JF2019: Building back your business with Land With Adam Southey

Adam Southey lost it all in the 2008 market crash and in this episode, he explains how he was able to come back strong from a big setback that took him from full-time investor to W2 employee back to full-time real estate investor all with a sole focus on his new niche, raw land.

Adam Southey Real Estate Background:

  • Raw land investor
  • Invests in raw land and consults with clients to help them do the same
  • Host of the podcast Casual Fridays REI
  • Based in Fort Worth, TX
  • Say hi to him at http://www.casualfridaysrei.com/

Best Ever Tweet:

“Trust but verify.” – Adam Southey


TRANSCRIPTION

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

Adam Southey: Hey! I’m doing so good, thank you so much for having me.

Joe Fairless: Well, I’m glad to hear it, and it’s my pleasure. A little bit more about Adam – he’s a raw land investor; he invests in raw land and consults with clients to help them do the same. Host of the podcast Casual Fridays REI. I love that podcast name; it just makes me want to enjoy myself and listen to the podcast, just really relaxing, versus something like Best Real Estate Investing Advice Ever… Right? Casual Fridays just welcomes me into it.

Adam Southey: Yeah…  You know, every day is a casual Friday when you’re an investor.

Joe Fairless: There you go… That’s true. Based in Fort Worth, Texas. With that being said, Adam, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Adam Southey: Yeah, no problem. I’ve been in real estate for probably 15 years now, and I’ve done just about everything. I got started as a new home builder, and became a realtor, and a wholesaler, a rehabber, a landlord, I’ve done mobile homes – you name it, I’ve done it. Then the market slowed down back in 2008-2009, and essentially because I was so leveraged, I went broke. Just like a lot of people, I ended up having to go get a job, and I ended up on the railroad, I was a conductor.

The whole time, all I was trying to do is rebuild everything I had and get back into real estate. I was listening to a podcast, the Side Hustle Podcast, and some guy was coming on, talking about buying and selling land, and how he was doing it for a couple hundred bucks an acre… And that hooked me, because that’s essentially all the money I had right then.

So I got involved, and my very first marketing blitz I bought three 2,5-acre parcels for $250/piece, and I sold them for $1,000/piece, and that was it. I was hooked. I went all-in at that point. That was 3,5 years ago, and we’ve scaled up the number of properties, the price range of properties, and like you said, we built a podcast where we just kind of talked about our journey as land investors… And through all that, other people reached out, and we started helping others. That’s where we’re at today.

I have a partner on the podcast, Justin Silvia. We have our land businesses, and we have the podcast, where we like to help others out.

Joe Fairless: Will you elaborate on how you went broke?

Adam Southey: Yeah… A bunch of bad decisions, really. I was  a realtor, a house flipper. As a realtor, basically I was living dollar-to-dollar. If I went out and made 10k, 15k, I spent it. And then I’ve had rehabbed properties that I had just over-leveraged, and couldn’t sell them for what I initially thought I could… So when it came time to sell, I didn’t make what I needed to, and that put me on the job as a railroader.

Joe Fairless: Okay… And why in the world would you wanna get back into real estate after al that?

Adam Southey: That is a good question… I don’t know, but I wanted to do real estate all through college. I think I came up and gone through college around that time when those HDTV shows became really popular and made it seem really cool… I thought “That could be me. I could be out there flipping houses…” So I gave it a shot, and it went well at first, until it didn’t… And then luckily, through it all, I found land, and it’s just been the best thing I’ve done since.

Joe Fairless: Okay. Well, let’s talk about land now… Prior to us recording this, I rarely talked to investors on this show about raw land, because there’s just not a whole lot of people out there – maybe there are, but my team hasn’t found them – who do raw land. YOu mentioned that  you saw I’ve interviewed a couple people and you said “There’s a similar approach to what we do, but we all do it in slightly different ways.” Can you first talk about your overall approach for how you buy it, and then mention your differentiators for how you’re unique?

Adam Southey: Yeah. So really at the core of what we’re looking for is more of an opportunity than per se some people wanna look just for back-tax properties, or they’ve got websites built where people come to them… What we do is focus on a county where there’s plenty of raw land, and then instead of just picking out certain people, we will send blind offers to everyone in the entire county who owns land. And it’s an actual offer, it tells them exactly how much money we’ll spend for it on their land, and they can sign it, mail it back, they can call us and talk to us about it… But regardless, that’s what we do.

So as we’ve done this over the years, the price range has also increased. Like I said earlier, my first properties were 2,5-acre parcels, for $250/acre. They were way out in the desert, I didn’t know why anyone would ever wanna buy them, but they were so cheap I bought them anyway, and just trusted the process. And as we’ve gone over the years, we’ve scaled up to what we now kind of refer to as a bass boat property, which is that price range that a bass boat or a Harley or something recreational would be. Our typical deal now would be somewhere in that 7k to 12k, and selling in the 25k to 35k range.

Joe Fairless: Okay. You  live in Fort Worth, Texas. I’m from Fort Worth, and I don’t remember a dessert being in Fort Worth… So where was the first raw land that you bought?

Adam Southey: Yeah, so that’s the great thing about this industry – you can do it anywhere;  you don’t have to buy near your home. I’m in Fort Worth, my first properties were in North-West Arizona. I currently own land in about seven different states, and never been to any of it, don’t plan on it.

Joe Fairless: You’d never bought land before… How did you end up looking at properties there?

Adam Southey: Everything’s online. Everything you need to buy land is online. You have to have a GIS mapping software, and those are readily available. You’ve got like ParcelFact, and MapQuest… You’ve got Google Earth, Google Maps, the counties sometimes have really good websites where you can get on their GIS, and do research on taxes, make sure everything’s current, make sure the right owners are there… You have everything you need to make your decisions based on that without physically going to see it.

Now, if we’re gonna spend a lot of money, 15k, 20k, 30k or above, we would send someone out there, but for the most part we’re not in that price range, so we just go with what we have.

Joe Fairless: Yeah, but Arizona – how did you pick Arizona as an area to take a look at?

Adam Southey: Yeah, that’s a good question. One of the things that I look for when I’m doing it is I just look for other investors. I knew there was activity going on in Arizona just from my research, and I just narrowed in on a property there. At the time, I didn’t really know what I was doing. I just saw other investors were in that North-West part of Arizona, so I figured if it’s working for them, maybe I should give it a try too, and that’s what I did. I ended up mailing out there.

Since then, I’ve put a little bit more thought into it, and we kind of know what we’re doing… But basically, every time I do a mailer now, for me personally, the first thing I always do is go “Man, where do I wanna own some land right now?” The last marketing I did was in Oregon. I just thought “Oregon is gonna be a cool spot to go.” So we get online, we go to Lands of America, or LandWatch.com…

Joe Fairless: That was the last one?

Adam Southey: Yeah, the last one was in Oregon.

Joe Fairless: I thought you said you’d put more thought into it. [laughs]

Adam Southey: Yeah, so it gets better.

Joe Fairless: Is the thought “Hey, where do I wanna own land?” [laughs]

Adam Southey: Yeah, so once we pick the state, then the thought comes in… We start looking for “Are there other investors there? Is it affordable?” So for me, I like to look for that market value of being right around $1,000. You can go on these land-specific websites like Lands of America and you can put Oregon in, as an example, and you can see everything that’s for sale in that state.

Then you start looking for the market value, where 20 acres is selling for $20,000. You’ll find certain counties where that happens, and then you’ll start doing a little bit more research. Are there other investors there? Is the pricing the same throughout the entire county? Because some of these counties will have big cities in it, so the price per acre will be one price in one part of the county, and cheaper in the other… And the way that we do it is we mail the whole county. So we wanna make sure the pricing is similar throughout.

And we wanna make sure there’s good attributes… Like, is it a good county? Are there mountains there? Are there lakes there? Is there hunting there? Are the things that would draw a buyer there? And you can really tell a lot of that from these land websites. That’s kind of where once we see all that stuff in one area, that’s where we’ll mail to.

Joe Fairless: Well, I’ve never done this, so I don’t claim to know much at all about buying raw land… One thing I’ve heard from conversations with other raw land investors is your best buyer is the neighbor of the property… Because they’ll want to buy the land right next to where they currently live. But when you said one of the first questions you ask is “Are other investors there?”, why is that relevant if other investors aren’t the number one buyer? …assuming that is a true statement.

Adam Southey: Yeah, for me it’s relevant that other investors are there, because you wanna know if the county works. Is there people actively buying and selling land there? What a new investor does is they get this idea into their head that they’re gonna go find the golden nugget. They’re gonna go to a county where no one’s working, and they’re gonna be the only investor there that makes all the money. Well, the problem with that is there’s a reason why it’s not working. And while you might find some good deals, you can go to counties where you know it’s being worked, and you can up your chances of success.

For example, Costilla County, Colorado is probably one of the most worked counties in America. It seems like every new investor goes to Costilla County, but they’re all buying land, and that’s because there’s so much of it. I’ve heard there’s 26,000 5-acre properties in Costilla County, Colorado. That’s more than enough to go around for anyone if they just put in the time to market out there.

Joe Fairless: Okay. What’s been an interesting deal that you can tell us a story about?

Adam Southey: Yeah, so I’ve got a good one and I’ve got a bad one I can touch on…

Joe Fairless: Let’s talk about the bad one first.

Adam Southey: Sure. I got this killer deal in South-East Oklahoma. It was 20 acres. It was a beautiful property. I got it under contract for $16,500, and it was gonna easily sell for 60k. I probably could have put it up on the market  for 100k and sat on it for 2-3 months and gotten it… But I was buying it from an only child, whose parents had passed away. She was an older lady, she had been paying the taxes for 10-15 years… Only child, but there was no will, so the property wasn’t in her name. She said if I could help her get it into her name, she’d sell it to me for what I offered her.

So we got through this whole process of getting a quiet title done, hiring attorneys, going in front of the judge… It takes about six months. She goes in front of the judge, says that she’s an only child, she does all this, and at the end of it the order goes through, it gets transferred in her name, she goes to the attorney’s office, I transfer the money, they close the deal, and two days later a guy walks into the attorney’s office and says “You sold my 20 acres to some guy, from my sister, who had no right to sell it.”

So the attorney initially calls me back, he’s freakin’ out, and I’m like “She swears she’s an only child.” So we call her, she takes a friend of hers to the attorney, the friend swears up and down she’s an only child, so we kind of think that this guy is just full of it, basically… But he [unintelligible [00:11:58].17]

Joe Fairless: [laughs]

Adam Southey: So not only was she not an only child, but there was 14 brothers and sisters.

Joe Fairless: [laughs] Oh, man…

Adam Southey: And because it was a quiet title action in Oklahoma, they had a certain timeframe that they could fight this, and just have it overturned. Obviously, she said (whether she did or not) she spent the money I gave her, so now I’m basically out of my money and out of a property… But luckily enough, the 14 brothers and sisters – they came back and… Let me go back real quick – one of the best things my attorney did when he heard this, when he found out there was more brothers and sisters, is he went to all of them and told the story and got them to deed over their ownership, their portion of it to me, so I became the controlling interest.

Joe Fairless: Why would they do that?

Adam Southey: Most of them lived out of state, they didn’t care for their sister, which I can’t really figure out why…

Joe Fairless: No kidding…

Adam Southey: And even though they didn’t really talk to her, they didn’t want her to get in trouble, because she had just committed fraud.

Joe Fairless: Wow… That’s the kicker.

Adam Southey: Yeah.

Joe Fairless: Okay…

Adam Southey: So they came back and they bought it back from me for 18k. So I bought it for 16,5k and got 18k out of it. Not what I would consider a great success. It was definitely a huge learning opportunity, but I definitely don’t want to do that again.

Joe Fairless: Well, besides not doing deals with that one woman, what are some lessons that you’ve taken from that and applied to your business?

Adam Southey: Trust by verify. The way that we knew that guy was true was that he — this is what I thought I had hired the attorney for, because I was brand new to this and I didn’t really know, but… We just started doing Google searches, and going deeper, and we found out that yeah, that was true; we found an obituary from way back, that told the whole story.

Also, instead of closing through the attorney, I would have gone through a title company, and gotten title insurance, but because I had hired the attorney to do the whole thing, I thought it was just above board; I thought it was legit… So now any property that we buy above a certain price range is always through title.

Joe Fairless: What’s that price range?

Adam Southey: 5k or higher.

Joe Fairless: Okay.

Adam Southey: That was a good one to learn from.

Joe Fairless: Yeah, it’s a fun one. What about the other one that you mentioned?

Adam Southey: That was a good one. That was in North-East Nevada… So like I said, we mail to an entire county when we do our mailing. I sent out a bunch of offers… I had previously had some people looking for land, around 80 acres in size, but didn’t have anything available… And I mailed to this entire county, and without knowing, two people both accepted my offer, and each person had a 40-acre and they were right next to each other.

Joe Fairless: Oh, my…

Adam Southey: So it was just pure luck that the two 40-acres right next to each other, with access, 100 feet off the highway… And now I’ve got an 80-acre where probably 45 acres or so is flat, and then the rest of it is just mountain. So the person that bought it, they can sit back on the side of this mountain and look into the flat part, or they can somehow hide in the flat part, or do whatever they need to do… But I bought each 40 for $4,500, and I turned around and sold it for 36k.

Joe Fairless: Alright, so you were in it for 9k plus costs, and sold it for 36k… Which – 80 acres for 36k… [laughs]

Adam Southey: That’s still a great deal, right?

Joe Fairless: I think it’s still a great deal, but I know that’s an ignorant statement, because it’s all based on location-location-location… But it’s still sticker shock to me, talking about these price points with this amount of acreage.

Adam Southey: I get it, too… Especially when you’re trying to see the lower-end range. We have people we work with that go buy land for $100 every day. We have one client who’s done 400 deals where he bought them for $100 and flipped them for $500.

Joe Fairless: Where’s the 80 acres, by the way?

Adam Southey: That was in North-East Nevada, Elko county.

Joe Fairless: Okay. And what would disqualify an area? So “Hey, I wanna buy in Oregon.” Okay… Now I look at the areas. What would disqualify them?

Adam Southey: Like I said, if there’s no activity going on, but also there’s nothing attractive there. A lot of the properties we look for have mountains, or they’re good hunting areas, or there’s lakes nearby… It’s affordable, people wanna get out there… Maybe there’s a tiny home community in the area, or it’s a place where people like to get outside and go hike…

There’s a big area in Colorado –  Alamosa, Costilla counties, where there’s big 14,000-foot mountains, where it’s real popular to get out and hike during the day, and then go back to your tiny home at night… So you can buy five-acre parcels for cheap and sell them for $5,000-$6,000, and you’ve got people lining up to buy them, because a) it’s super-affordable for them, but then they can live that kind of free lifestyle.

Joe Fairless: That’s interesting. I love talking about this stuff, because I’m learning a whole new world, and it’s fun to do… Based on your  experience as a real estate investor, what’s your best real estate investing advice ever?

Adam Southey: Don’t give up. Not just investing, but any industry can be difficult; times get tough, or it gets hard… And a  lot of people wanna make their first million dollars, or flip their big deal in the first 2-3 months, and when it doesn’t happen, they give up. But the dream is to be an investor where you’ve got cashflow, or you’re doing big properties. If it takes you a year or two years, who cares? As long as you get there and you keep working and be persistent; eventually, it will happen, as long as you don’t quit.

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

Adam Southey: Yeah, let’s do it.

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

Break: [00:17:22].24] to [00:18:10].11]

Joe Fairless: Best ever resource you use right now to do what you do?

Adam Southey: MapQuest. It’s an online GIS. You can go on and put in a property APN and the county, and you can see everything you need to see about the piece of land. It will draw a line around it, you can make maps to send out for marketing… It will essentially tell you anything you need to know.

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

Adam Southey: Hm… I think probably not fully checking everything. When you’re new, there’s so many due diligence points that you can forget. You may check ownership, but you’ll forget to check back-taxes. Or you’ll forget to send in a certain document when you register… That’s a pretty common one, because every state you just don’t need to send the deed in; some of them have excess paperwork, like an affidavit or property value or something. It’s easy to forget those as you learn and grow. Those aren’t huge deals; after you learn and grow, you’re good at them.

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

Adam Southey: I’m really involved with my CrossFit gym, and just like every crossfitter, we always think of a way to get together… So several times throughout the year we do big things for charity, like [unintelligible [00:19:02].02] We raise money for neverthirst. It’s a company where they go out and they build clean drinking water for people that don’t have it. Or we’ve done Barbells for Boobs – that supports breast cancer. Anything we can do to get together and help out.

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

Adam Southey: Casual Fridays REI is our podcast. Monday, Wednesday, Friday. Me and my partner, Justin Silvia, we talk about our journey, we talk about things that come up in our business, and try and help everyone out.

Joe Fairless: Adam, thanks so much for being on the show, talking about raw land, your approach to finding areas, your approach to buying, and then the two entertaining stories. Trust but verify, for sure, Google searches… But really, even with the Google search that’s a little flimsy still… But the title insurance – that’s where it’s pretty rock-solid.

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

Adam Southey: Alright, thanks so much.

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JF2001: Being Your Own Tenant in Commercial Real Estate with Ken Wimberly

Ken is a business owner who started out as a land broker and in 2008 he quickly learned how to adapt due to the economic downturn. Fast Forward to today and now he has developed a successful app called Legacy of Love, an app that helps connect kids with their parents. Ken also shares a story on how he went from purchasing a shopping center and searching for tenants to creating his own tenant. 

Ken Wimberly Real Estate Background:

  • Founder and visionary behind Legacy of Love, LLC.
  • Entrepreneur and real estate investor, and has 16 streams of passive income and 4 streams of active income
  • Based in Fort Worth, Texas 
  • Say hi to him at https://www.laundryluv.com/ 
  • Best Ever Book: The Obstacle is the Way 

Best Ever Tweet:

“Whether it’s a client, customers, tenants, your partners, your lenders, if we can figure out how to be a significant source of value to others life rewards us.” – Ken Wimberly


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, Ken Wimberly. How are you doing, Ken?

Ken Wimberly: Dynamite. And you?

Joe Fairless: I am doing dynamite as well. You said that earlier, but when I first called you, I was like “No one’s ever said ‘dynamite’, and I love that.” So maybe I’ll start incorporating ‘dynamite’ more in my vocabulary. A little bit about Ken – he is the founder and visionary behind Legacy of Love LLC. He’s an entrepreneur and real estate investor, has 16 streams of passive income, and four streams of active income. Based in Cowtown; if you don’t know Cowtown, that’s Fort Worth, Texas. Go see the Stockyards.  It’s a great tourist place, as well as for locals in Fort Worth.

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

Ken Wimberly: I’d love to, and thanks so much for having me on the podcast. I’ve got a background in finance out of college. I studied finance and real estate in college – if you wanna date me here, back in the early ’90s. I served in the Navy for a little while, got out… Kind of got into an entrepreneurial spirit. I was a restauranteur for a little while… And I eventually made my way into the real estate business in 2002.

I got into real estate brokerage, and really got into the land brokerage business. For anyone getting into the real estate brokerage business, especially the commercial real estate brokerage business, the lead time is long to start really producing. It took about a year to start making any money. But once I did, I spent that year building a pipeline and things started to really kind of flow in.

So from end of 2002 is when I got into the real estate business, I started making money in 2003. Around 2006 I broke away from the small, family-owned partnership that I had interned with and mentored with and learned the business, I started my own company in 2006, and around that time I started looking for my own real estate deals at that time, and got involved in a couple of commercial real estate deals. Around that time markets crashed; basically,  July 2008 the commercial real estate market crashed, and I had to really reset and restart, figure out what I was gonna do within the brokerage business… Because the land brokerage business died. Everything I had dried up at that point that we’d stuck in the brokerage business. I did a lot of REO work with some banks, and really just whatever I could do to help people at that point… Help them, which helped me.

I stuck with that, and continued to grow my real estate business. I really started to scale it around late 2009, early 2010, and scaled a pretty significant brokerage operation. We became the number one producing real estate team in all of KW Commercial out of about 2,000 agents… So we scaled a nice business, which was beautiful, because that threw off income, and we were able to use that income to make investments, both in our own deals, and in some other folks’ deals, and start to slowly build this passive wealth path that we’re on today. Also, the income from those allowed us to venture into some other endeavors that have evolved, other businesses that are also creating income opportunities. One of those is a laundromat business that we’ve actually created. The beauty of the laundromat business is we have a built-in tenant for real estate opportunities. So our first laundromat called Laundry Luv just opened three weeks ago. We bought a shopping center a year prior to that, where our laundromat is now a tenant in the shopping center… We bought a 50,000 sqft. center, we’ve now got a 6,200 sqft. laundromat as a tenant in that center, and now we are looking to repeat that process over and over and over again as we expand the laundromat operations.

Also, the income from the real estate brokerage business had allowed us to get into the Legacy of Love app, and that allowed me to really focus on a passion project of giving back and being a parent, and being a dad, and we created an app that is [unintelligible [00:05:05].27] parent-to-child journaling platform; a cross-platform journaling app that we’ve got a pretty rapid growth trajectory so far… And we’re growing and scaling that business.

All of this came from the ultimate real estate, and now I continue to invest in real estate and focus on these two growing businesses as well.

Joe Fairless: So much to talk about… [laughs]

Ken Wimberly: Pick and choose.

Joe Fairless: Yeah, well – let’s talk about Legacy of Love app. We are gonna spend a lot of time on the shopping center stuff, but just to quickly touch on Legacy of Love app… You said it’s a parent-to-child journaling platform. When I hear that, I think “It’s a way to take notes that are then shared with my kid.” But I’m sure that it’s a little bit more to it than that. Can you just elaborate a little bit more?

Ken Wimberly: Yeah. Think of this as a place to capture moments, memories, and lessons of life before they fade away with the passage of time. Things happen, the funny little stuff that your kids will say, and you wanna capture that moment, and you think “Oh, I’m gonna remember that forever”, and a month later you can’t even remember what they said, or even what was funny about it.

I guess the best way to describe it is a modern-day, easy to use digital scrapbook. It creates a chronological history of your child’s life based on what you input in there. The system automatically calculates your age and your child’s age of each entry, so that later in life they can go back and read these entries with the context of where you were at the different stages of your life.

You can put photos, videos, voice notes, save voicemail… I remember some of the sweetest little voicemail of my now 15-year-old son left for me back when he was 4-5 years old. Of course, now it’s hard to get him to say five words, but back then he used to leave the sweetest little voicemails. And of course, with phone upgrades and whatnot they eventually disappeared, but we created a space where all of that can be captured and passed down to future generations.

Joe Fairless: I love it. I have now downloaded it, and I am registering it right now, and I have successfully created the account, it says… And I’m off and running. I’m gonna be doing that. Such a great idea.

Ken Wimberly: Thank you.

Joe Fairless: Thank you for creating it. You’re the one who created it, so I appreciate you and other entrepreneurs for creating stuff that can be useful, and is useful, and fills a need, so props to you for that. I guarantee you I am your newest downloader, because I literally just did.

So let’s talk about the shopping center stuff.

Ken Wimberly: Yeah.

Joe Fairless: And it was very quick to register, I did it while you were talking about it, by the way…

Ken Wimberly: Awesome.

Joe Fairless: So the shopping center – the business model, it sounds like, is buy a shopping center and then have your own  businesses, or have some of your own businesses be the tenants to double-dip on the income. Is that correct?

Ken Wimberly: That’s correct. And I learned that strategy from a client of mine that we’ve done a fair amount of business with. This client owns the Family Video chain. No doubt that that is a dying industry, and they’ve realized that for years, but now they’re converting those locations into other tenants. But what that tenant allowed them to do was acquire a lot of real estate. They own somewhere in the neighborhood of 800 real estate assets that they have these old video storage locations in… I thought “That is a beautiful idea.”

So when we came up with this idea for the laundromat, we thought “This is our foray into having a great tenant to go into these B and C class shopping centers.” So our objective is to go pick up some of these centers with a decent amount of vacancy at a significant discount, that we can then go put our built-in tenant and then other tenants that would like to cohabitate with us… Because there’s kind of a natural fit based on the demographics and income that we’re looking for for a laundromat.

Joe Fairless: Okay, it makes sense. Your businesses that you bring into your shopping centers – are they only laundromats?

Ken Wimberly: Yes, our business that we have is just the laundromats. However, it’s a different laundromat. It’s not like you would drive by and see in so many places. We are a laundromat with a mission. Laundry Luv  is our laundromat concept, and we’re a large-store format, 5k to 7k sqft, brand new, beautiful [unintelligible [00:09:26].13] machines. You walk into our store – it’s super-clean, super well-lit, safe, big-screen TV showing positive programming up there… We don’t allow daytime crap TV on there; we put positive programs on our TVs. Big areas in the laundromat to sit as families while your laundry is being done… So we’re building these to be an impact in the community. But with a 6,000 sqft. tenant, that allows us to put a very nice tenant in an otherwise vacant center right there. That’s the one business we have at this time, and frankly, it’s enough to keep us busy.

Joe Fairless: Okay… And how do you make a laundromat profitable? Because most laundromats I see are not what you described, and my guess is they’re not what you described because it’s tough to make a lot of money out of a bunch of quarters that are being inserted into it… So educate us on the business model of your laundromat.

Ken Wimberly: Yeah, it’s interesting… When we started studying the industry and the profit margins that could be in the industry if done right… First of all, we have no coins in our operations; we’re all card-based systems; all of our machines are card-based, so it’s all cash going into a vault that issues a card out, like a Dave & Buster’s type card… But how it becomes profitable is just a matter of garnering enough of the business that is in a particular location. So the site selection is one of the most important factors in opening up a laundromat.

Number one, we need the right kind of demographics, and it’s a lower income demographic that typically goes in and visits a laundromat… Although with a pick-up and delivery wash/dry/fold business, that opens up the opportunity for laundering higher-income folks’ laundry. We have that very minorly factored into our proforma numbers right there. But we expect based on our investment that we’ve made into the asset, we expect pushing a 30% cash-on-cash year one return. You’ve gotta keep in mind, it’s an operating business; this is not a passive real estate business, although the real estate component is… But this is an operating business, so we’ve got employees that are hired, managers that are hired… It’s a full-on operating business here.

Joe Fairless: Okay. And out of the different types of businesses that you could put into a shipping center, how did you initially arrive at doing a laundromat?

Ken Wimberly: By a fluke. I was not looking for a business to get into. What I was looking for was a tenant for a shopping center. I actually had been asked to invest in a nearby shopping center, not the one that we purchased, and frankly, I was just looking for tenants  that we could backfill the vacancy on that center.

I met a guy at a conference that was kind of [unintelligible [00:12:15].15] and I said “Hey, would you guys be interested in coming in as a tenant in this center?” I sent him the details on the center, he ran a side-assessment on it… He said “Ken, this is like an ideal location for a laundromat.” And again, I thought he was a tenant; I said “Great, let’s get you signed up, get you in there”, and I came to realize that he was not a tenant, he was actually a manufacturing rep for a laundromat equipment company. So he started looking for an operator and couldn’t fine ond in this particular town – in Abilene, Texas, in West Texas. he just didn’t have any operators out there.

So I went to one of my partners in real estate deals and said “Hey, what would you think about us exploring this opportunity to become an operator of a laundromat?” Because we were already looking for opportunities in that area as far as real estate investments… Let’s look into it. So we went to a third friend of ours…

So this guy and I are both big-picture real estate guys, neither of us have the bandwidth to be an active operator, so we went to another friend of ours that is a phenomenal operator, asked if he would be interested in exploring the opportunity… And that’s how it started. So we went to a couple of seminars, and listened to these laundromat companies talk about how to run one, how to set one up, the economics of what it looks like… And that’s how it started.

We started by going to seminars, we talked to other laundromat operators, we talked to people that had good experiences, bad experiences, people that were doing it right, and wrong, and we started to learn a lot. And really, we took about a year of studying the industry before we pulled the trigger, and took about another year once we pulled the trigger to get it operational and the first one opened.

So it’s been a two-year endeavor, but now we have this beautiful model, a beautiful concept,  a business plan, and a way to move forward and do these time and time and time again.

Joe Fairless: And I believe if I heard you correctly earlier you said you opened it up three weeks ago, correct?

Ken Wimberly: Yeah. Our first location in Abilene, Texas opened three weeks ago. We had our official grand opening last Friday. Every day our customer base is growing, and the feedback has just been amazing. People have walked in there and said “I’ve never been in a laundromat like this in my life. I will never go anywhere else.” That is the response we’re looking for.

It’s more than just a laundromat, it’s a place for us to impact community. We want people to come in there… It’s a lower income demographic, and maybe it’s not always treated that well. And we want people to come into our operation and feel like it’s a home away from home, and it’s a place where they can gather the family. We’ve built in a children’s play area in our laundromat. We’ve got hundreds of books in there that children can read; we’re bringing in local librarians and volunteers from local colleges to read to children at pre-designated times, so that it is truly a community space where people wanna come back time and time again.

Joe Fairless: How many other spots does the shopping center have that need to be filled?

Ken Wimberly: We have one remaining vacancy, and then we have four other tenants, our primary tenants; we’ve got a CSL Plasma, an EZPAWN, and a buddy’s home furnishing in there, then us with the laundromat, and then we’ve got a 12,000 sqft. vacancy remaining… So we’re looking for larger tenants who would fill it all, but we’re also talking with a few smaller tenants to subdivide the 12,000 sqft. into a number of smaller tenants.

Joe Fairless: And how much did you purchase the shopping center for?

Ken Wimberly: We got it for a song, actually. We bought this thing at just over $20/sqft. and it’s  a 50,000 sqft. center, so we’re around 1.1 (million)

Joe Fairless: And how many tenants were there when you purchased it?

Ken Wimberly: Those primary tenants were already there.

Joe Fairless: Oh, okay…

Ken Wimberly: …and EZPAWN. So we went in at over an 8 cap, buying it with the vacancy, and then we knew we were gonna back-fill some of the vacancies… So to give you perspective, we’re cash-flowing at a 12,5% cash-on-cash today, and the laundromat tenant is just now starting to pay. This is one of those things that will be  a really phenomenal investment… And we just went in, we did a basic rehab of the center as we were opening the laundromat… So we went in and repainted the entire center, we resurfaced and striped the parking lot, just refreshed it, and it looks much brighter.

We’ve put wall pack LED lighting up, so it’s super-bright at night, and upgraded the sign… So we’ve just done some little minor improvements, and we budgeted for that when we bought the center. So we had the reserve funds in there, budgeted for it, and we had the intent that we would do it when we opened the laundromat, so it all looks new and fresh at the same time.

Joe Fairless: What’s something that if you had unlimited budget and you didn’t quite care about profitability, that you would do to enhance the shopping center?

Ken Wimberly: There’s only so much you can do with a C+ shopping center… If I had unlimited budget, I would probably update the facade even more. So we’ve repainted everything, it looks great… But I would update the facade and put a really nice sign up front. Just a couple of things like that.

I can tell you, the parking lot improvements alone made a massive difference, from resurfacing and restriping the parking… That and the paint refresh – it looks incredible.

Joe Fairless: About how much did it cost to resurface and restripe the parking lot?

Ken Wimberly: We were pretty close — around $15,000.

Joe Fairless: And how did you find the deal?

Ken Wimberly: In that market, in Abilene, Texas, I have a [unintelligible [00:17:36].16] realty franchise in Abilene, so I’m out there quite a bit… And this was a broker friend of mine that I know; he had this for sale, and I’d kind of seen it come across, and I called him to start enquiring about it, because I thought it would be a good fit for our laundromat.

Joe Fairless: And how many shopping centers have you purchased to date?

Ken Wimberly: In addition to this, we have some office buildings, some land holdings… I’m in shopping centers with some other people… This was the first one that I’d put together that was just me and my partner as a large-size shopping center.

Joe Fairless: What type loan did you get on it, if any?

Ken Wimberly: We put debt on it. In this case, a traditional bank loan. It was a lender that we’ve done other business with. It’s a 5-year fixed interest rate on it, and then it bumps for another five.

Joe Fairless: The reason why I ask that is what concerns did they bring up – if any – about you all creating a tenant from scratch, doing a business model that you’ve never done before?

Ken Wimberly: The separate lender on that, that is a lender on our laundry deals… And our primary lender had no concerns, even though we did not have direct experience in the laundromats, my other two partners did not have certainly a lot of experience in business… Our operating part was a West Point grad, and has run some very sizeable companies; he’s really dialed in, got his act together… So we had an incredible business plan that we put together as we launched this. Frankly, all the lenders that look at that were very pleased with what we had come up in the plan.

Joe Fairless: Do you remember what year your buddy graduated from West Point? Or do you know?

Ken Wimberly: I don’t know… It was 10-12 years ago.

Joe Fairless: Okay. One of my brothers graduated in ’96 or ’97; that’s why I was wondering. You said you have office buildings… What’s the last office building you purchased?

Ken Wimberly: We bought an office building that houses our [unintelligible [00:19:28].01] It’s a single-tenant office building, it’s leased [unintelligible [00:19:35].13] as the single tenant.

Joe Fairless: Cool. So that is a building you purchased, and then you are the tenant for that?

Ken Wimberly: That’s right. We added a tenant in there. Then I’ve got some guys that have done a whole lot of different office buildings, and I’m passive in that. However, I would encourage your listeners… Someone made a comment to me about five years ago, and it really was a light bulb moment. He said “Ken, I own a small interest in a lot of deals, and they all add up.”

Prior to that, I would just look at my own deals, and putting my own deals together that I was either going to be the sponsor of, or own then all outright… And that was a light bulb moment. Since that time, I’ve started investing into many other people’s deals. I only had so much bandwidth that I can run on my own stuff… Some great deals I’ve done have been frankly from investing into other folks that I know have a good track record, that invest in things that I understand as well, and I trust them… And they’ve performed quite nicely.

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

Ken Wimberly: Be a source of value for others… Whether it’s a client, customers, tenants, your partners, your lenders… If we can figure out how to be a significant source of value to others, life rewards us.

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

Ken Wimberly: Yes, sir.

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

Break: [00:20:58].21] to [00:21:47].13]

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

Ken Wimberly: The Obstacle is the Way, Ryan Holiday. I’m gonna give you my second and third – Building Your Story Brand (Donald Miller) and Profit First (Michael Michalowicz). I’ve read all three of those recently, and they’re all dynamite.

Joe Fairless: What deals have you lost the most amount of money on?

Ken Wimberly: I haven’t lost money on deals yet. I’ve not made money, but I haven’t lost money on a real estate deal here.

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

Ken Wimberly: One of my first deals that I did – a buddy and I put together  a land assemblage. We acquired three parcels, about 6,5 acres, took it through zoning, got the land entitled for a beautiful office complex that we were gonna develop… We dealt with the asbestos issue on the house that was there, razed the house, got everything planned, and ready to develop. It was interesting, because it was almost the worst deal I ever had, because the day before we closed on our development loan to start our first two buildings, our equity investor walked. The financial markets were turning, he walked from the deal, and we didn’t start construction on our first two buildings.

Shortly thereafter, about two months later, the financial markets started to collapse. A couple months after that, I had someone approach me about buying my interest out. I had less than $10,000 of my own money invested in this. We had an equity partner that had put up the bulk of the money that we did, and a lender on it… And I sold  my interest in that for $150,000 based on the value that we created bringing in this project. So I think that was my best deal yet.

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

Ken Wimberly: Giving up control of a deal. One of the first deals as I was starting — probably THE first deal I tried to put together, with the same partner that I later did the one I just described to you (the one where I sold my interest out for such a big return), we tried to put our first deal together and put a deal under contract. We went to someone that was gonna be our  equity partner in it… We ended up assigning the contract over to the equity partner. We just didn’t know better at the time. I’ll tell you what – we learned on that.

The equity partner ended up not manifesting, not materializing, and we had assigned the deal over to him, and the deal ended up dying.

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

Ken Wimberly: The two ways that I’ve kind of mentioned – with our laundromat, and what we’re doing with  the laundromat as a community service; I love what we’re doing there. And then with Legacy of Love, just as a way to help parents to really create a true, beautiful legacy to pass on to their children.

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

Ken Wimberly: Go check us out at LaundryLuv.com or LegacyOfLove.app, to learn a lot about what we’re doing there.

Joe Fairless: Ken, thank you for being on the show today, talking about your business model at Laundry Luv, your business model of buying shopping centers, and putting in a business that you create; the app that you’ve created along those lines as well… And just overall your real estate experience as an entrepreneur.

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

Ken Wimberly: Thanks so much, I appreciate it.

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JF1407: How To Market Like A Wholesaler with Jerry Puckett

Jerry never had any intentions of owning a marketing company. When he was stuck with the task of finding work from home, he worked with a friend answering phones and talking to people because she was great at everything but talking to people. Once he did his first wholesale, he was hooked. Jerry learned how to do marketing and went out on his own. Now he helps investors keep deals in the pipeline.

 

Best Ever Tweet:

 

Jerry Puckett Real Estate Background:

  • Founder and managing partner at New Refined Images
  • Helps clients source deals through direct mail and internet marketing
  • Sent more than 1 million pieces of mail to more than 90 markets in 2017
  • Say hi to him at www.marketlikeawholesaler.com
  • Based in Fort Worth, Texas
  • Best Ever Book: The Speed Of Trust

Best Ever Listeners:

We have launched bestevercauses.com  

We profile 1 nonprofit or cause every month that is near and dear to our heart. To help get the word out, submit a cause, or donate, visit bestevercauses.com.


TRANSCRIPTION:

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

Jerry Puckett: I’m doing well, Joe. Thank you for inviting me onto the Best Ever Show. I appreciate it.

Joe Fairless: My pleasure, nice to have you.  A little bit about Jerry – he is the founder and managing partner at New Refined Images. He helps clients source deals through direct mail and internet marketing. He sent over one million pieces of mail to more than 90 markets in 2017, and you can learn more about his company at MarketLikeAWholesaler.com. Based on Fort-Worth, Texas, Cowtown, where I’m from. With that being said, Jerry, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Jerry Puckett: Sure, you bet. I did not start off to have a marketing service; that was not my goal, that was not my plan. I just wanted to be a wholesaler. In 2010 my wife was diagnosed with breast cancer, and I needed to find something that I could do from home, so that I could take care of her. It was either quit my job, stay home and take care of her, or it was to hire somebody else to stay home and take care of her, and I just couldn’t see me doing that… So I ended up falling in with  a friend of ours who had a very small real estate company, and all she wanted me to do was answer the phone for her.

So it went from that to — just the long story short, she really had no people skills; she could analyze a number up, down, backwards and sideways, but she could not talk to people. So I was talking with them on the phone, and she’d go out there and ruin the deal every time. They’d say “Well, we’ve spent 20-30 minutes on the phone with Jerry. Where is he?” So she started bringing me along to her appointments with her, and I found out that I had a knack for negotiation.

At one point we had two fully executed contracts and she only had enough money to close on one, and we didn’t know anything about creative financing at the time. She was like “Oh my goodness, what are we gonna do with this other one?” and I said “Well, I’ve been reading Bigger Pockets. Why don’t you let me wholesale that thing?” She said “Wholesale? What’s that? I don’t know anything about wholesaling. I said “That’s okay, I do”, because I’d been reading Bigger Pockets.

I made a couple of calls, I sold the property, I made a $10,000 fee in just a few minutes, and I was hooked. Wholesaling is cool, it’s really easy, or so I thought at the time. What I didn’t really factor into my equation at the time was that she had done all the work ahead of time of setting up the marketing campaigns and everything else like that… So when I actually got out on my own, I had to learn how to do all of that stuff for myself.

I had a colleague from — my very first Bigger Pockets colleague; his name is John Claus. He was kind of watching over my shoulder as I got better at wholesaling here in DFW. He was like “You’re doing  a really good job competing there against some of these big guys… Could you do a campaign like that for me down in Austin?” I’d drank the Bigger Pockets Kool-Aid a long time ago and I wanted to pay it forward, so I said “Sure, no problem. We’ll just set it up and I’ll run it like I do with my own systems, and all you’ll have to do is pick the calls and make the deals.”

He thought that sounded pretty good, so within five months he had three deals under contract and he had netted six figures off of each. So what does he do? He gets back on Bigger Pockets and starts shooting his mouth off about it – “Hey, six-figure income from a yellow letter.”

Next thing I know, my phone is ringing off the hook. “Hey, Jerry, can you help me with my marketing? Can you…? Can you…?” So that’s how the marketing service was first built.

I ended up going out to a Bigger Pockets conference out in Denver that year, and people all over the place were saying “Hey, can you mentor me? Can you mentor me?” There were folks out there that were charging 10k-15k a pop upfront, just to teach people regurgitated crap that you could get anywhere for free. So I just saw the two things kind of dovetailed. There’s nothing I can really teach you unless you’re actually out there talking to sellers, and you’re not gonna be talking to sellers unless you’re doing your own marketing, so hey, why don’t you use my marketing pieces, and the least I can do is teach you how to go from there. So that’s how the wholesaler thing got started… Dovetailed exactly at the same time when the MLS dried up for investors and they weren’t able to find products on the MLS anymore, so that a lot of them would say “Jerry, you always have product, how come I don’t have product?” I said, “Well, you’ve gotta market like a wholesaler.”

And one thing just kind of led to another and one market after another, one investor after another, one state after another, people were coming to me, I was doing their marketing for them, and it just kind of grew from there. If you check out my profile over at Bigger Pockets you’ll see we’ve got something like 7,000 positive reviews from people that are out there making money off of what we’re doing.

I don’t try to reinvent the wheel, I just kind of stay sharp and in front of  the different trends; you learn  a lot by split testing with over a million pieces in 90 markets, so I almost feel like I’m cheating, but that’s the way we do it. Everything we do is custom and boutique.

Joe Fairless: Split testing that many tests, for a lack of a better word, you’re gonna learn a lot… What  have you learned?

Jerry Puckett: Well, the funny thing is I can take all the data that we get from the mailings and I can kind of put it on a heat map of sorts; Google’s got some pretty amazing features. So I start to see trends, I start to see something that happens out in California or over in New York and I know that it’s gonna spread. I see from the results of the mailings that some language choices work well, while others don’t… So it’s just something that you pick up along the way. We monitor every response that comes, so everything that we write is done custom. We don’t use templates that are just stale. I don’t write letter two until I see the results from letter one etc.

So I see trends a lot of times before they happen, I know when an area is getting hot, I know when an area is drying up, I can see it shift from one place to the other, and hopefully when you examine all of that you can get in front of it. I think that’s one of the advantages that we have – we’re able to stay in front of the market as it were, and stay out in front of everybody else.

Joe Fairless: What are some language choices that work well?

Jerry Puckett: Well, you’ve gotta be somewhat particular to your market in that. For instance, the things that I say in Austin absolutely wouldn’t work in Denver, and the things that I might say in Southern California could probably get you locked up in New Hampshire. You wanna kind of focus in on the vernacular. It’d be kind of hard to do it nationally, but for example when I’m in Texas I say things like “Y’all”, “Circle the wagons”, mustangs on the mail piece itself… People love horses out in Texas…

Joe Fairless: [laughs] Oh, I thought you were talking about the car.

Jerry Puckett: Oh, no, no, no. Not at all. Mustangs. We’ve done some studies on that, the psychological profiling of American people; they’ve always wanted an American kind of royalty and people have an affinity for horses or mustangs. It’s a real subtle psychological thing, but if you put a picture of a mustang on the outside on your envelope, your open and read rate is gonna jump way up. It’s sometimes just that simple.

Joe Fairless: What do you put in New Hampshire? You mentioned New Hampshire, you got me curious about that state.

Jerry Puckett: New Hampshire – they’re Yankees, right? And they think that everybody is out to kind of scam them, and there are a lot of — well, I guess I’m just gonna say there are older folks that if… There’s certain things that you must do. You must put your full name on the return address; if you don’t, they’re just going to assume that you’re a scammer and they’re gonna call the cops on you, or they’re gonna report you to the district attorney, or something like that.

You must do that, you must be absolutely polite, you must Mr. And Mrs. when you address somebody, no “Hey, Dave” or “Hey, Bob.” It’s got to be very formal, it’s got to be very polite, and you’ve got to assure them somewhere along the course of the way that you are not trying to scam them, that you really do want to buy their property… And “Please give me a call” and then have the number be one that works well, and not at all try to be anonymous. That’s the thing when you’re over anywhere in New England – if you try to be anonymous in any kind of way you’re automatically gonna be targeted as a scammer, and they will call the police on you quickly.

Joe Fairless: What happens when they call the police?

Jerry Puckett: Well, usually the police will call you and say “Hey, we got a report from so-and-so that you’re running some kind of a scam.” You’re not doing anything wrong, you’re not doing anything illegal, so you’ve got to explain to them exactly what you’re doing, how you go the address and everything else, and they’ll usually just leave it with “Okay, but take so-and-so off your list” and I’m like “Of course.”

Joe Fairless: [laughs]

Jerry Puckett: I don’t wanna have anything else to do with them. But if you’re in this business for any length of time, something like that’s gonna happen. I’ve listened to quite a number of older posts that Michael [unintelligible [00:09:52].25] would put out; he’s got recordings of people who have called him and threatened to shoot him in the head and different things like that. I’ve got a few snippets of those myself. You get all kinds of interesting calls, with people who wanna do all kinds of crazy things to you. They get mad; I don’t know why they get mad, but they get mad.

Joe Fairless: Conversely, Southern California – what’s the approach there?

Jerry Puckett: Man, Southern California is a bear to get anybody to notice you at all. We’re lucky if we get a 1% response rate out there. That is the toughest market anywhere. So the approach there is you’ve gotta kind of be bold and over the top, and you have to exude a frame of mind that says that you have money, and that you’re able to move quickly.

I know that that sounds kind of like Captain Obvious sort of thinking, but it’s not, because in a lot of markets you want people to think that you’re just the guy next door.

Joe Fairless: That’s Texas.

Jerry Puckett: Yeah. Here in Texas I get in the door by being the guy next door.

Joe Fairless: Yup.

Jerry Puckett: I just do a couple of deals a year to help buy Christmas presents and groceries, but in California if you take that kind of — I guess you would call it a kiss me approach… If you take that kind of approach in California, you’re never gonna get a call. No one is ever gonna call you. So the best thing you can do there is show them pictures of other deals that you’ve done, maybe put some of your numbers out there, anything that’s gonna be visually appealing and speak to their heart immediately. They can’t be overdone; it’s still got to be  a short and a sweet message, but we’ve gotten traction just by saying “Hey, here’s the last deal that we did” or point them to a website where you might have testimonials… “Here’s what so-and-so had to say after doing a deal with us”, and just have that be something easy that they can get to and listen to. That will capture their attention sometimes, and they’ll give you a call just to check you out and kick your tires, and if they’ve done that, then you’re in the door, so to speak. You’re in play.

Once anybody’s called, that’s one of the biggest things that folks will do wrong – they don’t follow up. I can have somebody call me and say “Take me off your list” and that’s fine, I’m gonna take you off a list, and I’m not gonna waste any more money mailing to you, because now I have your phone number. I can reach out and touch you any time that I want for free, and you’ve already opened the door by calling me.

So the way I work any given market – I continue to stay in touch with people until one of four things happens. They either will sell me their property, sell it to someone else, tell me to go to hell, or die. And if they die, then I’m gonna follow up with their executors and the heirs until they sell me their house, sell it to someone else, tell me to go to hell or die.

Joe Fairless: Wouldn’t the “Take me off your list” be basically telling you to go to hell? So wouldn’t that already take them off the list?

Jerry Puckett: No, no. “Go to hell” means literally “I’m gonna shoot you in the head, leave me alone.” They’ll get mad. If somebody’s rude, if they’re at the point where they’re rude on the phone, I won’t ever speak to them again, I’m done. But if somebody is just “You know, I’m not really interested, take me off the list” – that’s okay, because people’s circumstances change frequently. The people who are in distress this month, last month they didn’t have a clue what was going on, or that they were gonna fall into something where they needed some help.

The people who are gonna be in distress next month, right now they’re cruising along like everything’s fine. So when I reach out — I usually just use text. I will reach out and text somebody maybe 3-4 times a year if they’ll say “Take me off the list.” One of about four things can happen. And I’ll just say something like “Hey Bob, it’s been a while since we’ve talked… Has everything been okay?” I don’t ask about the property specifically; polite society being what it is, their only point of reference for speaking with me in the first place is their property, so when I reach out to them like that, they can either answer back and say “Jerry, I’m still not interested, but thanks for checking on me.” And that’s fine, then I’ve deepened my rapport with them, and I’ve reconnected my name with selling their house.

Or they could say “Jerry, I’m not interested right now, but I know somebody who is… And didn’t you offer me a referral fee?” So they can refer me to somebody. Or at that point they can tell me to go to hell, leave them alone, don’t ever contact them again.

So if any of those things happen, that’s fine, it pushed my agenda a little bit more forward. And they could always say “You know, Jerry, things have changed. I’m interested in hearing your offer now.” And that happens more often than you would think. People’s circumstances change, they change quickly; if you’re somebody that’s been in contact with them and that stayed in touch with them over time, then when it’s time to do something, you’re gonna be the one they call.

That’s why everybody who does this just preaches about being persistent and consistent, and that’s why. The more persistent and consistent you are, the luckier you get. You’re gonna be the one they call.

Joe Fairless: And when you were talking about the different states and the vernacular that you use, or the approach – that’s not just your off-the-cuff thoughts, that’s based on quantifiable split testing research, is that correct?

Jerry Puckett: That’s correct. We have a system that we use for everybody that we work with that allows them to track their responses. It really kills two birds with one stone; I call it a lead tracker, but it’s not quite sophisticated enough to be software… It’s a spreadsheet with a lot of bells and whistles built into it. While it allows the client some place to track their calls, set appointments, take notes and everything like that, it also keeps my master mailing list updated in real time, so that I don’t have to nag anybody to do it. But part of keeping track of the calls is that I ask them and try to teach them how to take good notes when they’re talking to people, and if they happen to record calls, then that’s something I can hear too, and I can actually listen to the way people talk.

But yes, in any given market, I will keep track via that lead tracker which version of the text that I used for which segment. That gives me back information on the back-end; I can see who responded to what. With this many different pieces to play with, I’ve done things as small as moving a comma to see if it helps or it doesn’t help. I know that sounds silly, but you really have to test something to death.

Joe Fairless: I’ve heard that when you put in a comma, it makes the amount look larger, but when you remove the comma, then it makes the amount look smaller.

Jerry Puckett: Yeah, anything that gives more wide space on the page is gonna be helpful. But then on the other hand, if you don’t use a comma, sometimes when people are reading it they don’t take a breath as they’re reading the message in their mind where they should, so if you meant to pause for emphasis, then it’s not there. So there’s a lot of different things to take into consideration.

I tell people all the time that just because you have a printer on your desk and you know how to use mail merge that doesn’t mean you’re a marketer any more than having a set of tools out in your garage makes you a mechanic. So there are a lot of things to take into consideration if you’re trying to crack a market open and you’re really trying to succeed.

Joe Fairless: I do have some tools in my garage and I am definitely not a mechanic, so I understand that… The direct mail that you do – do you work with any investors who purchase medium to large apartment buildings?

Jerry Puckett: I have worked with people who have bought up to — I think the largest any of my clients has bought is like a 50-unit, so I guess that would probably be small to you, considering the things that you do, but I think it was pretty big to them. Where would you put 50? Is that small or medium?

Joe Fairless: I don’t know, we’ll say medium; we’ll call it medium. So what is the approach for the 50-unit, compared to what you’re doing with the single-families?

Jerry Puckett: Oddly enough, a lot of the messaging is the same. Messaging when you’re trying to buy something is usually just different iterations of your contact information plus the benefits of working with you plus a strong call to action. If you apply that formula, it’s the same thing. But with the apartment owners, and also with mobile park home owners, you want to convey to them that you really know what you’re talking about.

So if you start talking about the rent rolls, or separately metered — different things like that… You want to let people know that you know what you’re talking about, and that you are a fellow landlord. And if nothing else, so “If you’re not interested in selling, I certainly would like to network with you, I’d like to know more people like you.” Often times it’s a matter of just getting them into your network.

A community of people who own properties like that is much smaller, so if you’re networking with everybody, these folks also see each other a bit different — oh gosh, what’s the word for it? They network with each other in different ways, so if you get into somebody’s network, there’s a good chance that you’re gonna be able to reach out to somebody else, because they’re involved in the same association, they go to the same sorts of meetings, they deal with the same sorts of issues… So conquering that smaller market is actually a lot easier than when you’re doing a single-family house – to hit all the prospects that you need to, that’s usually a pretty huge prospects, and most people’s budgets don’t carry that kind of wallet to it. But when you’re looking at the apartment buildings, the community is much smaller, so you try to capture all of them and get all of them into your network.

Joe Fairless: Based on your experience as a real estate entrepreneur, what is your best advice ever for investors?

Jerry Puckett: Don’t cheap out. If you want to make money in this business, don’t go cheap. There’s just too many people out there that try so hard to pinch a penny that they’ll the make the things scream. I was brought up with the notion that the harder you squeeze a watermelon seed, the more likely it is to slip right out of your fingers. I’ve seen people try to outsmart people that have been doing this for years, I’ve seen them try to come up with uber-laser-targeted lists that nobody else has thought of… They’ll bend over backwards trying to save money, instead of counting the cost of what it’s gonna take to actually get to where they wanna be.

So my best advice that I can give to your best ever listeners would be really consider what it is that you wanna do and count the cost. Don’t cheap out on it. Sink some money into it if you’re gonna make some money back on it.

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

Jerry Puckett: Oh, the Best Ever Lightning Round… Okay, yes!

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

Break: [00:20:28].22] to [00:21:32].06]

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

Jerry Puckett: Best ever book I’ve ever read… I guess if it’s a business book, I’m gonna say The Speed of Trust, by Stephen Covey.

Joe Fairless: What’s the best ever business transaction or real estate deal you’ve done?

Jerry Puckett: The best one was the first one that I told you about earlier. It happened so easily and fell together so nicely that it was purely addictive. Man, a couple of phone calls and I made $10,000, wholesaling a property that I didn’t have enough money to buy.

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

Jerry Puckett: The biggest mistake that I ever made was not conveying my vulnerability. In other words, the biggest mistake that I ever made was at one point in time I was not 10)% honest with somebody that I was working with, and that came back to bite me more times than I could count.

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

Jerry Puckett: I love helping people on Bigger Pockets. I love to spend time answering people’s questions, and I make myself available to people who have questions trying to get started. I’m there all the time, hit me up.

Joe Fairless: And how can the Best Ever listeners get in touch with you? What’s the best way?

Jerry Puckett: The Best Ever listeners can get in touch with me by going either to BiggerPockets.com and looking at my profile, Jerry Puckett, or they can go to my website at www.marketlikeawholesaler.com. Fill out that Contact form and I’ll be in touch with you.

Joe Fairless: Jerry, thank you so much for being on the show, talking about best practices for direct mail, the differences, not only in regions, but also in states and the locations within the states… You talked about Southern California, you talked about the difference between that and (it sounds like, according to you) the polar opposite, New Hampshire. With Texas, having it all in there – mustangs (the horse, not the car) on the envelope, that sort of stuff. Really interesting, because it’s based on research and data, not opinion, and that’s what’s most interesting to me… It’s simply what’s working, and that’s the kind of stuff that I really love learning about, and it will be helpful for any Best Ever listener who is doing direct mail to pay attention to the word choices that we’re using.

Then also you talked about that 50-unit and how to approach that larger property… So thanks again for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Jerry Puckett: Thanks, Joe. It’s been great. I appreciate you.

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Best Real Estate Investing Advice Ever Show Podcast

JF989: How to Save Paradise and Put Up a Parking Lot…and Garages for BIG MONEY

Save paradise, put up a parking lot… and rake in the cash! That’s right, everything you want to know about investing in parking lots and garages are locked in this episode! Unconventional ways to invest? Absolutely! Take some notes!

Best Ever Tweet:

John Roy Real Estate Background:
– Founder of JNL Parking, a parking investments company
– Featured on CNBC as an expert in parking from his guide The Ultimate Parking Business Buyer’s Guide
– Serves on the Board of the National Parking Association and is a Certified Parking Professional
– One of the leading brokers in the Parking Industry
– Based in Fort Worth, Texas
– Say hi to him at www.jnlparking.com/
– Best Ever Book: The Fish that Swallowed the Whale

Made Possible Because of Our Best Ever Sponsors:

Want an inbox full of online leads? Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to adwordsnerds.com/joe to schedule the appointment.

 

Investment advice from John Roy

 

 

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

Today we’re gonna be talking about a topic we have never interviewed someone about before. As creepy as it sounds, I’ve actually dreamt about interviewing someone about this topic, because I hadn’t met anyone who invests in… Parking lots and parking garages! How are you doing, John Roy?

John Roy: Great, Joe. How are you doing?

Joe Fairless: I am doing well, and I’m pumped to talk about this stuff. I guarantee you no one’s ever been more excited to talk about parking lots and parking garages than I am right now, because again, I’ve interviewed close to 1,000 people and not one person has invested, or at least have talked about investing in parking lots and parking garages.

A little bit about John – he is the founder of GNL Parking, a parking investments company. He’s been featured on CNBC as an expert in parking, from his guide “The Ultimate Parking Business Buyer’s Guide.” He’s on the board of the National Parking Association and is a certified parking professional. He is based in Fort Worth, Texas, my hometown. With that being said, John, do you wanna give the Best Ever listeners a little bit more about your background and your focus?

John Roy: Thank you, Joe. I don’t wanna put the listeners to sleep with all the accolades in parking. Sometimes it’s not a very exciting topic to talk about. People that know about the subject, once they start learning about it, they can’t stop talking about it. They always say “I’ve never really looked at it as an investment.” I know that I always have to pay, so it’s something that’s relatable to everybody, because we’ve all had to pay for this, but we never really think about it as an asset class.

Once people come around and learn about it, they’re usually very motivated to learn more about the investment and how they can get involved.

Joe Fairless: Well, let’s talk about how you make money with parking lots — well, first off let’s do this, before you answer that question. How about you tell us the business model behind parking lots and the business model behind parking garages? And if we can group them together in the same conversation or if we have to have two separate conversations.

John Roy: Great. Here’s the basic business – it’s the business of taking blacktop or pavement, an 18 by 10 section, and renting it over and over and over, with very little upkeep, no TI’s and very little headaches when you do it properly. That is the basic business model. Now, as with anything, it’s a lot more complicated, but what you really are looking for when you’re looking at parking investments is “What is my demand generator?” That is the number one thing that you always have to ask yourself.

We look for certain demand generators and certain demographics… We love universities, we love courthouses, we love hospitals and we love sporting events. We focus on those areas that have just proven time and time again to be great demand generators for people in need of parking.

Joe Fairless: Universities, courthouses, sporting events and what else? What was the fourth one?

John Roy: Hospitals.

Joe Fairless: Yes, I have driven to all four of those and parked somewhere. That makes sense. How do you run the numbers?

John Roy: It is calculated on a cap rate basis. A lot of times people get hung up in the price/space, what you’re paying. It’s similar to the hotel industry and a lot of other industries, where they’ll look at the price per key, but really in parking it comes down to your cap rate. You look at it and you analyze it just like any other business. You’ll take your revenue minus expenses, and you end up with your net operating income, and you look at it based on a cap rate.

Now, there’s opportunities within that, and you can’t always be scared of the cap rate because some of our best deals are purchased at low cap rates, so we immediately turn around, fix the operations and we can increase the cap rate sometimes by 300-400 basis points.

Joe Fairless: Will you give us an example?

John Roy: We were looking at a deal up in Milwaukee – it’s a great little parking market, not a lot of big institutional investors are really clamoring to look at some of these great Midwestern towns, but we found a listing where an owner was selling a Thai restaurant and a parking lot. A lot of people are gonna be chasing Thai restaurants in downtown Milwaukee. So we went up there, took a look at it, and we found a great opportunity with a surface lot. We didn’t really want the Thai restaurant, that’s not our forte, so we convinced the owner to keep the restaurant and we would purchase the parking lot for a million dollars.

Now, on the cap rate it was a 5% rate of return. It didn’t look great, but we saw opportunity, we saw the traditional signs that you look for, which is an attendant taking cash, not good signing, no automation… The operations were wrong. He was catering to monthly parkers, which in the parking industry you don’t typically want a lot of monthly parkers. You want daily, what we call “transient” parkers that are gonna turn the spaces over and over again.

So we purchased it on a 5% cap, then we turned around and signed a lease with Standard Parking, which is the largest parking operator in the country for $155,000/year. After our taxes, we were at an unlevered rate of return of 14%. We signed a ten-year lease, so we don’t even operate the lot; that’s not our model, we’re not operators. And we have a tenant in there that’s a publicly-traded company, and we have a great asset that we can probably turn around and make some good money off.

Joe Fairless: So you’re not operators, that’s what you’ve just said… Standard Parking – is that the name of the company? You usually just lease out your stuff to them?

John Roy: And there are hundreds, if not thousands of parking operators in the country. When somebody wants to get into parking, the easiest thing to do is to get into the operation side of it. Very few people have the capital, the wherewithal, the patience to actually invest into real estate, and that’s really what’s made us successful – we invest in the actual, physical real estate asset of parking, and then we turn around and lease it. It’s a cutthroat industry among operators. They operate on very low profit margins, so you’re actually able to get really good lease terms from parking operators throughout the country.

Joe Fairless: Okay, so you’re buying the actual real estate, the parking lot, but then you’re leasing it out so you don’t have to operate it, because as you said, it’s a cutthroat business and it’s tough to make some money on that unless you’re a well-funded, well-oiled machine…?

John Roy: I’m gonna jump to the end of your show here, where I’m gonna offer your listeners the best advice ever.

Joe Fairless: You’re killing my format! I’ve gotta ask you the question, we’ve got lead-up music and everything, so I’m gonna ask you the question and then we’re gonna keep our conversation going… What is your best real estate investing advice ever, since you forced my hand?

John Roy: Don’t get into operations. [laughter] If you’re going to get into parking, get into the physical real estate side of it. Don’t get into operations, it’s a nasty business. If you go into it, you’re gonna get killed. They’re very competitive. Focus on real estate. That’s really my talk here – we’re driven by real estate; there’s no money to be made in operations… Very little. Let’s look at the actual ownership of assets. However, we have a lot of experience in operations, because we’ve done that in the past, so we could literally walk into a parking lot or a parking garage and within the first five minutes be able to say, “Okay, this is how we’re going to improve this operation, this is how we’re gonna drive our return; here’s what they’re doing right, here’s what they’re doing wrong.” Once you know that, then you can drive the actual value.

For people who wanna get into this type of business, what I always tell them is if you find a great site, contact two or three operators, let them do the due diligence by having them give you offers to lease this parking space from you, and you’ll have three competitive bids and you’ll be able to know pretty quickly what the real value of that asset is, without getting in trouble.

Joe Fairless: Okay. Obviously, you need to have it under contract at that point, when you get the bids, right?

John Roy: Not necessarily, no. Because if it hasn’t been sold and you’re doing your due diligence work before, it doesn’t take the operator very long to give you an operating bid. It usually takes about a week to get a bid back, as long as it’s not a very complicated process.

Joe Fairless: But the concern would be that they’d buy it and take it out from under you.

John Roy: That’s correct, yes. If you’re in a marketplace that’s competitive, depending on the market, sometimes these assets are gone very quickly, so you do have to tie it up and then start your due diligence, and that’s usually the process that we follow.

Joe Fairless: You said you can walk into a parking garage and know pretty quickly what they’re doing right, what they’re doing wrong. You already mentioned two things that are wrong – an attendant taking cash and not good signage… What else is wrong that you’ve commonly seen?

John Roy: I’m gonna give you an example for a garage, and this is very common. We had an example of a garage in Baltimore where they couldn’t make money – they were operating in the negative. We walk in there, and there’s another garage just a few doors down that is just absolutely killing it. It doesn’t take very long for us to walk in there and say “It’s the lighting. You have a lot of female clients who will not park in a garage that’s not well lit, that [unintelligible [00:11:52].24] that’s dirty.” A lot of times you’ll neglect that demographic of your business, which is a huge mistake.

First thing we tell people is make the appearance presentable and welcoming, and don’t ignore that demographic of your clientele. They wanna be able to feel safe the whole time – safety is a huge issue in garages. So just simple things like fixing up the lighting, cleaning up the place, new paint will do wonders in turning around that garage.

Joe Fairless: And then things people do right with their garages – proper lighting, having it automated, good signage and clean with new paint?

John Roy: That’s correct. You want a garage that’s presentable, good lighting, you want the latest technology… You want to be able to have a garage where people can come in, pay and get out quickly. They don’t wanna wait in lines, they don’t wanna deal with cash, they don’t wanna deal with tellers a lot of the time. The business is moving away from the human factor into almost complete automation.

You really do find opportunities out there when you find what we call the dinosaurs – people still taking cash… Or some people will be familiar with the [unintelligible [00:13:02].24] boxes with a bunch of slots in them that you fold your dollar up sometimes to slip it in there… Whenever you see that, it’s a great opportunity. You know, on average, that according to studies through the National Parking Association, there’s about 30% theft rates whenever you’re dealing with cash.

Joe Fairless: You say “death rate”?

John Roy: No, theft.

Joe Fairless: Theft. [laughter]

John Roy: I guess it could — well, let’s not talk about that. Yeah, theft rate. People are stealing money, in other words. It’s a cash business, it’s been going on for years and it’s changing, but there still are some opportunities out there.

Joe Fairless: Okay, so if we find a parking garage or a parking lot that had any of the things you’ve just mentioned that are wrong, then it could be a tell-tale sign that we have a motivated seller, or someone who would be interested in selling. How do we get in touch with that person?

John Roy: You rarely see signs for parking lots and parking garages for sale. I don’t know if you’ve ever have seen one yourself, but it’s very, very rare.

Joe Fairless: No, I haven’t.

John Roy: That’s the thing. Most of the times they’re done quietly, that’s why we’re in such demand in the industry and that’s why we specialize in what we do, and it’s really relationship-driven and you have to do your work. We call it pounding the pavement – getting out there, going to cities… We focus on downtown areas. We’ll walk around and we’ll look for garages and lots that have some of the tell-tale signs that we’ve just discussed, and we’ll call the office back and we’ll do a title search, tech search, and then we just start dialing and trying to get a hold of people. Sometimes it takes years before they come around, but eventually we see that if they get the right price, they’ll be interested in selling.

Joe Fairless: What does that conversation sound like, when you reach out to them initially?

John Roy: “Never. I will never sell this asset. It generates great cash, I’m not in a hurry to sell.” That’s typically how the conversation starts. Over time you just kind of break them down, sometimes you’ll bring an offer and  you’ll pique their curiosity. A lot of the times sellers don’t have an idea that their asset could be worth as much, so once you present a number that they weren’t really thinking about, they tend to start opening up.

Sometimes there’s deaths in the families, they’re generational assets that are passed down, and the next generation doesn’t have any interest in operating the parking assets.

Joe Fairless: If we find a parking lot and we’re like “You know what? I might be able to get this person to sell me it”, who are the top three leasing companies I should reach out to?

John Roy: The biggest one is Standard Parking. They go by ticker symbol SP. They’re publicly traded, so you can actually invest in them. You have a lot of regional operators. If you’re on the East Coast, you have a company called [unintelligible [00:16:02].24] they’re a pretty big one. You have a Canadian company named Impark – it’s growing rapidly here in this country. Then I would say ABM is another one that’s a pretty big company in the Midwest… There’s no shortage of operators throughout the country.

Joe Fairless: What type of risk should we be aware of as someone who has real estate experience, but not this type of experience in this industry?

John Roy: This is why parking, in my opinion, is the greatest asset, because it’s really a hybrid of investment vehicles. You have basically a bond that pays you regular payments once you sign a lease with an operator, and it’s also a stock, because the land underneath it appreciates in value, and it’s always for future development – whether it’s a garage or a surface lot in a downtown. You have a stock, you have a bond,  it’s all backed by real estate, and you also have basically a tip that protects you against surges in inflation because you have annual CPI increases built into your lease.

A typical investment is you purchase a surface lot in a downtown, you sign a lease for $100,000/year, plus 2,5% annual CPI increases. You have this guaranteed income for the next ten years.

Here are the risks that you have if you don’t get a guaranteed lease from an operator – the biggest risk is the governments, through taxation. But I guess that’s an inherent risk throughout real estate. What some cities will do is that it’s really a tech parking in the form of the parking tax, because that’s usually the low-hanging fruit for cities. So they could implement overnight a 10% parking tax. Now, typically it’s a pass-through cost to the consumer, but that’s really the biggest risk that you have.

If you’ve done your due diligence properly and don’t have any environmental risk on the land below you, there’s really not a lot of risk because if the operator stops paying you, you just move on to the next operator.

Joe Fairless: You mentioned environmental risks… Who does the due diligence on this? What type of professionals do we need to hire in order to do all the due diligence that we possibly need to do on a parking lot?

John Roy: Number one – you start with an operator. Get them to give you a guaranteed lease – I can’t emphasize that enough. Number two – YOU are going to do the due diligence on the surface lot, and here’s how it’s gonna go. You’re gonna tie it up for 45 days, you’re gonna order a property condition report if it’s a garage. You want to know that the garage is structurally sound. Do not ever buy a parking garage without a property condition report, because there’s a lot of swindlers out there that will try to sell you a garage that’s falling apart or could be condemned, and those are usually huge expenses. So get a clean bill of health through a property condition report.

You’re also gonna get environmental reports, and this is more prevalent for surface lots than garages. You wanna make sure that the land that you’re purchasing has not been contaminated in the past, because you could potentially be liable, even if it’s before you purchased this asset. Once you get a clean phase one, as we call it, then you’re fine. If they come up with what’s called RECs (recognized environmental concerns), you need to order a phase two where they will actually drill into the surface and try to get samples of any contamination. If it comes back that there are contaminations, walk away. Don’t do anything but walk away. If you get a clean phase two, then you can proceed with the deal. It’s as simple as that.

You’re gonna get a survey, which is standard for most real estate, and you’re gonna get a clean title. As long as you get that done, then it’ll be a very good investment for you.

Joe Fairless: Anything else we haven’t talked about as it relates to investing in parking lots and parking garages that you wanna mention?

John Roy: It’s tough to do. It’s tough to find these assets, but if you do, most of the time you need debt, so you wanna leverage these assets. Typically, in today’s market you can actually get debt on these parking assets where in the past you really couldn’t… Especially surface lots, banks would look at them as land plays, and you know how difficult and expensive it is to get financing for raw land. But now, with about 35% down, you can actually buy these assets, as long as you prepare a good proforma showing the cashflows, and especially if you have a guaranteed lease from an operator, you can get financing pretty easily.

I would say people that wanna get into this realm – don’t get discouraged. It’s gonna take you some time, but if you ever do find a great asset, you [unintelligible [00:20:53].01] make it work, have a worst-case-scenario and you can pass it on to us and we’ll give you a referral fee. There’s opportunities to be had, you just have to be patient with it.

Joe Fairless: The chicken before the egg thing that I’m getting tripped up on is this guaranteed lease from the operator, but hen also getting financing… Because the bank’s gonna wanna make sure that you have the guaranteed lease, but you can’t get the guaranteed lease until you actually own it. So how does that work?

John Roy: That’s a great point, thank you for pointing that out. Sometimes you get so caught up in your industry, you do it so much that you think everybody understands it. A guaranteed lease is just as simple as getting a commitment letter from the operator. The commitment letter will specify all the details; you will actually work through a lease, and then the day that you close on the property, the lease will be in place. The contract is really contingent upon closing.

So you get the commitment letter from the operator, you will sign a lease and it will state that on this date, the lease commence is as long as the deal close.

Joe Fairless: It makes sense. Are you ready for the Best Ever Lightning Round?

John Roy: Let’s go.

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

Break: [00:22:11].07] to [00:22:52].25]

Joe Fairless: Best ever book you’ve read?

John Roy: The Fish That Swallowed The Whale. It deals with Sam Zemurray and the Banana King. If people have not read that, that would be the number one book that you need to read right now. Get it on our list, you won’t be able to put it down. Amazing book.

Joe Fairless: The Fish That Swallowed The Whale?

John Roy: About bananas. Who would have ever thought a book about bananas would be the best book that one could ever read?

Joe Fairless: Wait, I wanna make sure I got the title down right: The Fish That Swallowed The Whale And Bananas…? Is that the title?

John Roy: The Fish That Swallowed The Whale, that’s the title. And it deals with making of the Banana King.

Joe Fairless: Okay, got it. There’s a lot of nouns thrown into that title. Okay, cool. Best ever deal you’ve done?

John Roy: Downtown Cincinnati. We took an old mall, we converted into a parking garage. Purchased it for 14,5 approximately, and when I said “we purchased it”, we helped that real estate group buy it. Now potentially worth 25-28 million, two years later.

Joe Fairless: How much did you put in to make that conversion?

John Roy: It was already done. It was turnkey at 14,5.

Joe Fairless: Oh, wow. Best ever way you like to give back?

John Roy: I like to volunteer my expertise in parking. Like I said, it’s a difficult field to get into, but I will always take calls and give people advice. They’re free to call me on my cell phone and I’ll walk them through a process, I have no problem doing that.

Joe Fairless: Just on that best ever deal, you said it was a mall and now it’s a parking garage, right?

John Roy: Correct, it was a mall. It’s downtown on Ray’s Street and 3rd, if you know Cincinnati. It was repurposed into a parking garage, about 775 spaces, and it’s been an absolute home run.

Joe Fairless: It was repurposed after you purchased it or before?

John Roy: It was concurrent. We had a deal in place with the city and a contractor to buy in and have them convert it into a parking garage. It took about 8-12 months for completion, but once it was done, it opened and we almost filled that garage up within two months.

Joe Fairless: So you didn’t have to pay for the conversion?

John Roy: We did, yeah.

Joe Fairless: You did, okay.

John Roy: Basically the conversion, land, everything, all-in 14,5.

Joe Fairless: Okay, I’m with you now. Got it. What’s a mistake you’ve made on a deal, on a very tactical level?

John Roy: Partnering up with a developer where you contribute the land and they don’t contribute enough equity themselves. We will never do that again.

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

John Roy: Go on my website and you can find both me and my partner’s contact information. Feel free to give us a call if you’re ever in Dallas or Fort Worth. Look me up, I’d love to have a drink or dinner with you.

Joe Fairless: Well, the theme has been clear, that’s for sure, on parking, and that is if you get into parking and you get into operations, then you did not listen to this episode very closely, because John does not want you in parking operations. Instead, buying the parking lot or garages and then finding an operator that has the experience to then enter into a lease with them.

We talked about a bunch of stuff, from the due diligence that you need to do to how you make money, which is through that lease, which is something I didn’t know. Then also you said at the very beginning of our conversation how you don’t want monthly parkers, you prefer to have more transient parking, and you look for universities, courthouses, sporting events and hospitals.

Then also the ways to do a parking garage right and wrong, and when we look at the wrong areas, perhaps we find a motivated seller. Or in your case, you said not a lot of times are they motivated, so really just someone who should be selling and perhaps eventually will sell to you if you stay in their ear long enough. Thanks so much for being on the show, John. I hope you have a best ever day, and we’ll talk to you soon.

John Roy: Joe, my pleasure. Thank you!

 

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Joe Fairless's real estate podcast

JF901: SECRETS of Wholesaling/ASSIGNMENTS and a DEAL BREAKDOWN #SkillSetSunday

A breakdown of all you need to know about assignments and wholesaling is the missing piece to your real estate puzzle. Our guest will take you step-by-step on how he gets it done and how you should do it to make it smooth and fair for all parties. This is when you cannot miss!

Assignment Contract: http://bit.ly/2lwrLT6

Best Ever Tweet:

Jimmy Reed Real Estate Background:

– Founder of 1REClub.com
– A DFW Real Estate Club in Fort Worth, Texas
– He started out wholesaling to local Investors in Fort Worth, TX
– 29 years experience in buying and selling real estate
– Based in Fort Worth, Texas
– Say hi to him at: http://www.jimmyreed.net

Made Possible Because of Our Best Ever Sponsors:

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

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

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

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Best Ever Show Real Estate Advice from experts

JF821: What You are MISSING During an Inspection Period and Why You MUST Pay Attention

Inspecting the home is often overlooked, especially by a real estate entrepreneur who has not been properly trained in knowing what to look for. Today you are about to get an inside look at why having a professional home inspector take the lead before you buy.

Best Ever Tweet:

Adam Sedinger Real Estate Background:

– Professional Home Inspector at HouseEXAM DFW
– 10 year of experience in construction and has inspected over 7,000 homes
– Home inspections from new construction to vintage homes, one-year warranty inspections to investment properties
– HouseEXAM is a family business dedicated to serving home ownership needs, from buying to selling
– Based in Fort Worth, Texas
– Say hi to him at http://houseexamdfw.com
– Best Ever Book: Bible

Click here for a summary of Adam’s Best Ever Advice: http://bit.ly/2g0tKfD

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple.

Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Learn more at http://www.fundthatflip.com/bestever.

https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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no fluff real estate advice

JF700: How You Should DIVERSIFY Your Income Streams in Real Estate

Ever thought about being a property manager? Try being a landlord of multiple styles of homes, acquiring properties creatively, Property Management, and selling inventory! Today’s guest has dug himself deep in the roots of Fort Worth Texas where he can make multiple income streams, you are next!

Best Ever Tweet:

James Like Real Estate Background:

-Owner of Revolution Real Estate
-Sold over $30,000,000
-Based in Fort Worth, TX
-Say hi at jameslike.com
-Best Ever Book: Getting Things Done by David Allen

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

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors.

We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:
https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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Best Ever Show Real Estate Advice

JF247: The Stand-Up Comedians Guide to Lease Options

Have you ever wondered how I get my hair so thick and luscious? Well today you get to find out. That’s not all though! Today’s Best Ever guest shares with us how he found his niche in lease options, and how he gets 94% of his tenants to buy.

Best Ever Tweet:

John Jackson’s real estate background:

–          Founder of Leasing to Buy based in Fort Worth, Texas

–          Started as a self-taught day trader then got into real estate lease options in 2003

–          Since 2003 he has done over 500 lease option transactions and structures them so buyer is highly likely to purchase the house

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

–          Did 10 years of stand-up comedy

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

Made Possible Because of Our Best Ever Sponsors:

Norada Real Estate Investments – Having a hard time finding great investment properties?  Unfortunately, the best deals are rarely found locally. Norada Real Estate’s simple proven system provides you with the best deals across the U.S. to create wealth and cash-flow.  Get your FREE copy of The Ultimate Guide to Out-of-State Real Estate Investing

Patch of LandWant to learn more about crowdfunding? Let the leading expert in the crowdfunding space, Patch of Land, give you all the info you need to get started. Grab your FREE copy of Top Ten Answers to the Top Ten Crowdfunding Questions athttp://www.PatchOfLand.com/bestever

Youth Nation – How much do you really know about your clients? With milenials taking over the real estate market place, YOU need to learn about them. Read Youth Nation by Matt Britton to learn all you need to know.

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Joe Fairless