really [unintelligible [00:23:26].23] some offers for like 160k and 170k, and I was like “I can’t do that, obviously. Maybe I’m gonna have to go renegotiate”, but I’d already been kind of firm with the guy that I was not gonna beat him up over price, so…

I really didn’t feel like I got that one as low as I should have, but it worked out. I just trusted my gut, but I would say that one really kind of kept me up at night a little bit, thinking “How am I gonna get this thing done?”

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

Brent Moreno: Well, they can e-mail me at brent@cashhomescarolina.com, or give me a ring. I’d love to talk to anybody. 803-335-56-59.

Joe Fairless: Brent, this has been an impressive conversation. The word “impressive” is the one that comes to mind when I think about what you’ve done on these two deals, because they were not cookie cutter deals, in terms of how you approached getting them. The two next level strategies that you implemented is 1) going to the foreclosure auction, sitting down in the courtroom, listening to each transaction, writing down the names of the people who are buying the properties, introducing yourself to as many of them as possible, and writing down the names of the others, googling them later, and then calling them and building your buyers list. It’s such a smart, effective move. Clearly, it was for you, because it closed you the first deal.

And 2) you started a Facebook group for other ride-share drivers and you posted about having them take pictures of properties and be a bird dog for you. One person was really active and she ended up finding that property for you and you paid her $1,000, which is a whole bunch of Uber rides that she didn’t have to do to make that $1,000. She was happy, right? She loved it.

Brent Moreno: Oh, absolutely. Now she’s trying to get other Uber drivers to work for her… [laughter] I was like, “I love it!” I love her drive, I love the way she goes about it.

Joe Fairless: These are stories that put a smile on my face, and it’s a beautiful thing to hear. And then lastly, the persistence in follow-up. You said that about seven times in a row, and I’m glad that you did. No elaboration needed there.
Thanks for being on the show, Brent. I hope you have a best ever day. I’m glad that you got value from a previous guest and you took action on it; we didn’t even mention that… And now here you are. I hope you have a best ever day, and we’ll talk  to you soon.

Brent Moreno: Absolutely. Thanks, Joe.

 

 

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Best Ever Show Real Estate Advice

JF61: But I Don’t Wanna Do My Homework!

Today’s Best Ever guest brings a different perspective to the show than what’s typical because her background isn’t exclusively focused on real estate. She’s a certified financial planner and talks to you about her Best Ever advice.

Tweetable quote:

Ashleigh Brooker’s real estate background:

–        Certified Financial Planner for A.J. Brooker Financial Associates in Columbia, SC

–        Guest Columnist for The State newspaper

–        Provides wealth management for professionals, business owners and families

–        Real estate investor and owner of a rental property

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