JF2167: My First General Partnership Deal With Alexander Felice #SituationSaturday

Alexander Felice is a career banker working in risk analysis for SBA lending. Alex is a previous guest on episode JF1614 and is now back after completing his first general partnership deal and today he joins us to share the lessons he has learned through this deal. 

Alexander Felice Real Estate Background: 

  • A career banker working in risk analysis for SBA lending
  • 6 years of real estate investing experience
  • Portfolio consist of 40 BRRRR deals, and a 24-unit multifamily 
  • From Fayetteville, North Carolina
  • Say hi to him at: https://www.brokeisachoice.com/ 

 

 

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Best Ever Tweet:

“Start off small to get your reps in first, proof of concept, before doing bigger deals” – Alexander Felice


TRANSCRIPTION

Theo Hicks: Hello, Best Ever listeners. Welcome to the best real estate investing advice ever show. My name is Theo Hicks and today I’ll be speaking with Alex Felice. Alex, how are you doing today?

Alexander Felice: I’m extremely well. Thanks for having me.

Theo Hicks: Absolutely, thanks for joining us. So Alex is a repeat guest. So make sure you listen his first episode; it’s Episode 1614. Since today, I didn’t know it’s Saturday, we’re gonna be doing a Situation Saturday where we talk about a sticky situation that our guest is in, and have a conversation about any challenges he’s facing and what he is doing to overcome them. So that’s gonna be the focus of the conversation today, but before we get into that, let’s go over Alex’s background as a refresher. He’s a career banker working in risk analysis for SBA lending; he has six years of real estate investing experience, his portfolio consists of eight BRRRR deals and a 24-unit multifamily. He’s from Fayetteville, North Carolina, and you can say hi to him at brokeisachoice.com. So Alex, before we start talking about your sticky situation, which is your first JV deal, do you mind telling us a little more about your background and what you’re focused on now?

Alexander Felice: Yeah. So I got into real estate trying to — I had a job I hated, so I had to get out of it. So I started buying single-family homes, because I was broke, and that’s all I could swing, and that went well for a little while, but it doesn’t take long before you realize that there’s no economies of scale, which is probably something everybody who listens to the show already knows or has figured out – that you have to go to big multifamilies to get the economies of scale. So after about eight of them, I started moving towards that, but it’s a challenge to grow, for me at least, to go up to– some people do hundreds of units in their first bid; that was not something that I was capable of, so I switched into slowly going towards multifamilies, and lately, I’ve been doing flips. I still want to do multifamily, but I’m just gonna go a little bit slower than I had anticipated, but yeah, that’s the transition that I’ve been at.

Theo Hicks: Sure. So you’ve got the 24-unit multifamily. Is that the JV deal?

Alexander Felice: Yeah, last June, we closed on a 24-unit multifamily. I did it with four other people, all of which whom I met on the internet, which was neat, and our original intent was to syndicate, but the 24-unit at a million dollar purchase price, it didn’t warrant the cost to do that. So we JVed it, and it’s gone reasonably well, with some hiccups.

Theo Hicks: Sure, yeah. So before we get into the hiccups, I want to just set the stage a little bit more. So you mentioned it as a $1 million purchase price. What was the original business plan?

Alexander Felice: So the plan was, it was five people who had never done this before, and we all have the same idea – multifamily, buy for cash flow, value-add if we can. We wanted something that– we were worried about preservation of capital first, and more so than anything, I wanted the experience. I have a giant ego and so I was trying to make sure that I didn’t let that run the show. I said, “Look, I just need to get one of these. I need to get five partners that I know I can return money to, and get the experience,” and then– I have a long life ahead of me that I can buy bigger, bigger deals. I didn’t want to go off and buy something that I couldn’t handle the first one. So idea was to get my reps in, proof of concept, get one done so that I knew I could do it and then the sky’s the limit.

Theo Hicks: How did you find the deal?

Alexander Felice: Broker. We were talking to brokers for probably four or five months, just looking at everything. One of the partners was just looking at deals, looking at deals, looking at deals. So this one, he brought to me, my partner; he brought it to me and we looked at it. It was in an area that we knew well that I already invest [unintelligible [00:06:19].18]. It was about what we wanted to do, and I wish there would have been more value add, but it was a deal that we knew we could make money on and we said, “Okay, let’s snowball.”

Theo Hicks: Perfect. So a million dollar purchase price, found it through a broker. The last thing I want to know is about your partner. So you said you met him on the internet. Do you mind walking us through that? I mean, a lot of people do that as well. I actually met Joe through the internet and I’ve been working for him for four years. So I’m just curious, can you walk us through how you met those four people in more specifics?

Alexander Felice: Well, on my website, what I’ve been doing as an experiment for three years now, interestingly, is I put up on the contact page — so the first thing you see is, “Do you want a video chat with me?” There’s no strings attached, there’s no nothing, no cost, no– I don’t sell anything. So I just put it on there and see who will reach out, and sure enough, I booked a month out for Thursday nights, and strangers just going on the internet and they video chat me and I do deals with some of them. So these are four people that I met through doing video chat with me, because they just wanted to be interested in what I was putting together.

I’m very transparent on my website about the deals that I do and how I do them, so it resonates with certain people. So people reach out to me and over time, it was, “Hey, I want to do multifamily next,” and so you say that to people enough– the rule of investing or the rule of networking is, just tell everybody what you’re doing. And so I’m very loud on social media, and I’m very loud on the internet, and it attracts the people that I needed. So over time, I got four other people that wanted to do the same thing as I did. They wanted to be part of what I was putting together, and it’s not more complicated than that. It’s just you have to put yourself out there and you have to be consistent, you have to be loud, and it inevitably will attract the people that wanna do the same thing as you.

Theo Hicks: Can you give us an example of you being very loud on social media?

Alexander Felice: I don’t go– No, I guess not. I wear a lot of bright pink. I say things that other people think they’re controversial. I don’t think any of that I say is controversial, but I’m very unapologetic on the internet and I’m not good at marketing strategy. I’m just good at saying my authentic thoughts and I’m just good at saying them loudly, and I do it quite often.

Theo Hicks: Perfect. Okay, so we’ve get the context for the deal set–

Alexander Felice: For instance, my website is called Broke is a Choice; that’s a jerk thing to say to a lot of people. That’s the thing I mean, where broke is a choice, but it’s a little bit rude; that’s my style.

Theo Hicks: Yeah, I like it. So when I first read that, I was like, “Ah, it’s a really cool website. I like that.” I think it’s a lot of attention because of that website.

Alexander Felice: There you go. That’s it.

Theo Hicks: And in the pink too. I’m sure the pink helps as well. Okay, so 24-unit, four partners, including you. We talked about how you met them, purchase price, how you found the deal. So the deal’s purchased. You mentioned that it’s going relatively smoothly. Maybe explain to us what happened after you bought the deal.

Alexander Felice: So I’m a career banker, so I should have known this, but I made– one big error that I made was, I didn’t anticipate the maintenance costs to go to escrow to the bank. So we have a certain percentage that goes to reserves to the bank every month that comes out of cash flow. Well, I didn’t anticipate that in my projections. So that cost every month, plus insurance on year one charged me for year one and year two. The bank took the second year to an escrow. So I have about 10% of my gross potential income that comes out of cash flow every month. Is it the end of the world? No, not a little bit, but it does reflect on my ability to pay out investors cash on cash year one.

Theo Hicks: I’m sorry, but before you continue, I’m just confused. So it was reserves — so you’ve got reserves coming out each month. What about the insurance? You’re saying it was a lump sum?

Alexander Felice: No. So say I have $13,000 a month in gross potential rents. Well, I have $500 a month that goes to the bank for repair escrow. Now that’s pretty standard. I just fumbled it, I was paying attention to a lot of the things. So I put that into the projection. So $500 a month comes out and it goes to the bank. Now that’s our money, but we don’t get it every month. We won’t get it till whenever, probably two or three years down the road. The second one is $715 in insurance. Now, we pay $750 in a month in insurance for year one, but the bank is taking an additional $715 a month for escrow to pay for year two. Now that’ll come off at the end of year one, but for that first year, we have $1300 a month that comes out of our cash flow to go to escrow costs; that’s 10% of gross potential rent. It’s not painful, but it’s really annoying.

Theo Hicks: It wasn’t disclosed to you by the lender at closing?

Alexander Felice: It was probably something that would have been caught by anybody who’s done this before, and I should have caught it myself, but when you’re doing these deals your first time, and everybody who had done this on this team was a first-timer, it’s one of those things that just slipped by us, and I wish I would have better accounted for it. It’s not the end of the world, but it is very frustrating, because it messes up my year one cash on cash returns for investors.

Theo Hicks: 100%, yeah. Okay, any other challenges with the deal?

Alexander Felice: Yeah, it’s too small. I’ll never do 24 again; that’s ridiculous. It’s way too small. Most of our problems were scale problems. I’m trying to think of some good examples, but my first thought was to go to multifamily for economies of scale, but I don’t think you’d get economies of scale until you get to probably– now that I look back, probably 100 units is what you really need. Maybe a little less than that, but 24 is not enough, at least not for us. The rents are $600 to $625. I’ll never do that again. I don’t want anything less than mid-market rents, and that’s in my market $1,100 to $1,200. Maybe some of that is personal reasons, personal approach, but these are the things that I learned. Went too small, we were too timid with the money, we should have gone bigger, we should have been bolder, and I think it would have actually made us more.

Theo Hicks: Are you managing the deal yourself or is there a third-party management company?

Alexander Felice: We have a third-party management company.

Theo Hicks: Okay. Do they have someone on-site?

Alexander Felice: No, it’s not big enough to do on-site management, in-house, to do it full time with them. So we have a third-party management company. I love them; they’re working out fantastic, they’re taking great care of the place. Actually, our expense ratio is less than the previous owners who were self-managing. So I don’t have a problem on the expense side. What I have a problem really is– so we bought it in mid-2019 at, now we know, at the top of the market. I knew it then, but mania gets, I think, everybody in the beginning at least, “I should just pay less.” But the property is being run as well as it possibly can be, in my opinion. We just have the deal up a little bit shaky. And we’re going to end up making good money in this property, I just look back and think of all the things I could have done better.

Theo Hicks: Yeah, totally. So you’ve got four other people. What is everyone’s role in the joint venture?

Alexander Felice: So my main partner – we have somebody who does the financial side, so they’ll do my books, and then another guy just helped us get it and he’s helping us get the next deals, and then some people play less of a role than I would have liked, but I’m okay with that. So I just do– I manage the property manager and I manage monthly reports. My other main partner does the accounting books, and then another guy’s doing acquisition side.

Theo Hicks: Did everyone involved invest money in the deal?

Alexander Felice: Yes, I did this so everybody went in equal, or very close to equal. Me and my main partner have a slightly larger share, so that we can take the guarantee, and then the other partners didn’t have to take the guarantee, and they took a small share for it. I spread it out equally so that I could– how do I say it? People are taking a chance on me because it’s my first one, so I just said, “Hey, look, just believe in me. I’ll give a return and I don’t care what the work costs me, I just want to make sure that I can show that I can get this done, I can show a profit, and then I’ll take a bit of cut in the next one.”

Theo Hicks: Yeah, exactly. So since everyone’s in the deal for equal amounts, are the profit split done equally as well?

Alexander Felice: Yep. You’re split with the amount that you put in, both equity and cash flow.

Theo Hicks: Okay, perfect. Any challenges with doing a JV as opposed to doing the syndication route? Any challenges with control, or everyone having a say, anything like that?

Alexander Felice: No, but people is my specialty. So I didn’t expect any of those challenges from the start. Everybody knew that I was gonna lead the deal for the most part, and that’s worked out well. I didn’t take in anybody that I thought it was going to be more of a hassle than I was willing to take on. So I haven’t had any problems with that. The syndication route, I’m up for it in the future. I underestimated the challenge of the cost to price balance of doing syndication. With the syndication, thhe attorney costs you 15 grand, it’s like, “Dude, don’t do it on a million-dollar deal. It doesn’t make sense.” But the problem is not that we should have syndicated, the problem is that do a bigger deal. That’s the correct solution, in my experience.

Theo Hicks: So with all the lessons you learned, what would be your ideal next deal?

Alexander Felice: I would like an A or B Class property in a bigger area, in a growing area with higher rents and more investors. I would go bigger even if it means less returns. I think the stability is worth the premium by a longshot. The C Class properties, the numbers look good, but it’s just not what I would do again. I’d go with an A Class property in Raleigh or Charlotte, that’s what I’d prefer.

Theo Hicks: And then do you have a network of people that if that ideal deal were to fall into your lap tomorrow, you could raise the capital?

Alexander Felice: I think so. Funny, in this business everybody who’s done no deals – that uphill battle is really hard, but once you do one, it’s like the doors really open up. So obviously that gets bigger as you do more. I think I have– a lot of people didn’t want to do the first one with me, even though I’ve been doing single-families for a long time, and I have a big social media presence, a lot of people were interested… But I’ve had literally people tell me, “Yeah, I’ll do the second one with you. I don’t want to do the first one with you.”

And also, the first one, you don’t have a problem with — it’s hard for me to explain. I have a problem selling the first deal to people, because you don’t really know if it’s going to close when you get a hold of it, because I was new… And so you go to somebody, it’s like, I really can’t sell them as confidently as I’d like, because I’m not sure how to do this. So they can feel that, and that hinders me. So it’s like a cyclical thing; I’m not as confident so they aren’t as confident, so then I’m not as confident. When we go to do this next one, I think that will be mostly entirely removed, and so I’ll be able to much more confidently go out and get funding, and I’ll have learned a lesson from this first one, and I perceive that to be a much lesser problem.

Theo Hicks: Alright, Alex, is there anything else that you want to mention before we close out the interview?

Alexander Felice: Buy something that makes money. You can grow, you don’t have to do everything on your first one. Ego, I’m prone to ego, and it got me in a little bit of trouble on this one, and I know that problem for other people, but I play the long game. This multifamily thing, it works, but you don’t have to do it on the first deal.

Theo Hicks: Alright, thanks for sharing that. Alright, Alex, well, I enjoyed this conversation. I look forward to checking out your Broke is a Choice website and some of your comments on social media, but in the meantime, some of the biggest takeaways that I got from the episode was – number one, how you were able to put together a joint venture deal with four people you’d met on the internet.

I really liked your strategy of having a “Do you want to video chat with me?” on your contact page, and that’s how you were able to meet the individuals you did this deal with. You also mentioned how the roles and responsibilities were allocated, but your biggest lessons on this deal was number one, not anticipating the reserves that need to go to the bank every month, as well as having to pay a monthly insurance rate that was covering year one and year two during, year one. So another is understanding what the lenders’ criteria is for reserves and insurance and taxes. I know taxes is another thing that people talk about as well, that might be a little bit different in year one.

The second thing you said is that 24 units is too small, because most of the issues that you’ve come across have been economies of scale issues, and so you prefer to focus on 100 units or more, because that’s where economies of scale come into play. You also mentioned that you wouldn’t do $600 to $625 rent ranges anymore, and that you want to go a little higher than that. You also mentioned that you probably should have paid a lot less for the deal, but were really excited.

Alexander Felice: A little less, Theo. Not that much, a little less.

Theo Hicks: And then the last thing we talked about having a little bit of trouble selling the deal confidently – because you hadn’t done it before, so you weren’t exactly sure how things were gonna play out, so you didn’t feel comfortable saying something you didn’t really feel confident and comfortable with, and then in turn, they could feel that, so they were less confident and it’s a negative feedback loop.

So again, Alex, I appreciate you coming on the show. Make sure you guys check out his previous episode; again, that’s 1614. Go to the website Broke is a Choice, take advantage of the free video chat. It’s not every day that guests offer that to listeners. Best Ever listeners, as always, thank you for listening. Have a best ever day and we’ll talk to you tomorrow.

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JF2041: Wholesale Fail to Rental Success With Michael Glaspie

Michael served in the US Army Special Operations and is a commercial real estate broker who also invests in real estate holding over 35 rental properties, with over $1.5M assets under management. He started out house hacking his first property and gradually went into wholesaling where he actually lost money. This lesson helped him grow and pivot into focusing more on rental properties which led to him getting his license and partnering with a realtor.

 

Michael Glaspie Real Estate Background:

 

Best Ever Tweet:

“There are many creative ways to acquire real estate.” – Michael Glaspie


TRANSCRIPT

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

Michael Glaspie: I’m doing great, Joe. How about yourself?

Joe Fairless: I’m doing great as well, and looking forward to our conversation. A little bit about Michael – he’s a commercial real estate broker, also served in the U.S. special operations; thank you, sir, for keeping us all safe when you were in the Army, and a thank you to your colleagues as well. He invests in real estate himself too, and in fact, holds over 35 rental properties, with over 1.5 million assets under management. Based in Fayetteville, NC.

First, Michael, how about you give the Best Ever listeners a little bit more about your background and your current focus? Then we’ll go from there.

Michael Glaspie: Absolutely. I am based out here in Fayetteville, NC. I’ve been active duty military for a little over 11 years. When I first started investing, it was in 2014, and I purchased a standard single-family home, 3-bedroom/2-bath, 1,200 sqft. Now, I know many people listening are thinking “That’s not an investment, that’s a liability.” Well, at that time – single soldier, I was young, I rented out each one of the rooms to other people in my unit. And I didn’t know it at the time, but obviously I was house-hacking.

During that period I was looking for many different ways to create revenue, so MLMs, Uber driving, Lyft driving, whatever the case may be… But as I began to do  more research, I saw that real estate was a common denominator in many people’s success stories. So I just dove all in and I started to wholesale during that time, because from all the research, it seemed like just the natural progression. Well, the first two wholesales I completely bombed, lost a lot of money on those. I learned a lot of good lessons…

Joe Fairless: How do you lose money on wholesale?

Michael Glaspie: I’m gonna tell you how. Here in the market, now working with wholesalers – they exchange money upon the signing of the initial contract with the seller. And as long as they put down any type of money, it’s considered a valid contract. Here, they’ll put down a dollar. But me, being so anxious getting started, I’d put down $500, $1,000 on a home that I obviously had under contract for way more than I should have, because I couldn’t pay a buyer to take if off me.

And it actually ended up being pretty bad, because not only did I lose the money during the contract, but I had asked the seller to force her brother who was living in the property out of the property to make it more marketable. So I’ve learned a lot, and I apologized profusely to her back then. Hopefully she’s not still mad at me many years later.

Joe Fairless: So you’ve lost money AND karma points.

Michael Glaspie: And karma points. A lot of karma points. So I stuck with it a little bit longer and I ended up doing (I think) two more successful deals where collectively I made a little over 5k… But ultimately, I realized that the reason that I got into real estate in the first place was to create that passive income, and ultimately I wanted to do that through buy and holds. So I really started to focus on “Okay, the wholesaling thing – that’s fine. But if I’m gonna continue this energy and this focus here, then that needs to be my primary objective”, so I decided to just go ahead and focus on buy and hold.

At that point in time I didn’t have capital, so I started to research more creative ways to acquire real estate. Luckily enough, being here in a military town, we have something where the military forces you to move from location to location. We call it a PCS (permanent change of station), and there was a couple who bought  a house one year, the next year they refinanced it, and the third year the military forced them to move, so they had zero equity on the property. If they were to sell it, they would have to pay somewhere around 10k in closing costs, realtor commissions etc. So I decided to go ahead and approach them with a subject to, or a deed in lieu of… And it worked out in our favor.

Joe Fairless: How did you know about subject-to’s at that time?

Michael Glaspie: Just research. When I started, I read a lot of blogs, read a lot of books, but I went to a lot of local real estate investor meetups… And there was one person who mentioned it at one of the meetups, and he said “Have you ever thought about subject to?” And as soon as he said that, I just deep-dived into it [unintelligible [00:04:50].09] was my best friend then; Bigger Pockets was instrumental in that development as well, and… It kind of worked out.

Now, the way it really worked out was I had an attorney. I knew that I couldn’t really figure this out by myself throughout the whole process, so I found a local attorney who practiced subject to regularly, and I had him actually carry me  and the client (the seller) at the time through the entire process. So it worked out in all of our favors. But once I’d accomplished that, I said “This is a no-brainer. There’s many creative ways to continue to acquire real estate.”

So I continued to go forward. I do multiple – subject to, owner finance deals… I did a VA live-in-flip. Essentially, I used my VA loan to purchase a foreclosure. I fixed it up while I lived in there, and I sold it in less than a year. At that time I made a pretty decent net profit; a little over 20k. But when I looked at the closing disclosure, I noticed that I paid my friend and my realtor at the time very close to $12,000. That was the time that I decided to go ahead and get licensed.

I got licensed as an agent, so I continued to invest myself, but I actually partnered with my current business partner now. She was a dominant real estate agent in the area, that focused primarily on investors. So once we kind of joined forces, we decided to go ahead and build the team as it stands now to cater to not only investors, but to fellow veterans to kind of educate them on the whole mindset of passive income.

Joe Fairless: So you’ve got 1.5 million in assets under management. 35 rental properties. What property is worth the most in that portfolio?

Michael Glaspie: I would say it’s probably an 8-unit that we have. It’s a little over $500,000. Right around $550,000. But when we purchased it, we purchased it collectively in a 21-unit portfolio. It was two 8-units and a 5-unit that we collected all at once, from the same seller. But I would say that that one eight-unit property is probably the most expensive.

Joe Fairless: And how much is that worth?

Michael Glaspie: That’s a little over $500,000. I think last it appraised for $535,000.

Joe Fairless: And will you talk to us about how  you came across that deal and what the business plan is with it?

Michael Glaspie: Yeah, absolutely. We started off cold-calling. We all come from a background of being investors first… So I actually drove by a beautiful little 5-unit in a small subdivision that I constantly drove by throughout my time here in the area… And I decided one day I’m just gonna cold-call them.

I cold-called. Nice, elderly lady, who was just going through a situation where her husband had just passed. She wanted to let go of the property, she didn’t really know how to go about it, she didn’t really trust realtors in the area… So we kind of just — over the course of about six months we continued the negotiations until she was finally ready to accept our offer. Once we got that property under contract–

Joe Fairless: How do you continue the negotiations over that period of time, and not be a pest, but also still be relevant?

Michael Glaspie: Yeah, so I found a good medium of about every 2-3 weeks we’d follow up, but every time I followed up, I tried to provide a solution for her. As I mentioned, her husband had just passed; she was trying to go through some of the tax liabilities involved with that, and getting next to her daughter who lived in California, which is across the country… And there’s so many different things going on that every time I called her, I tried to provide her with a new solution. I gave her contact information for CPAs, I gave her contact information for 1031 specialists. I offered to help her move some of the equipment from one of her properties to another one of her properties… And I just continued to provide as much value as possible.

Over time, I believe that that rapport was built up enough that she just wanted to continue the conversation… And then she became accepting or trusting in me and what my intentions were.

Joe Fairless: That’s a great tip. That’s really good. So I interrupted you… You were negotiating and staying in touch with her in a relevant way by providing a solution every time you talked to her, every 2-3 weeks… And then what happened?

Michael Glaspie: From there, once we got it under contract, I made sure that I took the burden to handle everything – coordinating with the tenants, getting the inspectors in there, getting the attorneys on both sides on board… I coordinated everything, and I ended up making it so easy for her, and so smooth, that she actually came to me and said “Hey, I have more properties that I’d be interested in selling.” And she actually owned quite a few, but we were only interested in a select few of them.

So we identified those other two 8-units, and once we started the process with the first 5-units, we just continued forward and closed them all up. Now, how we financed them – that’s a different story. We did find a commercial lender who was willing to do 25% down, 30-year amortization, so that was good. Interest rates were a little under 6%, so a little higher than normal, but not all too bad… And collectively between me and my partners – there’s four partners – we just raised the money any way we could, because we still didn’t have the money when we were starting to acquire those.

So we took lines of credit, depending on which partner’s approach — some of us took out lines of credit, some of us just had personal money from friends or family… Whatever we needed to do to raise that 25% down payment, and the reserve requirements… And we closed.

Joe Fairless: How did you divide and conquer the responsibilities among four partners?

Michael Glaspie: That’s a really good question. It actually came through some headaches in the beginning. As I’m sure everybody out there knows, once you work with other individuals there’s a lot of opinions that may go around. But what we decided to do was we highlighted everybody’s strengths. Then we just essentially made an organizational chart. And I have to thank the military for that, because that’s how we were groomed, and all four of us are all from the military, so we understood this very well.

Once we divided those tasks based off of our strengths,  we made that organizational chart. We then had monthly follow-ups where that individual was ultimately in charge for that section. For example, when it comes to the accounting and the bookkeeping, that’s my realm. So I talk specifically to the bookkeeper and the accountant about these properties, and I report back to my partners about the results. And so on and so forth.

We have another individual that’s specifically in charge of coordinating with the property management company, and so forth and so on.

Joe Fairless: What do the other two do?

Michael Glaspie: We call that investment relations, and the reason why is because we’re looking at bringing in more investors to invest in that specific LLC. So we currently have 21 properties in that LLC and we’re looking to acquire. I’m sorry, we have 24 properties now in that LLC. It was a 21 acquisition just that time. So he’s constantly bringing in more and more investors to potentially partner with that. And the second one is just capital. He was the only one that was extremely liquid, and we used him. [laughter]

Joe Fairless: Well, did I hear you correct, that you have over 20 properties — I think you said 21 properties owned by one LLC?

Michael Glaspie: Let me rephrase that – it’s 24 doors.

Joe Fairless: Owned by one LLC.

Michael Glaspie: That is correct.

Joe Fairless: Why not have one LLC own one property?

Michael Glaspie: We’ve thought about this long and hard.

Joe Fairless: I bet you have, yeah.

Michael Glaspie: Individually, we have our own portfolios as well, so those are divided up however those individuals chose to divide it up. The reason we wanted to keep it all under one LLC is because our strategy is not to hold these indefinitely. We’re actually looking at repositioning a few of them and then selling them.

We didn’t really see the necessity to do that with such a short turnaround. We’re looking over the next 3-5 years to sell off at least two of the four; because they’re four different locations. So we’re looking at selling off at least two of them. And then from there, we gave the option for some of our partners to actually be bought out as well. That’s built into our operating agreement.

So because we really wanted the flexibility of how we can kind of move around, we wanted to keep it under one roof, because we don’t expect them to stay there that long. We do understand the risk involved in that, and that now all doors are subject to any sort of lawsuit or claims against us or whatever the case may be… But it was a collective decision where we sat down and said “Maybe it won’t be too bad.”

Joe Fairless: What’s been the most profitable property to date?

Michael Glaspie: Actually, for me in my personal portfolio is was one straight off the MLS. It was priced at 60k. I got the seller to pay all the closing costs. It was turnkey, for all intents and purposes. I bought it for 15% down using a regional lender, and I rented it out in less than three weeks at $975/month. That’s been my best cashflow.

Joe Fairless: Do you still own it?

Michael Glaspie: Yeah, I still own that one.

Joe Fairless: Is that in Fayetteville?

Michael Glaspie: Yes, it is.

Joe Fairless: What about the least profitable, other than the two wholesale deals?

Michael Glaspie: The least profitable would still be that first property that I purchased originally. It’s still, to this day, the least profitable. I used a VA loan on it, so there’s still barely any equity in it, back in 2014, and it rents out now for $1,100/month. The mortgage is somewhere around $900, so it’s a very low cashflow margin.

Joe Fairless: What’s a part of your process that you’ve optimized over the last year or so?

Michael Glaspie: For me, I’ve really learned how to optimize the leverage. There’s many different things going on – still active duty currently; I’m on my way out the door, but that’s still an obligation. We do have the business that we’re running as real estate brokers, we have our portfolios that we’re overseeing, and I’m also currently working on my MBA…

Joe Fairless: Dang.

Michael Glaspie: So there’s a lot of different — hands are in the bucket everywhere. So what I’ve learned is you have to leverage and you have to lean on others for support. I would not have been able to accomplish anything up to this point without my partners, without finding key individuals. And yes, that comes at a premium. I do pay for my leverage. But ultimately, when you double down on your strengths and you leverage out your weaknesses, you find that you become ten times more productive and efficient.

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

Michael Glaspie: Best advice ever is that there is no such thing as no. If I would just accept no at face value from somebody who said “No, that’s not possible. We can’t do that. That’s not within the scope of our work” etc. then nothing would ever get accomplished. I’m a firm believer that there’s always a how to anything. So yes, we may not be able to go directly with the standard approach of  a transaction, but there’s always a workaround. And if you’re willing to do the work and the research, there’s always a how. Don’t take no for face value.

Joe Fairless: Will you give an example of how you’ve applied that in your life?

Michael Glaspie: Absolutely. Wholesaling – here’s a great example. We had actually switched firms. As I’d mentioned, we’re investors first, and we work primarily with investors, so we have a lot of internal wholesalers on our team, we have a lot of other attorneys and things like that who specifically know these investing strategies of subject-to’s, owner financing, auction properties, you name it.

The last firm that we were at, they actually  pulled us in the office and they said that we couldn’t do wholesaling, because wholesaling is illegal. Obviously, we know that wholesaling isn’t illegal; it’s just about how you perform it. Especially as a real estate professional, we have to disclose what our current position is.

So that right there was a simple no, and if we had just accepted that no at face value and said “No, we cannot do a wholesale”, or the way specifically they said “As a realtor, you cannot conduct a wholesale” – we know that to be false. But if we had accepted it as a no, then we would have stopped all production in that part of our business and we would have lost a lot of business… Because that’s a large chunk of our revenue.

Instead, what we did was we went to many different attorneys until we found a local attorney who was very well-versed in wholesaling specifically. And he knew all of the documents that were necessary, all of the rules and regulations involved around it in the state of North Carolina, and then we developed and designed that portion of our business based off of his insight. That’s more so what I mean by “Don’t take No’s.”

And then we also switched firms… Because obviously, that broker in charge was just not willing to evolve with the times. So we switched firms to somebody who could understand it, we explained it to them, we partnered up with an excellent real estate attorney, and so forth and so on. That’s just kind of an example.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the best ever lightning round? Let’s do it. First, a quick word from our Best Ever partners.

Break: [00:17:04].29] to [00:17:49].27]

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

Michael Glaspie: The Go-Giver by Bob Burg.

Joe Fairless: What’s the best ever resource that you use in your investing business, that you think might be helpful for others to know about?

Michael Glaspie: Bigger Pockets. The calculators in the forums are paramount.

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

Michael Glaspie: Two ways. We do have a local investor meetup, that we call Pints and Properties. We do that once a month, and that’s really to share and support any of the local real estate professionals. The second way is any time we do a charitable benefit, our charity of choice is the Green Beret Foundation. It’s a military foundation specifically for the special forces operators out there in the world.

Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?

Michael Glaspie: You can reach me on Instagram at @michael.s.glaspie, or you can go directly to the Five Pillars Website and you can get in contact with me, or anybody else on my team.

Joe Fairless: Michael, thank you for being on the show, thanks for talking about the large deal that you have, as well as how you structure that partnership, where you highlight the strengths, and based on those strengths everyone has certain tasks. Then there’s monthly follow-ups. Such a simple, but effective process. I’m a simple-minded person, so I like simple processes… And especially if they’re effective, even better. So thank you for that, and thank you for talking about how you’ve built a portfolio with partners, as well as your personal portfolio.

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

Michael Glaspie: Thank you very much, Joe.

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JF2037: App to Real Estate With Daniel Kidd

Daniel is a real estate agent and investor in Fayetteville, NC. He initially wanted to develop an app for community service members but decided to pivot once he realized the upfront capital was too much for his comfort. He now works with Five Pillars Realty team purchasing properties for investments and he shares some of the processes he learned from Amway and Keller Williams that he uses to grow his investor list.

Daniel Kidd Real Estate Background:

  • Real estate agent and investor 
  • Works with the Five Pillars Realty team purchasing properties for investments
  • Based in Fayetteville, NC
  • Say hi to him at danielkiddATfivepillarsrealty.com 

 

Best Ever Tweet:

“Instead of me driving for dollars, I like to find all the wholesalers that are in a given area, reach out to them and offer to help push their listings.” – Daniel Kidd


TRANSCRIPTION

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

Daniel Kidd: Hey. I’m doing alright, man.

Joe Fairless: Well, I’m glad to hear that, and looking forward to our conversation. A little bit about Daniel  – he’s a real estate agent and an investor. He works with Five Pillars Realty team, purchasing properties for investors, as well as he purchases his own properties. Based in Fayetteville, North Carolina. With that being said, Daniel, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Daniel Kidd: Yes. After I got out of college I went through about five years in the army here. That’s how I ended up in Fayetteville, near Fort Bragg. I started doing a little bit of investing before I got out of the army; I wasn’t really planning to get out at the time, but then my agent, Shelby Osborne, she invited me to join her team, so that’s when  I decided to make the transition out.

Pretty much from there, I got my license right away; I had a few properties under my belt, and then I started helping other people do what I was  doing. Then I switched over and started doing a couple partnerships with other people on the team – Shelby, and my brother a few times, just buying up small bits of turnkey multi. And I guess that’s about where I’m at right now. If you want me to dive a little deeper into any of that or anything, just let me know.

Joe Fairless: I would. And first, thanks for helping us all be safe during the time you were in the army. And second, you were investing while in the army…

Daniel Kidd: Yes.

Joe Fairless: What gave you that idea to invest while being in the army?

Daniel Kidd: Really, if I had to track it back, I was hanging out with some friends that I grew up with, and they were talking about something that I didn’t understand, and I really felt outclassed in that moment by — I mean, when you come back for holidays and you  meet your old friends… And it sparked something in me where I knew I had to evolve and start doing something a little bit different.

Joe Fairless: So your friends outside the army were investing when you connected with them, they had already gotten started? Did I hear that right?

Daniel Kidd: Yes. They were investing, and also they were just in much higher-paying jobs. They were just pulling in figures that were above where I really thought that — and I didn’t realize that I thought this way before, but they were above where I thought I ever deserved to be… So I never even actually envisioned myself making a quarter-million dollars a year, or something; and when I heard my friend I grew up with since I was 3-4 was doing that, it really just [unintelligible [00:03:25].07] something where I was like “I can do this, too. I’ve just gotta figure out how.”

So I just started digging into books, and after a few failed attempts that weren’t real estate, I really got hooked on real estate.

Joe Fairless: What did you do that wasn’t real estate, that didn’t work?

Daniel Kidd: The first I did was I tried to build an app with my sister, and I found out very quickly that I didn’t know much about apps, or anything like that. It got to be much more expensive than I thought it would be going in. I thought I could get a simple little thing going and prove as I went, and it just did not turn out to be my thing.

Joe Fairless: What was the idea for the app and how much in total did you put into it?

Daniel Kidd: I buried about 7k in it and walked away from about 7k that I put into the project, and I was trying to come up with a way to connect people that needed community service and people that needed community service hours, so they would have an app that would track it; so you could have your hours tracked, and all of that stuff via this app.

It was kind of like a [unintelligible [00:04:20].25] or an Angie’s List or something, except without money involved… A little closer to what I was going for.

Joe Fairless: At what point did you identify “I’ve gotta cut bait and run, get out of this”?

Daniel Kidd: I thought originally I could produce the app across both phone systems for about 20k to 40k, and then it turned out that it would be [unintelligible [00:04:40].05] platform once it really got down to what I wanted.

Joe Fairless: 80k per platform?

Daniel Kidd: And again, some apps are much more simpler; they don’t have GPS, they don’t have this, or that, or the other, so they can be a lot cheaper. But this one, with everything that it would need, it would have been about that.

So yeah, as soon as I heard the figure, 80k for each, and 160k all-in, I was like…

Joe Fairless: [laughs] That’s a lot of years in the army that you’d be working off…

Daniel Kidd: Exactly, exactly what you’ve just said, because I looked at my pay [unintelligible [00:05:09].04] And then it would take me 50 years to pay that. [laughter] So yes… That’s when I decided to get away from it.

Joe Fairless: And what was the other thing?

Daniel Kidd: Amway.

Joe Fairless: Amway, okay. I obviously heard of it; is that insurance, Amway?

Daniel Kidd: It’s network marketing.

Joe Fairless: Yeah, I know it’s network marketing, but what is the network selling through their marketing?

Daniel Kidd: So I guess there’s two things they’re selling. One, they’re kind of set up like most real estate firms, where you have profit share; you’re trying to really build people underneath of you and get the profit-sharing going on. And then other than that, they just have the XS energy drinks, and all of Amway products… So as long as you buy their products, you get x amount back from the product, type of a thing. Great idea, they just need to get Coke, and Fritos, and stuff people buy, and I think they would really take off. The concept is there, it’s just —

Joe Fairless: The product…  It’s tough to sell the product. Got it. Alright, so you dipped your toe in the water on a couple of things, and that didn’t work out… What did you learn from those experiences that you have applied to your first deal?

Daniel Kidd: So the biggest things I took – with the app, I’ve figured out how to buy a domain name, set up an email account that matches the domain name… Just a lot of business things, and also crowdsourcing things, and a little bit about Facebook ads and how to do Kickstarter. So I picked up a lot of little tips and tricks that I’ve been able to carry over into different ventures, so 100% I don’t even look at that as a failure, so much as just yet another learning period in my life. And it was cheaper than half a semester at college, if you really think about it.

And then the other one with Amway – Amway has one of the best reading lists out there. Even if you don’t wanna do Amway, definitely check out their initial startup emailing list. And then if you’re not in any type of a sales system – you know, KW is gonna have one, or CarMax, or any type of dealer is gonna have these exact same 30/60/90 systems… But you can check out those systems and they work for any type of a sales industry. So all of the tools that I learned there are 100% legit. I loved the people, there was a lot of energy, but it just wasn’t my thing; that’s really what it boiled down to.

Joe Fairless: With the systems – I find that really interesting… Will you elaborate more on how the systems from Amway have helped you with your real estate endeavors?

Daniel Kidd: Yes. So it put in my head before I got to real estate – so it really got in there deeper when I saw the exact same system at KW, which is the…

Joe Fairless: Keller Williams.

Daniel Kidd: Keller Williams, yes, which was the first firm we were at. So they really had the exact same things – you come in and you kind of touch all of the people that you know, and you touch all the people that are on your Instagram, Facebook, social media, anything like that… And then it’s about consistently repeating these things across periods of time, and meeting these checkpoints; on your first 30 days you reach out to 30 people a day, in order to produce 10 leads, and then maybe you close one… That type of a thing. So it really helped with structuring the idea of funneling people into a system that you would be able to then convert into actual transactions.

Joe Fairless: Hm. That is interesting. I totally see the direct correlation there… Okay, so first is touch people you know and who are connected with you on social media. Second is consistently repeating that over time, so reach out to 30 or 50 people per day, and then you’ll start getting some leads… Are there any tips within that reaching out to people consistently that would be helpful to share? Like the approach you take, or how you reach out to them, the language you use, messaging, that sort of thing.

Daniel Kidd: Yes. So I’m 100% a fan of scripts. There’s scripts everywhere, so feel free to download the scripts. The second piece of advice with a script – do not make you script perfect before you dial the phone. Dial the phone first, figure out where you screwed up and move on to the next one.

So really a script is something that’s gonna evolve as you go. Sometimes I’ll sit down and I’ll realize that — this was earlier on, and I was a little bit scared to dial; I wasn’t sure–

Joe Fairless: Oh, yeah…

Daniel Kidd: [unintelligible [00:09:15].23] words that would come out of my mouth… So what I would do is punch in the number and hit Send; then I’d just wait. If somebody shows up on the phone, you have to start talking… And you do. You just kind of start feeling out the best ways to approach people,  the best things to say upfront, and then the key pieces of information you need to walk away with at the end of that call for it really to counts as a lead if they are interested. So those would be the biggest things. You have to have some way to reach back out… Especially with real estate, it’s nice if you can set up a time to meet them at the property if they are interested.

Joe Fairless: Got it. So don’t have everything written down verbatim, but have an outline for how the conversation should flow, and always make sure that you’ve got some action item agreed upon to follow up with them, or meet them somewhere, or send them something, whatever the objective is.

Daniel Kidd: Exactly. And down the road you may have a verbatim script that you’ve come up with, but again, don’t wait till you have a perfect script to dial that first number. Really just use the first 10, 20, 30, 40 calls to figure out “Do you say hello? Do you say hi?”, what really flows with you, and make sure that you’re doing something that you’re actually gonna say. Because a lot of these scripts – when you read them, you’re like “Oh yeah, that sounds good”, and then you go to say it… “This is not how I would ever say this. This feels very weird coming out of my mouth”, and I’m sure they can hear it, too.

Joe Fairless: What dynamic are you using that type of script now? In what situation, rather, are you using that type of script right now for the things you’re currently doing?

Daniel Kidd: That was a little earlier on. I’m not so much doing the cold calls as I used to.

Joe Fairless: Why  not?

Daniel Kidd: I realized that I was better at hunting for the property than I was at hunting for the person. I have certain ways that I reach out and I find pools of properties that I can then turn around and pass over to buyers without ever actually having to negotiate. So that’s where I really try to find myself, is in the middle of groups. So I’ve got my buyer group, I’ve got my seller group, and I try as much as I can to make sure they’re [unintelligible [00:11:15].17] it’s less of a competition going on there. And then I just try to link them up and see if there’s enough room for me in the middle.

Joe Fairless: If you were to look at it as objectively as you could, and you were to look at yourself and your skillset versus someone else and their skillset, and they aren’t finding as many properties as you are, what would you say that you’re doing differently to accomplish those objectives more so than the other person?

Daniel Kidd: I work smarter, not harder. I see a lot of people, they’ll go out there and they’re obviously working hard, they’re grinding, they might even be driving for dollars or something like that, and that’s really where I like to use the leverage of the people that are doing that… Because a lot of wholesalers – they’ll get something under contract and they don’t listen to the advice of most podcasts, where you need your buyers list before you ever get one under contract… Because otherwise you’re just sitting there, holding a property and you have no idea how to offload it. That’s where I really like to come in and help.

So instead of me driving for dollars, I like to find all of the wholesalers that are in a given area that I might be working in, reach out to them and just offer to help try to push their listings, and it’s just been really effective for me. So if you could have 10-20 people and we’re able to tie up one to two properties a month, 50% to 25% of those are something that your buyers are interested in, and you can get paid by your buyer and you can sell it for the wholesaler – everybody walks away happy. I really haven’t had to do that much. The biggest thing that I do is I try to hit as many meetups in my area as I can, and just talk to everybody.

Joe Fairless: So going back to what you mentioned earlier, you’re go-between you need to make sure you have the leads coming in, ideally through wholesaler connections, and then you can deliver on matching up those leads with a buyer, so you’re making sure that you have built  your buyers list as well.

Daniel Kidd: Exactly. And really Shelby helped me out with that more than anything, just because of the nature of her presence on social media, and part of the team, and stuff. It pulls in  investor buyers all of the time, which is really great; so I don’t have to source that. The biggest thing that I have to source is the properties, and then I just push them to all of these buyers. And whatever they want, they can pretty much have off of that list.

And I still run MLS drips and listing cars and stuff for people as well, straight off of the MLS, but the off-market deals are the ones that I tend to grab the bigger majority of.

Joe Fairless: And can  you recall a recent transaction where you worked with a wholesaler, and just the numbers on a recent transaction?

Daniel Kidd: Yes. We’ve actually just closed one… It was pretty funny, one of my friends was coming up here – he’s still in the army, and he’s starting a course here at Bragg… And the first day he came up, I was like “Dude, you have to come see this property.” He’s like “Alright, whatever, man. I’m not buying it.”

Joe Fairless: [laughs]

Daniel Kidd: And we go out there and I’m like “Check this out, man. It’s a 3/3, 48k.” And he’s like “No way.” I was like, “Yeah, it’s 48k, if you want it.” He’s like, “Yeah, I’ll take that.” [laughter] Anyway, the wholesaler had pushed it out at — I believe it was  44k-45k, somewhere in there… So I added about 3k-4k to it, I don’t recall… But that’s usually where I stay, is somewhere around 4k per transaction.

Then it took about 20-30 days, close in cash, and it was pretty much turnkey. We have to get a contractor in there to redo the floors and maybe replace the backsliding door, but other than that it’s ready to put a renter in there at about $1,100/month. So that’s probably one of the best ones that I’ve started in 2019.

Joe Fairless: And when you say “We have to put a contractor in there” – are you still involved in that process? Or when you sell it, then you connect them with the property manager, or they have their own and they run with it.

Daniel Kidd: So just because, for one, he’s my friend, and I know he’s super-busy with the course, I’m helping him out with that out with that one. In general though – no, the client would take the reins and run with that.

Joe Fairless: Okay, cool. I was wondering if you all had a property management arm of your company, but you don’t have that, right?

Daniel Kidd: No, but we do have a property manager that we work very closely with here, and he also works very closely with contractors that we work with here. So anytime that someone chooses to use the same property management, it does make it a little easier for us to kind of ask for favors, move keys around a little bit easier… Just because I’m always meeting with them and the contractors, so I can pass them a key, pass them a check, pass them a lockbox, whatever it may be; I can do the same thing with other property managers and stuff like that, it’s just that it’s not as natural throughout my work schedule to meet up with them.

Joe Fairless: How many deals have you bought for your own portfolio?

Daniel Kidd: I have done 42 including partnerships, and then if I divide my percentages out of that, I own 19 of those.

Joe Fairless: Wow. Nice. And I’ll ask  both sides of this question, by the way, but which deal have you lost the most money on?

Daniel Kidd: I don’t know. It’s not so much that I really have one that I lost a lot of money on, it’s just that I realized that you really shouldn’t be looking to use the income from a property in year one. I had an HVAC go out on one, I had the ceilings in one of mine go out because of the air handler up in the ceiling… The water was supposed to run out a different valve, and it collected, and all that moisture came down to one of the bedrooms… So those are some of the things we’ve had to deal with.

All the properties still cash-flowed in that given year, it was just pretty small… And now they’re operating really well, once you can kind of control it. The only thing that’s really hurt me was just with tenants that I didn’t place, so when you inherit a tenant. Those have really been my only bad ones, which is why I do love my current property management, because they tend to put in pretty good tenants… But yeah, those first couple of tenants that I had inherited – I don’t know if they talk to each other, but I had two of them, they both left in the night and they both took the front door and threw it in the yard.

Joe Fairless: [laughs]

Daniel Kidd: I was like, “I don’t even know what to do with that.”

Joe Fairless: That’s too much of a coincidence. How far away are the properties from each other?

Daniel Kidd: Oh, it was a quad, so it was the same–

Joe Fairless: Oh, yeah…

Daniel Kidd: [unintelligible [00:17:16].07] I don’t know.

Joe Fairless: Yeah, they definitely collaborated on that exercise. Huh… Oh, that’s great.

Daniel Kidd: It wasn’t a big deal… We just went and screwed it back in and it was fine, but… Yeah, I just thought it was funny.

Joe Fairless: [laughs] There’s some symbolism there, too. If I was trained in psychology a little bit more — I’m sure there’s something a little bit deeper there for them throwing the front door into the front yard.

Well, when you take a look at your portfolio, what’s the best-performing property that you’ve got?

Daniel Kidd: The one that I bought with my brother up in Virginia is probably the best-performing. It kind of has all of the advantages, and some of them you don’t realize until you’re going into other deals… But we were able to get a seller finance deal on six units up there, and then we were able to immediately raise the rents by about $100/door. So what was already cash-flowing just went up… And the only issue we had with it was that one ceiling repair we had to do in that bedroom.

So that one actually has done very well for me… And then another one that’s close at its heels – and that’s just because I mixed short and long-term renters, so in that quad, in the unit that I was no longer living in, I started to Airbnb it out, and that really took what was an okay return and really boosted it. That unit out-performs any of the other two units, and almost the other three.

Joe Fairless: You said seller financing… Is that something that you proposed, or were they already offering that?

Daniel Kidd: No, he was already offering that. He was also an attorney and a real estate investor himself. It actually saved us a lot on closing costs. He is one of the few — well, actually I should say the only attorney that’s ever read every word of every document to me. It was the longest closing I’ve ever had in my life.

Joe Fairless: What? He read every word of every document at the closing table?

Daniel Kidd: Yes, he did. It was funny. [laughter] This is either the worst or the best thing ever… Because I was pretty new to the game, and I was like “Okay, so he’s kind of explaining things as we go.” I thought he’d more or less hit the high points. Oh, no. Oh, no…

Joe Fairless: [laughs] How long did that take? There’s a lot of pages…

Daniel Kidd: About 2,5 hours, yeah…

Joe Fairless: [laughs] Oh my god, I’ve never heard of that.

Daniel Kidd: I had been to a closing earlier that day. So the first property I ever bought, I bought it that morning in North Carolina. I bought a duplex down there. I used a POA  to sign for him. And then I drove up to Virginia to sign with him; I thought it would go pretty quick. We go out to dinner, I got there at maybe  like [5:30]… It was like [8:15] or something when we left, and we were just like “Let’s just go home.” [laughter] It took forever.

Joe Fairless: Oh, my gosh… With that seller financing, what are the terms of the financing?

Daniel Kidd: 6%, 30-year am, but with a 3-year balloon, so we’re gonna plan to refi out of that sometime in the next year.

Joe Fairless: What did you buy it for?

Daniel Kidd: 450k, and we had to put about 50k down.

Joe Fairless: Okay. What do you think it’s worth now, now that you’ve raised the rents?

Daniel Kidd: I’d actually have to run the numbers on that one again. My brother kind of takes care of most of the books and properties up in Virginia, whereas I’m kind of more in the weeds on the ones down here in North Carolina.

Joe Fairless: Okay, fair enough.

Daniel Kidd: So we’re not sure if we’re going to refinance them individually, so it would be two residentials, with the quad and a duplex, or whether we’re going to put them together in a commercial refi. The commercial refi – we could probably actually pull a little money out, with how high the rents are… Because we’re right around $900 for the smaller units and $1,100 for the larger units, somewhere in that realm… So that really should put us somewhere closer to the $600,000 range if we do it commercial.

Joe Fairless: Going back to the way you approach the buyers and the wholesalers – or you have a buyers list and you have a wholesaler list – why not instead go find your own listings and make more money per deal and do less deals by making your commission?

Daniel Kidd: I think it’s just all about the system that I have. With the transaction coordinator, the biggest piece that I do is get a meeting of the  minds. After the meeting of the minds, I can kind of leverage that piece of it over, until if we do an inspection, if there’s any type of retrading going on, or anything like that, I step back in. But other than that, the deal at that point should pretty much go on to close, and I can focus on the other deal, focus on gathering these bunches, as opposed to seeking out an individual property to go ahead and try to negotiate it.

Now, I’m not knocking that, and if I move cities, I think  in lieu of getting a real estate license, I will likely start wholesaling. And I’ll still use the same tactic of helping other people push their listings, and stuff like that, which most of them actually love, and in fact I’d say all of them love it, especially  if you’re able to provide a transaction coordinator, just because a lot of wholesalers don’t actually know a lot of the things to do, or even the attorneys that they need to go to in order to make the deal happen and allow themselves to get paid from the deal.

So I try to bring all of that… I really don’t have a great reason for not coming out and trying to find my own wholsale listings, or just listing in general, which — I do standard real estate listings when they do come up, but again, the biggest thing is just finding that group, find a way to systemize and monetize it, and then move on from there.

Joe Fairless: We’re gonna do a lightning round, but first I’ve gotta ask you the question “What is the best real estate investing advice ever?”

Daniel Kidd: Best  real estate investing advice ever… Man.

Joe Fairless: Or something that you’ve learned on a recent transaction, that you tucked away and you’re like “Oh, okay. I’m gonna make sure I do that again” or “Noted.”

Daniel Kidd: One of the biggest things I would avoid at this point would be fire properties. Those caused me some of the bigger headaches. We still were able to close a number of them, but just looking back, trying to get insurance on a fire property prior to the close has been one of the more difficult struggles of actually getting a property to close.

The only other thing would be – and this is just for those people who have analysis paralysis and they wanna overdo everything before they ever do their first deal… After you’ve read three notable real estate books that are out there, you pretty much know the ins and outs of what it takes to get a deal done… So at that point   you really need to start diving in and actually taking some actions. Don’t wait till you read 20, 30, 40, 50 books and listen to every podcast ever done before you actually do a deal.

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

Daniel Kidd: Yes.

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

Break: [00:23:58].23] to [00:24:43].13]

Joe Fairless: Best ever resource that you use that you couldn’t live without?

Daniel Kidd: I wanna say, I might be screwing up this question; I’m sorry.

Joe Fairless: Well, just like a website that you always reference, or…

Daniel Kidd: Oh, I’m sorry. Okay, yeah.

Joe Fairless: A resource, an app that you — you’re an army guy, so maybe you’re thinking like water or food or something. No, I’m talking about apps on your phone, or something else…

Daniel Kidd: Yes, so one of the big ones that a lot of the wholesalers are using is the Deal Machine. That helps me out, because they’re actually able to push certain listings over to me as well. And I actually just love the Zillow app. It probably has one of the worst reps out there as far as Zillow. Don’t use Zestimate; everybody kind of makes fun of Zestimate… But  it does show what has sold and how much it sold for in a given area, and then it also gives you tax information, and it’ll give you usually a lot of really good information. So Zillow is probably one of the biggest ones I use.

And probably one of the more obscure ones that I use would be called Karl’s Mortgage Calculator. That’s my favorite one if I need to come up with, on the fly, what a monthly payment or something would be, if I’m not using the real quick “multiply by 6” rule, and I want a real number… Then I use Karl’s Mortgage Calculator.

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

Daniel Kidd: That would definitely be the BRRRR Book by Bigger Pockets. I really enjoyed that book. Of course, I got the shirt, but that book was really great.

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

Daniel Kidd: I really like to offer what I know to anybody that’s trying to get into this game. One of the ways that I do that is I came up with a list of action steps, and it’s one of the first resources that I try to give anybody who wants to be an agent, a wholesaler, an investor, or anything like that. It really kind of travels across all realms, much like the 30/60/90 does for sales businesses. The action steps will get anybody set up and ready to invest in a 60-day period.

Joe Fairless: And how can the best ever listeners learn more about what you’re doing?

Daniel Kidd: The easiest way would be to probably just follow Five Pillars Realty on Instagram. There’s a lot of posting that we do there. And they could also reach out to me, and especially if they’re here, I’m more than happy to meet with anybody.

Joe Fairless: Daniel, I enjoyed our conversation. I think it’s really smart the way you’re working with wholesalers. They’re already doing a lot of the work, a lot of the marketing — and you’re doing work too, I’m not trivializing that, but you have a lot of people out there working to get their own deals, and then you help them connect the dots and add value to their life, so you’re eliminating a big part of the process through those partnerships. As you said, it’s working smarter, not harder.

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

Daniel Kidd: Awesome. Thanks for having me, Joe.

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1987 Shelby Osborne

JF1987: How to Implement a Strong Process to Grow Your Realty Group Quickly with Military Veteran Shelby Osborne

Shelby Osborne shares how she utilizes her military experience to grow her realty group quickly by implementing unique systems to ensure she has the right people in the right seats. She started 5 Pillars Realty Group in 2019 and in her first year her team closed 130 transactions equaling to $19 million in volume. She also shares her passion behind giving away free advice by hosting conferences and coaching.

Get your pen and paper ready to learn Shelby’s systems and secrets to her fast success.

Shelby Osborne Real Estate Background:

  • Served in the Army for 6 years, getting out in 2018 to be in real estate full time both as a broker and investor
  • Keller Williams Rookie of the Year for the “Carolinas Region”
  • Founded Five Pillars Realty Group on January 1st, 2019 and in their first year, were recognized as an eXp Icon Team, completing 130 transactions and 19 million in volume
  • Based in Fayetteville, NC
  • Say hi to her at https://www.fivepillarsrealty.com/ 

 

Best Ever Tweet:

“The best way to learn is to jump in there and learn on the fly because you can listen to podcasts, you can read books, you can study your butt off but until you’re in the project, that’s the best way to learn and the best way to expidite your growth. So just jump in there.” – Shelby Osborne

 

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

 

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

 

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

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real estate pro advice

JF831: How to Get LEADS from Social Media #SkillsetSunday

Social media, most importantly Facebook and how these three phases our guest is going to show you can improve your lead generation flow. If you want to rock 2017, you must hear the show!

Best Ever Tweet:

Grant Wise Real Estate Background:

– Serial Entrepreneur & Founder at Modern Agent Mastery
– Teaches Real Estate agents how to grow their business through social media
– Grew first business to a million dollars in less than 48 months
– Serviced over 75 different businesses over the last 12 months
– Based in Fayetteville, Arkansas
– Say hi to him at http://www.likegrantwise.com

Made Possible Because of Our Best Ever Sponsors:

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

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

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Subscribe in iTunes and Stitcher so you don’t miss an episode!

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Joe Fairless