JF1558: Championship Level Rehabs For Better Returns #SituationSaturday with Michael Jordan

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Today Joe is talking with Michael about his keys to successful renovations on single family homes. With over $100,000,000 in successful transactions, it is safe to say he has plenty of experience and knowledge to share. If you’re renovating anything, especially single family homes, you’ll want to hear these tips. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Michael Jordan Real Estate Background:

  • Entrepreneur since 1999, over $100,000,000 in total business transactions
  • Has successfully done multiple different real estate strategies including: renovations, building homes, buy and hold rentals, turkey provider, buying NPN’s, property management, wholesaling, and more
  • Based in Detroit, MI
  • Say hi to him at http://strategyproperties.com/

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

First off, I hope you’re having a best ever weekend. Because today is Saturday we’ve got a special segment for you called Situation Saturday, and here’s the situation – you’ve got a single-family house or you’re looking at a single-family house, and you need to renovate that puppy. Today our Best Ever guest, Michael Jordan, is gonna talk about the keys to successful renovations. First off, how are you doing, Michael?

Michael Jordan: I’m very well, thank you, Joe… And thank you for having me on your wonderful podcast.

Joe Fairless: Well, it’s my pleasure, and looking forward to our conversation. Michael has been an entrepreneur since 1999, he’s got over 100 million dollars in total business transactions, he has successfully done multiple real estate strategies, including renovations, building homes, buying and holding rentals, he’s a turnkey provider, non-performing notes, property management, wholesaling and a bunch more… Based in Detroit, Michigan.

I’ve met Michael a couple years ago at our conference (BestEverConference.com) in Denver, stayed in touch, and he is certainly an active player in the real estate world. Today we’re gonna be talking about the keys to successful renovations. First though, Michael, do you wanna give the Best Ever listeners just a little bit of context about your background and your experience within the renovation world?

Michael Jordan: Yeah, absolutely. I started out in 1999 and I was a contractor; I basically was running a contracting company, doing sales to property management companies, and handling their renovations. From there, it evolved into me being a real estate investor. I became an accidental landlord, and from there it was something that I loved, the real estate world and the investing world, and I put in my construction knowledge into the real estate investing world, and it paired very well for me.

That’s a little bit of background on my construction… I have roughly 19 years in that industry, and it’s something that there has been a lot of ups and downs, that maybe at some point today or at some other time I can share with you guys, as far as dealing with contractors and projects… But that is my experience in the construction world.

Joe Fairless: We’ll talk about keys to a successful renovation on a single-family house. What is the type of single-family house that you typically renovate? Can you describe it?

Michael Jordan: The typical single-family home that I would renovate is one that I buy as a REO from a bank, or a vacant home, that really needs to be renovated from A to Z – roof, windows, kitchen, bathroom, update electrical, update the plumbing, HVAC… So you’re doing the whole nine years. And when you’re in a project like that, it’s very important as a real estate investor to assess the project properly, from the standpoint of knowing what you do and don’t have to do in that home, and understanding the pricing, the timeframe… Everything is a key component in being successful in that renovation, and it all starts out by doing what we call “a pre-scope of work.” We call it “pre-purchase scope of work” because we go in there and we assess what needs to be done, and we can’t spend too much time on that, because we don’t know if we’re gonna get the home as a real estate investor or not. So we’re gonna be in there for 15 minutes and we’re gonna have a rough budget. Our rough budget should eventually be very close – within 10% – of our actual scope of work, which is a detailed scope of work. Hopefully that answers your question, but that is something that is a very important part of any project – knowing what needs to be done and have an accurate cost.

Joe Fairless: Before you enter the property to do the 15-minute walkthrough, what work (if any) is completed prior to that walkthrough?

Michael Jordan: I would say prior to that walkthrough we just know about the location-location-location. That’s what we’re going off of. We know that our average interior renovation is gonna cost approximately $25-$30 a square foot. That’s our approximate price to renovate a home from A to Z, and that’s what we’re working off of. Now, if we go in there and we find that there is a lot less work than we expected – there’s hardwood floors that look great, and there is a new kitchen that was put in there, which is very doubtful, obviously that number comes down. But when we’re looking at a home, we’re always gonna write an estimate, and we’re looking at it from, “Okay, let’s start off with that $25-$30/square foot number, and let’s either come down or possibly go up from there.”

We’ve been into homes where the walls have been gutted and there was no drywall up or installation, and it’s like almost a complete new home when we’re done.

Joe Fairless: That $25-$30/square foot – does that include your labor costs?

Michael Jordan: Yeah, that does. What we do is we are constantly — one of the biggest challenges that I think most real estate investors have is finding the right crews to do their work. What we do is we’re constantly recruiting, and we have to recruit crews that not only do good quality work, but that can meet our pricing. That is a challenge. So we really have to always be on the hunt for new contractors, and contractors that can work with us. And just the nature of our business – we’re gonna lose 10% of our contractors every month or so, just because that’s the nature of the business. They’ve got another bigger job, or they dropped off because they don’t have enough workers now… That’s what happens.

But we find that a way to combat that is to constantly recruit, and also to have in-house direct labor, labor that works for us on an hourly basis, or a salary basis. That’s a way that we combat getting hurt by crews that leave us or that don’t perform.

Joe Fairless: So you’ll know the location very well prior to doing the 15-minute walkthrough… How does that influence what your actual scope of work cost is, knowing the location?

Michael Jordan: We’re gonna look at comparables in the area – what’s the market going for? How much is the rental rate? What are the taxes? What are the trends in the area? Is it an inclining area? Is it an area that is stabilized out, where there’s not growth nor decline? Is it an area where there’s a lot of development going on, where we expect there to be appreciation on the value of the home and on the rent? That’s the homework that we do prior to getting to the home, and understanding the rough costs of a renovation.

Dependent on the area… Some areas call for — for example Royal Oak, Michigan, which is a very popular area… That area calls for more of — there’s finishes that are more desirable in that area, that we feel that more homeowners and renters like, so that’ll affect material prices, and then that also might affect our scope writing and our cost of the project.

Joe Fairless: You’ve done your research on the location, and now you have just pulled up to the subject property, and you’re about to do your 15-minute walkthrough… Walk us through what you’re looking for in a house, and your thought process, and where you’re writing it down, in just as much detail as possible, please.

Michael Jordan: Well, I would say what we’re looking for in a house is 1) we’re going in there and we’re taking a look at the cosmetics. We’re looking at the floors, the walls; can we move any walls to make it more of an open concept, or give a better layout there? Two of the main items that we look at are the kitchen and the bathrooms. We’re seeing “Okay, what can we do to make this look nicer, increase the size, make a better layout?” And then we’re going into the mechanicals – electrical, the plumbing, the HVAC.

Once we get through cosmetics – the floor, the walls, the kitchen, the bathroom, the electrical, mechanical and plumbing, then we’re taking a look at the windows, the roof, the driveway, and then safety and structure. Because we wanna make sure that every home that we complete compliance with the city code and ordinance, so we can get a city certificate of occupancy.

Joe Fairless: How do you do that in 15 minutes, and what part of what you’ve just talked about takes up the most amount of time?

Michael Jordan: I would say how we do that in 15 minutes is training, training and training. To me, I love it when people actually do a walkthrough with me. When I say 15 minutes, it might be 20 minutes. I’m just giving you a roundabout timeline. Just being so used to have in your eye, look at the main items that you’re looking for.

We also have assessment sheets, which help us go through it line by line what needs to be checked off or inputted into that sheet, to make sure we cover everything from A to Z.

I would say the scariest factor that anyone around the country can come across in a house is a foundation issue. Everything could be fixed; a kitchen could be changed out, cabinets can be changed out… All that good stuff that’s not going to be tremendously costly versus what [unintelligible [00:11:53].28] but if you miss a foundation issue – you miss a bowing wall, you miss a crack in the foundation that is really having the foundation sink… Those are major, major items.

I don’t wanna be going away from your question too much, but to answer your question, it’s really having that experience. I’ve probably been through maybe 5,000-6,000 houses, if not more, myself; my team has been through thousands of houses. We’ve been through so many of these things, and we knew where we’ve gotten bit in the past. My biggest losses have been from foundation issues that we’ve had to cure.

Going back to your question about how could it be so quick – well, first of all, we have to make it quick, because if we’re gonna buy homes, then we’re gonna take a look at 15-20 homes a day that we’re offering on, and scoping on, and doing all that stuff. We have to be time efficient, and it just comes with experience.

It’s not that someone that hasn’t done that that many times can’t learn – they can; that’s where I always tell real estate investors that wanna get into flipping… Some wholesalers wanna get into flipping, they wanna maximize their money there, and I tell them “You really first have to start off by you being an expert on pricing.” And don’t just count on the contractor, because you can take  a contractor out there, that you can rely on, but that contractor can disappear after a week, a month, a year or whatever it may be.

You have to be the pricing expert. You have to have more than one contractor to be able to come out there and finish the job. That’s why I look at educating oneself on how to write a scope of work and the proper pricing as one of the most crucial elements in becoming a good flipper and a good single-family home real estate investor.

Joe Fairless: The categories of cosmetics is one, kitchen bathrooms, two; mechanicals, three; miscellaneous stuff like windows, roof, driveway, four, and safety and structure, five. With those five categories, which one of those you look at it and you’re like “Pf, whatever. Let’s move on. I got this. I can handle really anything that comes my way.”

You mentioned foundation is the big one, that you don’t wanna mess up on, but which one of those five is like “Pf, whatever… Let’s do this. Easy.”

Michael Jordan: Painting and flooring. So easy.

Joe Fairless: Cosmetics?

Michael Jordan: Yeah, cosmetics. I think that I can bid the cosmetics off of a picture. Someone might say, “Well, you might have missed a hole in the wall.” It’s drywall, it’s not a big deal. It can be patched. It’s an item that’s gonna take you an hour to fix. So that’s the easiest one right there.

Joe Fairless: Well, within cosmetics, you mentioned “Can we move walls to make it a more open concept?”, how do you determine that?

Michael Jordan: Well, first of all, you wanna make sure that the wall is not load-bearing. And to do that, you wanna have some experience to know where the beams are placed, and to make sure that you can move those walls. That’s number one.

Number two, you’ve gotta have a vision from the standpoint of understanding what the benefits are to opening up those walls, because to do demo on a wall does take much time. But if you demo a wall and it shouldn’t have been demo-ed, you could also mess up the layout. So it really has to be someone that has that good vision, that quick vision.

I walked into a home with a wholesaler, probably around six or eight months ago, and I walked in and I told him — the home was around $250,000 potential ARV, and he was looking to wholesale it for $70,000 or $80,000… But there was a lot more work than our typical home. And the first thing when I walked in there, I’m like “Yeah, I would knock this wall out”, and he said “Man, how did you know that so quick?” I said, “Because there’s no purpose of this wall here. It actually gives you the vision of a smaller home. It gives you a more compressed look. It doesn’t benefit the layout in any factor, whereas if you took this wall out, you’ve got a more open floor plan, you’ve got a visual that is just much more appealing to anyone. And why it was placed here in the first place? I don’t know.” Maybe in the ’50s, ’60s, ’70s there was more [unintelligible [00:16:04].16] I don’t know, but for me, I just look at it from the standpoint of “What are the majority of people going to like? What are the majority of owners that are gonna buy this home going to like? What are the majority of tenants going to like?” That’s where I learned what they liked, and I kind of go off with that.

Joe Fairless: Going back to “know where the beams are placed, to determine if it’s a load-bearing wall or not”, how do you know that?

Michael Jordan: There’s tools; you could bring tools along to see if it’s a load-bearing beam, and if you can remove that wall. If you’re that good, you could pretty much knock on that wall and see if it’s hallow or if there’s a beam in there. That’s just also experience too, but there’s ways that we teach people to take a look if it’s a load-bearing beam or not and determine that.

Joe Fairless: Anything else as it relates to keys to successful renovation that we haven’t talked about, that you think we should?

Michael Jordan: Sure, absolutely. I would say that the keys to successful renovations also comes with a couple other parts. Number one is knowing the materials you’re gonna use and the costs of the materials you’re gonna use. A lot of people get started with the renovation and they actually finish the renovation, but they end up realizing that they weren’t as profitable as they should have been, because they maybe went overboard on materials, maybe they didn’t buy the materials at the right stores, where they could have got better discounts, they didn’t scope out the proper materials, that would give the same results as the more expensive materials, and they didn’t know how to color-coordinate things properly, and the home sold for less because they used the wrong color coordinations.

So materials is a huge factor in flipping homes, and I tell any investors that are out there – I know that everyone has watched the HGTV shows and whatnot, with them going through materials and whatnot… There is big reality to that. I would say that color-matching, proper materials are very important, but know your area, know your comps, know what your home is gonna sell for, and know what you can afford from the get-go with your materials. That’s one of the two other items I was gonna speak about.

The second item, which I spoke about earlier, is having the right contractor on your site. The right contractor doing a renovation means someone that you’ve seen their work, you have referrals from them, you know that they’re someone that can abide by a contract that is very reasonable for them to complete a home, and someone that their pricing is very competitive. I don’t recommend using contractors that don’t do work with their own hands, because that will defeat the purpose of what we as real estate investors are trying to do, and that is to be as profitable as possible.

I feel that that contractor that is a company, and has an office, and [unintelligible [00:19:11].19] eats into the profit by 30%-40% higher prices on the construction. So I recommend having smaller crews – you have your electrician, your plumber, your HVAC guy, your painter, your flooring guy… And just cut up the job.

Sometimes people feel that they just have to hire a contractor that does everything. Sure, that’s possible, you can do that, but cutting up the job also works really well if you plan it the right way.

Joe Fairless: You’ve done renovations for a long time… What is one mistake that you’ve made recently that you can share with us, on a renovation?

Michael Jordan: One mistake that I’ve made recently on a renovation I would say would be not saving hardwood floors because we thought the stains were just that bad on them… Because sometimes over the years people have pets, and there’s urine stains and whatnot that the pets create on the floor, and us going through there and figuring out another flooring option… Whereas now we realize throughout time – and I don’t think this was even recent; this was maybe something like last year. We realize over time that imperfections on floors are sometimes beautiful, so you can use different color stains to hide some of those imperfections and make it look like it’s part of the age of the floor, or going with a solid color, not stained, but pain that sits on top of it and looks wonderful. So I think one of the bigger mistakes that I’ve seen in the last year or so was us sometimes reverting to alternate flooring when we already have great flooring there.

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

Michael Jordan: Well, my name is Michael Jordan, I’m with Strategy Properties. You can visit us on my website, at StrategyProperties.com. You could also reach us at 734-224-5454. We’d be more than happy to give advice. We’ve been doing some training on renovations and how to handle renovations from A to Z, and teaming up with some people to do simulation renovations for them to go through a project with us, for them to learn the ins and outs of it before they go out on their own and do it in whatever state they’re in… So I hope that we’ve provided some good information to people, they could use it in their renovation projects to be successful, and that’s our goal on this podcast today.

Joe Fairless: Yeah, that would be a fun and worthwhile experience to go through for anyone who’s in the value-add business, so… That sounds really good.

Thank you so much for being on the show, talking about your approach, your pre-purchase scope of work, what you do, then the 15-minute walkthrough, the different categories of items that you look for… The one that could bite you real hard – the foundation – and other stuff that is just easy to address, like cosmetics… As well as talking about how you wanna make sure — what materials you’re using, what the cost is of those materials, and then getting deeper there. We didn’t have time to get into too many details there, but you went through that, as well as having the right contractor on your site, and having a backup option… And ultimately being an expert on pricing, so that when – not if, but when – a contractor does leave in the middle of the night, with the project halfway done, you know how to take it from there.

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

Michael Jordan: Thank you, Joe. I appreciate you having me on the show, and have a great weekend. Thank you.

JF1357: Identify An Emerging Part Of A Down Market, Invest, & Make Money with Brent Maxwell

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Brent is an investor in Detroit, MI. That’s right, Brent invests in, makes money, and helps other investors make money in Detroit. The trick is finding emerging neighborhoods before they become “hip”. We may focus the conversation on Detroit today, but a lot of these tactics are applicable across the country. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Brent Maxwell Real Estate Background:

  • Real estate investor whose personal and professional stories align with the recovery of Detroit
  • Has a passion for the “limping” sections of Detroit and helps people buy into a piece of the city’s recovery
  • Based in Detroit, MI
  • Say hi to him at http://www.ipsrealty.com/
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Brent Maxwell. How are you doing, Brent?

Brent Maxwell: Hey, Joe. I’m doing great.

Joe Fairless: I’m glad to hear that. A little bit about Brent… He’s got an interesting approach – he has a passion for the “limping” sections of Detroit, and helps people buy into a piece of the city’s recovery. He’s based in Detroit, Michigan, his company’s website is IPSRealty.com (that’s in the show notes). Brent, with that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Brent Maxwell: I’d love to. I’ve been in real estate investing in Detroit for going on 15 years now. I’ve started in 2005 with my first duplex, and just been running it at full steam ever since. I lived through the great run-up to the great crash of our generation.

Joe Fairless: What type of investor are you?

Brent Maxwell: I like to be a value investor; I do added value purchases, we invest for cashflow, but with long-term upside potential as a secondary criteria.

Joe Fairless: What does your portfolio look like today?

Brent Maxwell: Single-family residentials, small multifamily, small apartment buildings. The only time we’re dealing with anything really commercial is if it’s mixed use. For example, we bought a 32-unit building which four of the units were storefronts… But other than that, it’s all at this point in time residential income property.

Joe Fairless: When I mentioned your bio at the beginning, I said you’ve got a passion for the limping sections of Detroit and helping people buy into a piece of the city’s recovery – can you elaborate on that?

Brent Maxwell: Sure. So for limping – we like buildings that are limping, and by that I mean for the apartment buildings we like them with some occupancy, ideally with bad management or neglect, but with some people in the building, so that the building has functional systems, even if they need to be updated, or at the end of the use or life, or even functionally obsolete; at least they’re operating… Either there’s some people in the building, typically not paying rents, or paying below market, that sort of thing.

As far as the areas that we like to invest in, I like what I call “the edge of hip.” The areas that are on the cusp or the edge of where the hottest areas are, or areas that are just starting to hit that gentrification curve.

Joe Fairless: Let’s pretend that you weren’t from Detroit and you didn’t live in Detroit, and you lived in Indianapolis. If you were to invest in Detroit, how would you identify the edge of hip?

Brent Maxwell: There’s two ways to do that. One is to utilize a local expert like myself that knows the city and lives and breathes the city. The other way to identify those areas would be to look at all the data and go from that. I think that our approach — both of those support each other. So it’s not a gut feeling, it’s backed by science and math and the markets.

Joe Fairless: What data do you look at?

Brent Maxwell: Sales data. Also, we look at — from a planning standpoint, I buy for cashflow. So everything we buy is based on what’s it gonna cash-flow like, what’s the ROI gonna be when it’s rented now? But we have that secondary criteria of “What’s it gonna look like when this area has recovered?” and that isn’t just current sales data. The current sales data tells us what markets are hot, and you can see that from the streets as well, but from looking at just numbers you can tell prices are increasing in this area, versus other areas that are still flat.

But what we look for is — the city has 50-year land use maps; they have long-term planning. So the city doesn’t determine the market. People buy what they wanna buy, and the city is putting on a map and is saying “This is what we wanna have happen.” It doesn’t necessarily make that happen, but if you have the government behind what you’re doing, whether it be through tax breaks, or added attention to neighborhoods, bringing in NSP dollars or stabilization dollars from the Feds…

The city of Detroit just created a plan to do 12k affordable housing units with 250 million dollars in a fund – that money is gonna be targeted at areas that are in our target areas, and it was part of the reason we picked them, because of things like that. So even if we’re not participating at that fund, for example, if they develop the area that we have holdings in, it’s gonna help pull ours up… You know, a rising tide raises all the boats. And even if we’re not participating in government money, which has its own downsides and caveats to making it that useful, we still can take advantage of the fact that the government is putting a lot of money into certain areas of town.

And other areas of Detroit – large areas of Detroit – are vetted and planned to be farmland (they call it Innovative Ecological and Innovative Productive). So farmland, or factories, or small assemblies… They’re not gonna be building [unintelligible [00:05:47].07] and doing large manufacturing in the city anymore. It’s not something that really makes sense for anywhere in the States based on the cost of labor, but we still have plenty of opportunity for manufacturing and other types of industry… So that’s what the city is looking at.

If you look at the city of Detroit, it’s 139 square miles. 2.1 million people lived here at one point in time. Now you’ve got a third of that, so you’ve got a  huge quantity of land. I’ve seen drawings where they’ve taken San Francisco and Boston and put them in the city of Detroit, and there’s still a huge amount of city left for another city to be put in there. It’s got a lot of land. So we don’t have enough people living in the city, or enough demand to fill that, so I think that there’s a plan to do the agricultural and production in the city; that’s where it’s headed. And hopefully in our lifetime we’ll see all of Detroit experience the recovery that a small portion of the town has already seen.

Joe Fairless: I have a follow-up question on the population being a third, but I’ll get to that in just one second. First, the 50-year land use map…

Brent Maxwell: Sure.

Joe Fairless: How or who does the Best Ever listener talk to to obtain that?

Brent Maxwell: I’ll actually be putting a page coming up soon on the website with all my slide deck of maps on it, so it’ll be there… But you can get it if you just type in a Google search and look at the 50-year Detroit land use; the maps or the programs should come up where you can see what they have going on.

Joe Fairless: And then they can apply that same approach for Indianapolis? Apparently, Indianapolis is on my mind. I don’t know why… Or other cities like that?

Brent Maxwell: Well, the Indy 500 is in a month, right?

Joe Fairless: There it is, maybe that’s what it is.

Brent Maxwell: But as far as applying that map to other cities – no.

Joe Fairless: No, no, I’m saying applying that approach, the Google search of Indianapolis 50-year land use map… Searching for that and then coming up with the Indianapolis–

Brent Maxwell: I think this is a Detroit-specific thing. I don’t know if Indianapolis has that.

Joe Fairless: Okay, fair enough.

Brent Maxwell: But obviously, you can get all kinds of information about any of the competitive Rust Belt, Snow Belt cities like Indianapolis, or Milwaukee, or Cleveland, what have you. I think the advantage with Detroit over those markets is while they all have and can generate pretty strong ROI numbers and cashflow numbers, the housing stock, if you really compare… A city that comes up a lot is Buffalo, New York – if you look at the housing stock in Buffalo… No offence to Buffalo, but if you look at the housing stock that’s available for low-end, low-income rentals, it’s mostly frame in smaller houses, and if you look at the housing stock that’s available in Detroit, there’s plenty of quarter million dollar replacement value brick houses that you can have fully renovated for 20k-50k price points. So that’s something that all these other cities don’t have available. They just don’t have that high-end housing stock that’s so affordable.

Joe Fairless: Let’s talk about the housing stock, and in particular the one-third of the population that used to live there and now lives there. As a real estate investor, you need residents to pay the rent, so that you can at least break even, and then hopefully make money… So when you look at a city that has a whole bunch of land, but not as many people, wouldn’t that be the opposite of what you typically want?

Brent Maxwell: Well, I think the key there is to not look at the city, because I don’t invest in Detroit, I invest in certain areas of Detroit. So as I’ve said before, you could fit Boston and Seattle and San Francisco in Detroit and still have land left over… So for the investor, the idea is to find the specific areas that you want to invest in. There are plenty of areas in the city of Detroit that are experiencing strong transitional housing trends, as well as some areas that are experiencing somewhat substantial population growth.

If you break it down in our target areas, the population is either stable or growing, and the demand is increasing, and the demographics of the potential buyers and renters is also changing. Those are the areas in flux that we target.

Joe Fairless: Will you give us maybe a case study of the last deal, or a latest deal that you did, just so we get an idea of what you’re buying?

Brent Maxwell: Okay, so there’s a neighborhood called Jefferson-Chalmers, which is on the East Side of Detroit on the river, by the border of Grosse Point, which is an affluent suburb of Detroit; it borders right on it. Jefferson-Chalmers is right on the water, and it’s about a 10-minute drive from downtown. It’s certainly Uber-able and it’s bicycle-able. [unintelligible [00:10:16].26] it’s a nice neighborhood, lots of great houses, and we recently purchased a 4-unit at the end of the block on one of the side streets off of Jefferson, which is the main road that runs down along the East Side riverfront.

We purchased this property, a 4-unit building, right around the corner from the coffee shop next to the new used record store, right by the bike lanes that the city is putting in. Those things are really strong markers for an area that is attractive and attracting millennials, and experiencing some recovery and gentrification for sure.

Coffee shops, and certainly used record stores don’t open in neighborhoods that aren’t hip.

Joe Fairless: The record store recently opened?

Brent Maxwell: Yes.

Joe Fairless: Oh, my… Okay.

Brent Maxwell: Yeah, 12-inch vinyl records, you know? Old record store or new record store, whatever…

Joe Fairless: [unintelligible [00:11:04].15]

Brent Maxwell: Yeah, it’s been a couple years now, but it’s been there. So we purchased this 4-unit, and it had some capital improvements, some cap ex needed, and some deferred maintenance; we’re putting a roof on it. We’ve purchased it actually end of last summer, we’ve started to turn the units, and when the people move out, we’re turning $450-$500 per unit for these two-bedrooms into $750 rents. We’re absolutely capitalizing on the change in the demographic of the renters in the area.

Joe Fairless: When looking at your portfolio to date, and taking into account the value that’s been added through both forced appreciation and just natural appreciation, so regardless of what you do it just went up, what percent would be allocated towards forced, and what percent would be allocated towards just natural, because you’re picking the right edge of hip areas, as you call it?

Brent Maxwell: What percent of — can you clarify the question a little bit?

Joe Fairless: Sure. Your properties increase in value.

Brent Maxwell: Right.

Joe Fairless: What percent would you allocate towards you having a hand and forcing that appreciation through renovations or whatever else, versus you just — it’s not luck, but you’re finding the right area and it’s just naturally increasing, regardless of what you do to it?

Brent Maxwell: Right, so let me take a shot at answering that. Basically, all of the properties we buy have some built-in equity potential, some ability for forced appreciation, with rare exceptions. We do buy some that are fully stabilized, but being local and able to add that value, it just makes sense to buy properties that are at least a light project, a turn of some kind, or some form of distress that we can take advantage of, and add some leverage to our purchasing in that fashion.

And then all of them for sure are purchased with appreciation potential being a key component… And I’m not talking about a few points a year type of appreciation here. The areas that we’re buying in – I can give you an example of my primary; I’ve purchased ten years ago for $23,000 in Indian Village a 4,000 square foot [unintelligible [00:13:08].28] mansion. It was rough and I’ve put a lot of money into it, perhaps close to 100k total invested, but it’s worth 400k-500k now.

That type of appreciation, that type of hockey stick curve exists and it existed in downtown, in Midtown, Corktown, Indian Village, which I mentioned… That’s transferred over to other areas of Detroit (a university district), and now it’s hitting other neighborhoods, like the Jefferson-Chalmers we’re talking about, MorningSide is also near on the East Side, South-West Detroit outside of the super hip Hubbard Farms and Mexican Town area. There’s a lot of opportunity in South-West Detroit; we just bought a duplex down there.

And then on the West Side – I don’t deal much in the left side for geographic reasons, simply because I like my holdings within my regular travels, or ideally within a bicycle ride from my office or from my house… But North-West Detroit has a lot of churn and a lot of opportunity for transition there. So we’re talking about properties that pre-crash peak – for example your three-bedroom typical bungalow… In Detroit, the 1,000-square foot three-bedroom bungalow is kind of a common type of home – these houses sold for 80k to 120k pre-crash, 2005-2006, and now you can still purchase them in many neighborhoods, fully renovated, tenant-ready, in the 30k-40k range, or even 50k on the higher end. Sometimes even in the 20k range, but maybe not quite as nice.

Basically, you’re buying at a quarter to a third, sometimes half of the pre-crash peak values, and these areas when they hit that sweet spot, around 50k-60k/unit, lenders really start to take attraction to it, and the whole area experiences a dynamic shift from being a primary renters’ area to being new homeowners buying – and not just on FHA, but on conventional mortgages – new homes in the area. So you’ve got a big pop, where these properties go 20k, 30k, 40k over a couple years, and then all of a sudden they jump into 75k, 85k, 95k… Because when I look at a house that’s $80,000 versus a house that’s $60,000, the difference in strike point for me is $20,000, but for a homeowner who’s buying a house that’s $60,000 versus an $80,000 house, they’re looking at $125/month in debt service… So it’s easy for them to say “Well, we’ll just pay $5,000 more”, whereas for me that’s hard cash out of pocket, so it doesn’t always make sense.

Investors can’t compete against homeowners, and those neighborhoods that are ripe for transition – those are the areas we like to target.

Joe Fairless: Based on how you’re talking, it sounds like you also have your own property management company.

Brent Maxwell: We do. And we were a public property management company and we provided services to the world, but we’ve actually kind of closed our doors on that and now are only working with clients that are purchasing through us, with us, or partnering with us. So we’re a private in-house property management company doing all of our own management.

Joe Fairless: What’s a typical partnership structure?

Brent Maxwell: We used to do flips, so it was basically an equity split where an investor put up cash, we would take care of the acquisition of the deal, managing it, doing the whole process, and we would split the upside. Sometimes we would have cash in the investment, other times it’d just be straight 100% investor capital.

What we switched the model to though is now we offer a small percentage on an annual basis, because we’re buying to hold for basically 2-5 years is the typical target length, and then of course it depends on factors that are outside of everyone’s control, such as if we hit another swoon, or if there’s a recession for a while, what that does with the market. I look forward to the opportunity to have easier buying, for sure, because the market is very tight and it’s hard to find good deals… But that is unlikely – based on everything I’ve read and everything I’ve seen, and historical evidence – that it’s going to last for a long time if there is any kind of a buyer’s market there, because of the fact of the massive shortage that exists in the inventory of the market here.

So we offer a fixed return plus an upside.

Joe Fairless: So it’s kind of like a preferred return, plus they’re equity owners in the deal?

Brent Maxwell: Exactly.

Joe Fairless: Okay.

Brent Maxwell: And we form new LLC’s, and partnerships, and a full operating agreement – it’s done in a  very clean, professional fashion. [unintelligible [00:17:11].03] the whole nine yards.

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

Brent Maxwell: Best real estate investing advice ever? I don’t want to live with regret, and I don’t think anybody else does either. Looking back, the deals that really bothered me the most are the ones that I passed on, for one reason or another, that I should have pulled the trigger on.

So if you look at the opportunities that happened in say, Corktown in Detroit, just outside of downtown – those values are through the roof. I’m not gonna miss them again, and I don’t think anybody else should.

The big crash of 2008 (09.15.2008) – that day came once in our lifetime. It’s not gonna come again. We’re not gonna see that level of opportunity, that level of correction. It’s a multigenerational event. So we still have the opportunity here in Detroit to take advantage of the opportunity that is here. It’s not gonna be here forever, so my best advice is if you see something and you wanna do something, take a shot.

Joe Fairless: At the time, why didn’t you pull the trigger on the properties in Corktown?

Brent Maxwell: I thought they were overpriced at the time, and I didn’t see the massive appreciation that was going to take place.

Joe Fairless: When you say that you thought they were massively overpriced at the time, what sales data were you looking at to determine that?

Brent Maxwell: To determine whether they were overpriced or not?

Joe Fairless: Yes.

Brent Maxwell: Just by comparing to other neighborhoods of Detroit, price per square foot, type of property and how much it was selling for. It comes down to demand and what people will be willing to pay. In some cases I’m still just completely baffled. There are brand new townhouses built in Detroit, not far from these neighborhoods that I’m talking about on the East Side, that are selling for $400/foot. Now, I don’t know about other markets in the country as far as that goes, but $400/foot for Detroit housing is through the roof, and it’s awesome! But if you would have told me 8 years ago that these houses were gonna be developed and you were gonna have 2,000 square foot townhouses selling for $799,000, I would have said “No way! That’s insane!”

But yet, if you look at that from a global standpoint and from other markets’ standpoint, it’s actually not that expensive to have a nicely developed townhouse, 2.5 miles outside of the city center, in a stable neighborhood, that you can get for under a million… That’s challenging in Chicago, for sure. You’re not gonna get that in Lincoln Park, are you?

Joe Fairless: Well, I don’t think so. I don’t know. [laughs] Probably not. I don’t know Chicago real estate that well, but I’ll trust you on that. So at the time – just traveling back in time to when you thought they were overpriced, based on other neighborhoods in Detroit and the price of property, without just pretending you’re at the roulette wheel and just hoping that it goes up, if the numbers and the data was saying “Don’t do it”, then how do you now make a decision in a similar circumstance to then do it, besides just hoping that it does it?

Brent Maxwell: Okay, [unintelligible [00:20:06].29] that area completely turned, and that’s one of the reasons why those prices have gone up so high; it was a different flavor of neighborhood, and it changed due to the influx of double-income no-kid people, and hipsters, and millennial workers, and so forth. You know, a very popular, hip neighborhood. Same thing with the West Village area, the Islandview area I was talking about with the property on 2,000 square foot townhouses trading for 799k. That example of the 2,000 square foot townhouse has been supported by the transition of the Corktown neighborhood.

Corktown was an anomaly at the time, but now we’ve got a historical precedent that suggests that this is something that’s going to happen in other areas, and I could see it happening in other areas as we speak.

Islandview, which is where those townhouses are – it’s really challenging to find any deals there for sure, but they’re available. We bought a house on Field Street a little while ago, which is in that neighborhood, that’s doing very well for us… And that Jefferson-Chalmers I mentioned on the East Side is another one where the edge of that has a lot of opportunity for us. So we are basing our buys on historical precedent, along with, in many cases, in more of the bread and butter neighborhoods; we’re not looking at that gentrification factor, but just looking at the ability for the neighborhood to catch back up to where it was. We’re dealing with a straight recovery there, it’s not a gentrification.

So if you’ve got a neighborhood where properties are trading for 30k-40k for nice houses, but they were trading for 80k-100k, that is just a recovery play waiting to happen, and the city and the market are both behind a nice neighborhood, with lots of good brick housing stock, including some mixed in frames. Those areas are going to recover; the city wants them to recover, the market is gonna want to recover, the prices are going up, and you see where prices were flat for 12, 13, 14, where they’re now starting to curve up and you see values increasing. It’s happening, we’re in the middle of it, watching it occur, so that’s how we know that these opportunities are real, and they’re happening, and we’re gonna take advantage of that. But like I said before, the caveat to it all is at this moment in time we still buy based on cashflow and income. So as long as we can make a real-world realized double-digit return on these investment properties, they’re buys when they have all those other upside potential elements attached to them, and we’re buying them with the immediate forced appreciation value-add play attached to them.

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

Brent Maxwell: Sure, let’s go.

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

Break: [[00:22:28].29] to [[00:23:08].13]

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

Brent Maxwell: Best ever book I’ve read… How about The One Thing, Gary Keller.

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

Brent Maxwell: I like to help people who are struggling to get back on track, whether it be via taking my time and working with recovering alcoholics and addicts, or helping struggling families to get back on track.

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

Brent Maxwell: 313-422-1333, or Brent@IpsRealty.com.

Joe Fairless: Brent, thank you so much for being on the show. A couple takeaways — I got a lot of takeaways, but a couple of them certainly rose to the surface… One is alignment of interest with the city, and also looking historically what’s happened in certain neighborhoods, and seeing if the fundamentals are still there, that will continue to drive that growth or bring that growth back… And that’s some of the things that you’ve mentioned with the 50-year land use map; by the way, I googled a couple cities and I didn’t get it, the 50-year land use map, so perhaps — obviously, it’s with Detroit, but then I’m sure there are others similar things… Perhaps looking at the zoning for the city. There are zoning maps for all the cities, and seeing how that’s laid out, and seeing what the plans are for the future use of that land; maybe talk to some individuals within the economic development organization with your city or your county.

Then you said this – you don’t invest in Detroit, you invest in certain areas of Detroit, and being very specific about those areas; you like the edge of hip, and we talked about how to look at that, both 1) talk to local experts, and 2) look at the data, and then that’s where the land use and just where the city is wanting to take it… Because it’s tough to swim upstream against the government, but if you flow with the government and where the city is allocating funding, then as you said, rising tides lift all boats.

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

Brent Maxwell: Thank you, Joe. You know, I always say, “You can’t flip the tide, but you can ride the waves.”

Joe Fairless: I love that.

Brent Maxwell: Thanks, Joe. Have a great day.

Wendy Patton and Joe Fairless

JF1241: Buy Real Estate With Little Or No Money Down with Wendy Patton

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Wendy has been investing in real estate for 32 years, specializing in little to no money down options. If you’re looking for a crash course in lease options, land contracts, subject to, and others, this is the episode for you! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


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Wendy Patton Real Estate Background:

-Recognized world-wide as one of the most inspiring speakers on “Little or No Money Down” real estate investing.

-Orchestrating the most complete and easy to follow Lease Option & Subject To programs in the US and UK.

– she has done over 750 deals and been investing since 1985

-Focus is on creative seller financing lease options, subject tos, and land contracts (contract for deed)

-Founder of the Michigan Real Estate Investors and has been investing since she was 21 years old

-Say hi to her at https://wendypatton.com/

-Based in Detroit, Michigan

-Best Ever Book: The One Thing by Gary Keller


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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, Wendy Patton. How are you doing, Wendy?

Wendy Patton: Excellent, Joe. Thank you for having me.

Joe Fairless: My pleasure, nice to have you on the show. Wendy has done over 750 deals, and has been investing since 1985. Her focus is on creative seller financing, lease options, subject to’s and land contracts (contract for deeds). She is based in Detroit, Michigan. Wendy, with that being said, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Wendy Patton: You bet, Joe. When I started in 1985 I was young and broke, and did not have anything saved, did not have any credit established. I wanted to get started in this investing business. I started it because my mother gave me a real estate course that she had purchased at an event, and my father said “No, we’re not gonna do that.” He was a little bit fearful of this investing world.

She gave me the course after I had graduated from college, and on my way from Colorado to Michigan I listened to the course and decided “Oh my gosh, this is what I wanna do! This is so much more exciting than my degree is in!” So I started to pursue that on top of the job that I already had, and was able to start buying properties using creative financing strategies, because like I said, I only made $10/hour and had to pay for living expenses, so I didn’t have a lot of money. Then I ended up getting married, had twins, unfortunately got divorced, so I was a single a mother for many years as well.

So I started doing these creative strategies like a land contract, where you just pay a small amount down to the seller, they finance it instead of the bank. Then I started getting into — the biggest specialty and what I’m more known for is lease options. So I was leasing properties with the option to buy them, and then subletting them with the lease option to buy them to another end buyer – what we call a sandwich lease option – and started making a boatload of money. Of course, I ended up quitting my job soon after that. That’s what I’ve done… I’ve done so many of those, Joe, over the years, and I’ve done other kinds of investing, but some of my favorite things are just those creative strategies that it takes a little bit more creativity to put together.

Now I have the money, so I also buy fix and flip, and I buy and hold… However, those creative deals are the ones that I really enjoy, because they make you think about how to structure something.

Joe Fairless: Yeah, it keeps things fresh, too.

Wendy Patton: Yeah, they’re all different.

Joe Fairless: Let’s talk about one. Will you tell us a story of one creative financing example that you’ve done?

Wendy Patton: Sure. I have this one deal, and it was a deal that — I had an ad on Craigslist, and it basically said “Company, looking for 3-4 homes for a long-term lease.” So this woman called me, she had this home, it had been listed for 189.9k on the market, and it hadn’t sold, it had just expired. So she saw my ad and decided that since it hadn’t sold, maybe she should lease it. Of course, after we talked – I have a little script that I use – she really wanted to sell it, which is what I really wanted to do, buy it.

We worked out a deal, and it kind of sounds a little bit strange, but I ended up paying 185k for it. Now mind you, with commissions she wouldn’t have received 185k; however, because of the terms she gave me – it was a real low monthly; I think I paid $1,100 a month and I had the option to buy it for three years at the 185k.

Well, I knew I could lease it for $1,495 a month, so $1,500/month, and I was able to option it to a tenant buyer who paid me 225k for that deal. So I was able to create this $40,000 spread on the purchase and the selling of something that just didn’t sell on the retail market, and had almost $400/month cashflow on that deal.

It was really kind of an interesting deal. People will say “Why would this person pay you 225k?” and I said “Well, guess what it appraised for?” It appraised for 225k or 240k, I can’t remember for sure, but it was more than what she paid for it. And it was kind of out in the country… This woman had seven dogs.
Okay, first of all, landlords are not gonna take someone with seven dogs, right?

Joe Fairless: [laughs] Right…

Wendy Patton: And she had some credit issues, so that’s why she needed something like a lease option. She just had needed a little bit of time to improve her credit, and it took her only about 18 months to do that, and then she was able to cash me out on that deal. So I’ve done lots and lots of those types of deals, with lease options.

Joe Fairless: Let’s do a summarized replay of that… I’m gonna attempt to recap what you’ve just said, just so I have it in my head clearly. Your purchase price was 185k, and you agreed to pay $1,100/month in monthly payments, and I assume you had a balloon payment too with her?

Wendy Patton: Yeah, and actually I didn’t put anything down on that one and I didn’t get any credit of the $1,100. Had I thought a little more creatively [unintelligible [00:07:24].08] to be credited, but I didn’t.

Joe Fairless: Okay, so it was $1,100 in rent then.

Wendy Patton: Yeah, I paid $1,100, it was rent; totally expense, nothing credited.

Joe Fairless: Okay, $1,100 in rent. That doesn’t go towards your purchase price, and then you have a balloon payment… And when was the balloon payment due?

Wendy Patton: Within three years.

Joe Fairless: Within three years. So basically, I’m thinking doomsday scenario, you don’t find a buyer, but you do find a tenant, and they are renting for the same amount that you’re renting it for from her, and since you have no money in, you’re breaking even… But if you can find someone who pays above that in rent, and then also agrees to a higher purchase price, then you’re making money in both of those areas.

Wendy Patton: Yeah. I didn’t really get into the full details. One of the things that the buyer did is she also gave me $10,000 down, non-refundable. So I’m not putting anything down with that seller, I’m getting this $10,000 down, so I have $10,000 in my pocket when I started this deal, on top of that cashflow. That’s the part that — even if they don’t buy, that’s what’s beautiful about a lease option; if they don’t buy, or I don’t wanna buy, or I can’t buy, I’m in control with the privilege and the right to purchase that property, but not the obligation.

And even though I have this balloon, it’s not really a balloon because that would imply maybe that I have to pay it off by that time. I have the right to buy it by that time, but I don’t have to do it. So if things tank, doomsday, we have another 2007 type of market – no problem, I can go back to the seller, renegotiate, or go back to the seller and say “You know, I’ve decided I’m not gonna exercise my lease with option to buy.”

Joe Fairless: And the $225,000 purchase price, when she was looking for 185k – is that seller financing where you’re doing the financing for it?

Wendy Patton: I actually only do a lease with an option to buy on it. So it’s not true seller financing, because I don’t even own it, and she’s not gonna own it, so I’m not technically financing it, however I kind of put it in that same bucket of creativity, where it’s almost like owner financing. I am kind of financing it for them in the short-term, until they can get their mortgage. And usually, when I get a deal from a seller, I usually will get a 3-5 years type of timeframe; that’s kind of my typical. Sometimes longer, not usually much less. But when I get my buyer time, usually I will give them between 12 and 18, maybe 24 months, depending on the situation. If they had a bankruptcy and they need that two years, or whatever their situation is, it’s kind of dependent on them, why they need that time to get a mortgage.

Sometimes they may only need six more months, and in that case I may give them nine. I’m gonna give them a few extra months of cushion on the back-end to get that done.

Joe Fairless: The appraisal is an important aspect of this, since they’re getting financing in a traditional sense… In that case, did it appraise for 225k? And if so, what happens if it didn’t?

Wendy Patton: That one actually appraised for more than 225k. And I think the reason that it can, especially when you get to these unusual properties – that one was kind of out in the country, it had 10 acres; it was a little bit unique in that regard – the appraisals are a little bit more flexible than like maybe a city consistent type of “every cookie cutter home is the same.” If it didn’t appraise, I do not have to sell; I only have to sell for 225k. The buyer may not buy if it doesn’t appraise, but I only have to sell at 225k.

Now, I could choose to go down, Joe. There have been times over the years — of course, I’ve done a lot of deals, so there have been a few times over the years where it didn’t appraise, and I’m a realtor, so I go back, I look at the comps at that time, and I might say “I agree with the appraiser”, and maybe then I will go down. I have a choice to, I don’t have to.

For me, I have kind of a philosophy that I’ve taken over these years, because I’ve been in business a long time and I feel like one of the things that became important to me was this whole rule of “Pigs get fat, hogs go to slaughter”, or “You never get hurt taking a profit”, that kind of philosophy. So if I’m still gonna make money and it’s the right thing to do to drop that price because that’s truly what it might be worth, I would reduce my price if I could still make a profit. But that doesn’t mean someone listening has to do that; they just have to sell it for what they agreed to.

Joe Fairless: Right. Will you tell us a story of another deal that you’ve done?

Wendy Patton: Sure. So that’s called a sandwich lease option. Another strategy would be what’s called a cooperative lease option. That’s kind of like wholesaling a deal. So I came across a deal recently where the seller came to me and was willing to do a lease option, however they wanted about 149k, so we’ll just call it 150k, right? And it was really only worth maybe 155k, or something like that. It was so close, and I didn’t feel like I could mark it up that much more than about 155k, because [unintelligible [00:12:36].01]

So what I did is I went in and locked it up on a lease option for the 150k, and I flipped it to a tenant buyer for 5k. But then I’m out of it. So it’s not a sandwich; I actually assigned my contract to the tenant buyer for the 150k, but they paid me 5k for it. Just like we do in wholesaling for investors, except that this is not wholesaling to an investor, it’s wholesaling to like a tenant buyer, who’s willing to pay top dollar to get terms on a property that they’re going to live in and occupy.

I’ve done lots that are like that, those little flip things. We find these deals that just don’t have enough meat on the bones, and I’m not gonna do anything like that; there’s no money in it. I can’t sandwich that, I can’t really do much with it, but I can flip it for 5k. I can do those all day long.

Joe Fairless: So when you come across a deal that the seller is looking for top dollar – or whoever is representing the seller is looking for top dollar – then this is a place where you can go, where you flip it to a tenant buyer who would then buy it directly from the seller, and they’re just assigning the rights to purchase.

Wendy Patton: You got it, exactly. It’s just there’s not enough in there. And this is a great strategy for anyone listening who is an investor, who is out scrounging for deals, they’re sourcing them and they find some deals but it’s just nothing there. We probably have turned away many deals like that, and as long as the seller is willing to do a creative thing like a lease with an option to buy for a few years out, then it’s a perfect opportunity to flip that [unintelligible [00:14:12].17]

Typically, an option fee is gonna be about 3%-5% of that purchase price. In that example, 5k, that’s just a hair over 3%, and that’s gonna be a typical deal that I can do all day long like that.

Joe Fairless: What’s the most complicated deal you’ve done?

Wendy Patton: What was complicated…?

Joe Fairless: Or just a lot of people involved, or a lot of entities, or it was just really challenging – whichever direction you wanna go with this.

Wendy Patton: I’m gonna think of one that’s just really recent… One of my most complicated ones was — I do some small development where there was a lot split, and there was a property that I was buying… I bought the property on an option, so the owner came to me and said “Hey, I’ve got this other property that’s down the road, it’s on this canal”, and our waterfront properties are fairly valuable here in Michigan.

So it was on the canal, not the main part of the lake, but number one, it wasn’t ready; I felt like it could be split, but I wanted to make, of course, the purchase subject to this split being done, and I had to go through an entire process that took about nine months where I had to do an application to the city, I had to hire a surveyor… I had to put a lot of money out on this deal without it closing.

Joe Fairless: And time.

Wendy Patton: Soil borings on it… And to make sure that — the city wanted soil borings to know what could be built and what the quality of the ground was. So it was a lot of things that I don’t normally deal in, and I learned a lot about just land development, just from this one little teeny parcel.

It ended up working out. We ended up getting the approval, we got the right to split it, and then at the last minute after it was ready to split and it got all approved – I went to all the meetings and I went in front of the township… Then the seller goes “You know, I kind of changed my mind. Maybe my son wants to buy it.” So then immediately — I have this thing called a claim of interest that gets recorded against their title… And I didn’t even tell him I was doing this; I went right to the county, recorded my claim of interest to say “Hey world, I have an interest in this property. I’ve got a purchase agreement dated such and such”, and then once I had it recorded, I came back and I called him and I said, “Hey, I just wanna let you know that we need to move forward. I think you should contact an attorney if you feel like we have a valid contract… But I have a claim of interest recorded against this, because I’ve done everything and I’ve paid all those money out and I’ve spent nine months to split this property and make it valuable.”

I think he got some legal advice, and the guy was like [unintelligible [00:16:32].02] you’re not gonna win… You might as well just sell it to Wendy.” And he did, and it worked out fine, but there was that moment of “We changed our mind.” I had a little bit of complexities in that project, and…

Joe Fairless: And some drama.

Wendy Patton: Yeah.

Joe Fairless: When he told you that, was it over the phone or e-mail, by the way?

Wendy Patton: Over the phone.

Joe Fairless: Over the phone. Let’s pretend I’m him. Wendy, I actually think a relative of mine is going to buy it, but I appreciate working with you and talking to you over the last nine months.

Wendy Patton: Okay, Joe, why did you change your mind? What happened? I thought your son didn’t wanna buy that property.

Joe Fairless: Okay, so now we’ll step out of role-playing… So I give you a reason, and then how do you end that conversation?

Wendy Patton: I’m trying to remember exactly how that call went, but I probably would have said something like “Okay, Joe, you know what? I hear what you’re saying and I need some time to digest that. Let me think through that. Can I give you a call back maybe tomorrow or the next day?”

Joe Fairless: Yup.

Wendy Patton: And then what that does is it keeps that relationship still intact, where I didn’t get angry, I didn’t get upset with him, however, I needed to go protect myself immediately with the title. Because as soon as someone starts to flake out on me and I’ve done work, I immediately go and record that, because I’ve got to protect my interest at that point. I don’t ever normally do that unless there is an issue.

Then I came back and said, “Okay, Joe, here’s the deal. I’ve really thought about it, and I just don’t feel that it’s fair. I’ve spent the last nine months doing this, and if you want to get out of the contract, then I feel like it’s only right that you pay me now what I’m going to sell those properties for.” And he goes “Well, what do you think that would be?” and I go, “Well, it’s gonna be a lot more than you sold it to me for, because now I’ve put thousands of dollars, and not including any of my time, into confirming to see if these properties are even splittable. And now what they’re worth is two lots, not one, because of the work I did. So if you’d like to buy me out, then you could. Would you wanna do that?”

And of course, he had no idea what they were gonna be worth, and when I told him what they were gonna be worth, he said “Wow, that’s a lot”, and I said, “Well yeah, that’s why I wanted to do that. I went through this whole process.” And we ended up closing on it, but it was a little bit risky there for a minute. I was a little bit worried for a little bit; I was like, “Oh man, I just did all that work…”

Joe Fairless: Oh, I bet. Yeah, nine months, that’s a long time and that’s a lot of money. How did you know what to do with the county to push that through for the split?

Wendy Patton: Well, normally when you’re gonna do anything that’s gonna be a split or land development, you kind of start with the city first – and that one really was through just the city – where I would go to them… I actually usually go in or call the assessor first, or whoever in that particular — in Michigan it’s the assessor’s office, they’re the ones that go out and value land and properties. I would call them and just say “Hey, I’ve got this property. Here’s the property ID number, the address (or whatever it is). I think it might be splittable, and I just kind of wanna know if you think it might be; if you could tell me the process over the phone or if you can tell by looking at your aerial overlays… Is that a possibility that it could be divided?” I’ve done quite a few of those, too.

So I just ask, and then they might say, “Well, this is what you need to do first.” “Okay, what is that? The application? Okay.” And then of course [unintelligible [00:19:45].20] soil borings, which was kind of unusual. Some cities, they’ll want perc test on it, if it’s gonna be a septic area… It depends on where you live. I kind of live on the North part of Metro Detroit, so 5-10 minutes North of me is gonna be all septic fields and bigger parcels, and then just South of me is going to be your normal lots in the city, with your city water and sewer, normal subdivisions. So they kind of look at both.

Joe Fairless: All-in, how much did you pay, and then how much did you sell it for?

Wendy Patton: I can remember my profit, because I 1031-exchanged it…

Joe Fairless: Okay, what was your profit?

Wendy Patton: It was 70k on them. For a little deal. I think we paid maybe 70k, or something… It must have been like 64k, because I probably had 5k of closing stuff, and the fees and stuff in there.

Joe Fairless: What did you 1031 into?

Wendy Patton: I 1031-ed into another property up in Northern Michigan.

Joe Fairless: What’s that deal?

Wendy Patton: It’s a lot on a golf course where we thought we would build our summer home. We put it into the company first, because it was an LLC, and then we thought that later, if we end up converting it, then we’ll do it, but we probably aren’t going to now. So we’re probably going to sell that property, or 1031 exchange it back down somewhere closer to something else; I just don’t know what it’ll be, but I’ll probably put it into more of an income-generating asset.

We just thought “Well, if we built something up there, we can rent it, we can use it a little bit…” We were just exploring that whole idea, and that’s what we thought we would do.

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

Wendy Patton: There’s a couple things, not just one thing. Number one, of course, get started immediately. Get as educated as you can. One of my biggest things I always tell investors that are wanting to get started, I say “Look, it’s not easy, it does take a lot of hard work, but it will pay off in the long-run if you just do it, and you do it persistently and consistently.”

Turn off the TV at night; stop watching that crap. You’re filling your mind with negative stuff. Spend your evenings listening to podcasts like this, to positive motivational things, reading, educating yourself, calling sellers, whatever it is… Especially if you have a full-time job. I think it’s that whole changing your mindset, and have some really strong goals that you’re gonna go after.

So it’s not necessarily all the real estate stuff. Actually, to me I would say the mindset is the most important thing. It’s changing your thinking first, because real estate is — yeah, you learn about real estate, you wanna learn about the techniques; all that stuff is great, but to me, the biggest thing that ever held me back was I didn’t think that I should make more than 100k or 200k/year. I actually had an issue with that, and from the very beginning I thought, “Well, money is the root of all evil” and all that stuff. I think everyone has these types of things that hold them back.

Yesterday afternoon I was mentoring one of the agents in my office. He was saying that he has been living at the poverty level for 15 years, but he’s brilliant. And I said, “Well, why are you living at the poverty level?” and he said “Because I think it’s this message I got when I was a kid, that I would never amount to much.” And I’m like, “Well, when are you gonna change that? I’ll help you. Let’s work on this right now. Because if you don’t change that mindset, you never will amount to much as far as income goes.” Anyways, I could go on for hours on that whole topic.

Joe Fairless: I hear you. It’s the foundation of what we must have.

Wendy Patton: Yeah. I was in a seminar last week and one of the speakers said a teenager or a kid has thousands of thoughts that go through their minds, and 80% of them are negative. But when you’re older, it’s even higher. “Am I good enough? Am I gonna amount to enough?” So it’s kind of like changing that whole mindset… And I’m not so much a ‘rah-rah-rah-rah’, it’s just that I do believe there is so much truth in that, that I have to always combat that negativity coming into our lives, or those naysayers that are saying…

My father, in the beginning he was like “Oh my god, I cannot believe you’re leaving your corporate job. Are you crazy? You have retirement, you have 401k, you have health benefits. Why would you do that? You went to college for this.” Then now, he’s 87 years old and he’s my biggest cheerleader in the entire Universe. He’s like, “Oh my god, my daughter Wendy!” He’s really cool.

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

Wendy Patton: Sure.

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

Break: [[00:23:58].00] to [[00:24:47].19]

Joe Fairless: Wendy, what’s the best ever book you’ve read?

Wendy Patton: I like The One Thing by Gary Keller. It keeps you focused and on track.

Joe Fairless: Best ever deal you’ve done?

Wendy Patton: Best ever deal I’ve done… I just did one this year in my IRA; I bought this property for $200,000 out of my IRA down, I borrowed from another IRA to fund it because I already had properties in my IRA and I didn’t have the cash in there, and it’s a deal that will net me about 90k tax-free in my Roth. So there you go.

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

Wendy Patton: I made a lot of mistakes over the years. I think one of my biggest mistakes, Joe, was back in the downturn I was speculating in Florida and other places, speculating on future appreciation instead of investing on current numbers and watching the data in the market.

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

Wendy Patton: I run the Michigan real estate investors group and I absolutely love that, because that gives me the opportunity to help hundreds of people locally learn to do the techniques that I made so much money at over the years. I love that.

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

Wendy Patton: I would say go to my website, WendyPatton.com. It’s got my office phone number, I’ve got some free giveaways on there… I would go there to check out a little bit more about what it is that I do and what I offer.

Joe Fairless: Wendy, thank you for being on the show and educating me and perhaps some Best Ever listeners on creative strategies. You truly did deliver on what you said you were focused on, and that’s creative financing. We’ve talked about three different structures, or creative deal-making, perhaps… And that’s the sandwich lease option, the co-op lease option and the lot split.

The lessons learned along the way with each of those three, with the lot split in particular, having the moment of drama where you then had to go get a claim of interest recorded on the property, and just knowing to do that. I wouldn’t know to do that. I would be talking to people like you, certainly, if I came across that situation, and say “Hey, what do I need to do here? Can you please help me out?” So that’s why we have this podcast – for Best Ever listeners who perhaps come across situations like that, then we know “Okay, if I have a contract but someone’s trying to back out”, then claim of interest – get it recorded.

So those types  of things, and then just your overall approach… I’m really grateful that you were on the show and shared that with us. Thanks for being on the show, Wendy. I hope you have a best ever day, and we’ll talk to you soon.

Wendy Patton: Thanks, Joe.

Al Beahn and Joe Fairless

JF1201: Turn Key Real Estate Investing In Detroit with Al Beahn

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Al runs a business that finds cash flowing properties for other investors in Detroit. He’ll tell us that most of the negativity associated with Detroit is exaggerated media driven information. About 90% of the clients that come to Detroit to see some properties are surprised ina  good way and end up investing with Al. Find out how to set yourself apart from other turn-key providers. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Al Beahn Real Estate Background:

– Founder and CEO of Pioneer Homes, the leading source for cash flow rental properties

– Past seven years, he has closed more than 1,000 deals, valued in excess of $50 million

– Has clients across six continents

– Based in Detroit, Michigan

– Say hi to him at: https://www.pioneerhomesus.com

– Best Ever Book: Profit First


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

With us today, Al Beahn. How are you doing, Al?

Al Beahn: I’m doing great, Joe. How are you?

Joe Fairless: I’m doing great as well, nice to have you on the show. Al is the founder and CEO of Pioneer Homes, which is a leading source for cash flow rental properties. Over the past seven years he’s closed more than 1,000 deals valued in excess of 50 million buckaroos. He has clients all across six continents, which almost is all of the continents; is Antarctica a continent? I think it is.

Al Beahn: I haven’t done anything there.

Joe Fairless: I figured that would be the one continent that you don’t have — this is where my board game risk background comes into play; I know my continents. And Al is based in Detroit, Michigan. His website is PioneerHomesUS.com, which is also in the show notes page.

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

Al Beahn: Yeah, absolutely. Thanks a lot for having me, Joe; I’ve been looking forward to it. I actually got into real estate in 2009. I graduated college, CMU [unintelligible [00:03:31].16], and I was living in my parents’ basement. My dad was not the kind of guy that liked having that going on, so I think I was home for about three or four months and he just sat down and said “Look, man, you’ve gotta figure something out.”

I had always wanted to get into real estate, I just never really understood how or what to do, so I just kind of took a plunge and went out and I raised some funds, and I bought my first fix and flip. I did that back in 2009. Bought my first property for $27,000, I did all the work myself – I guess you could say I learned the hard way doing that. I flipped it, I think we sold it about four months after we purchased it. It was a 90-day renovation, and about 30 days to sell.

At the time I think I was 22 years old and we cleared about $16,000, and I said “Man, this is kind of cool.” I was kind of like my own boss, I was doing whatever I wanted to do, and that’s kind of where I got into the business. That kind of transitioned us into the turnkey model, which kind of developed in about 2010 for us.

We were just kind of in the market; I always say we got lucky. It was just good timing, and being local Detroit guys, that model just kind of fell into our lap, and the rest is history, really.

Joe Fairless: Are your turnkeys in Detroit?

Al Beahn: Yes, about 90% of what we do is in Detroit. We were doing a lot more in the suburbs a few  years back, but the markets kind of shifted and we don’t see as much value there anymore, but yeah, we about 90%-95% now is in Detroit.

Joe Fairless: Pros and cons of investing in Detroit.

Al Beahn: Pros and cons… Pros is definitely going to be the price points. The ROI’s are significantly higher than the rest of the country. I think there’s a ton of value still to be had. Last week we were walking through properties that we could be all in at 40k-50k that will appraise in today’s market for 80k-100k, so… I think there’s a lot of opportunity for instant equity in certain parts of the city. I think there’s obviously the high ROI as well.

Cons – I think if you’re not careful with where you are, you’re definitely gonna be liable for some vandalism and theft like that, because that’s a real thing in Detroit if you’re not careful where you are. I’d say probably that’s the biggest con.

Joe Fairless: Where do you need to be? What areas?

Al Beahn: We try to stay in the North-West side of Detroit. We hone in on about six or seven different zip codes. East side there’s a couple small pockets; we like East English Village… That’s one of those areas I was talking about last week. It’s one of the few areas on the East side that we invest in. So between that and the West side, we try to stick to the West side for the most part.

Joe Fairless: When you talk to potential clients who have only heard about Detroit through probably negative means, what does that conversation sound like? And when they do invest, why do they ultimately invest?

Al Beahn: It’s really just media-driven negativity. This isn’t something that they’ve experienced themselves, so it’s just like a false image that they have, and I’d say 90% of the people that come here end up investing. I don’t think people expect to see what they see when they get here, and I think that’s one thing that kind of makes them get over that hurdle. But I don’t know, I guess we [unintelligible [00:06:46].01] They really take the time to educate the people that don’t wanna come visit. The sales cycle is extremely long – 60 to 90 days is pretty common, so I think they’re just comfortable that we spend that much time with them over the phone and educate them about the city as much as possible.

We like to share info about the market as well, so there’s just a lot of things I think that go into that, but ultimately the easiest sale is when they come here. They come and  we show them certain parts of the city, and they just… A lot of people that have never been here are shocked to see what they see in certain parts. We’ll show them the good and the bad. I’m not gonna sit here and say there’s not bad parts in Detroit because there are, but we just try to avoid those areas.

Joe Fairless: Let’s talk about your business – how do you stand out from other turnkey providers?

Al Beahn: Great question. There’s definitely some competition here. I think it’s just the time that we spend with our clients. I’m not gonna bash any of the clients or competitors because I think they’re all great in their own ways, but I think that some people just wanna be educated a lot before they decide to make this decision. I’d argue that our sales guys are pretty thorough with our clients, and then obviously our product is definitely top tier to our competitors. We know where to be in Detroit.

So I think just a communication thing, and obviously, after the sale too, we really try to stay in contact with our clients. If they have any issues, or sometimes there might be some paperwork [unintelligible [00:08:16].03] with the property management, so we try to help them get through those hurdles as well. I think those are a handful of those issues why we kind of stand apart.

Joe Fairless: And how do you make money on the business?

Al Beahn: Our profit is built into the purchase price of a property. We buy it for X, we put X into it, and then we sell it with our profit built in.

Joe Fairless: Do you manage it, too?

Al Beahn: No, we have a third party. I actually did property management for the first five years we were in business, and then I realized it’s not profitable. It was really more of a quality control for our clients, but it just kind of became a drag and it was really just kind of a money pit for the company, so I got out of that about four years ago, and now we just refer it all to a third party.

Joe Fairless: Do you have one third party you work with?

Al Beahn: There’s a couple we work with. If we have a really big month, I try not to shift too many properties at one company at any given time, just to ensure that everything is handled properly. Nobody will tell you that they can’t handle it, but we’ve kind of learned that there is a breaking point for sure on what they can take in at any given point.

Joe Fairless: On that note, on the breaking point for what a property management company can take in, what were some things that you noticed slipping through the cracks that normally wouldn’t if you didn’t inundate them with a bunch of properties that they’re bringing on for the month?

Al Beahn: I’d say the number one thing is just getting in contact with the tenants on a timely basis. A lot of the companies that we’ve screened, they would get really hung up on the paperwork and they wouldn’t wanna contact anybody until the paperwork assignment. Sometimes when we sell a house, we have clients that work 70 hours a week, they travel to different countries or out of the country or out of state, and sometimes they can’t get to that, so we were seeing a property management agreement (PMA) not be signed for 30 days, and the next thing you know we have a tenant who hasn’t been contacted in 30-45 days. So I think the biggest thing for me – and I’m not sure about you guys in your market, but here my most important part of this whole process is the transfer… So when we give a file to the manager, my number one thing is to get in contact with the tenants right away, and I think for us at least — because we also buy properties that are already turnkey… So we might buy property from a landlord that’s retiring, or something like that, so for me I think it’s really the contact with the tenant, to make sure that [unintelligible [00:10:33].07] with everything.

Joe Fairless: Yeah, I’d say that would be from a business owner standpoint. That’s the huge variable for you and growing your business, because if your client has a poor experience with the third-party management company, the house could be great, but then the management company just totally blows it on who they put into the property, or how they retain that person, or how they screen the future person, or they don’t address certain maintenance issues… That just seems like that could be a big headache for you and that could cost you some business.

Al Beahn: Right, absolutely. This is our screening conversation when we’re looking for new managers – “The number one thing that we need is that when we give you a file, you need to contact these tenants within 24/48 hours”, because a week goes by, two weeks go by, they have some maintenance issues, rent’s due and then they try to call somebody and they can’t get a hold of anybody, then red flags start going up. We’ve had tenants leave on us just for that simple little thing… So yeah, when you’re doing volume, there’s gonna be that little tiny percentage of issues, and that’s usually the number one issue – the lack in the management process. We’ve really tried to hone it and tried to perfect it. We’re not perfect, but I’d say we do as good as we possibly can with that part.

Joe Fairless: How many deals are you selling a year?

Al Beahn: We’re pacing probably to do about 250 this year. I try to hit between 15 and 20 a month, that’s our goal. Obviously, we have months where we succeed that and then other months that we don’t, but we’re pacing to do about 250 this year.

Joe Fairless: That’s a whole lot of deals, and you’re talking about you’re buying, renovating and selling them as turnkeys, about 20 a month or so?

Al Beahn: Yeah, we do about — I’d say 60% is already turnkey; we buy a lot of property as is, and then the rest would be the turnkey renovations, correct.

Joe Fairless: What type of process do you have – if any – with your clients who purchase the property and then after the purchase hand then off to the third-party management company. Do you have some sort of process to follow up with them later?

Al Beahn: Well, our sales guy is known to keep in touch with them, and a lot of our clients are long-time clients, so I wouldn’t call it a specific process; it’s more of just a relationship thing, because we’ve learned that if you maintain these relationships with these people, and you don’t just sell them a house and say “Hey, it’s great to meet you. Good luck”, there’s always that repeat business.
We had a guy who bought a house from us early in the year last year, and my sales guy just kept a relationship with him. Not trying to sell him anything, just “Hey, checking in… How are you doing? How’s your family?” I think they had a similar interest in sports, so they kind of chatted about that, and the next thing you know the guy had saved up some cash and bought another property. So it’s really not a specific process per se, I think it’s more about building relationships with your clients, and for me that’s always been the best way to do business… So I’d say that’s what we do with that.

Joe Fairless: The biggest challenge that you have right now is what?

Al Beahn: The biggest challenge… I’d like to say inventory, but it’s usually not inventory; Detroit is a really big place. I think really it’s just some of the people in Detroit, some of our competitors – I don’t wanna call them competitors, but… They’re in every market. The guys that think they’re wholesalers and they market properties at just crazy prices. When we’re selling houses at 45k-50k, these guys are sending lists out with properties for 25k-30k, and it’s just a real struggle because people see that and they just think that’s the market, so they want properties for that price, and we just really don’t do that. Yeah, we come across deals from time to time, but I think that’s probably our biggest. If I talk to our team, that’s probably the number one thing, if I had to pick.

Joe Fairless: What do you do to help mitigate the damage that that could have on your listings at the price points you have?

Al Beahn: Well, we cannot pool comparisons. Go look at the Google Maps Street View, go pull up Trulia and look at the surrounding values. I’m never one to use Trulia, but if you pull up a property and there’s houses in the area at 10k-15k, the majority of that, and then you go pull up one of our properties and there’s houses in the 50’s and 70’s, you can just see it’s a totally different property, it’s a totally different asset; it’s not apples to apples.

And the number one thing is to say “Look, I think you should come and look at them both. We’ll take you to that property and we’ll take you to ours and you can just see it for yourself.” And it’s funny, because a lot of people don’t wanna do that. They just wanna buy it site unseen. We turn away a lot of business, Joe. There’s a lot of people and we say “Look, we can’t compete with that. I don’t wanna put our name on that product.” So a lot of times we’ll just let the business walk away, because sometimes it’s a really hard pitch to get them to understand that.

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

Al Beahn: Best advice ever, that’s a good one. So the Best Ever listeners will like this, I guess… It’s really basic – I think no matter where you are, you have to do your due diligence. I’ve seen so many investors lose their shirt because they do not do their due diligence. Maybe that’s just a very simple, basic answer, but it’s such a major thing in the process. Obviously, price is one of them, but I think the due diligence part – inspections, title work and all that stuff… That to me, especially if you’re kind of getting into real estate — I know when I first got into it I didn’t even know what due diligence was; I’d walk through a property and think I just need to go to a title company and close. But I think the due diligence, inspections, title work is huge for me. If you’re just getting into it, I think that’s a big deal, for sure.

Joe Fairless: Tell us a story about when due diligence played a major role in the acquisition of a property.

Al Beahn: Yeah, absolutely. Back in the day, before we were good at this, it happened all the time. Buying properties on quitclaim deed… There was a time we bought (I think it was a) five-pack – this had to be in the very beginning, the first year, maybe a year and a half in the business. I found a house on a quitclaim deed. I think at the time the prices were so cheap back then… I wanna say we bought a five-pack for 55k or 60k, and “Hey, there’s back taxes. Hey, there’s water bills. Hey, there’s tax titles”, so you have to either [unintelligible [00:17:00].28] or you did not get title insurance. That happened to us before. I’d say that was probably early on one of the bigger mistakes that we made, just buying a property without understanding the title side of things.

Joe Fairless: Would you say that back taxes and water bills are more prevalent in Detroit that it will come up in due diligence compared to other markets?

Al Beahn: Well, it’s hard to say… I haven’t done much business in other markets, so I’m not sure. I’d say because of what happened in Detroit – there were 140,000 foreclosures when this whole thing hit the fan back in ’07 through ’09, so… To put it into perspective, there were on average 20k to 25k tax-foreclosed properties in the Wayne County auction every year. The most recent tax auction – there were only 6,500 properties. So it’s all getting cycled through.

So I think five years ago – absolutely; probably the number one in the country. But today, it might be more than average; I couldn’t say it’s more than any market, but it’s probably higher than the average.

Joe Fairless: Yeah. It was a poorly worded question. I should have asked you just relative to the properties you’re buying, are there a lot of back taxes and water bills? Because you’re in Detroit, you’ve been investing in Detroit, so you’re not aware of other markets. But you answered it. You made my stupid question into a smart answer, so thank you for that.

Al Beahn: No, it’s all good. I’d say maybe 20% to 30% of our properties that we buy have more than two years delinquent.

Joe Fairless: Okay, got it.

Al Beahn: I’m not sure, it might be different in every market. Here it’s after three years you’re subject to foreclosure, so we rarely see more than that.

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

Al Beahn: I’m ready, man.

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

Break: [[00:18:51].24] to [[00:19:44].01]

Joe Fairless: Best ever book you’ve read?

Al Beahn: Profit First, by Mike Michalowicz.

Joe Fairless: Best ever deal you’ve done?

Al Beahn: This is a tough one; there’s two of them. I’m gonna talk about the first one because  it was the first one I really did a creative deal. It was a package of 11 duplex units. In Detroit, a duplex — they’re side by side, and they’re actually two separate parcel ID’s, so you can buy and sell each half individually. There was a package of 11. I believe four of the units were actually side by side, so we actually bought the package, sold off the two buildings that were attached, profited enough to actually pay for the other seven units free and clear, and we had seven free and clear units with cash-flowing tenants basically for free.

I say that’s my best because it was one of the first deals we did that was very creative like that, and to this day I always love that deal.

Joe Fairless: Oh, absolutely. Do you still have those seven?

Al Beahn: No, we sold those probably about two years ago.

Joe Fairless: Okay. And when you sell them for your own personal investing, what’s the reason to sell and what do you do with that cash?

Al Beahn: At the time I think I was trying to get into some better assets at that time, so two years ago. I’d probably just put it back into the turnkey business and use it to basically flip some more properties.

Joe Fairless: And do you currently take some of the profits from the turnkey business and then buy rental properties for your own rental portfolio?

Al Beahn: Yes, I kind of do that model. I like to buy property from some of our profit. So if we flip ten houses, sometimes I might just maybe keep one of them. It’s almost kind of like a “no cash out of pocket”, really. There’s obvious opportunity cost there, but we do that as well for sure.

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

Al Beahn: In real estate as a whole, still to this day one of the bigger mistakes was selling some of the assets that we owned. Even though it’s duplex units, I’d argue if I would have held on for a few more years, it’d be much more valuable. But mistakes — it’s always probably a due diligence thing. We’re doing so much volume, sometimes something slips through and you’ve kind of gotta eat it. But it’s always usually a due diligence thing. I don’t think there’s a deal that stands out that I’d say was like the worst deal we’ve ever done.

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

Al Beahn: That’s a good question. For me, I don’t really have any formal way of giving back. I like to donate to our church around Christmas time more than average, but… For me, we get a ton of people that reach out to us through our social channels and other ways like that, people that obviously have never done anything in real estate, and I kind of make it a point to at least help a handful of people. I get a lot of kids; I’m a younger guy, so a lot of kids (15, 16, 17) reach out to me through maybe Instagram, and I’ll just be really bold with them if I think they have a crappy sales pitch, or their approach is bad, but I try to make it a point, at least a couple kids a month, just to kind of give them a little bit of advice.

I know back when I was 16, 17, even if I had one little tidbit of advice, it would help me out a long way, so I try to do that as much as I can each month.

Joe Fairless: How can the best ever listeners get in touch with you?

Al Beahn: You can call the office. I’d say the easiest would be through e-mail. The e-mail would be info@pioneerhomesus.com. Check out our website, PioneerHomeUS.com, and all of our social handles – most of them are @pioneerhomesus, so I’d say those are the best ways.

Joe Fairless: Congrats on building such a high volume business, with 250 deals a year that you’re rehabbing and then selling to clients across six continents. I did confirm via Google, while we were talking, that Antarctica is the seventh continent. You’ve gotta work on your Antarcticans. I don’t know about the stats, but maybe I’ve got an Antarctica listener, and they’ll be a new client. If so, then let me know; that way I can claim to cover all seven continents.

Also, the overall approach that you take with the due diligence, lessons learned along the way, the back taxes, the water bills etc., and then knowing where to invest and where not to invest, or at least an area where you need to go in eyes wide open. So perhaps maybe you do invest, but it’s just an area where you go eyes wide open. Where you choose to invest would be the West side and the North-West side in general. It sounds like there are exceptions.

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

Al Beahn: Joe, I appreciate it, man. Have a good day as well. Thank you!

Best Real Estate Investing Advice Ever Show Podcast

JF1096: Working Full Time While Investing on the Side with Brad Tacia

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Brad works 40-50 hours a week at his job, but owns a 110 units of multifamily, 2 single family houses, and has a 50 unit syndication under contact. A lot of investors start with full time jobs, while trying to invest on the side. Brad has been pretty successful with this model, so listen to what he has to say! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

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Brad Tacia Background:
-Real Estate Investor Began investing in 2011, going full time investing in 2015
-Replaced his full time income in 2 years after switching to multifamily investing
-First multifamily property was 12-unit in 2015, with his largest being 63-unit in September 2016
-5 years ago was working 70 hour weeks as an engineer
-Based in Detroit, Michigan
-Say hi to him at bradtacia@gmail.com
-Best Ever Book: Millionaire Real Estate Investor

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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 of that fluffy stuff.

With us today, Brad Tacia. How are you doing, Brad?

Brad Tacia: Great, thanks for having me, Joe.

Joe Fairless: My pleasure, nice to have you on the show. This is gonna be a fun interview, because you have a full-time job, but yet you’ve got quite the experience from a multifamily standpoint. A little bit about Brad – he began investing in 2011, and he got his first property (a 12-unit) in 2015. His largest was a 63-unit deal in September 2016. He is based in Detroit, Michigan. With that being said, Brad, do you wanna give the Best Ever listeners a little bit more about your background and your focus?

Brad Tacia: Sure. I grew up in the Detroit, Michigan area. My background is that I went to college for automotive engineering, and I’ve been doing that since 2000. My day job career has been in the engineering world; I definitely enjoy cars and engineering, but the day-to-day grind is really what had me looking into the real estate world. I dove in both feet, and I’m looking to do that full-time here shortly. I love real estate and everything about it, and what it can do for us.

Joe Fairless: How many hours a week are you working at your full-time job?

Brad Tacia: Right now I would say probably in the 45-50 range.

Joe Fairless: You’re working 45-50 hours… And what’s your real estate portfolio look like?

Brad Tacia: We have 112 units at the moment. 110 multifamily and two houses. We’re going to be selling those two houses this year. Then we’ve also got a 50-unit syndication on contract, so that will get us up to 160.

Joe Fairless: Where are they based?

Brad Tacia: All in Michigan. We have some in Monroe, Michigan, which is about 45 minutes South of Detroit, and then we have the majority of the rest in Lansing, Michigan (the capital of Michigan), and then a few in a subdivision in the city of Fowlerville, Michigan.

Joe Fairless: How many are in Monroe, Lansing and Fowlerville?

Brad Tacia: We’ve got 24 in Monroe, 23 in Fowlerville, and the balance would be in Lansing. I guess that’ll be 113 shortly.

Joe Fairless: Okay, cool. Lansing has been a market that you’ve clearly had some success in… How far away is it driving distance from you?

Brad Tacia: About one hour…

Joe Fairless: Okay. How did you build the team and find properties in Lansing?

Brad Tacia: First we got a property on contract that we found from a broker, and we jumped on it, got it under contract, then we interviewed about 10-12 different property management companies and narrowed it down to one that was really the leader in the city. So that’s where we found our property manager, which is one of the key players in our team.

Then our mortgage guy – we found him from a colleague from some meetups in the area. He’s actually down in Monroe, but he has funded most of our purchases.

Joe Fairless: By funding you mean the debt financing?

Brad Tacia: Yeah, the bank financing. It’s a credit union.

Joe Fairless: Okay. Which one?

Brad Tacia: Monroe County Community Credit Union is the one we use. They’ve been fantastic to work with.

Joe Fairless: What type of terms do you get with them?

Brad Tacia: Generally, most of them have been under a million, and one was over a million, so these are recourse loans; we’re not quite in the nonrecourse area yet. So these terms are 20% down, 4,25%, 4,5%, 20-year amortization, [unintelligible [00:06:08].02] five-year term with a rate adjustment at five years and then five years fixed again. So it’s a ten-year loan, but with two different rates.

Joe Fairless: 20% down… Are these properties ones that you put money into to improve, or is there a different business model that you do?

Brad Tacia: Each of the complexes is a little bit different. My first ones in Monroe were pretty much turnkey. They were built in 2006, 2007 and 2008. They were very nice units. They even got new roofs recently because of a hailstorm. For those I didn’t really need any capital at all; I was comfortable with that as my first apartments.

Then the second one we’ve got construction going on, because one was just a shell; a 6-unit that was full, a 6-unit shell, so we’ve got a lot of construction going on with that one. Then the 63 and the 23-units  after that were some light capital work, but really not a lot.

Joe Fairless: How are you financing the light capital work?

Brad Tacia: The one that we’ve got a fair amount of capital in we have a construction loan. The ones that are light capital are just coming out of cashflow. It’s light enough where we delayed taking distributions from them for a few months and we just use the first few months of cashflow for that.

Joe Fairless: And does Monroe County Community — what was it…?

Brad Tacia: Monroe County Community Credit Union…

Joe Fairless: Community Credit — I knew I was missing a word… [laughter] Monroe County Community Credit Union – have they done both of those loans in Lansing, even though they’re in Monroe?

Brad Tacia: Yes. Once we were performing on the first couple, they will go fund anything anywhere for us, with the right financials.

Joe Fairless: Excellent. What lessons have you learned in the lending approval or the overall process while working with the credit union to get these properties financed? In particular the 63-unit.

Brad Tacia: Well, definitely getting that coverage service ratio is one of their number one things to get right. That one in particular they liked a lot, because it’s a senior apartment complex, so they enjoyed that one. They actually gave us 25-year amortization on that one, which will bump the cashflow up a little bit, because it’s a senior — it’s not assisted living, but it’s an independent senior living facility where we take 55 and older people. I guess banks seem to really like that, that was one lesson we learned with that.

As long as you hit the service coverage ratio, you have a proven team — even if you don’t have the experience, if you get a property manager that’s very good with the area and the type of property you’re using, they put the property ahead of the person. That’s what I love about apartment investing – you’re not doing everything on your own credit. It’s the building itself, the property, and your team really that makes it work.

Joe Fairless: Let’s talk about the 63-unit that I believe you said you got from a broker… Is that correct?

Brad Tacia: Yeah, that’s correct.

Joe Fairless: Was it publicly marketed?

Brad Tacia: Yes, it was. This one was through [unintelligible [00:09:27].19] They’re pretty big in our area. It came on LoopNet, the place where most deals go to die, but we got it the first day on market, we went full price on it, got it under contract, and the reason we were happy with how they priced it was because they have 70% expenses to collected rent…

Joe Fairless: Wow…

Brad Tacia: …so there was so much opportunity to improve the management and just gain equity immediately. So the building was in really good shape, it was just run poorly.

Joe Fairless: Yeah, please elaborate. Keep talking about that… How did you knock it down from 70% to whatever percentage you ended up with?

Brad Tacia: The main thing we did was they had an on-site property manager – full-time property manager that was there from 8 to 5 every day, and they had a full-time maintenance guy and then another part-time maintenance guy, all on payroll. Their payroll expense was 90k+, which is insane for this size of a building. It just didn’t make sense at all. A 63-unit is much too small for that much on-site support. The property manager that we found is based in Lansing also. They have a bunch of maintenance guys on-site, and they have a property manager that runs our building and then a couple other smaller ones as well… So we’re not paying their entire salary. It’s a real easy drop in a better management style, more of a industry standards system, and boom, you just gained a bunch of equity and cashflow.

Joe Fairless: You said it was 90-what?

Brad Tacia: Call it 95k maybe, and now it’s roughly 25k.

Joe Fairless: [laughs]

Brad Tacia: That was an easy turnaround one for us.

Joe Fairless: Wow… 95k to 25k – that’s a difference of $70.000.

Brad Tacia: Exactly. And they still had a lot of maintenance cost — maybe a 10% maintenance cost as well. I don’t even know how — you would think they would save money by having enough on-site staff on the actual maintenance cost, but they didn’t. It was just wasted money.

Joe Fairless: And what’s the cap rate in the area?

Brad Tacia: Generally I would say that area is about an eight cap maybe.

Joe Fairless: So it’s $875,000 worth of value that was created…?

Brad Tacia: Yeah, that sounds about right. It was a home run, yeah.

Joe Fairless: See, this is why I love doing this show, because a lot of multifamily investors are complaining about how they can’t find deals, where are you finding deals… You found it on LoopNet. Now, you made an offer the very first day, so you pounced on it, but you immediately were well-versed enough to know that the expenses were out of whack, and you offered full-price and you got into it. Usually, the people who are complaining about “There’s no deals out there”, they’re also the same ones who aren’t going to make a full price offer on a deal the very first day. They’re gonna take more time to analyze it… I’m not saying that’s a bad thing, you do have to make sure that you’re comfortable with your offer, but you were prepared enough so that when you did see something, you jumped on it.

So you made an offer the first day… When did you officially have it under contract?

Brad Tacia: Within a day or two of that… A letter of intent anyway.

Joe Fairless: Okay, so you had an agreed upon letter of intent within a couple days.

Brad Tacia: Yes.

Joe Fairless: But you submitted your letter of intent (LOI) the first day and it was a full price offer?

Brad Tacia: Correct.

Joe Fairless: And prior to submitting the LOI on the first day, did you receive the Trailing Twelve financials and the current rent roll?

Brad Tacia: We got the financials, but we did not have the rent roll yet. We received that in due diligence.

Joe Fairless: Okay, so you were able to make the full price offer. Was this the first property that you were buying in Lansing?

Brad Tacia: Yes, it was.

Joe Fairless: How did you have the comfort level to buy a property — and it’s only an hour away from where you live, but still, it’s in a market that you don’t have property in… How were you able to feel comfortable doing that?

Brad Tacia: Well, a part of our due diligence was definitely researching the area. We spoke with all the property managers and some local police stations, and then some people we knew that lived in the area… That was a big part of our due diligence. Both me and my partner Mark were from this general area, so we have a lot of contacts in the area.

We also know the city a little bit, but we knew who to talk to about how the area is doing. We did our online research, talking with people and putting the data together.

Joe Fairless: Cool. Let’s talk about your 50 units that you said that you have right now under contract that you’re syndicating…?

Brad Tacia: Exactly, yeah.

Joe Fairless: Okay. Prior to these 50 units, did you use your own funds and that’s it? It sounds like you had a business partner, too?

Brad Tacia: Yeah, we have a 50/50 partner on the 63-units, 23-units and then one of the 12-units. It was all of our personal funds. We didn’t have any passive investors on any of those deals. This 50-unit is our first real syndication.

Joe Fairless: Tell us about how you’re structuring it.

Brad Tacia: Me and my partner Mark are syndicating this one, and it looks like we’re probably just gonna have one investor. We had planned on having about six or so investors, but one of the first ones we spoke with said that they wanted the whole deal… So it looks like there’s a good chance that we might just go with one investor. That is really gonna turn out to be more of a partnership than a full PPM kind of syndication.

Joe Fairless: What type of structure do you think you’ll do with them?

Brad Tacia: Basically, this is a similar deal to that 63-unit, where this one is actually 75% expenses… So it’s just as crazy, not run very well, so there’s plenty of profit here. We’re basically splitting the profit 50/50 on this one, and the investors are putting in all the money.

Joe Fairless: Okay, so you won’t put in any of your own money…?

Brad Tacia: Correct. We found the deal, we’re signing on the loan, we’re getting the financing, we’re getting the property management in place and running it, so that’s what we’re bringing to the table.

Joe Fairless: How did you find this 50-unit?

Brad Tacia: This was an off-market one that we found. My partner found this one on just a local Facebook real estate group. Someone said “Anyone interested in a 50-unit in Lansing, off-market?” We said yes, got it under contract, and here we are.

Joe Fairless: A Facebook real estate group… Please elaborate.

Brad Tacia: There’s plenty of real estate groups all over the country, but this is a local one that we had, and someone piped in asked if anyone was interested. It wasn’t an apartment-specific one or anything, and we jumped on it.

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

Brad Tacia: Just get started one way or another. I got started in single-family houses… It’s a lot less intimidating. I can definitely see starting there with a rental house or two, just so that you get the idea of how renting real estate works. Then from there, apartments let you scale so much faster… So if you’re looking to replace your job income, houses take a long time to do that. However, you can get comfortable, whether it’s small apartments or a single-family house. You really just need to get the ball rolling, and then once you get more comfortable, it’s crazy how fast you can grow your portfolio.

Joe Fairless: How were you notified of the broker deal that got placed on LoopNet, the 63-unit?

Brad Tacia: I just had a search on there for the area that I was interested in and the price range that I was interested in, and it popped up in my e-mail. I called the broker right away, I got right out there and checked it out, and really jumped on it fast.

Joe Fairless: You were subscribed to their newsletter and you received the e-mail from the broker and that’s how you were notified?

Brad Tacia: I got the notification through LoopNet, so it wasn’t off-market, or anything like that. I had not worked with that broker before. It was just a LoopNet subscription, I guess. You put an automated search in there, and you get e-mails when something new pops in there.

Joe Fairless: So you just signed up via LoopNet, said what you were looking for, and you got notified when something was posted?

Brad Tacia: Exactly.

Joe Fairless: Cool. What about the 50 units you saw — were you the person who saw the post on Facebook?

Brad Tacia: No, my partner Mark found that one.

Joe Fairless: Okay, your partner Mark found it. What were the immediate next steps?

Brad Tacia: The immediate next steps for that one was that he was actually gonna be out of town the next week, so I went out and checked it out.

Joe Fairless: How soon after?

Brad Tacia: This one we kind of drug our feet [unintelligible [00:19:01].07] Probably about a week after. I think they were feeling the off-market before listing it; if they didn’t sell it off-market, they were going to list it with a broker. But we were actually kind of dragging our feet on this one, and that actually worked to our advantage. I didn’t think the area would be all that great from my previous knowledge of the city, and then I went out there and was pleasantly surprised. I talked to the property manager, and he told me the same thing – it’s actually a pretty good rental area.

So in this particular case for negotiating, dragging our feet actually helped us out.

Joe Fairless: What do you have it under contract for?

Brad Tacia: We have it under contract for 1.125 million. That’s 225k/door, and the average rent is about $660/unit. It’s the same kind of high expense deal as our 63-unit. We’re gonna put the same property manager in there as our 63. This is only about three miles down the road from our other one, so it drops right into our system.

Joe Fairless: And how did you gain the credibility necessary with the broker on the 63-unit, since that was the largest deal you had done, and you weren’t local, you didn’t have any property in the area?

Brad Tacia: That’s a good question. Basically, I think it was just talking the lingo; we knew some of the same people, proof of funds, we had our property manager picked out… Beyond that, it was just talking with the broker and telling them that we know the next steps, we know what we’re doing, and what we said we were going to do we did, each step of the way. So we just showed competence, generally, I would say.

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

Brad Tacia: Sure.

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

Break: [[00:20:55].05] to [[00:21:54].14]

Joe Fairless: Best ever book you’ve read?

Brad Tacia: I would say The Millionaire Real Estate Investor. That really got me going in the real estate hard.

Joe Fairless: Best ever deal you’ve done?

Brad Tacia: The 63-unit in Lansing, with the 70% expenses.

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

Brad Tacia: I would say I spent too much in lawyer fees on my first deals. They were coming to closing with me; I spent a lot on legal on that one that I really didn’t need to.

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

Brad Tacia: Coaching, I would say… Friends, and I’m actually starting a coaching program here, where I will be coaching apartment investors just like what I’m doing here.

Joe Fairless: What’s the best ever way that you would tell someone who has done single-families, they’re ready to do multi, but they can’t find deals – what’s the best ever advice you’d give that person?

Brad Tacia: To be out there, to keep looking. Network with brokers… They can direct-mail right to owners, LoopNet… People say they’re not out there, but they do pop up. Just look everywhere and keep on it.

Joe Fairless: And Facebook groups.

Brad Tacia: Yes, exactly. That’s true.

Joe Fairless: Was the person presenting the 50-unit a wholesaler, or was that the owner?

Brad Tacia: He’s a part owner. It’s a syndication and he owned a piece of it.

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

Brad Tacia: They can e-mail me. That’s bradtacia@gmail.com. I also have started a Facebook group called Apartment Investors Of Michigan. Go ahead and join that, and we have a fair amount of information  sharing on that site as well.

Joe Fairless: Brad, thank you for being on the show, talking about these multifamily deals that you are getting in a time when I hear a lot of complaining from multifamily investors about how there’s not any good deals… And especially with your background, because you have a full-time job, and you were able to get a 63-unit from a broker without having gotten one that large before. So you showed the credibility, you had the things lined up, and then you acted on it almost instantaneously. You submitted the LOI that day… It’s a case study for how to act and approach getting deals on some markets that are hot or the deals are few and far between.

Thanks for sharing your story, and also talking about your business plan with each of the deal, and reducing the expenses. Thanks for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Brad Tacia: Sounds great. Thanks, Joe.


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JF587: How You are Leaving Thousands of $$$ Behind by Not Doing This!

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“Wholetail,” acquiring a property at a wholesale level and selling at a retail price without doing a lot to it, or very little. Today’s guest is pretty savvy using this strategy and has found success in this niche. Tune in and see how you can save even more cash at the closing table!

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Mike Cowper real estate background:

  • Been a wholesaler for 15 months and done over 50 transactions, 4 of them being his own rentals
  • Say hi to him at: webuyroi.com
  • He is based in Detroit, Michigan
  • His Best Ever book: Four Hour Work Week by Tim Ferriss and The One Thing by Gary Keller

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Are you a buy-and-hold investor or doing fix and flips?

I recommend talking to Lima One Capital. A Best Ever Guest told me about them after I asked how he financed 10 properties in one year. They are an asset-based lender with unique programs for long-term hold and fix and flippers.

Click to learn more or, better yet, reach out to Cortney Newmans at Lima One Capital. His cell is 404.824.6121.

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JF438: When Should You Evict?!?

Every landlord loathes the eviction process…you lose money, time, and it just looks bad. Not fun. Our Best Ever guest is a property manager pro, and he has processed many evictions, but is now well seasoned and evicts carefully. He is able to collaboratively work with tenants who will pay if they genuinely slip, but make no mistake, he is still stern and begins the process regardless. Hear his side of property management!

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Drew Sygit’s real estate background:

  • Founder and operating partner of Royal Rose Property Management
  • They have 403 units under management
  • Has 17 years in the mortgage biz as a mortgage broker and banker
  • Say hi to him at http://www.royalroseproperties.com
  • Based in Detroit, Michigan

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JF422: How to Flip 12 Homes a Year with a Full Time Job

Our Best Ever guest is not a full time investor, but he still manages to fix and flip 12 homes a year! He has established a power team that works cohesively in the Detroit, Michigan area. He was inspired by a previous guest on the show, Josh Sterling, who challenged him to jump in! Hear his story!

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Tom Wooderson’s real estate background:

  • Been investing for three years and is an active real estate agent, wholesaler, hard money lender and rehabber
  • He’s on track to rehab 12 properties in 2015 while having a full-time job
  • Based in Detroit, Michigan and graduated from Michigan State University
  • http://•http://www.twholdingsllc.com and thomaswooderson.com

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JF365: $1,000 Credit Card Charge to Virtual Wholesale Genius!

Ready for a new market? Our Best Ever guest hints how he successfully wholesales properties…virtually! No need to be everywhere at once; he instructs how to close a deal in another city while in the comfort of your home! How to find your “boots on the ground” including additional real estate professionals in places other than your hometown, you have to hear this!



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Chris Bruce’s real estate background:



  •  Full time real estate investor who started investing in Detroit, Michigan then went to Tampa, Florida
  • Say hi to him at http://escapethenewbiezone.com/aboutme
  • Popular podcast called Escape the REI Newbie Zone
  • Virtual wholesaling in different markets
  • Based in Tampa, Florida


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JF 359: How To Buy FIVE Houses While Making $30,000 Per Year

Today’s Best Ever guest has probably flown you across the country and he kept you safe then, so listen up because he shares with us exactly how he left his job as a pilot and continues to have investing success.

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Josh Sterling’s real estate background:

–           Based in Detroit, Michigan

–           Currently own and manage 125 units

–           Flip about 12 – 15 properties a year and also runs a property management company

–           Was an airline pilot for 5 years and now I have a Piper Saratoga that he flies for fun

–           Say hi to him at http://www.epicpropertymanagement.com

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Best Ever Show Real Estate Advice

JF 107: Presenting…The World’s Fastest Refinance!

All we do is…set refinance records…and win! 🙂

Today’s Best Ever guest shares how he set an unofficial world record on the fastest refinance on a property, why it happened and how to avoid in the future. Plus, we talk about his experience growing up in the real estate business and his company’s focus on multifamily investing.

Let’s go!

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Nick Keesee’s real estate background:

–        Founder of Nile Capital, focused on multifamily family investing

–        Real estate investor who has property in the Detroit area

–        Based in Novi, Michigan about 30 min from Detroit

–        4th generation real estate investor

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Sponsored by: Twenty Four Sound – visit http://www.twentyfoursound.com and mention “bestever” for an exclusive 20% discount on your purchase.

Listen to the Episode Below (17:46)
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Best Real Estate Investing Crash Course Ever!